[Title 15 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2000 Edition]
[From the U.S. Government Printing Office]






          15



          Commerce and Foreign Trade

[[Page i]]

          PARTS 0 TO 299

          Revised as of January 1, 2000

          CONTAINING
          A CODIFICATION OF DOCUMENTS
          OF GENERAL APPLICABILITY
          AND FUTURE EFFECT

          AS OF JANUARY 1, 2000
          With Ancillaries
          Published by:
          the Office of the Federal Register
          National Archives and Records
          Administration

          as a Special Edition of
          the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2000



               For sale by U.S. Government Printing Office
 Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 15:
          Subtitle A--Office of the Secretary of Commerce            3
    Subtitle B--Regulations Relating to Commerce and Foreign 
      Trade:
            Chapter I--Bureau of the Census, Department of 
          Commerce                                                 289
            Chapter II--National Institute of Standards and 
          Technology, Department of Commerce                       343
  Finding Aids:
      Table of CFR Titles and Chapters........................     489
      Alphabetical List of Agencies Appearing in the CFR......     507
      List of CFR Sections Affected...........................     517



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  15 CFR 0.735-1 
                       refers to title 15, part 
                       0, section 735-1.

                     ----------------------------

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, January 1, 2000), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Weekly Compilation of Presidential Documents and 
the Privacy Act Compilation are available in electronic format at 
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gpoaccess@gpo.gov.

[[Page vii]]

    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

January 1, 2000.



[[Page ix]]



                               THIS TITLE

    Title 15--Commerce and Foreign Trade is composed of three volumes. 
The parts in these volumes are arranged in the following order: parts 0-
299, 300-799, and part 800-End. The first volume containing parts 0-299 
is comprised of Subtitle A--Office of the Secretary of Commerce, 
Subtitle B, chapter I--Bureau of the Census, Department of Commerce, and 
chapter II--National Institute of Standards and Technology, Department 
of Commerce. The second volume containing parts 300-799 is comprised of 
chapter III--International Trade Administration, Department of Commerce, 
chapter IV--Foreign-Trade Zones Board, and chapter VII--Bureau of Export 
Administration, Department of Commerce. The third volume containing part 
800-End is comprised of chapter VIII--Bureau of Economic Analysis, 
Department of Commerce, chapter IX--National Oceanic and Atmospheric 
Administration, Department of Commerce, chapter XI--Technology 
Administration, Department of Commerce, chapter XIII--East-West Foreign 
Trade Board, chapter XIV--Minority Business Development Agency, chapter 
XX--Office of the United States Trade Representative, and chapter 
XXIII--National Telecommunications and Information Administration, 
Department of Commerce. The contents of these volumes represent all 
current regulations codified under this title of the CFR as of January 
1, 2000.

    A redesignation table appears in the Finding Aids section of the 
volume containing Parts 300-799

    For this volume, Cheryl E. Sirofchuck was Chief Editor. The Code of 
Federal Regulations publication program is under the direction of 
Frances D. McDonald, assisted by Alomha S. Morris.

[[Page x]]




[[Page 1]]



                         TITLE 15--COMMERCE AND
                              FOREIGN TRADE




                   (This book contains parts 0 to 299)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE A--Office of the Secretary of Commerce.............           0

     SUBTITLE B--Regulations Relating to Commerce and Foreign Trade:

chapter i--Bureau of the Census, Department of Commerce.....          30

chapter ii--National Institute of Standards and Technology, 
  Department of Commerce....................................         200

[[Page 3]]

             Subtitle A--Office of the Secretary of Commerce

  --------------------------------------------------------------------

Part                                                                Page
0               Employee responsibilities and conduct.......           5
1               The Seal of the Department of Commerce......          26
2               Procedures for handling and settlement of 
                    claims under the Federal Tort Claims Act          27
3               [Reserved]
4               Public information..........................          29
4a              Classification, declassification and public 
                    availability of national security 
                    information.............................          48
4b              Privacy Act.................................          52
5               Operation of vending stands.................          71
6               Civil monetary penalty inflation adjustments          73
7               [Reserved]
8               Nondiscrimination in federally-assisted 
                    programs of the Department of Commerce--
                    effectuation of Title VI of the Civil 
                    Rights Act of 1964......................          75
8a              [Reserved]
8b              Prohibition of discrimination against the 
                    handicapped in federally assisted 
                    programs operated by the Department of 
                    Commerce................................          89
8c              Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Department 
                    of Commerce.............................         102
9               Procedures for a voluntary labeling program 
                    for household appliances and equipment 
                    to effect energy conservation...........         108
10              Procedures for the development of voluntary 
                    product standards.......................         111
11              Uniform relocation assistance and real 
                    property acquisition for Federal and 
                    federally assisted programs.............         121
12              Fair packaging and labeling.................         121

[[Page 4]]

13              Intergovernmental review of Department of 
                    Commerce programs and activities........         124
14              Uniform administrative requirements for 
                    grants and agreements with institutions 
                    of higher education, hospitals, other 
                    non-profit, and commercial organizations         127
15              Legal proceedings...........................         154
16              Procedures for a voluntary consumer product 
                    information labeling program............         165
17              Licensing of Government-owned inventions in 
                    the custody of the Department of 
                    Commerce................................         171
18              Attorney's fees and other expenses..........         173
19              Referral of debts to the IRS for tax refund 
                    offset..................................         180
20              Nondiscrimination on the basis of age in 
                    programs or activities receiving Federal 
                    financial assistance....................         181
21              Administrative offset.......................         187
22              Salary offset...............................         196
23              Use of penalty mail in the location and 
                    recovery of missing children............         200
24              Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    State and local governments.............         203
25              Program.....................................         230
26              Governmentwide debarment and suspension 
                    (nonprocurement) and governmentwide 
                    requirements for drug-free workplace 
                    (grants)................................         245
27              Protection of human subjects................         264
28              New restrictions on lobbying................         275

[[Page 5]]



PART 0--EMPLOYEE RESPONSIBILITIES AND CONDUCT--Table of Contents




                      Subpart A--General Provisions

Sec.
0.735-1  Purpose.
0.735-2  Relation to basic provisions.
0.735-3  Applicability.
0.735-4  Definitions.

                        Subpart B--General Policy

0.735-5  General principles.
0.735-6  Standards required in the Federal service.
0.735-7  Special requirements of the Department.
0.735-8  Limitations on private activities and interests.

         Subpart C--Statutory Limitations Upon Employee Conduct

0.735-9  Employee responsibilities.

         Subpart D--Regulatory Limitations Upon Employee Conduct

0.735-10  Administrative extension of statutory limitations.
0.735-10a  Proscribed actions.
0.735-11  Gifts, entertainment, and favors.
0.735-12  Outside employment or other activity.
0.735-13  Financial interests.
0.735-14  Use of Government time or property.
0.735-15  Misuse of employment or information.
0.735-16  Indebtedness.
0.735-17  Gambling, betting, and lotteries.
0.735-18  General conduct prejudicial to the Government.
0.735-19  Reporting undue influence to superiors.

       Subpart E--Statements of Employment and Financial Interests

0.735-20  General provisions.
0.735-21  Form and content of statements.
0.735-22  Employees required to submit statements.
0.735-22a  Employee's complaint on filing requirement.
0.735-23  Employees not required to submit statements.
0.735-24  Time and place for submission of original statements.
0.735-25  Supplementary statements.
0.735-26  Interests of employees' relatives.
0.735-27  Information not known by employees.
0.735-28  Information not required.
0.735-29  Confidentiality of employees' statements.
0.735-30  Relation of this part to other requirements.
0.735-31  Special Government employees.

                  Subpart F--Supplementary Regulations

0.735-32  Departmental.
0.735-33  Operating units.
0.735-34  Effective date of supplementary regulations.

                        Subpart G--Administration

0.735-35  Responsibilities of employees.
0.735-36  Responsibilities of operating units.
0.735-37  Procedure.
0.735-38  Availability for counseling.
0.735-39  Authorizations.
0.735-40  Disciplinary and other remedial action.
0.735-41  Inquiries and exceptions.

 Subpart H--Disciplinary Actions Concerning Post-Employment Conflict of 
                           Interest Violations

0.735-42  Scope.
0.735-43  Report of violations and investigation.
0.735-44  Initiation of proceedings.
0.735-45  Notice.
0.735-46  Hearing.
0.735-47  Decision absent a hearing.
0.735-48  Administrative appeal.
0.735-49  Sanctions.
0.735-50  Judicial review.

Appendix A to Part 0--Statutes Governing Conduct of Federal Employees
Appendix B to Part 0--Position Categories, Grade GS-13, and Above, 
          Requiring Statements of Employment and Financial Interests by 
          Incumbents
Appendix C to Part 0--Position Categories Below GS-13 Requiring 
          Statements of Employment and Financial Interests by Incumbents

    Authority: E.O. 11222 of May 8, 1965, 30 FR 6469, 3 CFR, 1965 Supp.; 
5 CFR 735.104, unless otherwise noted.

    Source: 32 FR 15222, Nov. 2, 1967, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 0.735-1  Purpose.

    The purpose of this part is to set forth Department of Commerce 
policy and procedure relating to employee responsibilities and conduct.



Sec. 0.735-2  Relation to basic provisions.

    (a) This part implements the following:

[[Page 6]]

    (1) The provisions of law cited in this part;
    (2) Executive Order 11222 of May 8, 1965 (3 CFR, 1965 Supp. p. 130);
    (3) Part 735 of the Civil Service regulations (5 CFR 735.101-
735.412, inclusive).
    (b) This part prescribe additional standards of ethical and other 
conduct and reporting requirements deemed appropriate in the light of 
the particular functions and activities of this Department.



Sec. 0.735-3  Applicability.

    This part applies to all persons included within the term 
``employee'' as defined in Sec. 0.735-4, except as otherwise provided in 
this part.



Sec. 0.735-4  Definitions.

    For purposes of this part, except as otherwise indicated in this 
part:
    (a) Employee. (1) Shall include: (i) Every officer and employee of 
the Department of Commerce (regardless of location), including 
commissioned officers of the Environmental Science Services 
Administration; and
    (ii) Every other person who is retained, designated, appointed, or 
employed by a Federal officer or employee, who is engaged in the 
performance of a function of the Department under authority of law or an 
Executive act, and who is subject to the supervision of a Federal 
officer or employee while engaged in the performance of the duties of 
his position not only as to what he does but also as to how he performs 
his duties, regardless of whether the relationship to the Department is 
created by assignment, detail, contract, agreement or otherwise.
    (2) Shall not include: (i) Members of the Executive Reserve except 
when they are serving as employees of the Department under the 
circumstances described in paragraph (a)(1) of this section;
    (ii) Members of crews of vessels owned or chartered to the 
Government and operated by or for the Maritime Administration under a 
General Agency Agreement; or
    (iii) Any other person who is determined legally not to be an 
officer or employee of the United States.
    (b) Special Government employee shall mean an employee as defined in 
paragraph (a) of this section who is retained, designated, appointed, or 
employed to perform with or without compensation, for not to exceed 130 
days during any period of 365 consecutive days, temporary duties on 
either a full-time or intermittent basis.
    (c) Personnel officer means a personnel official to whom the power 
of appointment is redelegated under Administrative Order 202-250.
    (d) Operating unit means, for purposes of this part, primary and 
constituent operating units designated as such in the Department Order 
Series of the Department of Commerce and, in addition, the Office of the 
Secretary.
    (e) Head of an operating unit, for the purposes of this part, 
includes the Assistant Secretary for Administration with respect to the 
performance of functions under this part for the Office of the 
Secretary.



                        Subpart B--General Policy



Sec. 0.735-5  General principles.

    Apart from statute, there are certain principles of fair dealing 
which have the force of law and which are applicable to all officers of 
the Government. A public office is a public trust. No public officer can 
lawfully engage in business activities which are incompatible with the 
duties of his office. He cannot, in his private or official character, 
enter into engagements in which he has, or can have, a conflicting 
personal interest. He cannot allow his public duties to be neglected by 
reason of attention to his private affairs. Such conflicts of interest 
are not tolerated in the case of any private fiduciary, and they are 
doubly proscribed for a public trustee. (40 Ops. Atty. Gen. 187, 190.)



Sec. 0.735-6  Standards required in the Federal service.

    5 CFR 735.101 states: ``The maintenance of unusually high standards 
of honesty, integrity, impartiality, and conduct by Government employees 
and special Government employees is essential to assure the proper 
performance of the Government business and the maintenance of confidence 
by citizens in their Government.''

[[Page 7]]



Sec. 0.735-7  Special requirements of the Department.

    The close and sensitive relationship between the Department of 
Commerce and the Nation's business community calls for special vigilance 
on the part of all officers and employees to avoid even any appearance 
of impropriety. The regulations set forth in this part have been adopted 
in order to promote the efficiency of the service in the light of the 
particular ethical and administrative problems arising out of the work 
of the Department.



Sec. 0.735-8  Limitations on private activities and interests.

    It is the policy of the Department to place as few limitations as 
possible on private activities or interests consistent with the public 
trust and the effective performance of the official business of the 
Department. There is no general statutory or regulatory limitation on 
the conduct of private activities for compensation by officers or 
employees of the Department, when the private activity is not connected 
with any interest of the Government. When the private activity does not 
touch upon some interest, it may be conducted if it falls outside 
applicable statutory limitations and regulatory limitations.



         Subpart C--Statutory Limitations Upon Employee Conduct



Sec. 0.735-9  Employee responsibilities.

    Each employee and special Government employee has a positive duty to 
acquaint himself with the numerous statutes relating to the ethical and 
other conduct of employees and special employees of the Department and 
of the Government Appendix A of this part contains a listing of the more 
important statutory provisions of general applicability. In case of 
doubt on any question of statutory application to fact situations that 
may arise, the employee should consult the text of the statutes, which 
will be made available to him by his organization unit, and he should 
also avail himself of the legal counseling provided by this part.



         Subpart D--Regulatory Limitations Upon Employee Conduct



Sec. 0.735-10  Administrative extension of statutory limitations.

    The provisions of the statutes identified in this part which relate 
to the ethical and other conduct of Federal employees are adopted and 
will be enforced as administrative regulations, violations of which may 
in appropriate cases be the basis for disciplinary action, including 
removal. The fact that a statute which may relate to employee conduct is 
not identified in this part does not mean that it may not be the basis 
for disciplinary action against an employee.



Sec. 0.735-10a  Proscribed actions.

    An employee shall avoid any action, whether or not specifically 
prohibited by this subpart, which might result in, or create the 
appearance of:
    (a) Using public office for private gain;
    (b) Giving preferential treatment to any person;
    (c) Impeding Government efficiency or economy;
    (d) Losing complete independence or impartiality;
    (e) Making a government decision outside official channels; or
    (f) Affecting adversely the confidence of the public in the 
integrity of the Government.



Sec. 0.735-11  Gifts, entertainment, and favors.

    (a) General limitations. Except as provided in paragraphs (b) and 
(f) of this section, an employee shall not solicit or accept, directly 
or indirectly, any gift, gratuity, favor, entertainment, loan, payment 
of expenses, fee, compensation, or any other thing of monetary value, 
for himself or another person, from a person who:
    (1) Has, or is seeking to obtain, contractual or other business or 
financial relations with the Department of Commerce;
    (2) Conducts operations or activities that are regulated by the 
Department of Commerce; or
    (3) Has interests that may be substantially affected by the 
performance or nonperformance of the employee's

[[Page 8]]

official duty or by actions of the Department.
    (b) Exceptions. The following exceptions are authorized to the 
limitation in paragraph (a) of this section:
    (1) Acceptance of a gift, gratuity, favor, entertainment, loan, 
payment of expenses, fee, compensation, or other thing of monetary value 
incident to obvious family or personal relationships (such as those 
between the employee and the parents, children, or spouse of the 
employee) when the circumstances make it clear that it is those 
relationships rather than the business of the persons concerned which 
are the motivating factors.
    (2) Acceptance of food and refreshments of nominal value on 
infrequent occasions in the ordinary course of a luncheon or dinner 
meeting or other meeting or on an inspection tour where an employee may 
properly be in attendance. For the purpose of this section, ``nominal 
value'' means that the value of the food or refreshments shall not be 
unreasonably high under the circumstances.
    (3) Acceptance of loans from banks or other financial institutions 
on customary terms and on security not inconsistent with paragraph (a) 
of this section, to finance proper and usual activities of employees, 
such as home mortgage loans.
    (4) Acceptance of unsolicited advertising or promotional material, 
such as pens, pencils, note pads, calendars, and other items of nominal 
intrinsic value.
    (5) Acceptance of a gift, gratuity, favor, entertainment, loan, 
payment of expenses, fee, compensation, or other thing of monetary value 
when such acceptance is determined by the head of the operating unit 
concerned to be necessary and appropriate in view of the work of the 
Department and the duties and responsibilities of the employee. A copy 
of each such determination shall be sent to the counselor of the 
Department.
    (6) Special Government employees are covered by this section only 
while employed by the Department or in connection with such employment.
    (c) [Reserved]
    (d) Gifts to superiors. An employee shall not solicit a contribution 
from another employee for a gift to an official superior, make a 
donation as a gift to an official superior, or accept a gift from an 
employee receiving less pay than himself (5 U.S.C. 7351). However, this 
paragraph does not prohibit a voluntary gift of nominal value or 
donation in a nominal amount made on a special occasion such as 
marriage, illness, or retirement. An employee who violates these 
requirements shall be removed from the service.
    (e) Gifts from a foreign government. An employee shall not accept a 
gift, present, decoration, or other thing from a foreign government 
unless acceptance is (1) authorized by Congress as provided by the 
Constitution and in Pub. L. 89-673, 80 Stat. 952, and (2) authorized by 
the Department of Commerce as provided in Administrative Order 202-739.
    (f) Reimbursement for travel expenses and subsistence. Neither this 
section nor Sec. 0.735-12 precludes an employee from receipt of bona 
fide reimbursement, unless prohibited by law, for expenses of travel and 
such other necessary subsistence as is compatible with this part for 
which no Government payment or reimbursement is made. However, this 
paragraph does not allow an employee to be reimbursed, or payment to be 
made on his behalf, for excessive personal living expenses, gifts, 
entertainment, or other personal benefits, nor does it allow an employee 
to be reimbursed by a person for travel on official business under 
agency orders when reimbursement is proscribed by Decision B-128527 of 
the Comptroller General dated March 7, 1967. (Requirements applicable to 
Department of Commerce employees are set forth in Department of Commerce 
Administrative Order 203-9.)



Sec. 0.735-12  Outside employment or other activity.

    (a) Incompatible outside employment or other outside activity. An 
employee shall not engage in outside employment or other outside 
activity not compatible
    (1) With the full and proper discharge of the duties and 
responsibilities of his Government employment,
    (2) With the policies or interests of the Department, or

[[Page 9]]

    (3) With the maintenance of the highest standards of ethical and 
moral conduct. Incompatible activities include but are not limited to:
    (i) Acceptance of a fee, compensation, gift, payment of expense, or 
any other thing of monetary value in circumstances in which acceptance 
may result in, or create the appearance of, a conflict of interest;
    (ii) Outside employment which tends to impair the employee's mental 
or physical capacity to perform his Government duties and 
responsibilities in an acceptable manner;
    (iii) Employment with any foreign government, corporation, 
partnership, instrumentality, or individual unless authorized by the 
Department;
    (iv) Employment by, or service rendered under contract with, any of 
the persons listed in Sec. 0.735-11(a);
    (v) Receipt by an employee, other than a special Government 
employee, of any salary or anything of monetary value from a private 
source as compensation for his services to the Government. (18 U.S.C. 
209).
    (b) Improper benefit from official activity. (1) No employee of the 
Department shall receive compensation (e.g., an honorarium) or anything 
of monetary value, other than that to which he is duly entitled from the 
Government, for the performance of any activity during his service as 
such employee of the Department and within the scope of his official 
responsibilities.
    (2) As used in this paragraph, ``within the scope of his official 
responsibilities'' means in the course of or in connection with his 
official responsibilities. (See 29 Comp. Gen. 163; 30 id. 246; 32 id. 
454; 35 id. 354; B-131371, July 17, 1957.)
    (3) An activity shall ordinarily be considered to be in the course 
of or in connection with an employee's official responsibilities if it 
is performed as a result of an invitation or request which is addressed 
to the Department or a component thereof, or which is addressed to an 
employee at his office at the Department, or which there is reason to 
believe is extended partly because of the official position of the 
employee concerned. (When in doubt, it may be asked whether it is likely 
that the invitation would have been received if the recipient were not 
associated with the Department.) Whether an employee is on leave while 
performing an activity shall be considered irrelevant in determining 
whether an activity is performed in the course of or in connection with 
the employee's official responsibilities.
    (4) Acceptance of a gift or bequest on behalf of the Department 
shall be made in accordance with Department Order 3 and Administrative 
Order 203-9.
    (c) Teaching, lecturing, and writing. Employees are encouraged to 
engage in teaching, lecturing, and writing that is not prohibited by 
law. Executive Order 11222, 5 CFR Part 735, or the regulations in this 
part and Administrative Order 201-4, ``Writing for Outside 
Publication,'' subject to the following conditions:
    (1) An employee shall not, either for or without compensation, 
engage in teaching, lecturing, or writing, including teaching, 
lecturing, or writing for the purpose of the special preparation of a 
person or class of persons for an examination of the Office of Personnel 
Management or the Board of Examiners for the Foreign Service, that 
depends on information obtained as a result of his Government 
employment, except when that information has been made available to the 
general public or will be made available on request, or when the 
Assistant Secretary for Administration or his designee gives written 
authorization for the use of nonpublic information on the basis that the 
use is in the public interest.
    (2) No employee shall receive compensation or anything of monetary 
value for any consultation, lecture, discussion, writing, or appearance, 
the subject matter of which is devoted substantially to the 
responsibilities, programs, or operations of the Department of Commerce, 
or which draws substantially on official data or ideas which have not 
become part of the body of public information. As used in this 
paragraph, ``the body of public information'' shall mean information 
which has been disseminated widely among segments of the public which 
may be affected by or interested in the information concerned, or which 
is known by such segments of the public

[[Page 10]]

to be freely available on request to a Government agency.
    (d) [Reserved]
    (e) Application of the limitations. This section does not preclude 
an employee from:
    (1) [Reserved]
    (2) Participation in the activities of National or State political 
parties not proscribed by law.
    (3) Participation in the affairs of, or acceptance of an award for a 
meritorious public contribution or achievement given by a charitable, 
religious, professional, social, fraternal, nonprofit educational and 
recreational, public service, or civic organization.

[32 FR 15222, Nov. 2, 1967, as amended at 33 FR 9765, July 6, 1968; 55 
FR 53489, Dec. 31, 1990]



Sec. 0.735-13  Financial interests.

    (a) An employee shall not: (1) Have a direct or indirect financial 
interest that conflicts substantially, or appears to conflict 
substantially, with his Government duties and responsibilities; or
    (2) Engage in, directly or indirectly, a financial transaction as a 
result of, or primarily relying on, information obtained through his 
Government employment.
    (b) No employee shall participate in any manner, on behalf of the 
United States, in the negotiation of contracts, the making of loans, and 
grants, the granting of subsidies, the fixing of rates, or the issuance 
of valuable permits or certificates, or in any investigation or 
prosecution, or in the transaction of any other official business, which 
affects chiefly a person with whom he has any economic interest or any 
pending negotiations concerning a prospective economic interest, except 
with express prior authorization as provided for in subpart G of this 
part.
    (c) This section does not preclude an employee from having a 
financial interest or engaging in financial transactions to the same 
extent as a private citizen not employed by the Government so long as it 
is not prohibited by law, Executive order, Civil Service regulations (5 
CFR Part 735), or regulations in this part.
    (d) The financial (or economic) interests described below are too 
remote or too inconsequential to affect the integrity of an employee's 
services in any matter involving them, and are thereby exempted from the 
prohibitions of 18 U.S.C. 208(a), and do not exclude such employee's 
participation in the transaction of any official business involving such 
financial or economic interests:

    Deposits in a bank, savings and loan association, building 
association, credit union or similar financial institution; policies 
held with an insurance company; constructive interests in companies and 
other entities owned or held by a mutual fund or other diversified 
investment company in which the employee has an interest.


These exempted financial (or economic) interests need not be reported by 
employees in their statements of employment and financial interests 
referred to in Sec. 0.735-21.

(18 U.S.C. 208(b); 5 CFR 735.404a)

[32 FR 15222, Nov. 2, 1967, as amended at 41 FR 34939, Aug. 18, 1976; 47 
FR 3350, Jan. 25, 1982]



Sec. 0.735-14  Use of Government time or property.

    (a) An employee shall not directly or indirectly use, or allow the 
use of, Government time or property of any kind, including property 
leased to the Government, for other than officially approved activities.
    (b) Each employee shall protect and conserve Government property, 
including equipment, supplies, and other property entrusted or issued to 
him.



Sec. 0.735-15  Misuse of employment or information.

    (a) Use of Government employment. An employee shall not use his 
Government employment for a purpose that is, or gives the appearance of 
being, motivated by the desire for private gain for himself or another 
person, particularly one with whom he has family, business, or financial 
ties.
    (b) Use of inside information. For the purpose of furthering a 
private interest, an employee shall not, except as provided in 
Sec. 0.735-12(c), directly or indirectly use, or allow the use of, 
information which has been or has the appearance of having been obtained

[[Page 11]]

through or in connection with his Government employment and which has 
not been made available to the general public.
    (c) Coercion. An employee shall not use his Government employment to 
coerce, or give the appearance of coercing, a person to provide 
financial benefit to himself or another person, particularly one with 
whom he has family, business, or financial ties.
    (d) Disclosure of restricted information. No employee shall divulge 
restricted commercial or economic information, or restricted information 
concerning the personnel or operations of any Government agency, or 
release any such information in advance of the time prescribed for its 
authorized release.
    (e) Discrimination. No employee, acting in his official capacity, 
shall, directly or indirectly, authorize, permit, or participate in any 
act or course of conduct which, on the ground of race, color, creed, 
national origin, or sex, excludes from participation, denies any benefit 
to, or otherwise subjects to discrimination any person under any program 
or activity administered or conducted by the Department or one of its 
units, or such employee. (See Department Order 195.)



Sec. 0.735-16  Indebtedness.

    (a) An employee shall pay each just financial obligation in a proper 
and timely manner, especially one imposed by law such as Federal, State, 
or local taxes. For purposes of this section, ``a just financial 
obligation'' means one acknowledged by the employee or reduced to 
judgment by a court, and ``in a proper and timely manner'' means in a 
manner which, in the view of the Department, does not, under the 
circumstances, reflect adversely on the Government as his employer.
    (b) In the event of dispute between an employee and an alleged 
creditor, this section does not require the Department to determine the 
validity or amount of the disputed debt.



Sec. 0.735-17  Gambling, betting, and lotteries.

    An employee shall not participate while on Government-owned or 
leased property or while on duty for the Government, in any gambling 
activity including the operation of a gambling device, in conducting a 
lottery or pool, in a game for money or property or in selling or 
purchasing a numbers slip or ticket. However, this section does not 
preclude activities
    (a) Necessitated by an employee's law enforcement duties, or
    (b) Under section 3 of Executive Order 10927 (relating to 
solicitations conducted by organizations composed of civilian employees 
or members of the armed forces among their own members for 
organizational support or for benefit or welfare funds for their own 
members) and similar agency-approved activities.



Sec. 0.735-18  General conduct prejudicial to the Government.

    (a) General policy. Officers and employees of the Federal Government 
are servants of the people. Because of this, their conduct must, in many 
instances, be subject to more restrictions and to higher standards than 
may be the case in certain private employments. They are expected to 
conduct themselves in a manner which will reflect favorably upon their 
employer. Although the Government is not particularly interested in the 
private lives of its employees, it does expect them to be honest, 
reliable, trustworthy, and of good character and reputation. They are 
expected to be loyal to the Government, and to the department or agency 
in which they are employed.
    (b) Specific policy. An employee shall not engage in criminal, 
infamous, dishonest, immoral, or notoriously disgraceful conduct, or 
other conduct prejudicial to the Government.
    (c) Regulations applicable to public buildings and grounds. Each 
employee is responsible for knowing and complying with regulations of 
the General Services Administration and of the Department of Commerce 
applicable to public buildings and grounds.



Sec. 0.735-19  Reporting undue influence to superiors.

    Each employee shall report to his superior any instance in which 
another person inside or outside the Federal Government uses or attempts 
to use undue influence to induce, by reason of his official Government 
position,

[[Page 12]]

former Government employment, family relationship, political position, 
or otherwise, the employee to do or omit to do any official act in 
derogation of his official duty.



       Subpart E--Statements of Employment and Financial Interests



Sec. 0.735-20  General provisions.

    (a) In order to carry out the purpose of this part, certain 
employees of the Department, specified in or pursuant to this part, will 
be required to submit statements of outside employment and financial 
interests for review designed to disclose conflicts of interest, 
apparent conflicts of interest on the part of employees, and other 
matters within the purview of this part.
    (b) When a conflict or apparent conflict of interest on the part of 
an employee or other question of compliance with the provisions of this 
part arises and is not resolved at a lower level within the Department, 
e.g., by appropriate remedial action, the information concerning the 
matter shall be reported to the Secretary through the counselor for the 
Department designated in Sec. 0.735-38.
    (c) In the event of a conflict or apparent conflict of interest on 
the part of an employee or other question of compliance with the 
provisions of this part, the employee concerned shall be provided an 
opportunity to explain the matter. After consideration of the conflict 
or apparent conflict of interest or other question of compliance, and 
the employee's explanation thereof, appropriate action shall be taken.



Sec. 0.735-21  Form and content of statements.

    (a) Statements of employment and financial interests shall be 
submitted as far as practicable on one of the following forms, as 
appropriate:
    (1) Form CD-220, ``Confidential Statement of Employment and 
Financial Interests (For Use by Government Employees Other Than Special 
Government Employees)''; or
    (2) Form CD-219, ``Confidential Statement of Employment and 
Financial Interests (For Use by Special Government Employees).''
    (b) Each of the foregoing forms shall contain, as a minimum, the 
information required by the formats prescribed by the Office of 
Personnel Management in the Federal Personnel Manual. Questions on a 
statement of employment and financial interests that go beyond, or are 
in greater detail than, those included on the Office's formats may be 
included on a statement only with the approval of the Assistant 
Secretary for Administration and the Office.
    (c) [Reserved]
    (d) The employee will not be required to reveal precise amounts of 
financial interest when such information is not necessary for a proper 
determination as to whether there is any apparent conflict of interest.

[32 FR 15222, Nov. 2, 1967, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 0.735-22  Employees required to submit statements.

    Except as provided in Sec. 0.735-23, a statement of employment and 
financial interests shall be submitted by the following employees other 
than special Government employees:
    (a) Employees paid at a level of the Executive Schedule in 
Subchapter II of Chapter 53 of Title 5, United States Code.
    (b) Employees classified at GS-13 or above under section 5332 of 
Title 5, United States Code, or at a comparable pay level under another 
authority, who are in positions the basic duties and responsibilities of 
which are determined by the head of the operating unit concerned to 
require the incumbent to make a Government decision or to take a 
Government action in regard to:
    (1) Contracting or procurement;
    (2) Administering or monitoring grants or subsidies;
    (3) Regulating or auditing private or other non-Federal enterprise; 
or
    (4) Other activities where the decision or action has an economic 
impact on the interests of any non-Federal enterprise.

Each employee who occupies a position in one of the above-listed 
categories and who is not excluded from the reporting requirement shall 
be notified that he is subject to the reporting requirement.

[[Page 13]]

    (c) The following employees classified at GS-13 or above under 
section 5332 of Title 5, United States Code, or at a comparable pay 
level under another authority, not otherwise subject to paragraph (b) of 
this section:
    (1) Employees in grade GS-16 or above, or in comparable or higher 
positions.
    (2) Employees in Schedule C positions.
    (3) Employees in hearing examiner or hearing officer positions.
    (4) Persons employed as experts, consultants, or advisers.
    (5) Employees in positions or categories of positions, regardless of 
their official title, identified in Appendix B of this part.
    (d) Employees classified below GS-13 under section 5332 of Title 5, 
United States Code, or at a comparable pay level under another 
authority, who are in positions or categories of positions, regardless 
of their official title, identified in Appendix C to this part.
    (e) Appendices B and C. (1) Appendix B to this part shall be 
maintained and changes made therein in accordance with the criteria in 5 
CFR 735.403(c) and in accordance with the procedure in this paragraph. 
Appendix C to this part shall be maintained and changes made therein in 
accordance with the criteria in 5 CFR 735.403(d) and in accordance with 
the procedure in this paragraph.
    (2) Heads of operating units and heads of offices in the Office of 
the Secretary shall, in conformity with the above-cited criteria, 
recommend changes in Appendix B and Appendix C to the Assistant 
Secretary for Administration for approval. Changes in Appendix C shall 
be submitted, with specific justification, to the Office of Personnel 
Management for further prior approval.
    (3) Incumbents of positions added to Appendix B or to Appendix C 
shall become subject to the reporting requirements of this part upon 
receipt of notification that their position is subject to such 
requirements. Appendix B and Appendix C shall be republished annually to 
reflect changes in the lists.

[32 FR 15222, Nov. 2, 1967, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 0.735-22a  Employee's complaint on filing requirement.

    An employee shall have an opportunity for review through the 
Department of Commerce grievance procedure, as provided by 
Administrative Order 202-770, of a complaint by him that his position 
has been improperly included under the regulations of the Department as 
one requiring the submission of a statement of employment and financial 
interests.



Sec. 0.735-23  Employees not required to submit statements.

    (a) Employees in positions that meet the criteria in paragraph (b), 
(c), or (d) of Sec. 0.735-22 may be excluded from the reporting 
requirement when the head of the operating unit concerned determines 
that:
    (1) The duties of a position are such that the likelihood of the 
incumbent's involvement in a conflicts-of-interest situation is remote; 
or
    (2) The duties of a position are at such a level of responsibility 
that the submission of a statement of employment and financial interests 
is not necessary because of the degree of supervision and review over 
the incumbent or the inconsequential effect on the integrity of the 
Government.
    (b) A statement of employment and financial interests is not 
required by this part from the Secretary of Commerce, from the head of 
an independent agency for which the Department of Commerce performs 
administrative services, or from a full-time member of a committee, 
board, or commission appointed by the President. These employees are 
subject to separate reporting requirements under section 401 of 
Executive Order 11222.



Sec. 0.735-24  Time and place for submission of original statements.

    (a) An employee required to submit a statement of employment and 
financial interests under this part shall submit that statement not 
later than:
    (1) Ninety days after the effective date of this part if the 
employee is employed by the Department on or before the effective date 
of this part; or
    (2) Thirty days after the employee's entrance on duty date, but in 
no case

[[Page 14]]

earlier than 90 days after the effective date of this part.
    (b) Statements shall be submitted to a personnel officer specified 
by the head of the operating unit or to such other person as the head of 
the operating unit, with the approval of the Secretary, may specify. 
Secretarial officers and heads of operating units shall submit their 
statements to the Secretary or to such person as the Secretary may 
designate.



Sec. 0.735-25  Supplementary statements.

    Changes in, or additions to, the information contained in an 
employee's statement of employment and financial interests shall be 
reported in a supplementary statement as of June 30 each year, except 
when the Office of Personnel Management authorizes a different date on a 
showing by the Department of necessity therefor. (The Commission has 
authorized filing of the supplementary statement for 1967 as of 
September 30, 1967.) If no changes or additions occur, a negative report 
is required. Notwithstanding the filing of the annual report required by 
this section, each employee shall at all times avoid acquiring a 
financial interest that could result, or taking an action that would 
result, in a violation of the conflicts-of-interest provisions of 
section 208 of Title 18, United States Code, or subpart D of this part.

[32 FR 15222, Nov. 2, 1967, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 0.735-26  Interests of employees' relatives.

    The interest of a spouse, minor child, or other member of an 
employee's immediate household is considered to be an interest of the 
employee. For the purpose of this section, ``member of an employee's 
immediate household'' means those blood relations who are members of the 
employee's household.



Sec. 0.735-27  Information not known by employees.

    If any information required to be included on a statement of 
employment and financial interests or supplementary statement, including 
holdings placed in trust, is not known to the employee but is known to 
another person, the employee shall request that other person to submit 
information in his behalf.



Sec. 0.735-28  Information not required.

    This part does not require an employee to submit on a statement of 
employment and financial interests or supplementary statement any 
information relating to the employee's connection with, or interest in, 
a professional society or a charitable, religious, social, fraternal, 
recreational, public service, civic, or political organization or a 
similar organization not conducted as a business enterprise. For the 
purpose of this section, educational and other institutions doing 
research and development or related work involving grants of money from 
or contracts with the Government are deemed ``business enterprises'' and 
are required to be included in an employee's statement of employment and 
financial interests.



Sec. 0.735-29  Confidentiality of employees' statements.

    (a) No employee may have access to a statement of employment and 
financial interests, or a supplementary statement, unless his official 
duties make access necessary. Each employee who has access to such a 
statement is responsible for maintaining it in confidence and shall not 
allow access to, or allow information to be disclosed from, a statement 
except to an employee of the Department of Commerce or the Office of 
Personnel Management to carry out the purpose of this part or to other 
persons as the Office of Personnel Management or the Assistant Secretary 
for Administration may determine for good cause shown. (The foregoing 
limitations do not apply to release of information by an employee with 
respect to a statement he has submitted under this section.)
    (b) The employees designated in paragraph (b) of Sec. 0.735-24 to 
receive statements are authorized to review and retain the statements 
and are responsible for maintaining the statements in confidence, as 
provided in this section.

[32 FR 15222, Nov. 2, 1967, as amended at 55 FR 53489, Dec. 31, 1990]

[[Page 15]]



Sec. 0.735-30  Relation of this part to other requirements.

    (a) The requirement that employees submit statements of employment 
and financial interests and supplementary statements under this part is 
in addition to, and not in substitution for, or in derogation of, any 
similar requirement imposed by law, order, or regulation.
    (b) The submission of a statement or supplementary statement by an 
employee does not permit him or any other person to participate in a 
matter in which his or the other person's participation is prohibited by 
law, order, or regulation, including this part.



Sec. 0.735-31  Special Government employees.

    (a) Special Government employees shall be required to report:
    (1) All other employment; and
    (2) Financial interests specified on Form CD-219.
    (b) A waiver may be granted to the requirements of this section in 
the case of a special Government employee who is not a consultant or 
expert (as defined in Chapter 304 of the Federal Personnel Manual) when 
a determination is made that the duties of the position held by that 
special Government employee are of such a nature and at such a level of 
responsibility that the submission of the statement by the incumbent is 
not necessary to protect the integrity of the Government. Any such 
waiver shall be approved by the head of the operating unit concerned or 
his designee. A copy of the waiver shall be filed with the deputy 
counselor for the organization unit concerned.
    (c) The original statement of employment and financial interests 
required to be submitted by a special Government employee shall be 
submitted not later than his entry on duty. Each special employee shall 
keep his statement current throughout his employment with the Department 
by the submission of supplementary statements.



                  Subpart F--Supplementary Regulations



Sec. 0.735-32  Departmental.

    The Assistant Secretary for Administration may prescribe 
supplementary instructions consistent with this part.



Sec. 0.735-33  Operating units.

    Each operating unit is hereby authorized and directed to prescribe, 
after approval by the Assistant Secretary for Administration, such 
additional regulations not inconsistent with this part as may be 
necessary to effectuate the general purpose of this part in the light of 
its individual operating requirements, including but not limited to 
pertinent statutory provisions, such as:
    (a) 35 U.S.C. 4, 122 (Patent Office);
    (b) 46 U.S.C. 1111(b) (Maritime Administration);
    (c) Certain provisions of the Defense Production Act of 1950, e.g., 
50 U.S.C. App. 2160(b)(2) (avoidance of conflicts of interest), 50 
U.S.C. App. 2160(b)(6) (financial statements), and 50 U.S.C. App. 
2160(f) (prohibition of use of confidential information for purposes of 
speculation) (Business and Defense Services Administration and any other 
primary operating unit affected); and
    (d) Certain provisions of Pub. L. 89-136, the Public Works and 
Economic Development Act of 1965, e.g., section 711 (restriction on 
employing certain EDA employees by applicants for financial assistance), 
and section 710(b) (embezzlement), false book entries, sharing in loans, 
etc., and giving out unauthorized information for speculation).



Sec. 0.735-34  Effective date of supplementary regulations.

    Supplementary regulations prescribed pursuant to Sec. 0.735-33, 
shall become effective upon approval by the issuing officer unless a 
different date is required by law or a later date is specified therein.

[[Page 16]]



                        Subpart G--Administration



Sec. 0.735-35  Responsibilities of employees.

    It is the responsibility of each employee:
    (a) To assure, at the outset of his employment, that each of his 
interests and activities is consistent with the requirements established 
by or pursuant to this part;
    (b) To submit a statement of employment and financial interests at 
such times and in such form as may be specified in or pursuant to this 
part;
    (c) To certify, upon entering on duty in the Department, that he has 
read this part and applicable regulations supplementary thereto;
    (d) To obtain prior written authorization of any interest or 
activity about the propriety of which any doubt exists in the employee's 
mind, as provided in Sec. 0.735-39;
    (e) To confine each of his interests and activities at all times 
within the requirements established by or pursuant to this part, 
including any authorizations granted pursuant to this part; and
    (f) To obtain a further written authorization whenever circumstances 
change, or the nature or extent of the interest or activity changes, in 
such a manner as to involve the possibility of a violation or appearance 
of a violation of a limitation or requirement prescribed in or pursuant 
to this part.



Sec. 0.735-36  Responsibilities of operating units.

    The head of each operating unit, or his designee, shall:
    (a) Furnish or make available to each employee a copy of this part 
(or a comprehensive summary thereof) within 90 days after approval of 
this part by the Office of Personnel Management, and, upon their 
issuance, a copy of any regulations supplementary thereto (or a 
comprehensive summary thereof);
    (b) Furnish or make available to each new employee at the time of 
his entrance on duty a copy of this part as it may be amended and any 
supplementary regulations (or a comprehensive summary thereof);
    (c) Bring this part (or as it may be amended and any supplementary 
regulations thereto) to the attention of each employee annually, and at 
such other times as circumstances may warrant as may be determined by 
the Assistant Secretary for Administration;
    (d) Have available for review by employees, as appropriate, copies 
of laws, Executive orders, this part, supplementary regulations, and 
pertinent Office of Personnel Management regulations and instructions 
relating to ethical and other conduct of Government employees;
    (e) Advise each employee who is a special Government employee of his 
status for purposes of 18 U.S.C. 203 and 205;
    (f) Require each employee specified in Sec. 0.735-22 to submit a 
statement of employment and financial interests, as provided by or 
pursuant to this part;
    (g) Develop an appropriate form, with the approval of the counselor 
of the Department, on which the employee may certify that he has read 
this part and applicable regulations supplementary thereto, in 
accordance with Sec. 0.735-35(c), and on which he may, if he so desires, 
indicate that he has a private activity or interest about which he 
requests advice and guidance as provided by Sec. 0.735-38.
    (h) Require each employee upon entering on duty and at such other 
times as may be specified, to execute the certification required by 
Sec. 0.735-35(c);
    (i) Report to the program Secretarial Officer concerned and to the 
Assistant Secretary for Administration promptly any instance in which an 
employee, after notice, fails to submit the certification required under 
Sec. 0.735-35(c) or a statement of employment or financial interests 
required under this part within 14 calendar days following the 
prescribed time limit for doing so; and
    (j) Take action to impress upon each employee required to submit a 
statement of employment and financial interests, upon his supervisor, 
and upon employees with whom the employee works, their responsibility as 
follows:
    (1) The employee's supervisor is responsible (i) for excluding from 
the range of duties of the employee any contracts or other transactions 
between the Government and his outside employer, clients, or entities in 
which he has an interest within the purview

[[Page 17]]

of this part, and (ii) for overseeing the employee's activities in order 
to insure that the public interest is protected from improper conduct on 
his part and that he will not, through ignorance or inadvertence, 
embarrass the Government or himself.
    (2) The employee's supervisor and employees with whom he works are 
responsible for avoiding the use of the employee's services in any 
situation in which a violation of law, regulation, or ethical standards 
is likely to occur or to appear to occur.
    (3) The supervisor of an employee is responsible for initiating 
prompt and proper disciplinary or remedial action when a violation, 
intentional or innocent, is detected.
    (4) Employees shall avoid divulging to a special Government employee 
privileged Government information which is not necessary to the 
performance of his governmental responsibility or information which 
directly involves the financial interests of his non-Government 
employer.
    (5) An employee shall make every effort in his private work to avoid 
any personal contact with respect to negotiations with the Department 
for contracts, grants, or loans, if the subject matter is related to the 
subject matter of his Government employment. When this is not possible, 
he may participate if not otherwise prohibited by law (e.g., 18 U.S.C. 
203 and 205) in the negotiations for his private employer only with the 
prior approval of the head of the operating unit concerned.

[32 FR 15222, Nov. 2, 1967, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 0.735-37  Procedure.

    The review of statements of employment and financial interests shall 
include the following basic measures, among others:
    (a) Statements shall be submitted to the designated officer, who 
will review each employee's statement of employment and financial 
interests to ascertain whether they are consistent with the requirements 
established by or pursuant to this part. (See Sec. 0.735-24(b).)
    (b) Where the statement raises any question of compliance with the 
requirements of this part, it shall be submitted to a deputy counselor 
for the organization unit concerned. The deputy counselor may, in his 
discretion, utilize the advice and services of others (including 
departmental facilities) to obtain further information needed to resolve 
the questions.
    (c) The designated officer shall maintain the statements of 
employment and financial interests in a file apart from the official 
personnel files and shall take every measure practicable to insure their 
confidentiality. Statements of employment and financial interests shall 
be preserved for 5 years following the separation of an employee from 
the Department or following termination of any other relationship under 
which the individual rendered service to the Department, except as may 
be otherwise authorized by the Assistant Secretary for Administration or 
as required by law.



Sec. 0.735-38  Availability for counseling.

    (a) The General Counsel of the Department shall:
    (1) Serve as the counselor for the Department of Commerce with 
respect to matters covered by the basic provisions cited in Sec. 0.735-
2(a) and otherwise by or pursuant to this part;
    (2) Serve as the Department of Commerce designee to the Office of 
Personnel Management on matters covered by this part; and
    (3) Coordinate the counseling services provided under this part and 
assure that counseling and interpretations on questions of conflicts of 
interest and other matters covered by this part are available to deputy 
counselors designated under paragraph (b) of this section.
    (b) The counselor shall designate employees who shall serve as 
deputy counselors for employees of the Department of Commerce with 
respect to matters covered by or pursuant to this part and shall give 
authoritative advice and guidance to each employee who seeks advice and 
guidance on questions of conflict of interests and other matters covered 
by or pursuant to this part.
    (c) Each operating unit shall notify its employees of the 
availability of counseling services and of how and where these services 
are available. This notification shall be given within 90 days after 
approval of this part by the

[[Page 18]]

Office of Personnel Management and periodically thereafter. In the case 
of a new employee appointed after the foregoing notification, 
notification shall be made at the time of his entrance on duty.
    (d) In each operating unit a deputy counselor shall advise and 
counsel each employee concerning any adjustments necessary in his 
financial interests or activities, or in any contemplated interests or 
activities, in order to meet the requirements established by or pursuant 
to this part.

[32 FR 15222, Nov. 2, 1967, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 0.735-39  Authorizations.

    All requests for authorizations required under this part shall be 
addressed to the head of the operating unit concerned. In the Office of 
the Secretary such requests shall be addressed to the Secretary or such 
person as he may designate. When granted, authorizations will be in 
writing, and a copy of each authorization will be filed in the 
employees' official personnel file.
    (a) In case of doubt, or upon the request of the employee concerned, 
cases or questions will be forwarded to the counselor or a deputy 
counselor. (See Sec. 0.735-38.)
    (b) Where an activity requested to be authorized can be conducted as 
official business, it shall not be authorized as a private activity, but 
shall be conducted as official business.
    (c) Where authorizations involve speaking, writing, or teaching, use 
of the official title of the employee for identification purposes may be 
authorized, provided the employee makes it clear that his statements and 
actions are not of an official nature.
    (d) If an authorization has been granted for a specific activity or 
interest, and the activity or interest is subsequently deemed to 
constitute a violation of the limitations or requirements prescribed in 
or pursuant to this part, the employee concerned shall be notified in 
writing of the cancellation of the authorization and shall modify or 
stop the activity or interest involved, as requested.



Sec. 0.735-40  Disciplinary and other remedial action.

    (a) Violation of a requirement established in or pursuant to this 
part shall be cause for appropriate disciplinary action, which may be in 
addition to any penalty prescribed by law.
    (b) When, after consideration of the explanation of the employee 
provided by Sec. 0.735-20(c), the reviewing officer, in cooperation with 
the responsible supervisory official, decides that remedial action is 
required, he will take or cause to be taken immediate action to end the 
conflict or appearance of conflict of interest. Remedial action may 
include, but is not limited to:
    (1) Changes in assigned duties;
    (2) Divestment by the employee of his conflicting interest;
    (3) Disciplinary action (including removal from the service); or
    (4) Disqualification for a particular assignment.

Remedial action, whether disciplinary or otherwise, shall be effected in 
accordance with applicable laws, Executive orders, and regulations.
    (c) No disciplinary or remedial action may be taken under this 
section against an employee of another Federal department or agency on 
detail to the Department of Commerce other than through and with the 
concurrence of the detailed employee's employing agency.



Sec. 0.735-41  Inquiries and exceptions.

    (a) Inquiries relating to legal aspects of the limitations set forth 
in or cited in or pursuant to this part should be submitted to the 
appropriate deputy counselor. Inquiries relating to other aspects of 
this part or regulations supplementary thereto should be referred to the 
appropriate personnel office.
    (b) Within the limits of administrative discretion permitted to the 
Department, exceptions to the requirements of this part may be granted 
from time to time in unusual cases by the head of the operating unit, 
whenever the facts indicate that such an exception would promote the 
efficiency of the service. Each request for such an exception should be 
submitted in writing to the head of the operating unit concerned, and 
shall contain a full statement of the justification for the

[[Page 19]]

request. Reports concerning such requests, if approved, shall be 
forwarded to the program Secretarial Officer concerned and to the 
Assistant Secretary for Administration by the head of the operating unit 
concerned.



 Subpart H--Disciplinary Actions Concerning Post-Employment Conflict of 
                           Interest Violations

    Authority: 18 U.S.C. 207(j); 5 CFR 737.27.

    Source: 49 FR 32057, Aug. 10, 1984; 50 FR 928, Jan. 8, 1985, unless 
otherwise noted.



Sec. 0.735-42  Scope.

    (a) These regulations establish procedures for imposing sanctions 
against a former employee for violating the post-employment restrictions 
of the conflict of interest laws and regulations set forth in 18 U.S.C. 
207 and 5 CFR Part 737. These procedures are established pursuant to the 
requirement in 18 U.S.C. 207(j). The General Counsel is responsible for 
resolving questions on the legal interpretation of 18 U.S.C. 207 or 
regulations issued thereunder and for advising employees on these 
provisions.
    (b) For purposes of this subpart, (1) ``Former employee'' means a 
former Government employee as defined in 5 CFR 737.3(a)(4) who had 
served in the Department;
    (2) ``Lesser included sanctions'' means sanctions of the same type 
but more limited scope as the proposed sanction; thus a bar on 
communication with an operating unit is a lesser included sanction of a 
proposed bar on communication with the Department and a bar on 
communication for one year is a lesser included sanction of a proposed 
five year bar;
    (3) ``Assistant Secretary'' means the Assistant Secretary for 
Administration or designee;
    (4) ``Director'' means the Director for Personnel and Civil Rights, 
Office of the Secretary, or designee;
    (5) ``Inspector General'' and ``General Counsel'' include any 
persons designated by them to perform their functions under this 
subpart; and
    (6) ``Days'' means calendar days except that a dead-line which falls 
on a weekend or holiday shall be extended to the next working day.



Sec. 0.735-43  Report of violations and investigation.

    (a) If an employee has information which indicates that a former 
employee has violated any provisions of 18 U.S.C. 207 or regulations 
thereunder, that employee shall report such information to the Inspector 
General.
    (b) Upon receiving information as set forth in paragraph (a) of this 
section from an employee or any other person, the Inspector General, 
upon a determination that it is nonfrivolous, shall expeditiously 
provide the information to the Director, Office of Government Ethics, 
and to the Criminal Division, Department of Justice. The Inspector 
General shall coordinate any investigation under this subpart with the 
Department of Justice, unless the Department of Justice informs the 
Inspector General that it does not intend to initiate criminal 
prosecution.
    (c) All investigations under this subpart shall be conducted in such 
a way as to protect the privacy of former employees. To ensure this, to 
the extent reasonable and practical, any information received as a 
result of an investigation shall remain confidential except as necessary 
to carry out the purposes of this subpart, including the conduct of an 
investigation, hearing, or judicial proceeding arising thereunder, or as 
may be required to be released by law.
    (d) The Inspector General shall report the findings of the 
investigation to the Director.



Sec. 0.735-44  Initiation of proceedings.

    If the Director determines, after an investigation by the Inspector 
General, that there is reasonable cause to believe that a former 
employee has violated post-employment statutes or regulations, the 
Director shall initiate administrative proceedings under this subpart by 
proposing sanctions against the former employee and by providing notice 
to the former employee as set forth in Sec. 0.735-45.

[[Page 20]]



Sec. 0.735-45  Notice.

    (a) The Director shall notify the former employee of the proposed 
disciplinary action in writing by registered or certified mail, return 
receipt requested, or by any means which gives actual notice or is 
reasonably calculated to give actual notice. Notice shall be considered 
received if sent to the last known address of the former employee.
    (b) The notice shall include:
    (1) A statement of allegations and the basis thereof sufficiently 
detailed to enable the former employee to prepare a defense;
    (2) A statement that the former employee is entitled to a hearing if 
requested within 20 days from date of notice;
    (3) An explanation of the method by which the former employee may 
request a hearing under this subpart including the name, address, and 
telephone number of the person to contact if there are further 
questions;
    (4) A statement that the former employee has the right to submit 
documentary evidence to the Director if a hearing is not requested and 
an explanation of the method of submitting such evidence and the date by 
which it must be received; and
    (5) A statement of the sanctions which have been proposed.



Sec. 0.735-46  Hearing.

    (a) Examiner. (1) Upon timely receipt of a request for a hearing, 
the Director shall refer the matter to the Assistant Secretary who shall 
appoint an examiner to conduct the hearing and render an initial 
decision.
    (2) The examiner shall be impartial, shall not be an individual who 
has participated in any manner in the decision to initiate the 
proceedings, and shall not have been employed under the immediate 
supervision of the former employee or have been employed under a common 
immediate supervisor. The examiner shall be admitted to practice law and 
have suitable experience and training to conduct the hearing, reach a 
determination and render an initial decision in an equitable manner.
    (b) Time, date, and place. The hearing shall be conducted at a 
reasonable time, date, and place as set by the examiner. In setting the 
date, the examiner shall give due regard to the need for both parties to 
adequately prepare for the hearing and the importance of expeditiously 
resolving allegations that may be damaging to the former employee's 
reputation.
    (c) Former employee's rights. At a hearing, the former employee 
shall have the right:
    (1) To represent himself or herself or to be represented by counsel,
    (2) To introduce and examine witnesses and to submit physical 
evidence,
    (3) To confront and cross-examine adverse witnesses,
    (4) To present oral argument, and
    (5) To receive a transcript or recording of the proceedings, on 
request.
    (d) Procedure and evidence. In a hearing under this subpart, the 
Federal Rules of Evidence and Civil Procedure do not apply but the 
examiner shall exclude irrelevant or unduly repetitious evidence and all 
testimony shall be taken under oath or affirmation. The examiner may 
make such orders and determinations regarding the admissibility of 
evidence, conduct of examination and cross-examination, and similar 
matters which the examiner deems necessary or appropriate to ensure 
orderliness in the proceedings and fundamental fairness to the parties. 
There shall be no discovery unless agreed to by the parties and ordered 
by the examiner. The hearing shall not be open to the public unless the 
former employee or the former employee's representative waives the right 
to a closed hearing, in which case the examiner shall determine whether 
the hearing will be open to the public.
    (e) Ex-parte communications. The former employee, the former 
employee's representative, and the agency representative shall not make 
any ex-parte communications to the examiner concerning the merits of the 
allegations against the former employee prior to the issuance of the 
initial decision.
    (f) Initial decision. (1) The proposed sanctions shall be sustained 
in an initial decision upon a determination by the examiner that the 
preponderance of the evidence indicated a violation of post-employment 
statutes or regulations.

[[Page 21]]

    (2) The examiner shall issue an initial decision which is based 
exclusively on the transcript of testimony and exhibits together with 
all papers and requests filed in connection with the proceeding and 
which sets forth all findings of fact and conclusions of law relevant to 
the matter at issue.
    (3) The initial decision shall become final thirty days after 
issuance if there has been no appeal filed under Sec. 0.735-48.



Sec. 0.735-47  Decision absent a hearing.

    (a) If the former employee does not request a hearing in a timely 
manner, the Director shall make an initial decision on the basis of 
information compiled in the investigation, and any submissions made by 
the former employee.
    (b) The proposed sanction or a lesser included sanction shall be 
imposed if the record indicates a violation of post-employment statutes 
or regulations by a preponderance of the evidence.
    (c) The initial decision shall become final thirty days after 
issuance if there has been no appeal filed under Sec. 0.735-48.



Sec. 0.735-48  Administrative appeal.

    (a) Within 30 days after issuance of the initial decision, either 
party may appeal the initial decision or any portion thereof to the 
Assistant Secretary. The opposing party shall have 20 days to respond.
    (b) If an appeal is filed, the Assistant Secretary shall issue a 
final decision which shall be based solely on the record, or portions 
thereof cited by the parties to limit issues, and the appeal and 
response. The Assistant Secretary shall also decide whether to impose 
the proposed sanction or a lesser included sanction.
    (c) If the final decision modifies or reverses the initial decision, 
it shall state findings of fact and conclusions of law which differ from 
the initial decision.



Sec. 0.735-49  Sanctions.

    (a) If there has been a final determination that the former employee 
has violated post-employment statutes or regulations, the Director shall 
impose, subject to the authority of the Assistant Secretary under 
Sec. 0.735-48(b), the sanction which was proposed in the notice to the 
former employee or a lesser included sanction.
    (b) Sanctions which may be imposed include:
    (1) Prohibiting the former employee from making, on behalf of any 
other person except the United States, any formal or informal appearance 
before or, with the intent to influence, any oral or written 
communication to the Department or any organizational sub-unit thereof 
on any matter of business for a period not to exceed five years; and
    (2) Other appropriate disciplinary action.
    (c) The Director may enforce the sanctions of paragraph (b)(1) of 
this section by directing any or all employees to refuse to participate 
in any such appearance or to accept any such communication. As a method 
of enforcement, the Director may establish a list of former employees 
against whom sanctions have been imposed.



Sec. 0.735-50  Judicial review.

    Any former employee found to have violated 18 U.S.C. 207, or 
regulations issued thereunder, by a final administrative decision under 
this subpart may seek judicial review of the administrative 
determination.

  Appendix A to Part 0--Statutes Governing Conduct of Federal Employees

    There are numerous statutes pertaining to the ethical and other 
conduct of Federal employees, far too many to attempt to list them all. 
Consequently, only the more important ones of general applicability are 
referred to in this appendix.

                          a. bribery and graft

    .01  Title 18, U.S.C., section 201, prohibits anyone from bribing or 
attempting to bribe a public official by corruptly giving, offering, or 
promising him or any person selected by him, anything of value with 
intent (a) to influence any official act by him, (b) to influence him to 
commit or allow any fraud on the United States, or (c) to induce him to 
do or omit to do any act in violation of his lawful duty. As used in 
section 201, ``Public officials'' is broadly defined to include 
officers, employees, and other persons carrying on activities for or on 
behalf of the Government.

[[Page 22]]

    .02  Section 201 also prohibits a public official's solicitation or 
acceptance of, or agreement to take, a bribe. In addition, it forbids 
offers or payments to, and solicitations or receipt by, a public 
official of anything of value ``for or because of'' any official act 
performed or to be performed by him.
    .03  Section 201 further prohibits the offering to or the acceptance 
by a witness of anything of value involving intent to influence his 
testimony at a trial, Congressional hearing, or agency proceeding. A 
similar provision applies to witnesses ``for or because of'' testimony 
given or to be given. The provisions summarized in this section do not 
preclude lawful witness fees, travel and subsistence expenses, or 
reasonable compensation for expert testimony.

   b. compensation to officers and employees in matters affecting the 
                               government

    .01  Title 18, U.S.C., section 203, prohibits an officer or employee 
from receiving compensation for services rendered for others before a 
Federal department or agency in matters in which the Government is a 
party or is interested.
    .02  Section 203 applies to a special Government employee as 
follows:
    a. If the special Government employee has served in the Department 
of Commerce more than 60 days during the preceding period of 365 days, 
section 203 applies to him only in relation to a particular matter 
involving a specific party or parties (1) in which he has at any time 
participated personally and substantially in his governmental capacity, 
or (2) which is pending in the Department of Commerce; or
    b. If the special Government employee has served in the Department 
no more than 60 days during the preceding period of 365 days, section 
203 applies to him only in relation to a particular matter involving a 
specific party or parties in which he has at any time participated 
personally and substantially in his governmental capacity.
    .03  Section 203 does not apply to a retired officer of the 
uniformed services while not on active duty and not otherwise an officer 
or employee of the United States.

  c. activities of officers and employees in claims against and other 
                    matters affecting the government

    .01  Title 18, U.S.C., section 205, prohibits an officer or 
employee, otherwise than in the performance of his official duties, 
from:
    a. Acting as agent or attorney for prosecuting any claim against the 
United States, or receiving any gratuity, or any share of or interest in 
any such claim in consideration of assistance in the prosecution of such 
claims; or
    b. Acting as agent or attorney for anyone before any Government 
agency, court, or officer in connection with any matter in which the 
United States is a party or has a direct and substantial interest.
    .02  Section 205 applies to a special Government employee as 
follows:
    a. If the special Government employee has served in the Department 
more than 60 days during the preceding period of 365 days, section 205 
applies to him only in relation to a particular matter involving a 
specific party or parties (1) in which he has at any time participated 
personally and substantially in his governmental capacity, or (2) which 
is pending in the Department of Commerce; or
    b. If the special Government employee has served in the Department 
no more than 60 days during the preceding period of 365 days, section 
205 applies to him only in relation to a particular matter involving a 
specific party or parties in which he has at any time participated 
personally and substantially in his governmental capacity.
    .03  Section 205 does not preclude:
    a. An employee, if not inconsistent with faithful performance of his 
duties, from acting without compensation as agent or attorney for any 
person who is the subject of disciplinary, loyalty, or other personnel 
administration proceedings, in connection with those proceedings; or
    b. An employee from giving testimony under oath or from making 
statements required to be made under penalty for perjury or contempt.
    .04  Sections 203 and 205 do not preclude:
    a. An employee from acting as agent or attorney for his parents, 
spouse, child, or any person for whom, or for any estate for which, he 
is serving as guardian, executor, administrator, trustee, or other 
personal fiduciary, except in those matters in which he has participated 
personally and substantially as a Government employee or which are the 
subject of his official responsibility, provided the head of the 
operating unit concerned approves; or
    b. A special Government employee from acting as agent or attorney 
for another person in the performance of work under a grant by, or a 
contract with, or for the benefit of, the United States, provided the 
head of the operating unit concerned, with the approval of the 
appropriate program Secretarial Officer, shall certify in writing that 
the national interest so requires, and such certification shall be 
published in the Federal Register.
    .05  Section 205 does not apply to a retired officer of the 
uniformed services while not on active duty and not otherwise an officer 
or employee of the United States.

    d. disqualification of former officers and employees in matters 
       connected with former duties or official responsibilities; 
                      disqualification of partners

    .01  Title 18 U.S.C., section 207:

[[Page 23]]

    a. Provides that a former Government officer or employee, including 
a former special Government employee, shall be permanently barred from 
acting as agent or attorney for anyone other than the United States in 
any matter in which the United States is a party or is interested and in 
which he participated personally and substantially in a governmental 
capacity;
    b. Bars a former Government officer or employee, including a special 
Government employee, of an agency, for a period of 1 year after his 
employment with it has ceased, from appearing personally as agent or 
attorney for another person before any court or agency in connection 
with a matter in which the Government has an interest and which was 
under his official responsibility at the employing agency (e.g., 
Department of Commerce) at any time within 1 year prior to the end of 
such responsibility; and
    c. Prohibits a partner of a person employed by the Government, 
including a special Government employee, from acting as agent or 
attorney for anyone other than the United States in matters in which the 
employee participates or has participated personally and substantially 
for the Government or which are the subject of his official 
responsibility.
    .02  Subparagraphs .01a. and .01b. of this section do not prevent a 
former officer or employee or special Government employee who has 
outstanding scientific or technical qualifications from acting as 
attorney or agent or appearing personally before the Department of 
Commerce in connection with a particular matter in a scientific or 
technological field if the Assistant Secretary of Commerce for Science 
and Technology shall make a certification in writing, published in the 
Federal Register, that the national interest would be served by such 
action or appearance by the former officer or employee.

             e. acts affecting a personal financial interest

    .01  Title 18, U.S.C., section 208 prohibits an officer or employee, 
including a special Government employee, from participating personally 
and substantially in a governmental capacity in any matter in which, to 
his knowledge, he, his spouse, minor child, partner, organization in 
which he is serving as officer, director, trustee, partner, or employee, 
or any person or organization with whom he is negotiating or has any 
arrangement concerning prospective employment, has a financial interest.
    .02  Section 208 does not apply:
    a. If the officer or employee first advises the head of the 
operating unit concerned of the nature and circumstances of the matter 
involved, makes full disclosure of the financial interest, and receives 
in advance a written determination made by such official, with the 
approval of the appropriate program Secretarial Officer, that the 
interest is not so substantial as to be deemed likely to affect the 
integrity of the services which the Government may expect from the 
officer or employee; or
    b. If, by general rule or regulation published in the Federal 
Register, the financial interest has been exempted from the requirements 
of section 208 as being too remote or too inconsequential to affect the 
integrity of Government officers' or employees' services.

             f. salary of government officials and employees

    .01  Title 18, U.S.C., section 209, prohibits:
    a. An officer or employee from receiving any salary, or any 
contribution to or supplementation of salary, as compensation for his 
services as an officer or employee of the United States from any source 
other than the Government of the United States, except as may be 
contributed out of the treasury of a State, county, or municipality; and
    b. Any person or organization from paying, contributing to, or 
supplementing the salary of an officer or employee under circumstances 
which would make its receipt a violation of subparagraph .01a. of this 
section.
    .02  Section 209:
    a. Does not prevent a Government employee from continuing to 
participate in a bona fide pension or other welfare plan maintained by a 
former employer;
    b. Exempts special Government employees and employees serving the 
Government without compensation, and grants a corresponding exemption to 
any outside person paying compensation to such individuals; and
    c. Does not prohibit the payment or acceptance of sums under the 
terms of the Government Employees Training Act.

                g. code of ethics for government service

    ``Code of Ethics for Government Service,'' House Concurrent 
Resolution 175, 85th Congress, 2d Session, 72 Stat. B12 of July 11, 
1958, which reads as follows:
    ``Any Person in Government Service Should:
    ``Put loyalty to the highest moral principles and to country above 
loyalty to persons, party, or Government department.
    ``UPHOLD the Constitution, laws, and legal regulations of the United 
States and all governments therein and never be a party to their 
evasion.
    ``GIVE a full day's labor for a full day's pay; giving to the 
performance of his duties his earnest effort and best thought.
    ``SEEK to find and employ more efficient and economical ways of 
getting tasks accomplished.

[[Page 24]]

    ``NEVER discriminate unfairly by the dispensing of special favors or 
privileges to anyone, whether for remuneration or not; and never accept 
for himself or his family, favors or benefits under circumstances which 
might be construed by reasonable persons as influencing the performance 
of his governmental duties.
    ``MAKE no private promises of any kind binding upon the duties of 
office, since a Government employee has no private word which can be 
binding on public duty.
    ``ENGAGE in no business with the Government, either directly or 
indirectly, which is inconsistent with the conscientious performance of 
his governmental duties.
    ``NEVER use any information coming to him confidentially in the 
performance of governmental duties as a means for making private profit.
    ``EXPOSE corruption wherever discovered.
    ``UPHOLD these principles, ever conscious that public office is a 
public trust.''

                             h. prohibitions

    .01  The prohibition against lobbying with appropriated funds (18 
U.S.C. 1913) reads as follows:
    ``No part of the money appropriated by any enactment of Congress 
shall, in the absence of express authorization by Congress, be used 
directly or indirectly to pay for any personal service, advertisement, 
telegram, telephone, letter, printed or written matter, or other device, 
intended or designed to influence in any manner a Member of Congress, to 
favor or oppose, by vote or otherwise, any legislation or appropriation 
by Congress, whether before or after the introduction of any bill or 
resolution proposing such legislation or appropriation, but this shall 
not prevent officers or employees of the United States or of its 
departments or agencies from communicating to Members of Congress on the 
request of any Member or to Congress, through the proper official 
channels, requests for legislation or appropriations which they deem 
necessary for the efficient conduct of the public business.
    ``Whoever, being an officer or employee of the United States or of 
any department or agency thereof, violates or attempts to violate this 
section, shall be fined not more than $500 or imprisoned not more than 1 
year, or both; and after notice and hearing by the superior officer 
vested with the power of removing him, shall be removed from office or 
employment.''
    .02  The prohibitions against disloyalty and striking (5 U.S.C. 
7311, 18 U.S.C. 1918). An individual may not accept or hold a position 
in the Government of the United States if he:
    a. Advocates the overthrow of our constitutional form of government;
    b. Is a member of an organization that he knows advocates the 
overthrow of our constitutional form of government;
    c. Participates in a strike, or asserts the right to strike, against 
the Government of the United States or the government of the District of 
Columbia; or
    d. Is a member of an organization of employees of the Government of 
the United States or of individuals employed by the government of the 
District of Columbia that he knows asserts the right to strike against 
the Government of the United States or the government of the District of 
Columbia.
    .03  The prohibition against employment of a member of a Communist 
organization (50 U.S.C. 784).
    .04  The prohibitions against (a) the disclosure of classified 
information (18 U.S.C. 798, 50 U.S.C. 788); and (b) the disclosure of 
confidential information (18 U.S.C. 1905). Each employee who has access 
to classified information, e.g., confidential, secret, or top secret, or 
to a restricted area is responsible for knowing and for complying 
strictly with the security regulations of the Department of Commerce. 
(See Administrative Order 207-2.)
    .05  The prohibition against employment in the competitive civil 
service of any person who habitually uses intoxicating beverages to 
excess (5 U.S.C. 7352).
    .06  The prohibition against the misuse of a Government vehicle (31 
U.S.C. 638a(c)). No employee may willfully use or authorize the use of a 
Government-owned or Government-leased passenger motor vehicle or 
aircraft for other than official purposes.
    .07  The prohibition against the use of the franking privilege to 
avoid payment of postage on private mail (18 U.S.C. 1719).
    .08  The prohibition against the use of deceit in an examination or 
personnel action in connection with Government employment (18 U.S.C. 
1917).
    .09  The prohibition against fraud or false statements in a 
Government matter (18 U.S.C. 1001). An employee in connection with an 
official matter shall not knowingly and willfully conceal or cover up a 
material fact or falsify official papers or documents.
    .10  The prohibition against mutilating or destroying a public 
record (18 U.S.C. 2071). No employee may conceal, remove, mutilate, or 
destroy Government documents or records except for the disposition of 
records in accordance with law or regulation.
    .11  The prohibition against counterfeiting and forging 
transportation requests (18 U.S.C. 508). Falsely making, altering or 
forging, in whole or in part, any form of transportation request is 
prohibited.
    .12  The prohibitions against:
    a. Embezzlement of Government money or property (18 U.S.C. 641). No 
employee may convert any Government money or Government property to his 
own use or the use of another person.

[[Page 25]]

    b. Failure to account for public money (18 U.S.C. 643). Any 
employee, who, having received public money which he is not authorized 
to retain, fails to render his accounts for same as provided by law, is 
guilty of embezzlement.
    c. Embezzlement of the money or property of another person in the 
possession of the employee by reason of his employment (18 U.S.C. 654). 
An employee is prohibited from embezzling or wrongfully converting for 
his own use the money or property of another which comes under his 
control as the result of his employment.
    .13  The prohibition against unauthorized removal or use of 
documents relating to claims from or by the Government (18 U.S.C. 285). 
No employee, without authority, may remove from the place where it was 
kept by authority of the United States any document, record, file, or 
paper intended to be used to procure the payment of money from or by the 
United States or the allowance or payment of any claim against the 
United States, regardless of whether the document or paper has already 
been used or the claim has already been allowed or paid; and no employee 
may use or attempt to use any such document, record, file, or paper to 
procure the payment of any money from or by the United States or the 
allowance or payment of any claim against the United States.
    .14  The prohibition against proscribed political activities, 
including the following, among others:
    a. Using official authority or influence for the purpose of 
interfering with or influencing the result of an election, except as 
authorized by law (5 U.S.C. 7324);
    b. Taking an active part in political management or in political 
campaigns, except as authorized by law (5 U.S.C. 7324);
    c. Offering or promising to pay anything of value in consideration 
of the use of, or promise to use, any influence to procure any 
appointive office or place under the United States for any person (18 
U.S.C. 210);
    d. Soliciting or receiving, either as a political contribution or 
for personal emolument, anything of value in consideration of a promise 
of support or use of influence in obtaining for any person any 
appointive office or place under the United States (18 U.S.C. 211);
    e. Using official authority to interfere with a Federal election (18 
U.S.C. 595);
    f. Promising any employment compensation, or other benefit made 
possible by Act of Congress in consideration of political activity or 
support (18 U.S.C. 600);
    g. Action by a Federal officer or employee to solicit or receive, or 
to be in any manner concerned with soliciting or receiving, any 
contribution for any political purpose whatever from any other Federal 
officer or employee or from any person receiving compensation for 
services from money derived from the Treasury of the United States (18 
U.S.C. 602);
    h. Soliciting or receiving (by any person) anything of value for any 
political purpose whatever on any Government premises (18 U.S.C. 603);
    i. Soliciting or receiving contributions for political purposes from 
anyone on Federal relief or work relief (18 U.S.C. 604);
    j. Payment of a contribution for political purposes by any Federal 
officer or employee to another Federal officer or employee (18 U.S.C. 
607); and
    k. Payment of a political contribution in excess of statutory 
limitations and purchase of goods, commodities, advertising, or articles 
the proceeds of which inure to the benefit of certain political 
candidates or organizations (18 U.S.C. 608).
    .15  The prohibition against an employee acting as the agent of a 
foreign principal registered under the Foreign Agents Registration Act 
(18 U.S.C. 219).

   Appendix B to Part 0--Position Categories, Grade GS-13, and Above, 
Requiring Statements of Employment and Financial Interests by Incumbents

    (1) Auditors.
    (2) Attorneys other than attorneys engaged in patent examining or 
trademark examining operations.
    (3) Heads of divisions or comparable organization units, GS-15 or 
above.
    (4) Heads of field offices or installations, GS-15 or above.
    (5) Employees in positions involving assigned duties and 
responsibilities which require the incumbent to make fact-finding 
determinations or to exercise judgment in recommending a decision or an 
action in regard to:
    a. Evaluation, appraisal, or selection of contractors or sub-
contractors, prospective contractors or prospective subcontractors, 
proposals of such contractors or subcontractors, the activities 
performed by such contractors or subcontractors, or determination of the 
extent of compliance of such contractors or subcontractors with contract 
provisions.
    b. Negotiation, modification, or approval of contracts or 
subcontracts.
    c. Evaluation, appraisal, or selection of prospective project sites, 
or locations of work or activities, including real property proposed for 
acquisition by purchase or otherwise.
    d. Inspection and quality assurance of material, products, or 
components for acceptability.
    e. Review or approval for access permits.
    f. Technical planning or design which involves the preparation of 
specifications or technical requirements.

[[Page 26]]

    g. Negotiation of agreements for cooperation or implementing 
arrangements with foreign countries, international organizations, or 
non-Federal enterprises.
    h. Analysis, evaluation, or review of license applications.
    i. Analysis, evaluation, or review of licensees' compliance with 
Department of Commerce regulations and requirements.
    j. Utilization or disposal of excess or surplus property.
    k. Procurement of materials, services, supplies, or equipment.
    l. Authorization or monitoring of grants or subsidies to educational 
institutions or other non-Federal enterprises.
    m. Audit of financial transactions.
    n. Promulgation of safety standards, procedures, and hazards 
evaluation systems.
    o. Other activities where the decision or action has a substantial 
economic impact on the interests of a non-Federal enterprise.

    Appendix C to Part 0--Position Categories Below GS-13 Requiring 
     Statements of Employment and Financial Interests by Incumbents

    (1) Employees in the National Marine Fisheries Service, National 
Oceanic and Atmospheric Administration, who are in the following 
categories of positions:
    (a) Special Agents (Fish and Wildlife), Series GS-1812, grades 5 
through 12.
    (b) Fishery Products Inspectors, Series GS-1863, grades 5 through 
12.

(5 CFR 735.104, 735.403)

[50 FR 2276, Jan. 16, 1985]



PART 1--THE SEAL OF THE DEPARTMENT OF COMMERCE--Table of Contents




Sec.
1.1  Purpose.
1.2  Description and design.
1.3  Delegation of authority.

    Authority: Sec. 1, 32 Stat. 825, as amended, 15 U.S.C. 1501.

    Source: 33 FR 9337, June 26, 1968, unless otherwise noted.



Sec. 1.1  Purpose.

    The purpose of this part is to describe the seal of the Department 
of Commerce and to delegate authority to affix the seal to 
certifications and documents of the Department.



Sec. 1.2  Description and design.

    (a) The Act of February 14, 1903 (32 Stat. 825, as amended) (15 
U.S.C. 1501), which established the Department of Commerce, provided 
that ``The said Secretary shall cause a seal of office to be made for 
the said department of such device as the President shall approve, and 
judicial notice shall be taken of the said seal.'' On April 4, 1913, the 
President approved and declared to be the seal of the Department of 
Commerce the device which he described as follows:

    Arms: Per fesse azure and or, a ship in full sail on waves of the 
sea, in chief proper; and in base a lighthouse illumined proper.

    Crest: The American Eagle displayed. Around the Arms, between two 
concentric circles, are the words:

                         Department of Commerce

                        United States of America

    (b) The design of the approved seal is as shown below. Where 
necessitated by requirements of legibility, immediate comprehension, or 
clean reproduction, the concentric circles may be eliminated from the 
seal on publications and exhibits, and in slides, motion pictures, and 
television. In more formal uses of the seal, such as on letterheads, the 
full, proper rendition of the seal shall be used.
[GRAPHIC] [TIFF OMITTED] TC20SE91.005

    (c) The official symbolism of the seal shall be the following: The 
ship is a symbol of commerce; the blue denotes uprightness and 
constancy; the lighthouse is a well-known symbol representing guidance 
from the darkness which is translated to commercial enlightenment; and 
the gold denotes purity. The crest is the American bald eagle denoting 
the national scope of

[[Page 27]]

the Department's activities. (The above is a modification of the 
original symbolism issued with the President's approval of the seal, 
made necessary by

changes in the functions of the Department.)



Sec. 1.3  Delegation of authority.

    (a) Pursuant to authority vested in the Secretary of Commerce by 
law, (1) the Chief Administrative Officer of each operating unit, and 
(2) the Director, Office of Administrative Services in the Office of the 
Secretary, are hereby authorized to sign as Certifying Officers 
certifications as to the official nature of copies of correspondence and 
records from the files, publications and other documents of the 
Department and to affix the seal of the Department of Commerce to such 
certifications or documents for all purposes, including the purpose 
authorized by 28 U.S.C. 1733(b).
    (b) Delegations of authority to persons other than those named in 
paragraph (a) of this section may be made by the Assistant Secretary for 
Administration.
    (c) This delegation shall not affect or prejudice the use of 
properly authorized office or bureau seals in appropriate cases.



PART 2--PROCEDURES FOR HANDLING AND SETTLEMENT OF CLAIMS UNDER THE FEDERAL TORT CLAIMS ACT--Table of Contents




Sec.
2.1  Purpose.
2.2  Provisions of law and regulations thereunder.
2.3  Delegation of authority.
2.4  Procedure for filing claims.
2.5  Adjudication and settlement of claims.
2.6  Payment of claims.
2.7  Supplementary regulations.

    Authority: 28 U.S.C. 2672.



Sec. 2.1  Purpose.

    (a) The purpose of this part is to delegate authority to settle or 
deny claims under the Federal Tort Claims Act (in part, 28 U.S.C. 2671-
2680) as amended by Pub. L. 89-506, 80 Stat. 306, and to establish 
procedures for the administrative adjudication of such claims accruing 
on or after January 18, 1967.

[32 FR 3769, Mar. 7, 1967, as amended at 48 FR 31636, July 11, 1983]



Sec. 2.2  Provisions of law and regulations thereunder.

    (a) Section 2672 of Title 28, U.S. Code, as above amended, provides 
that:

    The head of each Federal agency or his designee, in accordance with 
regulations prescribed by the Attorney General, may consider, ascertain, 
adjust, determine, compromise, and settle any claim for money damages 
against the United States for injury or loss of property or personal 
injury or death caused by the negligent or wrongful act or omission of 
any employee of the agency while acting within the scope of his office 
or employment, under circumstances where the United States, if a private 
person, would be liable to the claimant in accordance with the law of 
the place where the act or omission occurred: Provided, that any award, 
compromise, or settlement in excess of $25,000 shall be effected only 
with the prior written approval of the Attorney General or his designee.
    Subject to the provisions of this title relating to civil actions on 
tort claims against the United States, any such award, compromise, 
settlement, or determination shall be final and conclusive on all 
officers of the Government, except when procured by means of fraud.
    Any award, compromise, or settlement in an amount of $2,500 or less 
made pursuant to this section shall be paid by the head of the Federal 
agency concerned out of appropriations available to that agency. Payment 
of any award, compromise, or settlement in an amount in excess of $2,500 
made pursuant to this section or made by the Attorney General in any 
amount pursuant to section 2677 of this title shall be paid in a manner 
similar to judgments and compromises in like causes and appropriations 
or funds available for the payment of such judgments and compromises are 
hereby made available for the payment of awards, compromises, or 
settlements under this chapter.
    The acceptance by the claimant of any such award, compromise, or 
settlement shall be final and conclusive on the claimant, and shall 
constitute a complete release of any claim against the United States and 
against the employee of the Government whose act or omission gave rise 
to the claim, by reason of the same subject matter.

    (b) Subsection (a) section 2675 of said Title 28 provides that:

    An action shall not be instituted upon a claim against the United 
States for money

[[Page 28]]

damages for injury or loss of property or personal injury or death 
caused by the negligent or wrongful act or omission of any employee of 
the Government while acting within the scope of his office or 
employment, unless the claimant shall have first presented the claim to 
the appropriate Federal agency and his claim shall have been finally 
denied by the agency in writing and sent by certified or registered 
mail. The failure of an agency to make final disposition of a claim 
within 6 months after it is filed shall, at the option of the claimant 
any time thereafter, be deemed a final denial of the claim for purposes 
of this section. The provisions of this subsection shall not apply to 
such claims as may be asserted under the Federal Rules of Civil 
Procedure by third party complaint, crossclaim, or counterclaim.

    (c) Section 2678 of said Title 28 provides that no attorney shall 
charge fees in excess of 25 percent of a judgment or settlement after 
litigation, or over 20 percent of administrative settlements.
    (d) Section 2401(b) of said Title 28 provides that:

    A tort claim against the United States shall be forever barred 
unless it is presented in writing to the appropriate Federal agency 
within 2 years after such claim accrues or unless action is begun within 
6 months after the date of mailing, by certified or registered mail, of 
notice of final denial of the claim by the agency to which it was 
presented.

    (e) Pursuant to section 2672 as amended, the Attorney General has 
issued regulations (herein referred to as ``the Regulations''; 28 CFR 
Part 14) prescribing standards and procedures for settlement of tort 
claims (31 FR 16616). Persons delegated authority under this part shall 
follow and be guided by such Regulations (28 CFR Part 14).

[32 FR 3769, Mar. 7, 1967, as amended at 63 FR 29945, June 2, 1998]



Sec. 2.3  Delegation of authority.

    (a) The General Counsel is hereby named as the designee of the 
Secretary ofCommerce with respect to tort claims filed under section 
2672 of Title 28, U.S. Code, as described in Sec. 2.2, with authority to 
act on such claims as provided in said section 2672, including denial 
thereof.
    (b) Authority delegated under this section may, with the approval of 
the General Counsel, be redelegated to other designees.
    (c) Settlement or denial of any claim under this part is final for 
the Department of Commerce.

[48 FR 31636, July 11, 1983]



Sec. 2.4  Procedure for filing claims.

    (a) The procedure for filing and the contents of claims shall be 
pursuant to Secs. 14.2, 14.3, and 14.4 of the Regulations (28 CFR Part 
14).
    (b) Claims shall be filed with the Assistant General Counsel for 
Finance and Litigation, Department of Commerce, Washington, D.C. 20230.
    (c) If a claim is filed elsewhere in the Department, it shall 
immediately be recorded and transmitted to the Assistant General Counsel 
for Finance and Litigation.

[32 FR 3769, Mar. 7, 1967, as amended at 48 FR 31636, July 11, 1983; 63 
FR 29945, June 2, 1998]



Sec. 2.5  Adjudication and settlement of claims.

    (a) Upon receipt of a claim by the Assistant General Counsel for 
Finance and Litigation, the time and date of receipt shall be recorded. 
The Assistant General Counsel may, after recording the claim, transmit 
it to the Departmental office or primary operating unit involved in the 
claim and request that an investigation be conducted. The appropriate 
Departmental office or primary operating unit shall designate an 
official to conduct the investigation, who shall prepare a file, obtain 
additional information as necessary, and prepare for the Assistant 
General Counsel's signature a proposed award or denial of the claim. If 
the investigation capabilities of the office or unit are insufficient 
for a proper and complete investigation, the office or unit shall 
consult with the Departmental Office of Investigations and Security to:
    (1) Have that Office conduct the investigation or
    (2) Request another Federal agency to conduct the investigation as 
necessary, pursuant to Sec. 14.8 of the regulations (28 CFR Part 14), 
all on a reimbursable basis.
    (b) If the amount of the proposed award exceeds $25,000 (in which 
case,

[[Page 29]]

approval by the Attorney General is required), or if consultation with 
the Department of Justice is desired or required pursuant to Sec. 14.6 
of the regulations, the Assistant General Counsel for Finance and 
Litigation will prepare and compile the material required by the 
Department of Justice under Sec. 14.7 of the Regulations.
    (c) Denial of a claim shall be communicated as provided by Sec. 14.9 
of the regulations (28 CFR Part 14).
    (d) Designees hereunder are responsible for the control over and 
expeditious handling of claims, bearing in mind the applicable statutory 
time limitations for adjudications of claims.

[32 FR 3769, Mar. 7, 1967, as amended at 48 FR 31636, July 11, 1983; 63 
FR 29945, June 2, 1998]



Sec. 2.6  Payment of claims.

    When an award is made, the file on the case shall be transmitted to 
the appropriate fiscal office for payment by the Department or for 
transmittal for payment as prescribed by Sec. 14.10 of the Regulations 
(28 CFR Part 14). Prior to payment appropriate releases shall be 
obtained, as provided in said section.

[32 FR 3769, Mar. 7, 1967]



Sec. 2.7  Supplementary regulations.

    (a) The Assistant General Counsel for Finance and Litigation may 
from time to time issue such supplementary regulations or instructions 
as he/she deems appropriate to carry out the purpose of this part.
    (b) Any designee mentioned in paragraph (a) of Sec. 2.3 may issue 
regulations or instructions covering his/her area of responsibility 
hereunder which are consistent with this part and with those issued 
under paragraph (a) of this section, such regulations and instructions 
to be approved by the Assistant General Counsel for Finance and 
Litigation.

[32 FR 3769, Mar. 7, 1967, as amended at 48 FR 31636, July 11, 1983. 
Redesignated and amended at 63 FR 29945, June 2, 1998]



PART 3  [RESERVED]


PART 4--PUBLIC INFORMATION--Table of Contents




Sec.
4.1  Scope and purpose.
4.2  Policies.
4.3  Definitions.
4.4  Availability of materials for inspection and copying; indexes.
4.5  Requests for records.
4.6  Initial determinations of availability of records.
4.7  Predisclosure notification procedures for confidential commercial 
          information.
4.8  Appeals from initial determinations or untimely delays.
4.9  Fees.

Appendix A to Part 4--Department Administrative Order 205-12--Public 
          Information
Appendix B to Part 4--Freedom of Information Public Facilities and 
          Addresses for Requests for Records
Appendix C to Part 4--Officials Authorized to Make Initial Denials of 
          Requests for Records

    Authority: 5 U.S.C. 301, 5 U.S.C. 552, 5 U.S.C. 553, Reorganization 
Plan No. 5 of 1950; 31 U.S.C. 3717.

    Source: 53 FR 6972, Mar. 4, 1988, unless otherwise noted.



Sec. 4.1  Scope and purpose.

    (a) This part sets forth the rules of the Department of Commerce 
whereby the Department and its organizational units are to make publicly 
available the materials and indexes specified in 5 U.S.C. 552(a)(2) and 
the records requested under 5 U.S.C. 552(a)(3).
    (b) These rules conform to requirements of the Freedom of 
Information Act, 5 U.S.C. 552; as amended, and supplement Department 
Administrative Order 205-12, which contains policies, delegations of 
authority, and other criteria implementing 5 U.S.C. 552. DAO 205-12 is 
attached as Appendix A to this part.
    (c) Certain units of the Department other than those identified in 
Sec. 4.4(d) have, pursuant to delegated authority and for appropriate 
reasons, established their own facilities for the public inspection and 
copying of records. The units have provided for separate locations to 
which requests for records are to be made. These facilities and 
locations are identified in Appendix B to this part. The units may 
publish in the Federal Register supplementary rules in addition to but 
not inconsistent with this part, DAO 205-12, and the rules and 
regulations contained in their respective chapters of the Code of 
Federal Regulations or otherwise in

[[Page 30]]

the Federal Register. These supplementary rules shall be maintained in 
the central public reference facility identified in Sec. 4.4(c), where 
information about them may be obtained.



Sec. 4.2  Policies.

    (a) Department Administrative Order 205-12 contains the basic 
policies and other criteria to be considered in issuing and 
administering these rules.
    (b) Requests for records made under 5 U.S.C. 552(a)(3) apply only to 
existing records. The Department is not required, in response to a 
request, to create records by combining or compiling information 
contained in existing records, to program or reprogram computers, or 
otherwise to prepare new records. Departmental officials may, upon 
request, provide or create new information in record form pursuant to 
user charge statutes, such as 15 U.S.C. 1525-27, or in accord with 
authority otherwise provided by law.



Sec. 4.3  Definitions.

    (a) All terms used in this part which are defined in 5 U.S.C. 551 
shall have the same meaning herein.
    (b) As used in this part, Act means the ``Freedom of Information 
Act,'' as amended, 5 U.S.C. 552.
    (c) The terms Office of the Secretary and operating unit, as 
explained in Department Organization Order 1-1, ``Mission and 
Organization of the Department of Commerce'' (35 FR 19704, December 27, 
1970), are defined as follows:
    (1) The ``Office of the Secretary'' is the general management arm of 
the Department and provides the principal support to the Secretary in 
formulating policy and in providing advice to the President. It provides 
program leadership for the Department's functions and exercises general 
supervision over the operating units. It also directly carries out 
program functions as may be assigned by the Secretary from time to time, 
and provides, as determined to be more economical or efficient, 
administrative and other support services for designated operating 
units.
    (2) An ``operating unit'' is an organizational entity outside the 
Office of the Secretary charged with carrying out specified substantive 
functions (i.e. programs) of the Department. The operating units 
constitute the components of the Department through which most of its 
substantive functions are carried out.
    (d) The term unit as used in this part means
    (1) An operating unit of the Department, and
    (2) Each Secretarial officer and the persons and the Departmental 
officers reporting to a Secretarial officer.

[53 FR 6972, Mar. 4, 1988; 53 FR 16211, May 5, 1988]



Sec. 4.4  Availability of materials for inspection and copying; indexes.

    (a) The Assistant Secretary for Administration has established and 
maintains a central public reference facility available to units of the 
Department, at which place the following materials of those units 
utilizing the facility shall be made available for public inspection and 
copying:
    (1) Final opinions and orders, including concurring and dissenting 
opinions, made in the adjudication of cases;
    (2) Those statements of policy and interpretations which have been 
adopted by the participating organizations and are not published in the 
Federal Register;
    (3) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (4) Current indexes providing identifying information for the public 
as to any matter which was issued, adopted, or promulgated after July 4, 
1967, and is required by 5 U.S.C. 552(a)(2) to be made available or 
published;
    (5) Records of the final votes of each member in every proceeding of 
an agency comprised of more than one member.
    (6) Rules and decisions denying requests for records which otherwise 
implement or relate to the Act; and
    (7) Materials published in the Federal Register pursuant to 5 U.S.C. 
552 (a)(1) and such other materials which each unit may consider 
desirable and practical to make available for the convenience of the 
public.
    (b) The Secretary of Commerce has determined (DAO 205-12, 
subparagraph 5.02a.5), that it is unnecessary and impracticable to 
publish quarterly or more frequently and distribute (by sale

[[Page 31]]

or otherwise) copies of each index and supplements thereto, as provided 
in 5 U.S.C. 552(a)(2). Upon request, copies of such indexes shall be 
provided at a cost not to exceed the direct cost of duplication and 
mailing, if required.
    (c) The central facility established by the Assistant Secretary for 
Administration is the Central Reference and Records Inspection Facility, 
Room H6628, Department of Commerce Building, 14th Street between 
Constitution and Pennsylvania Avenue NW., Washington, DC 20230. The 
facility is open to the public Monday through Friday of each week, 
except on official holidays of the Federal Government, between the hours 
of 9 a.m. and 4:30 p.m. There are no fees or formal requirements for 
inspection of materials. Equipment for making copies of these materials 
is available for use by the public. Copies of various Commerce 
Department materials regularly available for sale by the Department may 
be purchased at the facility. Information about these materials can also 
be obtained at this facility. Correspondence concerning materials 
available at the facility or information about the rules implementing 
the Act may be sent to the above address. The telephone number of the 
facility is (202) 377-3271.
    (d) The following units of the Department are participating in the 
use of this central facility: All components of the Office of the 
Secretary of Commerce.
    (e) Other units of the Department which have established separate 
public reference facilities, listed in Appendix B to this part, may 
publish rules applicable to the services provided therein for public 
inspection and copying of materials, provided such rules are not 
inconsistent with the part.



Sec. 4.5  Requests for records.

    (a) A request for a record (or information contained therein) of the 
Department which is not customarily made available to the public as part 
of the Department's regular informational services or which is not 
available in a public reference facility described in Sec. 4.4(c) or 
Appendix B to this part, shall be made in writing, with the envelope and 
the letter clearly marked ``Freedom of Information Request'' to 
distinguish it from other mail to the Department. Each such request, so 
marked, shall be addressed to the unit of the Department identified in 
Appendix B to this part which the requester knows or has reason to 
believe is responsible for the records requested. If the requester is 
not sure which is the responsible addressee unit, it shall address the 
request to the central facility identified in Sec. 4.4(c), or obtain 
advance information from that facility as to which is the responsible 
addressee unit.
    (b) Any request for records which is not marked and addressed as 
specified in paragraph (a) of this section will be so marked and 
addressed by Department personnel and forwarded immediately to the 
responsible unit having possession or control of the records requested 
or having primary concern with such records. A request which is 
improperly addressed by the requester will not be deemed to have been 
``received'' for purposes of the time period set forth in 5 U.S.C. 
552(a)(6), until the earlier of the time that (1) forwarding of the 
request to the responsible unit has been effected, or (2) such 
forwarding would have been effected with the exercise of due diligence 
by Department personnel. In each instance when a request is forwarded, 
the responsible unit receiving it shall notify the requester that the 
request was improperly addressed and of the date the request was 
received by the unit.
    (c) Requesters must reasonably describe the records sought. A 
request for records shall identify the records sufficiently to enable 
Department personnel familiar with the subject matter to locate them 
with a reasonable amount of effort. The requester shall, to the extent 
possible, furnish specific descriptive information regarding date and 
place the records were made, the file descriptions, subject matter, 
persons involved, and other pertinent details that will help identify 
the records. If the request relates to a matter in pending litigation, 
the court, location, and case shall be identified. When more than one 
record is requested, the request shall clearly describe each specific 
record, and the specific information requested which is contained in the 
record, so that its

[[Page 32]]

availability may be separately determined. When appropriate, the 
requester shall describe the intended use of the requested records. 
Employees at a facility or at a specific address listed in Appendix B 
will assist the public to a reasonable extent in framing a request.

[53 FR 6972, Mar. 4, 1988; 53 FR 16211, May 5, 1988]



Sec. 4.6  Initial determinations of availability of records.

    (a) The responsible unit which receives a request for records shall 
promptly log the receipt of the request, and within ten days of its 
receipt (excluding Saturdays, Sundays, and legal public holidays) shall 
initially determine:
    (1) Whether the request is for records under the Act, is for 
materials available otherwise than under the Act, or is for information 
not contained in existing records and, therefore, not under the Act. The 
requester shall be promptly notified in writing how the request is being 
handled when it does not come within the Act.
    (2) Whether the records requested are reasonably described and can 
be located on the basis of the information supplied by the requester. If 
any of the records requested cannot be identified and located from the 
information furnished, the unit shall promptly so inform the requester 
in writing, specifying what additional identification is needed to 
assist the unit in locating the record, and offering to assist the 
requester to reformulate the request.
    (3) Whether the records no longer exist, or are not in the unit's 
possession. The unit should, if it knows which unit of the Department or 
other agency may have the records, forward the request to it. In each 
instance, the unit shall promptly notify the requester in writing.
    (4) Whether the requested records are the exclusive or primary 
concern of another executive agency. If so, the unit shall refer the 
request and the responsive records to that other agency for further 
action under its rules, and promptly notify the requester in writing of 
this referral. When the subject matter of a classified record originated 
by another agency indicates that disclosure of the identity of the 
orginating agency might itself compromise national security, that agency 
shall be consulted prior to any referral of the responsive records.
    (5) Whether the request is a categorical one. A categorical request, 
i.e., one for all records falling within a reasonably specific but broad 
category, shall be regarded as conforming to the statutory requirement 
that records be reasonably described, if the particular records can be 
identified, searched for, collected and produced without unduly 
burdening or disrupting the unit's operations. If the categorical 
request does not reasonably describe the records requested, the unit 
shall promptly notify the requester in writing specifying what 
additional identification is needed, and extend to the requester an 
opportunity to confer with Department personnel to attempt to 
reformulate the request so as to reasonably describe the records.
    (6) In determining records responsive to a request a unit ordinarily 
shall include only those records within a unit's possession and control 
as of the date of its receipt of the request.
    (7) In each of the situations set forth in paragraphs (a) and (b) of 
this section, the procedures relating to fees described in Sec. 4.9 
shall be applied and coordinated as appropriate.
    (b) An authorized official in the responsible unit shall review the 
request to determine the availability of the records requested.
    (1) The determination shall be made within ten days (excluding 
Saturdays, Sundays and legal public holidays) of the receipt of the 
request (as defined in Sec. 4.5(b) of this part), unless the time is 
extended as provided in paragraph (b)(2) of this section.
    (2) In unusual circumstances, an appropriate official authorized to 
make initial denials of requests may extend the time for initial 
determination for up to ten days (excluding Saturdays, Sundays and legal 
public holidays) by written notice to the requester setting forth the 
reasons for the extension and the date on which a determination is 
expected to be sent. Extensions of time for the initial determination 
and extensions of time on appeal may not exceed a total of ten days, and 
time taken for the former counts against

[[Page 33]]

available appeal extension time. ``Unusual circumstances'' means, but 
only to the extent reasonably necessary to the processing of a 
particular request:
    (i) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
office processing the request;
    (ii) The need to search for, collect, and examine a voluminous 
amount of separate and distinct records which are the subject of a 
single request, or
    (iii) The need for consultation, which shall be conducted with all 
practical speed, with another agency or unit having a substantial 
interest in the determination of the request, or among two or more 
components of the responsible unit having substantial subject-matter 
interest in the pertinent documents.
    (3) If no determination has been sent to the requester at the end of 
the initial ten day period, or the last extension date, the requester 
may consider the request to be initially denied, and exercise a right of 
appeal of the denial. When no determination can be made within the 
applicable time period, the responsible unit shall nevertheless exercise 
due dilligence in continuing to process the request. It shall, on 
expiration of the applicable time period, inform the requester of the 
reason for the delay, of the date a determination is expected to be 
sent, and of the requester's right to treat the delay as a denial and to 
appeal. It may ask the requester to forego an appeal until a 
determination is made.
    (4) If it is determined that the records requested are to be made 
available, and there are no further fees to be paid, the responsible 
official shall promptly notify the requester as to how the disclosable 
records will be made available. If there are fees still to be paid by 
the requester, the requester shall be notified that upon payment the 
records will immediately be made available.
    (5) Appendix C lists the limited number of officials who have been 
authorized to make initial denials of requests for records, except as 
may be subsequently authorized. A reply initially denying, in whole or 
in part, a request for records shall be in writing, signed by an 
authorized official, and it shall include:
    (i) A reference to the specific exemptions of the Act authorizing 
the withholding of the records, stating briefly why the exemption 
applies and, where relevant why a discretionary release is not 
appropriate.
    (ii) The name and title or position of each official responsible for 
the denial.
    (iii) A statement of the manner in which any reasonably segregable 
portion of a record shall be provided to the requester after deletion of 
the portion which is determined to be exempt.
    (iv) A brief statement of the right of the requester to appeal the 
determination to the General Counsel and the address to which the appeal 
should be sent, in accordance with Sec. 4.8 (a) and (b).
    (6) A copy of each initial denial and its incoming request for 
records shall be provided to the Assistant General Counsel for 
Administration.

[53 FR 6972, Mar. 4, 1988; 53 FR 16057, 16211, May 5, 1988]



Sec. 4.7  Predisclosure notification procedures for confidential commercial information.

    (a) General policy. Confidential commercial or financial information 
provided to the Department of Commerce by a submitter shall not be 
disclosed pursuant to a Freedom of Information Act request except in 
accordance with this section.
    (b) Definitions. (1) The term ``confidential commercial or financial 
information'' means records provided to the Department by a submitter 
that arguably contain material exempt from release under Exemption 4 of 
the Freedom of Information Act, 5 U.S.C. 552(b)(4), because disclosure 
could reasonably be expected to cause substantial competitive harm to 
the submitter.
    (2) The term ``submitter'' means any person or entity who provides 
confidential commercial or financial information to the Department. The 
term ``submitter'' includes, but is not limited to corporations, state 
governments and foreign governments.
    (c) Notice to submitters. A unit of the Department of Commerce shall 
provide

[[Page 34]]

a submitter with prompt written notice of a request for disclosure of 
confidential commercial or financial information whenever required under 
paragraph (d) of this section. Such written notice shall be sent via 
certified mail, return receipt requested, or any other expeditious 
manner which provides for documentation of receipt of such notice. The 
notice shall either describe the exact nature of the information 
requested or provide copies of the records or portions thereof 
containing the confidential information.
    (d) When notice is required. (1) For confidential commercial or 
financial information submitted to the Department prior to January 1, 
1988, the unit shall provide a submitter with notice of a request 
whenever:
    (i) The records are less than ten years old, and the information has 
been designated by the submitter as confidential commercial or financial 
information;
    (ii) The Department has reason to believe that disclosure of the 
information could reasonably be expected to cause substantial 
competitive harm; or
    (iii) The information is the subject of a prior express commitment 
of confidentiality given by the Department to the submitter.
    (2) For confidential commercial or financial information submitted 
to the Department on or after January 1, 1988, the unit shall provide a 
submitter with notice of a request whenever:
    (i) The submitter has in good faith designated the information as 
confidential commercial or financial information, or
    (ii) The unit has reason to believe that disclosure of the 
information could reasonably be expected to result in substantial 
competitive harm to the submitter.
    (3) When a submitter has designated commercial or financial 
information as confidential, notice of a FOIA request for such 
information shall be required for a period of not more than ten years 
after the date of submission unless the submitter requests, and provides 
acceptable justification for, a specific notice period of greater 
duration. Whenever possible, the submitter's claim of confidentiality 
should be supported by a statement or certification by an officer or 
authorized representative of the submitter that the information at issue 
is in fact confidential commercial or financial information which has 
not been disclosed to the public.
    (e) Opportunity to object to disclosure. Through the notice 
described in paragraph (c) of this section, a unit shall afford a 
submitter 7 working days from date of receipt of such notice within 
which to provide the unit with a detailed statement of any objection to 
disclosure. Such statement shall specify all grounds for withholding any 
of the information and shall demonstrate why the information is 
considered to be commercial or financial information whose disclosure is 
likely to cause substantial competitive harm to the submitter. 
Information provided by a submitter pursuant to this paragraph may 
itself be subject to disclosure under the FOIA. Whenever notice is given 
to a submitter under this section the requester shall be advised that 
the submitter has been provided with notice and an opportunity to object 
to disclosure.
    (f) Notice of intent to disclose. A unit shall carefully consider a 
submitter's objections and specific grounds for nondisclosure prior to 
determining whether to disclose confidential commercial or financial 
information. Whenever a unit decides to disclose information over the 
objection of a submitter, the unit shall forward a written notice to the 
submitter which includes:
    (1) A statement of the reasons why the submitter's objections to 
disclosure were not sustained;
    (2) A description of the information to be disclosed; and
    (3) A specified disclosure date. Notice of intent to disclose shall 
be forwarded to the submitter via certified mail, return receipt 
requested. Such notice shall state the unit's intent to disclose the 
information on the expiration of 7 working days from the date of the 
submitter's receipt of the notice. When notice of intent to disclose is 
provided to the submitter, the requester shall be advised of such notice 
and of the specified disclosure date.
    (g) Notice of FOIA lawsuit. Whenever a requester brings a legal 
action seeking to compel disclosure of information subject to the notice 
requirements of

[[Page 35]]

paragraph (d) of this section, the unit shall promptly notify the 
submitter.
    (h) When notice is not required. The notice requirements of this 
section shall not apply if:
    (1) The Department determines that the information should not be 
disclosed;
    (2) The information has been published or has been officially made 
available to the public;
    (3) Disclosure of the information is required by law (other than 5 
U.S.C. 552);
    (4) The disclosure is required by an agency rule which: (i) was 
adopted pursuant to notice and public comment; (ii) specifies narrow 
classes of records submitted to the agency that are to be released under 
the Freedom of Information Act; and (iii) provides in exceptional 
circumstances for notice when the submitter provides written 
justification, at the time the information is submitted or a reasonable 
time thereafter, that disclosure of the information could reasonably be 
expected to cause substantial competitive harm; or
    (5) The designation made by the submitter of confidential commercial 
or financial information appears obviously frivolous, except that the 
Department must provide the submitter with written notice of any final 
administrative disclosure determination 7 working days prior to the 
specified disclosure date.

[53 FR 6972, Mar. 4, 1988; 53 FR 16057, May 5, 1988]



Sec. 4.8  Appeals from initial determinations or untimely delays.

    (a) When a request for records has been initially denied in whole or 
in part, or has not been timely determined, or when a requester has 
received an adverse initial determination regarding any other matter 
under this regulation, the requester may submit a written appeal within 
thirty calendar days after the date of the written denial or, if there 
has been no determination, on the last day of the applicable time limit. 
The appeal shall include a copy of the original request, the initial 
denial, if any, and a statement of the reasons why the records requested 
should be made available and why the initial denial, if any, was in 
error. No opportunity for personal appearance, oral argument or hearing 
on appeal is provided.
    (b) An appeal shall be addressed to the Assistant General Counsel 
for Administration, Department of Commerce, Room 5882, 14th and 
Constitution Avenue NW., Washington, DC 20230. Both the appeal envelope 
and the letter shall be clearly marked ``Freedom of Information 
Appeal.'' An appeal not addressed and marked as provided herein will be 
so marked by Department personnel when it is so identified, and will be 
forwarded immediately to the Assistant General Counsel for 
Administration. An appeal incorrectly addressed will not be deemed to 
have been ``received'' for purposes of the time period for appeal set 
forth in 5 U.S.C. 552(a)(6), until the earlier of the time that 
forwarding to the Assistant General Counsel for Administration has been 
effected; or such forwarding would have been effected with the exercise 
of due diligence by Department personnel. In each instance when an 
appeal is so forwarded, the Office of the Assistant General Counsel for 
Administration shall notify the requester that the appeal was improperly 
addressed and of the date the appeal was received by the office. All 
appeals shall be decided by the Assistant General Counsel for 
Administration with the exception of appeals for records which were 
initially denied by the Assistant General Counsel for Administration. 
Appeals initially denied by the Assistant General Counsel for 
Administration shall be decided by the General Counsel at the address 
listed in this paragraph.
    (c) The Assistant General Counsel for Administration shall make a 
determination on an appeal within twenty days (excluding Saturdays, 
Sundays and legal public holidays) of its receipt, unless an extension 
of time is taken in unusual circumstances, when the time for action may 
be extended up to ten days (excluding Saturdays, Sundays and legal 
public holidays) minus any days of extension granted at the initial 
request level. A notice of such extension shall be sent to the 
requester, setting forth the reasons and the date on which a 
determination of the appeal is expected to be sent. As

[[Page 36]]

used in this paragraph, ``unusual circumstances'' are defined in 
Sec. 4.6(b)(2).
    (d) If a decision on appeal is to make the records available to the 
requester in part or whole, such records shall be promptly made 
available as provided in Sec. 4.6.
    (e) If no determination of an appeal has been sent to the requester 
within the twenty day period or the last extension thereof, the 
requester is deemed to have exhausted his administrative remedies with 
respect to such request, giving rise to a right of judicial review as 
specified in 5 U.S.C. 552(a)(6)(C). When no determination can be sent to 
the requester within the time limit, the Assistant General Counsel for 
Administration shall nonetheless exercise due diligence in continuing to 
process the appeal. When the time limit expires, the requester shall be 
informed of the reason for the delay, of the date when a determination 
may be expected to be made, and of his right to seek judicial review. 
The requester may be asked to forego judicial review until the appeal is 
determined.
    (f) A determination on appeal shall be in writing and, when it 
denies records in whole or in part, the notice to the requester shall 
include:
    (1) Identification of the specific exemption or exemptions of the 
Act authorizing the withholding, a brief explanation of how the 
exemption applies, and, when relevant, a statement as to why a 
discretionary release is not appropriate;
    (2) A statement that the decision is final for the Department;
    (3) Advice that judicial review of the denial is available in the 
district in which the requester resides or has his principal place of 
business, the district in which the agency records are located, or the 
District of Columbia; and
    (4) The names and titles or positions of each official responsible 
for the denial of the appeal.
    (g) The Assistant General Counsel for Administration shall send a 
copy of each determination on appeal to the central public reference 
facility referred to in Sec. 4.4(c) where it will be indexed and kept 
available for public inspection and copying.

[53 FR 6972, Mar. 4, 1988; 53 FR 16058, May 5, 1988, as amended at 57 FR 
28781, June 29, 1992]



Sec. 4.9  Fees.

    (a) Definitions. The following definitions are applicable to this 
section.
    (1) The term ``direct costs'' means those expenditures which an 
agency actually incurs in searching for and duplicating (and in the case 
of commercial requesters, reviewing) documents to respond to a FOIA 
request. Direct costs include, for example, the salary of the employee 
performing work (the basic rate of pay for the employee plus 16 percent 
of that rate to cover benefits) and the cost of operating duplicating 
machinery. Not included in direct costs are overhead expenses such as 
costs of space, and heating or lighting the facility in which the 
records are stored.
    (2) The term ``search'' includes all time spent looking for material 
that is responsive to a request, including page-by-page or line-by-line 
identification of material within documents. Such activity should be 
distinguished, however, from ``review'' of material in order to 
determine whether the material is exempt from disclosure (see paragraph 
(a)(4) of this section). Searches may be done manually or by computer 
using existing programming.
    (3) The term ``duplication'' refers to the process of making a copy 
of a document necessary to respond to a FOIA request. Such copies can 
take the form of paper copy, microform, audio-visual materials, or 
machine readable documentation (e.g., magnetic tape or disk), among 
others. The copy provided must be in a form that is reasonably usable by 
requesters.
    (4) The term ``review'' refers to the process of examining documents 
located in response to a request that is for a commercial use (see 
paragraph (a)(5) of this section) to determine whether any portion of 
any document located is permitted to be withheld. It also includes 
processing any documents for disclosure, e.g., doing all that is 
necessary to excise them and otherwise prepare them for release. Review 
does not include time spent resolving general legal or policy issues 
regarding the application of exemptions.
    (5) The term ``commercial use request'' refers to a request from or 
on behalf of one who seeks information for

[[Page 37]]

a use or purpose that furthers the commercial, trade, or profit 
interests of the requester or the person on whose behalf the request is 
made. In determining whether a requester properly belongs in this 
category, the Department must determine the use to which a requester 
will put the documents requested. Moreover, where the department has 
reasonable cause to doubt the use to which a requester will put the 
records sought, or where that use is not clear from the request itself, 
the Department shall seek additional clarification before assigning the 
request to a specific category.
    (6) The term ``educational institution'' refers to a preschool, a 
public or private elementary or secondary school, an institution of 
graduate higher education, an institution of undergraduate higher 
education, an institution of professional education and an institution 
of vocational education, which operates a program or programs of 
scholarly research.
    (7) The term ``non-commercial scientific institution'' refers to an 
institution that is not operated on a ``commercial'' basis as that term 
is referenced in paragraph (a)(5) of this section, and which is operated 
solely for the purpose of conducting scientific research the results of 
which are not intended to promote any particular products or industry.
    (8) The term ``representative of the news media'' refers to any 
person actively gathering news for an entity that is organized and 
operated to publish or broadcast news to the public. The term ``news'' 
means information that is about current events or that would be of 
current interest to the public. Examples of news media entities include 
television or radio stations broadcasting to the public at large, and 
publishers of periodicals (but only in those instances when they can 
qualify as disseminators of ``news'') who make their products available 
for purchase or subscription by the general public. These examples are 
not intended to be all-inclusive. Moreover, as traditional methods of 
news delivery evolve (e.g., electronic dissemination of newspapers 
through telecommunications services), such alternative media would be 
included in this category. In the case of ``freelance'' journalists, 
they may be regarded as working for a news organization if they can 
demonstrate a solid basis for expecting publication through that 
organization, even though not actually employed by it. A publication 
contract would be the clearest proof, but the Department may also look 
to the past publication record of a requester in making this 
determination.
    (b) Application--Uniform fee schedule. The fees described in this 
section apply to FOIA requests processed by all units of the Department. 
They reflect rates for the full allocable direct cost of search, review, 
and duplication. The fees to be charged shall be based on the requester 
category.
    (1) The four specific categories and chargeable fees are:

------------------------------------------------------------------------
                 Category                        Chargeable service
------------------------------------------------------------------------
(i) Commercial Use Requesters.............  Search, Review, and
                                             Duplication.
(ii) Educational and Noncommercial          Duplication (excluding the
 Scientific Institution Requesters.          cost of the first 100
                                             pages).
(iii) Representatives of the News Media...  Duplication (excluding the
                                             cost of the first 100
                                             pages).
(iv) All Other Requesters.................  Search and Duplication
                                             (excluding the cost of the
                                             first 2 hours of search and
                                             100 pages).
------------------------------------------------------------------------

    (2) Uniform fee schedule.

------------------------------------------------------------------------
                 Category                               Rate
------------------------------------------------------------------------
(i) Manual search.........................  Actual salary rate of
                                             employee involved, plus 16
                                             percent of salary rate.
(ii) Computerized search..................  Actual direct cost,
                                             including operator time.
(iii) Duplication of records:.............
(A) Paper copy reproduction...............  $.07 per page.
(B) Computer tape or printout reproduction  Actual cost, including
                                             operator time.
(C) Other reproduction (i.e., microfilm,    Actual direct cost,
 microfiche, microform).                     including operator time.
(iv) Review of records (includes            Actual salary rate of
 preparation for release, i.e. excising).    employee conducting review,
                                             plus 16 percent of salary
                                             rate.
------------------------------------------------------------------------

    (3) Charging interest. Interest may be charged to those requesters 
who fail to pay fees charged in a timely fashion. Assessment of such 
interest will commence on the 31st day following the day on which the 
billing was sent. Interest will be charged at the rate specified in 
section 3717 of title 31 U.S.C. and will accrue from the date of the 
billing. The Department reserves the right to utilize consumer reporting

[[Page 38]]

agencies, and collection agencies, when appropriate, to encourage 
repayment as authorized by the Debt Collection Act of 1982 (Pub. L. 97-
365).
    (c) Waiver or reduction of fees. (1) Documents shall be furnished 
without charge, or at reduced charges if disclosure of the information 
is in the public interest because it is likely to contribute 
significantly to public understanding of the operations or activities of 
the government, and is not primarily in the commercial interest of the 
requester. To assure that the two basic requirements for waiver are met, 
Commerce shall rely on the following factors in making a determination 
on the fee waiver request:
    (i) The subject of the request (whether the subject of the requested 
records concerns the operations or activities of the government);
    (ii) The informative value of the information to be disclosed 
(whether the disclosure is likely to contribute to an understanding of 
government operations or activities);
    (iii) The contribution to an understanding of the subject by the 
general public likely to result from disclosure (whether disclosure of 
the requested information will contribute to public understanding);
    (iv) The significance of the contribution to public understanding 
(whether the disclosure is likely to contribute significantly to public 
understanding of government operations or activities);
    (v) The existence and magnitude of a commercial interest (whether 
the requester has a commercial interest that would be furthered by the 
requested disclosure);
    (vi) The primary interest in disclosure (whether the magnitude of 
the identified commercial interest of the requester is sufficiently 
large, in comparison with the public interest in disclosure, that 
disclosure is primarily in the commercial interest of the requester).
    (2) Additionally, a fee shall not be charged, or alternatively it 
may be reduced, in the following instances:
    (i) Requests for Department records made by a Federal agency, 
Federal court (excluding parties), Congressional committee or 
subcommittee, the General Accounting Office, or the Library of Congress, 
are not made under the Act, and fees payable under this part do not 
apply.
    (ii) The records are requested by a state or local government, an 
intergovernmental agency, a foreign government, a public international 
organization, or an agency thereof, and when it is determined by a 
responsible Department official that it is an appropriate courtesy, or 
the records are for purposes that are in the public interest and will 
promote the objectives of the Act and of the Department.
    (iii) A fee shall not be charged if the allowable charges are less 
than or equal to the cost of routine collection and processing of the 
fee. Therefore, if the total of charges due for processing a request is 
$20 or less, no fee will be charged.
    (d) Payment of fees. The following conditions shall apply to payment 
of fees charged under this part.
    (1) A search fee provided in paragraph (b) of this section is 
chargeable even when no records responsive to the request are found, or 
when the records requested are determined by the responsible Department 
official to be totally exempt from disclosure. If the estimated search 
or duplication charges exceed $25 the requester shall be notified of the 
estimated amount of search or duplication fees, unless the requester has 
previously advised the Department of a willingness to pay an amount 
sufficient to cover the estimated fee. Such notice shall offer the 
requester the opportunity to confer with Department personnel with the 
object of reformulating the request in order to reduce the cost.
    (2) A requester may be required to make an advance payment (i.e., 
payment before work is commenced or continued on a request) if the 
estimated or determined allowable charges that a requester may be 
required to pay will exceed $250 or the requester has previously failed 
to pay a fee charged in a timely manner (i.e., within 30 days of the 
date of the billing).
    (i) When the estimated charges exceed $250, the Department shall 
notify the requester of the likely cost and obtain satisfactory 
assurance of full payment where the requester has a history

[[Page 39]]

of prompt payment of FOIA fees. If the requester has no history of 
prompt payment of FOIA fees, the Department shall require an advance 
payment of an amount up to the full estimated charges.
    (ii) If a requester has previously failed to pay a fee charged in a 
timely manner, the Department shall require the requester to pay the 
full amount owed plus any applicable interest and to make an advance 
payment of the full amount of the estimated fee before the Department 
will process the request.
    (3) Whenever the Department acts pursuant to paragraph (d)(2) of 
this section, the administrative time limits prescribed in 5 U.S.C. 
552(a)(6) will begin only after the agency has received payment of the 
required fee.
    (4) Upon the completion of processing of a request, when a specific 
fee is determined to be payable and appropriate notice has been given to 
the requester, the payment of such fee shall be received before the 
requested records or a portion of the records are made available to the 
requester.
    (5) Payment of fees shall be made in cash or preferably by check or 
money order payable to ``Treasury of the United States'', and they shall 
be paid or sent to the unit stated in the billing notice or, if none, to 
the unit handling the request. Where appropriate, the responsible 
official may require that payment be made in the form of a certified 
check.
    (6) If an advance payment of an estimated fee exceeds the actual 
total fee by $1 or more, the difference shall be refunded to the 
requester.
    (7) When the responsible official reasonably believes that a 
requester or group of requesters acting in concert is attempting to 
break a request into a series of requests for the purpose of evading the 
assessment of fees, the unit may aggregate any such requests and charge 
accordingly.
    (e) Other charges. (1) This part does not apply to any special 
statistical compilation, study, or other record requested pursuant to 
statutes specifically providing for setting the level of fees for 
particular types of records such as 15 U.S.C. 1525-1527. The fee for the 
performance of such service is the actual cost of the work involved in 
compiling the record. All monies received by the Department in payment 
of the cost of this work are deposited in a separate account 
administered under the direction of the Secretary, and may be used to 
defray the ordinary expenses incidental to the work.
    (2) The full cost of other special services will be assessed. Such 
services would include:
    (i) Certifying that records are true copies; and
    (ii) Sending records by special methods such as express mail, etc.

[53 FR 6972, Mar. 4, 1988; 53 FR 16058, 16211, May 5, 1988]

  Appendix A to Part 4--Department Administrative Order 205-12--Public 
                               Information

    Section 1. Purpose--.01  This order, and the rules and other 
materials which implement it, are designed to carry out the 
responsibilities of the Department of Commerce under the Freedom of 
Information Act, as amended (5 U.S.C. 552), hereinafter referred to as 
``the Act.''
    02.  This revision updates and clarifies the provisions of the order 
(dated June 29, 1967) which it supersedes, in light of the amendments to 
the Act which become effective February 19, 1975. Section 7, 
``Compulsory Process Requesting Documents or Testimony'' contained in 
the superseded order, is now found in Department Administrative Order 
218-5, to be published separately in the Federal Register.
    Sec. 2 Authorities--This order is issued pursuant to the Act: 5 
U.S.C. 553; 5 U.S.C. 301; Reorganization Plan No. 5 of 1950; and other 
authority vested by law in the Secretary applicable to the dissemination 
of records and other information of the Department and charges for 
services related thereto.
    Sec. 3. Policies--.01  The Department of Commerce, in fulfilling its 
statutory missions to foster, promote and develop the foreign and 
domestic commerce of the United States and to administer the specific 
programs entrusted to it, regularly develops, collects, analyzes, and 
disseminates facts, statistics, consensus, charts, scientific findings, 
technology, and other information, and performs other services, in order 
to assist the business community and other segments of the public, 
according to their needs and interest. This information which the 
Department develops, collates, and disseminates is generally made 
readily available, either without charge or by purchase, to the affected 
persons and to anyone else who may be interested, through publications, 
reprints

[[Page 40]]

of regulations (by subscription or otherwise), press releases, special 
reports, correspondence and personal interviews or conferences with 
staff, speeches, and other media. It is the policy of the Department to 
continue its regular practices of disseminating information to the 
public prepared as a part of its program responsibilities, to the 
fullest extent legally permissible and economically feasible, and to 
continue to handle public requests for such information (which may 
include records) in the usual manner through its regular facilities and 
channels, as distinguished from those requests for records subject to 5 
U.S.C. 552(a)(3) which are to be made and handled in accord with the 
rules established in and pursuant to subsections 5.03 and 5.04 of this 
order.

In carrying out this policy, the officials designated in subsection 4.01 
of this order shall: (a) Establish and continue an effective program of 
communicating to the public the useful information obtained or developed 
in the fulfillment of their organizational missions; (b) publicize the 
availability of such informational materials in their rules or by other 
practical means so that the public shall utilize the regular 
informational programs of the Department, rather than resorting to the 
formal procedures for requesting records established pursuant to 5 
U.S.C. 552(a)(3); and (c) insure that any such information which is 
given to individuals or special groups shall also be made available to 
the general public in accord with subsections 5.01 and 5.02 of this 
order, when and to the extent such information is subject to publication 
or inspection under 5 U.S.C. 552(a)(1), (2), or (5).
    .02  Officials responsible for determining, in accord with the Act 
and this order:
    (a) What materials are to be published in the Federal Register; (b) 
What and how materials are to be made available for public inspection 
and copying, including indexing; and (c) What and how records which are 
requested are to be made available; shall, where discretion exists in 
making such determinations, take an affirmative and constructive view of 
the requirements of the Act. Accordingly, in making rules and specific 
determinations, they shall among other factors: (1) Provide such 
information to the affected public as well as enable it to deal 
effectively and knowledgeably with their organizations; (2) keep within 
the limits of demonstrable need the use of the legal authorities which 
permit the withholding of information and records; (3) apply principles 
of equal treatment to requests for records; (4) consider disclosure to 
be the rule rather than the exception; (5) consider the public 
convenience as well as the efficient conduct of their organizations' 
business; (6) act in a timely manner; and (7) be guided by materials 
prepared by the Department of Justice and the Office of General Counsel 
of the Department, and by applicable court decisions.
    Sec. 4. Delegation of authority--.01  The Secretary of Commerce is 
responsible for the effective administration of the Act and other laws 
applicable to the dissemination of records and other information of the 
Department. Aside from the Secretary's retaining authority for his 
immediate office, or as he otherwise may act, authority is hereby 
delegated to the following officials of the Department to decide 
initially whether or not to make publicly available records and other 
information subject to the Act which are in the possession of their 
organizations, in accord with the provisions of the Act, this order and 
rules supplementing it, other applicable law, and as may be otherwise 
provided by the Secretary:
    a. Secretarial Officers, for their respective offices and for the 
Department staff units reporting to them (as defined in Department 
Organization Order 1-1, ``Mission and Organization of the Department of 
Commerce'' (35 FR 19704, December 27, 1970)), as amended.
    b. Heads of operating units of the Department (as defined in 
Department Organization Order 1-1).
    .02  Although the officials having authority under subsection 4.01 
of this section may permit employees within their organizations to make 
records and information publicly available under the Act, they shall 
redelegate authority initially to deny such records and information only 
to a limited number of officers or employees under them without power of 
further redelegation.
    .03  The authority to make final decisions on appeal of initially 
denied requests for records is hereby delegated to the General Counsel 
of the Department without power of further redelegation.
    .04  The General Counsel of the Department, and his designees, shall 
provide legal services to enable the officials designated in subsections 
4.01 and 4.02 of this section to discharge their respective duties and 
responsibilities under and pursuant to this order, and shall make legal 
interpretations of questions arising thereunder. The General Counsel 
shall also act as the focal point within the Department for consultation 
or other communication with the Department of Justice with respect to 
any actions to be taken in connection with the Act, this order, and 
rules implementing it.
    .05  Program officials shall provide all support and assistance 
necessary to enable the General Counsel to perform the functions 
delegated in this order. This shall include (i) keeping the Office of 
the General Counsel informed of Freedom of Information Act requests 
received by the unit; (ii) providing prompt responses to Office of the 
General Counsel instructions, or requests for assistance; (iii) as 
requested, allowing the Office of the General Counsel access to relevant

[[Page 41]]

records; and (iv) promptly consulting with the Office of the General 
Counsel regarding any legal issues which arise during the processing of 
a request.
    b. The Office of the Inspector General shall comply with the 
provisions of this order except that the Office of the Inspector General 
need not allow the Office of the General Counsel access to records to 
the extent that (i) information contained therein might reveal the 
identity of a confidential source, or (ii) the Inspector General 
determines that disclosure to Office of the General Counsel would 
interfere with an audit, investigation, or prosecution.
    Sec. 5. Functions and responsibilities--.01  Publication in the 
Federal Register (5 U.S.C. 552(a)(1) of the Act).
    a. The following information of the Department and its component 
organizations shall be separately stated and currently published in the 
Federal Register for the guidance of the public.
    1. Descriptions of the central and field organizations and the 
established places at which, the employees (and in the case of a 
uniformed service, the members) from whom, and the methods whereby, the 
public may secure information, make submittals or request, or obtain 
decisions;
    2. Statements of the general course and method by which functions 
are channeled and determined, including the nature and requirements of 
all formal and informal procedures available;
    3. Rules of procedure, descriptions of forms available or the places 
at which forms may be obtained, and instructions as to the scope and 
contents of all papers, reports, or examinations;
    4. Substantive rules of general applicability adopted as authorized 
by law, and statements of general policy or interpretations of general 
applicability formulated and adopted by their agencies; and
    5. Each amendment, revision, or repeal of the foregoing.
    b. The information contained in paragraph 5.01a of this subsection 
shall be published in the Federal Register in the form of or included 
in:
    1. Department Organization Orders, including any supplements and 
appendices thereto. The Assistant Secretary for Administration shall 
cause such materials to be published in the Federal Register. The 
Department Organization Orders and their supplements and appendices 
contain, among other information, the descriptions of the various 
organizations, the descriptions of the various organizations of the 
Department, and in many instances the other information indicated in 
subparagraphs 5.01a.1 and 2. of this subsection.
    2. Department Administrative Orders, including any supplements or 
appendices thereto.
    3. Other Office of the Secretary or operating unit directives.
    4. Rules and orders contained in the various Titles of the Code of 
Federal Regulations assigned to the Office of the Secretary and to the 
operating units of the Department.
    5. General notices.
    6. Other forms of publications when incorporated by reference in the 
Federal Register with the approval of the Director of the Federal 
Register.
    c. Officials responsible for determning what materials are to be 
submitted for publication in the Federal Register pursuant to 5 U.S.C. 
552(a)(1) shall consider, among other factors, in making such 
determinations:
    1. That those matters which fall within one or more of the 
exemptions contained in 5 U.S.C. 552(b) need not be published. However, 
it may be decided, in accord with subsection 3.02 of this order, that 
publication even of such matters should in some instances and respects 
be made.
    2. That matters which are reasonably available to the class of 
persons affected thereby and which have been or are to be incorporated 
by reference in the Federal Register with the approval of the Director 
of the Federal Register are deemed to be published in the Federal 
Register. In such cases, the standards and procedures for incorporation 
by reference established by the Director of the Federal Register (See 1 
CFR Part 51; 37 FR 23614, November 4, 1972) shall be followed.
    3. That matters to which members of the public do not have to resort 
or by which they are not to be adversely affected, or which do not 
impose burdens, obligations, conditions, or limitations upon persons 
affected, need not be published in the Federal Register under 5 U.S.C. 
552(a)(1). However, the policy considerations expressed in subsection 
3.02 of this order may in certain instances suggest the publication of 
such matters.
    4. That no person shall in any manner be required to resort to or be 
adversely affected by any matter required to be published in the Federal 
Register under 5 U.S.C. 552(a)(1) when it is not so published. However, 
actual and timely notice given to such a person having such actual 
notice is equally bound as one having constructive notice by Federal 
Register publication. Nevertheless, such actual notice should as a 
matter of policy be in addition to, rather than instead of, publication.
    5. That ``currently publish'' as provided in 5 U.S.C. 552(a)(1) 
means promptly at the time that the action occurs.
    .02  Availability of materials for inspection and copying; indexing 
(5 U.S.C. 552(a)(2) and (5) of the Act).
    a. The head of each operating unit of the Department shall for his 
unit, and the Assistant Secretary for Administration shall

[[Page 42]]

for the officials, officers and units referred to in paragraph 4.01a. of 
this order, in accordance with rules which they shall cause to be 
published in the Federal Register, make available for public inspection 
and copying the following materials, unless such materials are promptly 
published and copies offered for sale:
    1. Final opinion (including concurring and dissenting opinions), as 
well as orders, made in the adjudication of cases.
    2.. Those statements of policy and interpretations which have been 
adopted by the agency and are not published in the Federal Register.
    3. Administrative staff manuals and instructions to staff that 
affect a member of the public.
    4. Where applicable, a record of the final votes of each member of 
an agency in every proceeding when the agency has more than one number. 
(The terms ``agency proceeding'' and ``agency'' are defined in 5 U.S.C. 
551, as amended by 5 U.S.C. 552(e).
    5. An index, currently maintained, which provides identifying 
information for the public as to any matter (a) which has been issued, 
adopted, or promulgated since July 4, 1967, and (b) which is required to 
be made available or published pursuant to 5 U.S.C. 552(a)(2). It is 
hereby determined, subject to subsequent redetermination by the 
Assistant Secretary for Administration pursuant to changed 
circumstances, that it is unnecessary and impracticable to publish 
quarterly or more frequently and distribute (by sale or otherwise) 
copies of each such index and supplements thereto. Copies of such 
indexes shall be provided upon request at a cost not to exceed the 
direct cost of duplication.
    b. The rules published in the Federal Register under paragraph 5.02a 
of this subsection shall include provisions for the time, place, copying 
fees, and any procedures applicable to making such materials available 
at facilities or otherwise for public inspection and copying.
    c. The Assistant Secretary for Administration shall establish and 
maintain a centralized public reference facility for the inspection and 
copying of materials subject to 5 U.S.C. 552(a)(2) and (5). The head of 
an operating unit may, with the approval of the Assistant Secretary for 
Administration, establish for this organization a separate place for 
making the materials subject to 5 U.S.C. 552(a)(2) and (5) available to 
the public for inspection and copying, and publish appropriate rules 
applicable thereto approved by the Assistant Secretary for 
Administration.
    d. The officials responsible for determining the materials to be 
available for public inspection and copying under paragraph 5.02a of 
this subsection shall consider, among other factors, in promulgating the 
published rules or in making such determinations:
    1. That those matters which fall within one or more of the 
exemptions contained in 5 U.S.C 552(b) are not required to be made 
available. Nonetheless, they may be made available in any particular 
respect if it is determined that this would better serve the public 
interest.
    2. That they may, to the extent required to prevent a clearly 
unwarranted invasion of personal privacy, delete identifying details 
from an opinion, statement of policy, interpretation, staff manual or 
instruction, or other materials, when it is made available or published. 
However, in each case the justification for the deletion shall be 
explained fully in writing. Such action is to be taken in order to 
provide the public with those information materials called for under 5 
U.S.C. 552(a)(2), while at the same time protecting the medical, family 
or other personal privacy rights of the individuals involved in such 
agency materials. Agency explanations for deletions of identifying 
details should provide such information as can be furnished without 
defeating the purpose of the deletion provision. When an agency has a 
number of recurring deletion situations, it may in its implementing 
rules or other public notice specify the applicable reasons for such 
deletions, and cite the rule in the preamble to each of the covered 
documents, rather than contain the complete explanation in each 
document.
    3. That distinction should be made between those materials (a) which 
do and which do not affect any member of the public, and (b) which are 
and which are not to be relied upon, used or cited as precedent by the 
agency against any private person or party. Those materials specified in 
5 U.S.C. 552(a)(2) which affect the public and which have precedential 
effect shall be made available for inspection and copying, and also 
included in the index, as provided in this order, However, since the 
basic purpose of this section of the Act is to disclose to the 
interested members of the public essential information which will enable 
them to deal effectively and knowingly with an agency, materials which 
provide such information should be included in the appropriate 
facilities.
    4. That an advisory interpretation made by an agency on a specific 
set of facts which is requested by and addressed to a particular person 
need not be made generally available under paragraph 5.02a. of this 
subsection if it is not to be cited or relied upon by any official of 
the agency as a precedent in the disposition of other cases. 
Nonetheless, if it may serve any useful public purpose, any such 
interpretation may be made publicly available upon the deletion of 
identifying details to the extent necessary to protect personal privacy.
    5. That the agency is not precluded using as precedent against any 
affected person those matters specified in subparagraphs 1.3.

[[Page 43]]

of paragraph 5.02a of this subsection as to which a person has actual 
and timely notice of the terms thereof, even though they have not been 
indexed and either made available or published. If the agency practice 
is to furnish such notices, it is more desirable that it do so in 
addition to, rather than instead of, indexing and making them publicly 
available hereunder, in recognition of the purpose of 5 U.S.C. 552(a)(2) 
to make the end product materials of the administrative process 
available to the public.
    6. That matters which are published in the Federal Register in 
accordance with 5 U.S.C. 552(a)(1) are not required to be made available 
under 5 U.S.C. 552(a)(2) for public inspection and copying nor need they 
be indexed (the Federal Register has its own index). However, to the 
extent that it would be useful and practicable to index and provide such 
published information to the public for ready reference, it should be 
included.
    7. That an index provides sufficient identifying information for the 
public if a person who exercises diligence may familiarize himself with 
the materials through use of the index.
    8. That an alternative to making materials available to the public 
for inspection and copying is to promptly publish and offer them for 
sale to the public. Such published materials, however, are subject to 
the indexing requirement. If it would help the public and it is 
practical to do so, a copy of such published materials should also be 
made available in any facilities established for public inspection, and 
if permissible, copies of the publications should be made available for 
sale therein.
    9. That materials required to be made available or published under 5 
U.S.C. 552(a)(2), but which were adopted or issued by an agency prior to 
July 4, 1967, may at any time be used, relied upon or cited as precedent 
by the agency irrespective of whether they are listed in the agency's 
index. Officials, however, may, to the extent they deem it practicable 
and helpful to the public, also index such materials in whole or in 
part.
    03. Availability of records upon request (5 U.S.C. 552(a) (3), (4), 
and (6) of the Act).
    a. The Assistant Secretary for Administration shall cause to be 
published in the Federal Register rules stating the time, place, fees 
and procedures to be followed, with respect to making records of the 
Department promptly available to any person requesting them, as provided 
in 5 U.S.C. 552(a) (3), (4) and (6).
    b. The rules published in the Federal Register pursuant to paragraph 
5.03a. of this subsection shall, insofar as is practicable, be complete, 
precise, and workable, suitable for the information of agency personnel 
and the public alike, and shall include provisions, among other matters, 
for the following:
    1. Information as to the place to make requests, when requests will 
be deemed received by the Department for purposes of the time limits 
contained in 5 U.S.C. 552(a)(6), the timely handling of requests, and 
the making of initial determinations concerning the availability of the 
records requested.
    2. Timely notice to the requester, as applicable, that a requested 
record does not exist, has been disposed of as provided by law, or is 
not in the possession or control of the Department.
    3. A procedure whereby the time limits for responding to requests 
for records or appeals from denials may be extended, as authorized by 5 
U.S.C. 552(a)(6)(B), and wherein a failure of the agency to respond in a 
timely manner may be considered a denial of the request.
    4. Consultation with other operating units or offices within the 
Department, or with other Federal executive agencies, when there is a 
mutual agency interest or concern in the record or its contents and 
there is a question as to its availability. The determination as to 
availability should be made by the predominantly interested agency, if 
there is one. When a record requested from the Department is the 
exclusive concern of another executive agency, the request shall be 
promptly referred to that other agency, and the requester so notified.
    5. A procedure for administrative appeal of a request for a record 
initially denied in whole or in part. The appeal procedure shall include 
provisions which insure that: (i) The requester may file an appeal, in 
writing, within thirty days of receipt of an initial denial; (ii) an 
appeal shall be considered received when properly addressed to the 
General Counsel: (iii) appeals shall be decided without right of the 
requester for a personal appearance, oral argument, or hearing; (iv) 
timely decisions on appeals or other notices concerning them shall be 
made in writing, and communicated to the requester; (v) if the decision 
is wholly or partly in favor of the requester, the General Counsel shall 
make the particular records of information available to the requester or 
order that such be done; and to the extent that the decision is adverse 
to the requester, it shall briefly state the reason for the decision and 
the identity of the official responsible for making it, (vi) whenever 
applicable, requesters shall be effectively notified of their right to 
seek judicial review.
    6. A schedule of fees as authorized by the Act, with procedures 
which (i) put requesters of records on timely notice as to substantial 
search and copying fees estimated to be incurred with respect to a 
request; (ii) attempt to insure that requester pay the chargeable fees 
for work to be done; (iii) which provide for appropriate waiver or 
reduction of fees; and (iv) which do not intend to discourage requests 
for records under the Act. Work, services, publications, or documents 
which

[[Page 44]]

the agency as part of its regular mission has been performing or 
producing or will be performed or produced for members of the public or 
for those who are engaged in the transaction of official business of or 
with the Government, without charge, by user charge, or by publication 
or subscription charge, are to be distinguished from those records 
properly requested under 5 U.S.C. 552(a)(3) and the fees charged 
thereunder.
    c. The officials designated in subsections 4.01 and 4.02 of this 
order who are responsible for initially determining whether any records 
properly requested under the Act may be made available, shall include in 
their consideration:
    1. Whether the records are of the type referred to in subsection 
3.01 of this order, and the request is to be handled in accord with the 
policy set forth therein;
    2. Whether the records are subject to 5 U.S.C. 552(a) (1), (2), or 
(5) and have been otherwise made publicly available pursuant to 
paragraphs 5.01a or 5.02a of this section;
    3. Whether the requester has complied with the published rules 
covering the making of requests and the payment of fees;
    4. Whether the records or information contained in them are matters 
which fall within one or more of the exemptions contained in 5 U.S.C. 
552(b), and if so whether they are not to be disclosed or whether, if 
such discretion exists, it would nevertheless be in the public interest 
to make the record or information available in whole or in part;
    5. Whether any reasonably segregable portion of the record can be 
disclosed after deletion of the portions which it is determined should 
not be disclosed.
    d. The officials who establish a facility as provided in paragraph 
5.02 of this section may utilize the facility to:
    1. Receive and assist in processing requests for records;
    2. Receive from officials the requested records which are made 
available, maintain custody of them and supervise their inspection and 
copying by requesters;
    3. Arrange for making certified and other copies of available 
records;
    4. Collect and account for fees established for services connected 
with the requests;
    5. Return records after inspection to their place of custody;
    6. Act as a central communication center between the requesters and 
the organizations involved in recordkeeping and officials making 
determinations as to their availability; and
    7. Provide reasonable assistance to persons requesting records, 
including explanations of the applicable procedure and other rules, and 
making referrals to sources of information available under regular 
informational programs of the Department.
    e. The Assistant Secretary for Administration shall establish such 
standard forms, procedures and instructions as he deems necessary for 
processing requests for records, maintaining records of related 
expenditures, and obtaining information for the Departmental report 
required by 5 U.S.C. 552(d).
    04. Special review requirements.--a. The General Counsel or one of 
his designees shall be consulted before any initial denial is issued.
    b. As provided in paragraph 7.03c. of DAO 205-12, the Operating Unit 
Public Affairs Office shall receive a copy of each request at the same 
time as the Action Office. If the Public Affairs Officer wishes to 
monitor and/or comment on any response to a particular request prior to 
transmittal, the Officer shall notify the Action Office within three (3) 
working days after receiving a copy of the request. The Action Office 
shall cooperate with the Public Affairs Officer in this effort; and give 
due consideration to any recommendations or comments from the Officer. 
In addition, the Director of the Office of Public Affairs or his or her 
designee shall be informed before any decision on an appeal from an 
initial denial is issued.
    c. As provided in Part B, Chaper IV, subsection 5.06f. of the 
Department's Handbook of Security Regulations and Procedures, appeals of 
initial denials based, even in part, on the ground that the matter is 
exempted from disclosure under 5 U.S.C. 552(b)(1) (classified 
information) shall be referred to the Departmental Information Security 
Program Committee. That Committee shall conduct a declassification 
review and determine if the record(s) involved may be made available to 
the public.
    d. Whenever, on appeal from an initially denied request, the General 
Counsel and the concerned Secretarial Officer or operating unit head 
cannot agree on whether applicable exemptions should be waived, as 
provided in subsection 03c.4. of this section, the matter shall be 
promptly referred to the Secretary for resolution.
    .05  Annual Report (5 U.S.C. 552(d) of the Act).
    a. The Assistant Secretary for Administration shall prepare and 
transmit to the Congress on or before March 1 of each year the annual 
report by the Act.
    b. To assist in the preparation of the report, each official 
specified in subsection 4.01 of this order, shall, no later than January 
31 of each year, provide the Assistant Secretary for Administration with 
the information specified in the Act and such other information as he 
may require.
    Sec. 6. Supplementary rules--.01 The Secretary may from time to time 
issue such supplementary rules or instructions as he deems appropriate 
to carry out the purposes of this order.
    .02  Each duly authorized official may issue rules covering his 
respective area of responsibility designed to implement this order, and 
which are consistent herewith and

[[Page 45]]

with any rules issued by the Assistant Secretary for Administration.
    Sec. 7. Effect on other orders. This order supersedes Department 
Administrative Order 205-12 of June 29, 1967, as amended. Any other 
prior orders, rules, or instructions, or parts thereof, the provisions 
of which are inconsistent or in conflict with the provisions of this 
order, are hereby constructively amended or superseded.

   Appendix B to Part 4--Freedom of Information Public Facilities and 
                   Addresses for Requests for Records

    The following public reference facilities have been established 
within the Department of Commerce for: (a) Public inspection and copying 
of materials from various units within the Department under 5 U.S.C. 
552(a)(2), or determined to be available for response to requests made 
under 5 U.S.C.(a)(3); (b) furnishing information and otherwise assisting 
the public concerning Departmental operations under the Freedom of 
Information Act; and (c) receipt and processing requests for records 
under 5 U.S.C. 552(a)(3).
    Commerce units that have separate mailing addresses are noted below. 
Requests should be addressed to the unit which the requester knows or 
has reason to believe has possession, control, or has primary concern 
with the records sought. Otherwise, requests should be addressed to the 
Central Reference and Records Inspection Facility.
    Department of Commerce Freedom of Information Central Reference and 
Records Inspection Facility, U.S. Department of Commerce, room 6020, 
Herbert C. Hoover Building, 14th Street between Constitution Avenue and 
Pennsylvania, NW., Washington, DC 20230. Phone (202) 377-4115. This 
facility serves the Office of the Secretary and all other units of the 
Department not identified below as explained at 15 CFR 4.4(c) and (d). 
Bureau of the Census, Chief, Program and Policy Development Office, U.S. 
Department of Commerce, room 2430, Federal Building 3, Washington, DC 
20233. Phone (301) 763-2758.
    The Bureau of the Census maintains a separate facility for 
inspection of (a)(2) records. The location is room 2455, Federal 
Building 3, Suitland, Maryland 20233.
    Bureau of Economic Analysis, Public Reference Facility, U.S. 
Department of Commerce, room 1115, Tower Building, 1401 K Street, NW., 
Washington, DC.
    Mailing address: Freedom of Information Control Desk, Office of 
Administration, Office of Economic and Statistical Affairs, U.S. 
Department of Commerce, room 4838, Herbert C. Hoover Building, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230. Phone 377-
3308.
    Economic Development Administration, Freedom of Information Records 
Inspection Facility, U.S. Department of Commerce, room 7001, Herbert C. 
Hoover Building, 14th Street and Constitution Avenue, NW., Washington, 
DC 20230. Phone (202) 377-4687. Mailing address of Regional EDA offices:

--Philadelphia Regional Office, EDA, U.S. Department of Commerce, 
Freedom of Information Request Control Desk, Liberty Square Building; 
First floor, 105 South 7th Street, Philadelphia, Pennsylvania 19106.
--Atlanta Regional Office, EDA, U.S. Department of Commerce, Freedom of 
Information Request Control Desk, suite 1820, 401 West Peachtree Street, 
NW., Atlanta, Georgia 30308-3510.
--Denver Regional Office, EDA, U.S. Department of Commerce, Freedom of 
Information Request Control Desk, room 670, 1244 Speer Boulevard, 
Denver, Colorado 80204.
--Chicago Regional Office, EDA, U.S. Department of Commerce, Freedom of 
Information Request Control Desk, 175 West Jackson Boulevard, suite A-
1630, Chicago, Illinois 60604.
--Seattle Regional Office, EDA, U.S. Department of Commerce, Freedom of 
Information Request Control Desk, Jackson Federal Building, room 1856, 
915 Second Avenue, Seattle, Washington 98174.
--Austin Regional Office, EDA, U.S. Department of Commerce, Freedom of 
Information Request Control Desk, Grant Building, suite 201, 611 East 
6th Street, Austin, Texas 78701.

    Bureau of Export Administration, Freedom of Information Records 
Inspection Facility, U.S. Department of Commerce, room 4525, Herbert C. 
Hoover Building, 14th Street and Constitution Avenue, NW., Washington, 
DC 20230. Phone (202) 377-5653.
    International Trade Administration, Freedom of Information Records 
Inspection Facility, U.S. Department of Commerce, room 4102, Herbert C. 
Hoover Building, 14th Street and Constitution Avenue, NW., Washington, 
DC 20230. Phone (202) 377-3031.
    Minority Business Development Agency, Freedom of Information Office, 
U.S. Department of Commerce, room 5073, Herbert C. Hoover Building, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230. Phone (202) 
377-2881.
    The Minority Business Development Agency maintains a separate 
facility for public inspection of (a)(2) records. The location is room 
5078B, Herbert C. Hoover Building, Washington, DC 20230.
    National Institute of Standards and Technology, Freedom of 
Information Records Inspection Facility, room E106, Administration 
Building, Gaithersburg, Maryland 20234. Phone (301) 975-2389.

[[Page 46]]

    Mailing address: National Institute of Standards and Technology, 
Freedom of Information Request Control Desk, U.S. Department of 
Commerce, room A-1105, Gaithersburg, Maryland 20234.
    National Oceanic and Atmospheric Administration, Public Reference 
Facility, room 714 WSC-5, 6010 Executive Boulevard, Rockville, Maryland 
20852. Phone (301) 443-8967.
    National Technical Information Service, Freedom of Information 
Records Inspection Facility, room 209, Forbes Building, 5285 Port Royal 
Road, Springfield, Virginia 22161. Phone (703) 487-4670.
    National Telecommunications and Information Administration, Freedom 
of Information Request Control Desk, U.S. Department of Commerce, room 
4717, Herbert C. Hoover Building, 14th Street and Constitution Avenue, 
NW., Washington, DC 20504. Phone (202) 377-1816.
    Patent and Trademark Office, Freedom of Information Records 
Inspection Facility, Public Search Room, room 1A01, Crystal Plaza 3, 
Arlington, Virginia 20231. Mailing address: Patent and Trademark Office, 
Freedom of Information Request Control Desk, Box 8, Washington, DC 
20231. Phone (703) 557-4035.
    United States Travel and Tourism Administration, Freedom of 
Information Request Control Desk, U.S. Department of Commerce, room 
1524, Herbert C. Hoover Building, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230. Phone (202) 377-3812.

[56 FR 20533, May 6, 1991]

 Appendix C to Part 4--Officials Authorized To Make Initial Denials of 
                          Requests for Records

    The following officials of the Department have been delegated 
authority to initially deny requests for records of their respective 
units for which they are responsible. (The listings are subject to 
change because of organizational changes or new delegations.)
    Accordingly, the Director for Federal Assistance and Management 
Support is specifically authorized to amend or revise this appendix from 
time to time in order to reflect changes.

                         Office of the Secretary

    Executive Secretariat, Director.
    Office of the Deputy Secretary: Associate Deputy Secretary.
    Office of Business Liaison: Director.
    Office of Consumer Affairs: Director.
    Office of Space Commerce: Director.
    Office of the Assistant Secretary for Legislative and 
Intergovernmental Affairs: Deputy Assistant Secretary for Legislative 
and Intergovernmental Affairs.
    Office of the Inspector General: Counsel to the Inspector General. 
Deputy Counsel to the Inspector General.
    Office of the General Counsel: Deputy General Counsel. Assistant 
General Counsel for Administration. Director of Intelligence Liaison.

                 Assistant Secretary for Administration

    Office of the Administrative Law Judge: Office Manager.
    Office of Civil Rights: Director.
    Office of Financial Management: Director.
    Office of Federal Assistance and Management Support: Director.
    Office of Federal Assistance: Director.
    Office of Budget Operations: Director.
    Office of Management Support: Director.

               Departmental Freedom of Information Officer

    Office of Budget, Planning and Organization: Director.
    Office of Management and Organization: Director.
    Office of Budget: Director.
    Office of Program Planning and Evaluation: Director.
    Office of Personnel: Director.
    Office of Personnel Operations: Director.
    Office of Information Resources Management: Director.
    Office of Procurement and Administrative Services: Director.
    Office of Administrative Services Management: Director.
    Office of Federal Property Programs: Director.
    Office of Publications: Director.
    Office of Security: Director.
    Office of Procurement: Director.
    Office of Major Systems Procurement: Director.
    Office of Procurement Operations: Director.
    Office of Procurement Management: Director.
    Office of Small and Disadvantaged Business Utilization: Director.

                    Economic and Statistical Affairs

    Office of Administration: Director.
    Bureau of Economic Analysis: Director.
    Bureau of the Census: Chief, Program and Policy Development Office.

                        Technology Administration

    Under Secretary for Technology: Deputy Under Secretary for 
Technology. Assistant Secretary for Technology Policy. Chief Counsel. 
Deputy Chief Counsel.
    National Institute of Standards and Technology: Director of 
Administration. Deputy Director of Administration.
    National Technical Information Service: Director. Associate Director 
for Administration.

[[Page 47]]

                   Economic Development Administration

    Chief Counsel.
    Deputy Chief Counsel.

                          Export Administration

    Under Secretary.
    Deputy Under Secretary.
    Director for Administration
    Assistant Secretary for Export Administration.
    Director, Office of Technology and Policy Analysis.
    Director, Office of Foreign Availability.
    Director, Office of Export Licensing.
    Deputy Assistant Secretary for Industrial Resource Administration.
    Assistant Secretary for Export Enforcement.
    Director, Office of Export Enforcement.
    Director, Office of Antiboycott Compliance.
    Director, Office of Enforcement Support.

                   International Trade Administration

             Deputy Under Secretary for International Trade

    Deputy Assistant Secretary for Planning
    Director, Office of Public Affairs
    Director, Office of Legislative and Intergovernmental Affairs

                      International Economic Policy

    Director, Office of Policy Coordination
    Director, Office of Multilateral Affairs
    Director, Office of Africa
    Director, Office of the Near East
    Director, Office of South Asia
    Director, Office of Western Europe
    Director, Office of European Community Affairs
    Director, Office of Eastern Europe, Russia and Independent States
    Director, Office of Latin America
    Director, Office of Mexico
    Director, Office of Canada
    Director, Office of the PRC and Hong Kong
    Director, Office of the Pacific Basin
    Director, Office of Japan Trade Policy
    Director, Office of Japan Commercial Programs

                          Import Administration

    Director, Foreign Trade Zones Staff
    Director, Office of Policy
    Director, Statutory Import Programs Staff
    Director, Office of Antidumping Compliance
    Director, Office of Countervailing Compliance
    Director, Office of Countervailing Agreements Compliance
    Director, Office of Antidumping Investigations
    Director, Office of Countervailing Investigations
    Director, Office of Accounting

                            Trade Development

    Director, Office of Trade and Economic Analysis
    Director, Office of Export Promotion Coordination
    Director, Office of Planning, Coordination and Resource Management
    Director, Office of Aerospace
    Director, Office of Computers and Business Equipment
    Director, Office of Microelectronics, Medical Equipment and 
Instrumentation
    Director, Office of Telecommunications
    Director, Office of Automotive Affairs
    Director, Office of Materials, Machinery and Chemicals
    Director, Office of Energy, Environment and Infrastructure
    Director, Office of Textiles and Apparel
    Director, Office of Consumer Goods
    Director, Office of Export Trading Company Affairs
    Director, Office of Finance
    Director, Office of Service Industries

                   U.S. and Foreign Commercial Service

    Director, Office of Information Systems
    Deputy Assistant Secretary for International Operations
    Deputy Assistant Secretary for Domestic Operations
    Director, Planning and Resource Management Staff
    Manager, Export Promotion Services

                             Administration

    Director, Office of Organization and Management Support
    Director, Office of Personnel
    Director, Office of Financial Management
    Director, Office of Information Resources Management

                  Minority Business Development Agency

    Freedom of Information Officer.

             National Oceanic and Atmospheric Administration

    Under Secretary.
    Assistant Secretary.
    Director, Office of Public Affairs.
    Director, NOAA Corps.
    General Counsel.
    Assistant Administrator for Ocean Services and Coastal Zone 
Management.
    Assistant Administrator for Fisheries.
    Assistant Administrator for Weather Service.
    Assistant Administrator for Environmental Satellite, Data, and 
Information Service.
    Assistant Administrator for Oceanic and Atmospheric Research.
    Director, Environmental Research Laboratories.

[[Page 48]]

    Director, Office of Administration.
    Director, Eastern Administrative Support Center.
    Director, Central Administrative Support Center.
    Director, Western Administrative Support Center.
    Director, Mountain Administrative Support Center.

       National Telecommunications and Information Administration

    Deputy Assistant Secretary.
    Chief Counsel.
    Legal Advisor.

                       Patent and Trademark Office

    Solicitor, Deputy Solicitor.

             United States Travel and Tourism Administration

    Under Secretary.
    Director, Office of Management and Administration.

[56 FR 50233, May 6, 1991, as amended at 57 FR 28781, June 29, 1992; 57 
FR 48969, Oct. 29, 1992]



PART 4a--CLASSIFICATION, DECLASSIFICATION AND PUBLIC AVAILABILITY OF NATIONAL SECURITY INFORMATION--Table of Contents




       Subpart A--Classification of National Security Information

Sec.
4a.1  General.
4a.2  Director, Office of Security.
4a.3  Classification levels.
4a.4  Classification authority.
4a.5  Duration of classification.

                       Subpart B--Declassification

4a.6  General.
4a.7  Systematic review for declassification.
4a.8  Mandatory review for declassification.
4a.9  Requests under the Privacy Act and the Freedom of Information Act 
          involving classified records.
4a.10  Presidential information.
4a.11  Foreign government information.
4a.12  Public availability of declassified information.

               Subpart C--Access to Classified Information

4a.13  Access by persons outside the Executive branch.
4a.14  Access by industrial, educational, and commercial entities.
4a.15  Access by historical researchers and former presidential 
          appointees.
4a.16  Access by foreign nationals, foreign governments, international 
          organizations and immigrant aliens.

    Authority: Sec. 5.3(b), E.O. 12356; 47 FR 14874, April 6, 1982; 47 
FR 15557, April 12, 1982.

    Source: 48 FR 20040, May 4, 1983, unless otherwise noted.



       Subpart A--Classification of National Security Information



Sec. 4a.1  General.

    Executive Order 12356 provides the only basis for classifying 
information within the Department of Commerce, except as provided in the 
Atomic Energy Act of 1954. The policy of the Department of Commerce is 
to make information concerning its activities available to the public 
consistent with the need to protect the national defense or foreign 
relations as required by the interests of the United States and its 
citizens. Accordingly, security classification shall be applied only to 
protect the national security.



Sec. 4a.2  Director, Office of Security.

    The Director is responsible for (a) acting on all suggestions, 
complaints, and appeals not otherwise resolved, concerning the 
implementation and administration of E.O. 12356 and implementing 
directives, and (b) deciding all appeals from denials of requests for 
national security information under the Mandatory Review provision of 
E.O. 12356, when the initial denial was based on continued 
classification under the Order. When acting on such appeals the Director 
shall confer, as necessary, with the Offices of the General Counsel, 
Information Management, and Personnel. The Director may solicit advise 
from various operating units as required. All suggestions, complaints, 
or appeals should be addressed to the Director, Office of Security, Room 
5044, 14th Street and Constitution Avenue, NW., Washington, D.C. 20230.



Sec. 4a.3  Classification levels.

    Information may be classified as national security information by a 
designated original classifier of the Department when it is determined 
that the information concerns one or more of the categories prescribed 
in E.O.

[[Page 49]]

12356 and when the unauthorized disclosure of the information, either by 
itself or in the context of other information, reasonably could be 
expected to cause damage to the national security. The levels 
established by E.O. 12356 (Top Secret, Secret, and Confidential) are the 
only terms which may be applied to national security information. Except 
as provided by statute, no other terms shall be used within the 
Department of Commerce in conjunction with any of the three 
classification levels.



Sec. 4a.4  Classification authority.

    Authority to originally classify information as Secret or 
Confidential may be exercised only by the Secretary of Commerce and by 
officials to whom such authority is specifically delegated. No official 
of the Department of Commerce is authorized to originally classify 
information as Top Secret.



Sec. 4a.5  Duration of classification.

    Information shall remain classified as long as its unauthorized 
disclosure would result in damage to the national security. When it can 
be determined a specific date or event for declassification shall be set 
by the original classification authority at the time the information is 
originally classified. Automatic declassification markings applied under 
predecessor executive orders shall remain valid unless the 
classification is extended by an authorized declassification authority. 
Information classified under predecessor orders and marked for 
declassification review shall remain classified until reviewed for 
declassification under the provisions of E.O. 12356 governing systematic 
review or mandatory review for declassification.



                       Subpart B--Declassification



Sec. 4a.6  General.

    Information that continues to meet the classification requirements 
prescribed in E.O. 12356 despite the passage of time will continue to be 
safeguarded. However, information which is properly classified at the 
time it is developed may not necessarily require protection 
indefinitely. National security information over which the Department of 
Commerce exercises final classification jurisdiction shall be 
declassified or downgraded as soon as national security considerations 
permit. When information is determined to be no longer damaging to the 
national security, it may continue to be exempt from public disclosure 
by law. If so, when the information is declassified the declassification 
authority shall indicate that all or portions of the information become 
FOR OFFICIAL USE ONLY and shall cite the authority which permits 
nondisclosure.



Sec. 4a.7  Systematic review for declassification.

    Classified information constituting permanently valuable records of 
the Government, as defined by U.S.C. 2103, that is in the possession and 
control of the Department of Commerce or of the Archivist of the United 
States, shall be systematically reviewed for declassification. This 
review shall be in accordance with systematic review guidelines 
authorized by the Secretary of Commerce.



Sec. 4a.8  Mandatory review for declassification.

    (a) Requests. Classified information under the jurisdiction of the 
Department of Commerce shall be reviewed for declassification upon 
receipt of a request by a United States citizen or permanent resident 
alien, a Federal agency, or a state or local government. A request for 
mandatory review of classified information shall be submitted in writing 
and describe the information with sufficient specificity to locate it 
with a reasonable amount of effort. Request shall be submitted to the 
Director, Office of Security, U.S. Department of Commerce, Room 5044, 
14th Street and Constitution Avenue, NW., Washington, D.C. 20230.
    (b) Processing requirements. (1) The Director, Office of Security, 
shall acknowledge receipt of the request directly to the requester. When 
a request does not satisfy the conditions of paragraph (a) of this 
section, the requester shall be notified that unless additional 
identifying information is provided, no further action will be taken. 
The request shall be forwarded to the operating unit or office which 
originated the information or which has primary

[[Page 50]]

interest in the subject matter. The unit or office assigned action shall 
review the information within twenty working days as prescribed below.
    (2) The action office shall determine whether, under the 
declassification provisions of the Department of Commerce National 
Security Information Manual, the entire document or portions thereof may 
be declassified. The action office shall also determine whether, if the 
document or portions are declassified, withholding the information is 
otherwise warranted under applicable statutes. Declassification of the 
information shall be accomplished by a designated declassification 
authority. Upon declassification the information shall be remarked. If 
the information may not be released in whole or in part, the reviewing 
official shall provide the reasons for denial by citing the applicable 
provision of section 1.3 of E.O. 12356. When the classification is a 
derivative decision based on classified source material of another 
Federal agency, the action office shall provide the information to the 
originator for review.
    (3) The action office shall also determine if declassified 
information is otherwise available for public release under the Freedom 
of Information Act. If the information is not releasable, the reviewing 
official shall advise the Director, Office of Security, that the 
information has been declassified but that it is exempt from disclosure, 
citing the appropriate exemption of the Freedom of Information Act and 
applicable regulations.
    (4) If the request for declassification is denied in whole or in 
part, the requester shall be notified of the right to appeal the 
determination within sixty days and of the procedures for such an 
appeal. If declassified information remains exempt from disclosure under 
the Freedom of Information Act, the requester shall be advised of those 
appellate procedures. All denials of information under the Freedom of 
Information Act must be approved by the Office of the Assistant General 
Counsel for Administration.
    (c) Fees. If the request requires the rendering of services for 
which fees may be charged, the unit assigned action may calculate the 
anticipated amount of fees to be charged and ascertain the requester's 
willingness to pay the allowable charges as a precondition to taking 
further action on the request in accordance with Sec. 4.9 of Department 
of Commerce Freedom of Information Act rules and Sec. 4b.11 of the 
Department's Privacy Act rules.
    (d) Right of appeal. (1) A requester may appeal to the Director, 
Office of Security, when the requested information is not declassified 
and released in whole. The Director shall determine, within thirty days 
after receipt of an appeal, whether continued classification of the 
requested information is required in whole or in part, notify the 
requester of his determination, and make available to the requester any 
information determined to be releasable. If continued classification is 
required under the provisions of this manual, the requester shall be 
notified of the final determination and of the reasons for denial.
    (2) During the declassification review of information under appeal 
the Director, Office of Security, may overrule previous determinations 
in whole or in part when, in his judgment, continued protection in the 
interest of national security is no longer required. If the Director 
determines that the information no longer requires classification, it 
shall be declassified and, unless it is otherwise exempt from 
disclosure, released to the requester. The Director shall advise the 
original reviewing Commerce office or unit of his decision.



Sec. 4a.9  Requests under the Privacy Act and the Freedom of Information Act involving classifed records.

    (a) The Freedom of Information Act (FOIA), Title 5 U.S.C. 552(b)(1) 
and the Privacy Act of 1974 (PA), Title 5 U.S.C. 552a(k)(1), authorize 
withholding of records from public availability which are ``(1) 
specifically authorized under criteria established by an Executive order 
to be kept secret in the interest of national defense or foreign policy 
and (2) are in fact properly classified pursuant to such Executive 
order.''
    (b) Under the FOIA a determination on an initial request must be 
made within ten working days after receipt of the request. A 
determination on an

[[Page 51]]

appeal to an initial denial must be made within twenty working days 
after receipt of an FOIA appeal; or for a PA appeal, within thirty 
working days. Time limits are mandatory for an FOIA request, but are 
permissive for a PA request. Except for unusual circumstances, failure 
to make a determination within the stated time limits means that a 
requester has exhausted the administrative remedies and may bring suit 
immediately.
    (c) Persons who request information under the provisions of these 
Acts, and whose requests are denied on appeal, may petition the courts 
to enjoin the Department of Commerce from withholding the record and, in 
this event, burden is on the Department of Commerce to sustain its 
actions.
    (d) To assure that PA/FOIA requests involving classified records are 
subjected to a thorough classification review and that a response is 
made within the specified time limits, the procedures in paragraphs (e) 
and (f) shall apply as well as those of DAO 205-12 ``Public 
Information,'' DAO 205-14 ``Processing Requests Under the Freedom of 
Information Act,'' and DAO 205-15 ``Implementing the Privacy Act of 
1974.''
    (e) Initial requests involving classified records:
    (1) The office determined to have primary interest shall conduct a 
declassification review of the information as prescribed in Sec. 4a.8(b) 
(2), (3), and (4).
    (2) If the information is subsequently declassified, the action 
office shall consult with the Office of the Assistant General Counsel 
for Administration to determine releasibility with consideration only 
for the legality of release within the purview of PA/FOIA.
    (3) If the record warrants continued classification, the action 
office shall coordinate with the Office of the Assistant General Counsel 
for Administration and so advise the requester, and further advise the 
requester of the right of appeal.
    (4) If the classification review cannot be completed within the 
prescribed time limit, due to unusual circumstances, the action office 
shall advise the requester. An extension of time shall be arranged in 
accordance with the FOIA and implementing Commerce PA/FOIA rules.
    (f) Receipt of an appeal for reconsideration of denial of a 
classified record under PA/FOIA: Appeals under this section shall be 
addressed to the General Counsel who shall refer the record(s) to the 
Director, Office of Security, for a declassification review. The 
Director may overrule previous determinations in whole or in part when, 
in his judgment, continued protection in the interest of national 
security is no longer required. If the information under review no 
longer requires classification, it shall be declassified. The Director 
shall advise the General Counsel of his decision.



Sec. 4a.10  Presidential information.

    Information originated by the President, by the White House Staff, 
by committees, commissions, or boards appointed by the President, or by 
others specifically providing advice and counsel to a President or 
acting on behalf of a President is exempted from the provisions of 
mandatory review for declassification, except as consistent with 
applicable laws that pertain to presidential papers or records.



Sec. 4a.11  Foreign government information.

    Requests for mandatory review for declassification of foreign 
government information shall be processed as prescribed in Sec. 4a.8(b). 
Consultation with the foreign source of the information through 
appropriate channels may be required prior to final action on the 
request.



Sec. 4a.12  Public availability of declassified information.

    A fundamental policy of the Department of Commerce is to make 
information available to the public to the maximum extent permitted by 
law. Information which is declassified, for any reason, loses its 
protective status in the interest of national security. Accordingly, 
declassified information shall be handled in every respect on the same 
basis as all other unclassified information.

[[Page 52]]



               Subpart C--Access to Classified Information



Sec. 4a.13  Access by persons outside the Executive branch.

    Department of Commerce classified information may be made available 
to persons outside the Executive Branch provided that (a) they are 
engaged in historical research projects or previously have occupied 
policy-making positions to which they were appointed by the President, 
or (b) the information is necessary for their performance of a function 
related to a contract or other agreement with the U.S. Government. The 
Director, Office of Security, shall determine, prior to the release of 
classified information under this provision, the propriety of such 
action in the interest of national security and obtain assurance of the 
recipient's trustworthiness and need to know.



Sec. 4a.14  Access by industrial, educational, and commercial entities.

    Bidders, contractors, grantees, educational, scientific or 
industrial organizations may receive classified information under the 
procedures prescribed in the Department of Defense Industrial Security 
Manual.



Sec. 4a.15  Access by historical researchers and former presidential appointees.

    (a) Persons who are engaged in historical research projects or who 
have previously occupied policy-making positions to which they were 
appointed by the President may be authorized access to classified 
information provided that the head of the component with classification 
jurisdiction over the information:
    (1) Makes a written determination that access is consistent with the 
interests of national security;
    (2) Is assured by the Director, Office of Security, that the 
requestors have an appropriate determination of trustworthiness as a 
precondition to access;
    (3) Obtains written agreements from requestors to safeguard the 
information to which they are given access in accordance with these 
regulations;
    (4) Obtains written consent to a review by the Department of 
Commerce of their resultant notes and manuscripts for the purpose of 
determining that no classified information is contained therein; and
    (5) Limits access granted to former Presidential appointees to items 
that the person originated, reviewed, signed, or received while serving 
as a Presidential appointee.
    (b) The material requested should be clearly identified so that it 
can be located and compiled with a reasonable amount of effort. If the 
access requested by historical researchers or former Presidential 
appointees requires the rendering of services for which fair and 
equitable fees may be charged, the requestor shall be notified.
    (c) The provisions of this section apply only to classified 
information, or any part of it, originated by the Department of Commerce 
or information that is now in the sole custody of the Department. 
Otherwise, the researcher shall be referred to the classifying agency. 
Operating units providing information under this section shall maintain 
custody of classified information at a Commerce facility.



Sec. 4a.16  Access by foreign nationals, foreign governments, international organizations and immigrant aliens.

    Foreign nationals employed by the Department of Commerce may be 
granted access to classified information originated within the 
Department only for the specific classified project to which they are 
assigned and only after they have met those requirements set forth in 
DAO 207-3, ``Security Requirements for Research Associates, Guest 
Workers and Trainees,'' and Appendix B of DAO 207-4, ``Security and 
Suitability Investigations of Personnel.'' If a need for access by 
foreign nationals (other than employees) is indicated, the Director, 
Office of Security, shall be consulted for decision on a case-by-case 
basis.



PART 4b--PRIVACY ACT--Table of Contents




Sec.
4b.1  Purpose and scope.
4b.2  Definitions.
4b.3  Procedures for inquiries pertaining to individual records in a 
          record system.

[[Page 53]]

4b.4  Times, places, and requirements for identification of individuals 
          making requests for access.
4b.5  Disclosure of requested information to individuals.
4b.6  Special procedures: Medical records.
4b.7  Request for correction or amendment to record.
4b.8  Agency review of request for correction or amendment of record.
4b.9  Appeal of initial adverse agency determination on correction or 
          amendment.
4b.10  Disclosure of record to person other than the individual to whom 
          it pertains.
4b.11  Fees.
4b.12  Penalties.
4b.13  General exemptions.
4b.14  Specific exemptions.

Appendix A to Part 4b--Officials to Receive Inquiries, Requests for 
          Access and Requests for Correction or Amendment
Appendix B to Part 4b--Systems of Records Noticed by Other Federal 
          Agencies and Applicable to Records of the Department and 
          Applicability of This Part Thereto
Appendix C to Part 4b--Facsimile of Official Form for Inquiries and 
          Requests

    Authority: 5 U.S.C. 552a; 5 U.S.C. 553; 5 U.S.C. 552; 5 U.S.C. 301; 
44 U.S.C. 3101; Reorganization Plan No. 5 of 1950.

    Source: 40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 
51168, Nov. 3, 1975, unless otherwise noted.



Sec. 4b.1  Purpose and scope.

    (a) The purpose of this part is to establish policies and procedures 
for implementing the Privacy Act of 1974 (Pub. L. 93-579), particularly 
5 U.S.C. 552a as added by the Act. The main objectives are to facilitate 
full exercise of rights conferred on individuals under the Act and to 
ensure the protection of privacy as to individuals on whom the 
Department maintains records in systems of records under the Act. The 
Department accepts the responsibility to act promptly and in accordance 
with the Act upon receipt of any inquiry, request or appeal from a 
citizen of the United States or an alien lawfully admitted for permanent 
residence into the United States, regardless of the age of the 
individual. Further, the Department accepts the obligations to maintain 
only such information on individuals as is relevant and necessary to the 
performance of its lawful functions, to maintain that information with 
such accuracy, relevancy, timeliness, and completeness as is reasonably 
necessary to assure fairness in determinations made by the Department 
about the individual, to obtain information from the individual to the 
extent practicable, and to take every reasonable step to protect that 
information from unwarranted disclosure. The Department will maintain no 
record describing how an individual exercises rights guaranteed by the 
First Amendment unless expressly authorized by statute or by the 
individual about whom the record is maintained or unless pertinent to 
and within the scope of an authorized law enforcement activity. An 
individual's name and address will not be sold or rented by the 
Department unless such action is specifically authorized by law; 
however, this provision shall not be construed to require the 
withholding of names and addresses otherwise permitted to be made 
public.
    (b) This part applies to all units in the Department in order to 
assure the maximum amount of uniformity and consistency within the 
Department in its implementation of the Act. The units of the Department 
may promulgate supplementary orders and rules not inconsistent with this 
part.
    (c) The Assistant Secretary for Administration is delegated 
responsibility for maintaining this part, for issuing such orders and 
directives internal to the Department as are necessary for full 
compliance with the Act, and for effecting publication of all required 
notices concerning systems of records.
    (d) Matters outside the scope of this part include the following:
    (1) Requests solely under the Freedom of Information Act (5 U.S.C. 
552) and part 4 of this title;
    (2) Requests involving information pertaining to an individual which 
is in a record or file but not within the scope of a system of records 
notice published in the Federal Register;
    (3) Requests to correct a record where a grievance procedure is 
available to the individual either by regulation or by provision in a 
collective bargaining agreement with the Department or a unit of the 
Department, and the individual has initiated, or has expressed in 
writing the intention of initiating, such grievance procedure. An

[[Page 54]]

individual selecting the grievance procedure waives the use of the 
procedures in this part to correct or amend a record; and,
    (4) Requests for employee-employer services and counseling which 
were routinely granted prior to enactment of the Act, including, but not 
limited to, test calculations of retirement benefits, explanations of 
health and life insurance programs, and explanations of tax withholding 
options.
    (e) The selection of the appropriate method for processing an 
individual's request for records depends on the status or capacity of 
the individual, the wording of the request and the character of the 
records requested. The Department anticipates the following situations 
and will undertake processing as indicated:
    (1) Requester is the individual to whom the record pertains and the 
requester expressly states only that the request is under the Act--The 
request will be processed under the Act and this part;
    (2) Requester is the individual to whom the record pertains and the 
requester expressly states only that the request is under the Freedom of 
Information Act--The request will be processed under the Freedom of 
Information Act and the Department's implementing regulations (part 4 of 
this chapter);
    (3) Requester is the individual to whom the record pertains and the 
requester expressly states that the request is under both the Act and 
the Freedom of Information Act--The request will be processed 
concurrently under both statutes and the Department's respective 
implementing regulations. For such dual requests the Department will 
follow the fee provisions under the Act and this part, and follow the 
time limits under the Freedom of Information Act and part 4 of this 
title;
    (4) Requester is the individual to whom the record pertains and the 
requester fails to specify whether the request is under the Act or the 
Freedom of Information Act or both--The Department will respond to the 
requester and ask for clarification of the requester's intention as to 
processing. The request will not be deemed to have been ``received'' for 
purposes of measuring time periods for response until the clarification 
actually has been received by the appropriate official of the 
Department; and,
    (5) Requester (i) is not an individual or (ii) is an individual but 
not the individual to whom the record pertains or one asserting 
parentage or guardianship as permitted under the Act--The request will 
be processed under the Freedom of Information Act and the Department's 
implementing regulations or under other applicable procedures.

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.2  Definitions.

    (a) All terms used in this part which are defined in 5 U.S.C. 552a 
shall have the same meaning herein.
    (b) As used in this part:
    (1) The term Act means the ``Privacy Act of 1974,'' Pub. L. 93-579.
    (2) The term appeal means the request by an individual that an 
initial denial of a request for correction or amendment by that 
individual be reviewed and reversed.
    (3) The term Department means the Department of Commerce.
    (4) The term inquiry means either a request for general information 
regarding the Act and this part or a request by an individual (or that 
individual's parent or guardian) that the Department determine whether 
it has any record in a system of records which pertains to that 
individual.
    (5) The term person means any human being and also shall include but 
not be limited to, corporations, associations, partnerships, trustees, 
receivers, personal representatives, and public or private 
organizations.
    (6) The term Privacy Officer means those officials, identified in 
Appendix A to this part, who are authorized to receive and act upon 
inquiries, requests for access, and requests for correction or 
amendment.
    (7) The term request for access means a request by an individual to 
see a record which is in a particular system of records and which 
pertains to that individual.

[[Page 55]]

    (8) The term request for correction or amendment means the request 
by an individual that the Department change (either by correction, 
amendment, addition or deletion) a particular record in a system of 
records which pertains to that individual.
    (9) The term unit of the Department and unit means the office of the 
Secretary of Commerce and operating units of the Department as defined 
in Department Organization Order 1-1, ``Mission and Organization of the 
Department of Commerce'' (35 FR 19704, December 27, 1970).

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.3  Procedures for inquiries pertaining to individual records in a record system.

    (a) Any individual, regardless of age, who is a citizen of the 
United States or an alien lawfully admitted for permanent residence into 
the United States may submit an inquiry to the Department. The inquiry 
should be made either in person or by mail addressed to the appropriate 
Privacy Officer identified in Appendix A to this part or to the official 
identified in the notification procedures paragraph of the systems of 
records notice published in the Federal Register. If an individual 
believes the Department maintains a record pertaining to that individual 
but does not know which system of records might contain such a record 
and/or which unit of the Department maintains the system of records, 
assistance in person or by mail will be provided at the first address 
listed in Appendix A to this part. The offices of Privacy Officers are 
open to the public between the hours of 9:00 a.m. and 4:00 p.m., Monday 
through Friday (excepting holidays).
    (b) The processing of inquiries submitted by mail will be 
facilitated if the words ``PRIVACY ACT INQUIRY'' appear in capital 
letters on the face of the envelope.
    (c) The Department has an official form for making inquiries and 
requests, a facsimile of which is Appendix C to this part. Its use is 
urged. Copies may be obtained by contacting any of the officials in 
Appendix A to this part. Copies also may be obtained by contacting any 
facility of the Department which offers direct services to the public. 
Please consult your telephone directory under the listing ``United 
States Government--Commerce Department.''
    (d) If, for some reason, an individual is unable to use the 
Department's official form, the letter should bear the words ``PRIVACY 
ACT INQUIRY'' in capital letters at the top. If the inquiry is for 
general information regarding the Act and this part, no particular 
information is required. If the inquiry is a request that the Department 
determine whether it has, in a given system of records, a record which 
pertains to the individual, the following information should be 
submitted:
    (1) Name of individual whose record is sought;
    (2) Individual whose record is sought is either a U.S. citizen or an 
alien lawfully admitted for permanent residence;
    (3) Identifying data that will help locate the record (for example, 
maiden name, occupational license number, period or place of employment, 
etc.);
    (4) Record sought, by description and by record system name, if 
known;
    (5) Action requested (that is, send information on how to exercise 
rights under the Act; does requested record exist; access to requested 
record; or copy of requested record);
    (6) Copy of court guardianship order or minor's birth certificate, 
as provided in Sec. 4b.4(f)(3), but only if requester is guardian or 
parent of individual whose record is sought;
    (7) Requester's name (printed), signature, address, and telephone 
number (optional);
    (8) Date; and,
    (9) Certification of request by notary or other official, but only 
if (i) request is for notification that requested record exists, for 
access to requested record or for copy of requested record; (ii) record 
is not available to any person under 5 U.S.C. 552; and (iii) requester 
does not appear before an employee of the Department for verification of 
identity.

The Department reserves the right to require compliance with the 
identification procedures appearing at Sec. 4b.4(f) where circumstances 
warrant.

[[Page 56]]

    (e) Any inquiry which is not addressed as specified in paragraph (a) 
of this section or which is not marked as specified in paragraphs (b) 
and (d) of this section will be so addressed and marked by Department 
personnel and forwarded immediately to the responsible Privacy Officer. 
An inquiry which is not properly addressed by the individual will not be 
deemed to have been ``received'' for purposes of measuring time periods 
for response until actual receipt by the Privacy Officer. In each 
instance when an inquiry so forwarded is received, the Privacy Officer 
shall notify the individual that his or her inquiry was improperly 
addressed and the date when the inquiry was received at the proper 
address.
    (f)(1) Each inquiry received shall be acted upon promptly by the 
responsible Privacy Officer. Every effort will be made to respond within 
ten days (excluding Saturdays, Sundays and holidays) of the date of 
receipt. If a response cannot be made within ten days, the Privacy 
Officer shall send an acknowledgment during that period providing 
information on the status of the inquiry and asking for such further 
information as may be necessary to process the inquiry. The first 
correspondence sent by the Privacy Officer to the requester shall 
contain the Department's control number assigned to the request, as well 
as a note that the requester should use that number in all future 
contacts in order to facilitate processing. The Department shall use 
that control number in all subsequent correspondence.
    (2) If the Privacy Officer fails to send an acknowledgment within 
ten days, as provided above, the requester may ask the General Counsel, 
to take corrective action. No failure of a Privacy Officer to send an 
acknowledgment shall confer administrative finality for purposes of 
judicial review.
    (g) An individual shall not be required to state a reason or 
otherwise justify his or her inquiry.
    (h) Special note should be taken of the fact that certain agencies 
are responsible for publishing notices of systems of records having 
Government-wide application to other agencies, including the Department. 
The agencies known to be publishing these general notices and the types 
of records covered therein appear in Appendix B to this part. These 
general notices do not identify the Privacy Officers in the Department 
to whom inquiries should be presented or mailed. The provisions of this 
section, and particularly paragraph (a) of this section, should be 
followed in making inquiries with respect to such records. Such records 
in the Department are subject to the provisions of this part to the 
extent indicated in Appendix B to this part. The exemptions, if any, 
determined by the agency publishing a general notice shall be invoked 
and applied by the Department after consultation, as necessary, with 
that other agency.

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.4  Times, places, and requirements for identification of individuals making requests for access.

    (a) Any individual, regardless of age, who is a citizen of the 
United States or an alien lawfully admitted for permanent residence into 
the United States may submit a request for access to records to the 
Department. The request should be made either in person or by mail 
addressed to the responsible Privacy Officer identified in Appendix A to 
this part. The offices of Privacy Officers are open to the public 
between the hours of 9:00 a.m. and 4:00 p.m. Monday through Friday 
(excluding holidays).
    (b) The Department has an official form for making requests, a 
facsimile of which is Appendix C to this part. Its use is urged. Copies 
may be obtained by contacting any of the officials listed in Appendix A 
to this part. Copies also may be obtained by contacting any facility of 
the Department which offers direct services to the public. Please 
consult your telephone directory under the listing ``United States 
Government--Commerce Department.''
    (c) The processing of requests submitted by mail will be facilitated 
if the words ``PRIVACY ACT REQUEST'' appear in capital letters on the 
face of the envelope. If, for some reason, an individual is unable to 
use the Department's official form the letter should bear the words 
``PRIVACY ACT REQUEST'' in capital letters at the top.

[[Page 57]]

    (d) Any request which is not addressed as specified in paragraph (a) 
of this section or which is not marked as specified in paragraph (c) of 
this section will be so addressed and marked by Department personnel and 
forwarded immediately to the responsible Privacy Officer. A request 
which is not properly addressed by the individual will not be deemed to 
have been ``received'' for purposes of measuring time periods for 
response until actual receipt by the Privacy Officer. In each instance 
when a request so forwarded is received, the Privacy Officer shall 
notify the individual that his or her request was improperly addressed 
and the date when the request was received at the proper address.
    (e) If the request follows inquiry under Sec. 4b.3 in connection 
with which the individual's identity was established by the Department, 
the individual need only indicate the record to which access is sought, 
give the Department control number assigned to the request, and sign and 
date the request. If the request is not preceded by an inquiry under 
Sec. 4b.3, the procedures of either Sec. 4b.3(c) or Sec. 4b.3(d) of this 
part should be followed.
    (f) The requirements for identification of individuals seeking 
access to records are as follows:
    (1) In person. Each individual making a request in person shall be 
required to present satisfactory proof of identity. The means of proof, 
in the order of preference and priority, are:
    (i) A document bearing the individual's photograph (for example, 
driver's license, passport or military or civilian identification card);
    (ii) A document, preferably issued for participation in a federally 
sponsored program, bearing the individual's signature (for example, 
unemployment insurance book, employer's identification card, national 
credit card, and professional, craft or union membership card); and,
    (iii) A document bearing neither the photograph nor the signature of 
the individual, preferably issued for participation in a federally 
sponsored program (for example, Medicaid card).

In the event the individual can provide no suitable documentation of 
identity, the Department will require a signed statement asserting the 
individual's identity and stipulating that the individual understands 
the penalty provision of 5 U.S.C. 552a(i)(3) recited in Sec. 4b.12(a). 
For the convenience of the public, and in addition to the Privacy 
Officers listed in Appendix A to this part, most facilities which are 
open to the public and operated by the Department outside Metropolitan 
Washington, D.C. have employees authorized to determine the identity of 
an individual. However, such employees are not authorized to take any 
other action with respect to a request except to transmit the request to 
the responsible Privacy Officer. In order to avoid any unwarranted 
disclosure of an individual's records, the Department reserves the right 
to determine the adequacy of proof of identity offered by any 
individual, particularly when the request involves a sensitive record.
    (2) Not in person. If the individual making a request does not 
appear in person before a Privacy Officer or other employee authorized 
to determine identity, a certificate of a notary public or equivalent 
officer empowered to administer oaths must accompany the request under 
the circumstances prescribed in Sec. 4b.3(d)(9). The Department's 
official form for requests contains a certificate. If, for some reason, 
the individual is unable to use the official form, the certificate 
within or attached to the letter must be substantially in accord with 
the following text:

City of ------------
County of ---------------- :ss
    (Name of individual), who affixed (his) (her) signature below in my 
presence, came before me, a (title), in and for the aforesaid County and 
State, this ------ day of ------------, 19--, and established (his) 
(her) identity to my satisfaction.
    My commission expires --------------.
                                                             (Signature)

    (3) Parents of minors and legal guardians. An individual acting as 
the parent of a minor or the legal guardian of the individual to whom a 
record pertains shall establish his or her personal identity in the same 
manner prescribed in either paragraph (f)(1) or (2) of this section. In 
addition, such other individual shall establish his or her identity in 
the representative capacity of parent or legal guardian. In the case of 
the

[[Page 58]]

parent of a minor, the proof of identity shall be a certified or 
authenticated copy of the minor's birth certificate. In the case of a 
legal guardian of an individual who has been declared incompetent due to 
physical or mental incapacity or age by a court of competent 
jurisdiction, the proof of identity shall be a certified or 
authenticated copy of the court's order. For purposes of the Act, a 
parent or legal guardian may represent only a living individual, not a 
decedent. A parent or legal guardian may be accompanied during personal 
access to a record by another individual, provided the provisions of 
Sec. 4b.5(f) are satisfied.
    (g) When the provisions of this part are alleged to have the effect 
of impeding an individual in exercising his or her right to access, the 
Department will consider, from an individual making a request, 
alternative suggestions regarding proof of identity and access to 
records.
    (h) An individual shall not be required to state a reason or 
otherwise justify his or her request for access to a record.

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.5  Disclosure of requested information to individuals.

    (a)(1) Each request received shall be acted upon promptly by the 
responsible Privacy Officer. Every effort will be made to respond within 
ten days (excluding Saturdays, Sundays and holidays) of the date of 
receipt. If a response cannot be made within ten days due to unusual 
circumstances, the Privacy Officer shall send an acknowledgment during 
that period providing information on the status of the request and 
asking for such further information as may be necessary to process the 
request. ``Unusual circumstances'' shall include circumstances where a 
search for and collection of requested records from inactive storage, 
field facilities or other establishments are required, cases where a 
voluminous amount of data is involved, instances where information on 
other individuals must be separated or expunged from the particular 
record, and cases where consultations with other agencies having a 
substantial interest in the determination of the request are necessary.
    (2) If the Privacy Officer fails to send an acknowledgment within 
ten days, as provided above, the requester may ask the responsible 
General Counsel, to take corrective action. No failure of a Privacy 
Officer to send an acknowledgment shall confer administrative finality 
for purposes of judicial review.
    (b) Grant of access--(1) Notification. An individual shall be 
granted access to a record pertaining to him or her, except where the 
provisions of paragraph (g)(1) of this section apply. The Privacy 
Officer shall notify the individual of a determination to grant access 
and provide the following information:
    (i) The methods of access, as set forth in paragraph (b)(2) of this 
section;
    (ii) The place at which the record may be inspected;
    (iii) The earliest date on which the record may be inspected and the 
period of time that the records will remain available for inspection. In 
no event shall the earliest date be later than thirty days from the date 
of notification;
    (iv) The estimated date by which a copy of the record could be 
mailed and the estimate of fees pursuant to Sec. 4b.11 of this part. In 
no event shall the estimated date be later than thirty days from the 
date of notification;
    (v) The fact that the individual, if he or she wishes, may be 
accompanied by another individual during personal access, subject to the 
procedures set forth in paragraph (f) of this section; and,
    (vi) Any additional requirements needed to grant access to a 
specific record.
    (2) Methods of access. The following methods of access to records by 
an individual may be available depending on the circumstances of a given 
situation:
    (i) Inspection in person may be had in the office specified by the 
Privacy Officer granting access, during the hours indicated in 
Sec. 4b.4(a);
    (ii) Transfer of records to a Federal facility more convenient to 
the individual may be arranged, but only if the

[[Page 59]]

Privacy Officer determines that a suitable facility is available, that 
the individual's access can be properly supervised at that facility, and 
that transmittal of the records to that facility will not unduly 
interfere with operations of the Department or involve unreasonable 
costs, in terms of both money and manpower; and,
    (iii) Copies may be mailed at the request of the individual, subject 
to payment of the fees prescribed in Sec. 4b.11. The Department, at its 
own initiative, may elect to provide a copy by mail, in which case no 
fee will be charged the individual.
    (c) Access to medical records is governed by the provisions of 
Sec. 4b.6.
    (d) The Department shall supply such other information and 
assistance at the time of access as to make the record intelligible to 
the individual.
    (e) The Department reserves the right to limit access to copies and 
abstracts of original records, rather than the original records. This 
election would be appropriate, for example, when the record is in an 
automated data media such as tape or disc, when the record contains 
information on other individuals, and when deletion of information is 
permissible under exemptions (for example, 5 U.S.C. 552a(k)(2)). In no 
event shall original records of the Department be made available to the 
individual except under the immediate supervision of the Privacy Officer 
or his designee. Title 18, United States Code, section 2701(a) makes it 
a crime to conceal, mutilate, obliterate, or destroy any record filed in 
a public office, or to attempt to do any of the foregoing.
    (f) Any individual who requests access to a record pertaining to 
that individual may be accompanied by another individual of his or her 
choice. ``Accompanied'' includes discussion of the record in the 
presence of the other individual. The individual to whom the record 
pertains shall authorize the presence of the other individual in writing 
and shall include the name of the other individual, a specific 
description of the record to which access is sought, the Department 
control number assigned to the request, the date and the signature of 
the individual to whom the record pertains. The other individual shall 
sign the authorization in the presence of the Privacy Officer. An 
individual shall not be required to state a reason or otherwise justify 
his or her decision to be accompanied by another individual during 
personal access to a record.
    (g) Initial denial of access--(1) Grounds. Access by an individual 
to a record which pertains to that individual will be denied only upon a 
determination by the Privacy Officer that:
    (i) The record is exempt under Secs. 4b.13 and 4b.14 or exempt by 
determination of another agency publishing notice of the system of 
records, as described in Sec. 4b.3(h);
    (ii) The record is information compiled in reasonable anticipation 
of a civil action or proceeding;
    (iii) The provisions of Sec. 4b.6 pertaining to medical records 
temporarily have been invoked; or,
    (iv) The individual unreasonably has failed to comply with the 
procedural requirements of this part.
    (2) Notification. The Privacy Officer shall give notice of denial of 
access to records to the individual in writing and shall include the 
following information:
    (i) The Privacy Officer's name and title or position;
    (ii) The date of the denial;
    (iii) The reasons for the denial, including citation to the 
appropriate section of the Act and this part;
    (iv) The individual's opportunities, if any, for further 
administrative consideration, including the identity and address of the 
responsible official. If no further administrative consideration within 
the Department is available, the notice shall state that the denial is 
administratively final; and,
    (v) If stated to be administratively final within the Department, 
the individual's right to judicial review provided under 5 U.S.C. 
552a(g)(1), as limited by 5 U.S.C. 552a(g)(5).
    (3) Administrative review. When an initial denial of a request is 
issued by the Privacy Officer, the individual's opportunities for 
further consideration shall be as follows:
    (i) As to denial under paragraph (g)(1)(i) of this section, two 
opportunities for further consideration are available in the 
alternative:

[[Page 60]]

    (A) If the individual contests the application of the exemption to 
the records, review procedures in Sec. 4b.5(g)(3)(ii) shall apply; or,
    (B) If the individual challenges the exemption itself, the procedure 
is a petition for the issuance, amendment, or repeal of a rule under 5 
U.S.C. 553(e). If the exemption was determined by the Department, such 
petition shall be filed with the Assistant Secretary for Administration. 
If the exemption was determined by another agency, referred to in 
Sec. 4b.3(h), the Department will provide the individual with the name 
and address of the other agency and any relief sought by the individual 
shall be that provided by the regulations of the other agency. Within 
the Department, no such denial is administratively final until such a 
petition has been filed by the individual and disposed of on the merits 
by the Assistant Secretary for Administration.
    (ii) As to denial under paragraphs (g)(1)(ii), (g)(1)(iv) of this 
section or (to the limited extent provided in paragraph (g)(3)(i)(A) of 
this section) paragraph (g)(1)(i), the individual may file for review 
with the General Counsel, as indicated in the Privacy Officer's initial 
denial notification. The procedures appearing in Sec. 4b.8 shall be 
followed by both the individual and the Department to the maximum extent 
practicable.
    (iii) As to denial under paragraph (g)(1)(iii) of this section, no 
further administrative consideration within the Department is available 
because the denial is not administratively final until expiration of the 
time period indicated in Sec. 4b.6(a).
    (h) If a request is partially granted and partially denied, the 
Privacy Officer shall follow the appropriate procedures of this section 
as to the records within the grant and the records within the denial.

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.6  Special procedures: Medical records.

    (a) No response to any request for access to medical records by an 
individual will be issued by the Privacy Officer for a period of seven 
days (excluding Saturdays, Sundays and holidays) from the date of 
receipt.
    (b) The Department has published as a routine use, for all systems 
of records containing medical records, consultations with an 
individual's physician or psychologist if, in the sole judgment of the 
Department, disclosure could have an adverse effect upon the individual. 
The mandatory waiting period set forth in paragraph (a) of this section 
will permit exercise of this routine use in appropriate cases. The 
Department will pay no cost of any such consultation.
    (c) In every case of a request by an individual for access to 
medical records, the Privacy Officer shall:
    (1) Inform the individual of the waiting period prescribed in 
paragraph (a) of this section;
    (2) Obtain the name and address of the individual's physician and/or 
psychologist, if the individual consents to give them;
    (3) Obtain specific, written consent for the Department to consult 
the individual's physician and/or psychologist in the event that the 
Department believes such consultation is advisable, if the individual 
consents to give such authorization;
    (4) Obtain specific, written consent for the Department to provide 
the medical records to the individual's physician or psychologist in the 
event that the Department believes access to the record by the 
individual is best effected under the guidance of the individual's 
physician or psychologist, if the individual consents to give such 
authorization; and,
    (5) Forward the individual's medical record to the Department's 
medical officer for review and a determination on whether consultation 
with or transmittal of the medical records to the individual's physician 
or psychologist is warranted. If the consultation with or transmittal of 
such records to the individual's physician or psychologist is determined 
to be warranted, the Department's medical officer shall so consult or 
transmit. Whether or not such a consultation or transmittal occurs, the 
Department's medical officer shall provide instruction to the Privacy 
Officer regarding the conditions of access by

[[Page 61]]

the individual to his or her medical records.
    (d) If an individual refuses in writing to give the names and 
consents set forth in paragraphs (c)(2) through (4) of this section and 
the Department has determined that disclosure could have an adverse 
effect upon the individual, the Department shall give the individual 
access to said records by means of a copy, provided without cost to the 
requester, sent registered mail return receipt requested.



Sec. 4b.7  Request for correction or amendment to record.

    (a) Any individual, regardless of age, who is a citizen of the 
United States or an alien lawfully admitted for permanent residence into 
the United States may submit a request for correction or amendment to 
the Department. The request should be made either in person or by mail 
addressed to the Privacy Officer who processed the individual's request 
for access to the record, and to whom is delegated authority to make 
initial determinations on requests for correction or amendment. The 
offices of Privacy Officers are open to the public between the hours of 
9:00 a.m. and 4:00 p.m. Monday through Friday (excluding holidays).
    (b) The processing of requests submitted by mail will be facilitated 
if the words ``PRIVACY ACT REQUEST'' appear in capital letters on the 
face of the envelope. If, for some reason, the individual is unable to 
use the Department's official form, the letter should bear the words 
``PRIVACY ACT REQUEST'' in capital letters at the top.
    (c) Any request which is not addressed as specified in paragraph (a) 
of this section or which is not marked as specified in paragraph (b) of 
this section will be so addressed and marked by Department personnel and 
forwarded immediately to the responsible Privacy Officer. A request 
which is not properly addressed by the individual will not be deemed to 
have been ``received'' for purposes of measuring time periods for 
response until actual receipt by the Privacy Officer. In each instance 
when a request so forwarded is received, the Privacy Officer shall 
notify the individual that his or her request was improperly addressed 
and the date when the request was received at the proper address.
    (d) Since the request, in all cases, will follow a request for 
access under Sec. 4b.5, the individual's identity will be established by 
his or her signature on the request and use of the Department control 
number assigned to the request.
    (e) A request for correction or amendment should include the 
following:
    (1) A specific identification of the record sought to be corrected 
or amended (for example, description, title, date, paragraph, sentence, 
line and words);
    (2) The specific wording to be deleted, if any;
    (3) The specific wording to be inserted or added, if any, and the 
exact place at which to be inserted or added; and,
    (4) A statement of the basis for the requested correction or 
amendment, with all available supporting documents and materials which 
substantiate the statement. The statement should identify the criterion 
of the Act being invoked, that is, whether the information in the record 
is unnecessary, inaccurate, irrelevant, untimely or incomplete.



Sec. 4b.8  Agency review of request for correction or amendment of record.

    (a)(1)(i) Not later than ten days (excluding Saturdays, Sundays and 
holidays) after receipt of a request to correct or amend a record, the 
Privacy Officer shall send an acknowledgment providing an estimate of 
time within which action will be taken on the request and asking for 
such further information as may be necessary to process the request. The 
estimate of time may take into account unusual circumstances as 
described in Sec. 4b.5(a). No acknowledgment will be sent if the request 
can be reviewed, processed and the individual notified of the results of 
review (either compliance or denial) within the ten days. Requests filed 
in person will be acknowledged in writing at the time submitted.
    (ii) If the Privacy Officer fails to send the acknowledgment within 
the ten days, as provided above, the requester may ask the General 
Counsel, to take

[[Page 62]]

corrective action. No failure of a Privacy Officer to send an 
acknowledgment shall confer administrative finality for purposes of 
judicial review.
    (2) Promptly after acknowledging receipt of a request, or after 
receiving such further information as might have been requested, or 
after arriving at a decision within the ten days, the Privacy Officer 
shall either:
    (i) Make the requested correction or amendment and advise the 
individual in writing of such action, providing either a copy of the 
corrected or amended record or a statement as to the means whereby the 
correction or amendment was effected in cases where a copy cannot be 
provided (for example, erasure of information from a record maintained 
only in magnetically recorded computer files); or,
    (ii) Inform the individual in writing that his or her request is 
denied and provide the following information:
    (A) The Privacy Officer's name and title or position;
    (B) The date of the denial;
    (C) The reasons for the denial, including citation to the 
appropriate sections of the Act and this part; and,
    (D) The procedures for appeal of the denial as set forth in 
Sec. 4b.9, including the name and address of the General Counsel.

The term promptly in this subsection means within thirty days (excluding 
Saturdays, Sundays and holidays). If the Privacy Officer cannot make the 
determination within thirty days, the individual will be advised in 
writing of the reason therefor and of the estimated date by which the 
determination will be made.
    (b) Whenever an individual's record is corrected or amended pursuant 
to a request by that individual, the Privacy Officer shall see to the 
notification of all persons and agencies to which the corrected or 
amended portion of the record had been disclosed prior to its correction 
or amendment, if an accounting of such disclosure required by the Act 
was made. The notification shall require a recipient agency maintaining 
the record to acknowledge receipt of the notification, to correct or 
amend the record and to apprise any agency or person to which it had 
disclosed the record of the substance of the correction or amendment.
    (c) The following criteria will be considered by the Privacy Officer 
in reviewing a request for correction or amendment:
    (1) The sufficiency of the evidence submitted by the individual;
    (2) The factual accuracy of the information;
    (3) The relevance and necessity of the information in terms of 
purpose for which it was collected;
    (4) The timeliness and currency of the information in light of the 
purpose for which it was collected;
    (5) The completeness of the information in terms of the purpose for 
which it was collected;
    (6) The degree of risk that denial of the request could unfairly 
result in determinations adverse to the individual;
    (7) The character of the record sought to be corrected or amended; 
and,
    (8) The propriety and feasibility of complying with the specific 
means of correction or amendment requested by the individual.
    (d) The Department will not undertake to gather evidence for the 
individual, but does reserve the right to verify the evidence which the 
individual submits.
    (e) Correction or amendment of a record requested by an individual 
will be denied only upon a determination by the Privacy Officer that:
    (1) The individual has failed to establish, by a preponderance of 
the evidence, the propriety of the correction or amendment in light of 
the criteria set forth in paragraph (c) of this section;
    (2) The record sought to be corrected or amended is part of the 
official record in a terminated judicial, quasi-judicial or quasi-
legislative proceeding to which the individual was a party or 
participant;
    (3) The information in the record sought to be corrected or amended, 
or the record sought to be corrected or amended, is the subject of a 
pending judicial, quasi-judicial or quasi-legislative proceeding to 
which the individual is a party or participant;

[[Page 63]]

    (4) The correction or amendment would violate a duly enacted statute 
or promulgated regulation; or,
    (5) The individual unreasonably has failed to comply with the 
procedural requirements of this part.
    (f) If a request is partially granted and partially denied, the 
Privacy Officer shall follow the appropriate procedures of this section 
as to the records within the grant and the records within the denial.

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.9  Appeal of initial adverse agency determination on correction or amendment.

    (a) When a request for correction or amendment has been denied 
initially under Sec. 4b.8, the individual may submit a written appeal 
within thirty days after the date of the initial denial. When an appeal 
is submitted by mail, the postmark is conclusive as to timeliness.
    (b) An appeal shall be addressed to the General Counsel, Department 
of Commerce, Room 5882, Washington, DC 20230. The processing of appeals 
will be facilitated if the words ``PRIVACY APPEAL'' appear in capital 
letters on both the envelope and the top of the appeal papers. An appeal 
not addressed and marked as provided herein will be so marked by 
Department personnel when it is so identified, and will be forwarded 
immediately to the General Counsel. An appeal which is not properly 
addressed by the individual will not be deemed to have been ``received'' 
for purposes of measuring the time periods in this section until actual 
receipt by the General Counsel. In each instance when an appeal so 
forwarded is received, the General Counsel shall notify the individual 
that his or her appeal was improperly addressed and the date when the 
appeal was received at the proper address.
    (c) The individual's appeal papers shall include a statement of the 
reasons why the initial denial is believed to be in error and the 
Department's control number assigned to the request. The appeal shall be 
signed by the individual. The record which the individual requests be 
corrected or amended and all correspondence between the Privacy Officer 
and the requester will be supplied by the Privacy Officer who issued the 
initial denial. While the foregoing normally will comprise the entire 
record on appeal, the General Counsel may seek additional information 
necessary to assure that the final determination is fair and equitable 
and, in such instances, the additional information will be disclosed to 
the individual to the greatest extent possible and an opportunity 
provided for comment thereon.
    (d) No personal appearance or hearing on appeal will be allowed.
    (e) The General Counsel shall act upon the appeal and issue a final 
determination in writing not later than thirty days (excluding 
Saturdays, Sundays and holidays) from the date on which the appeal is 
received; Provided, That the General Counsel may extend the thirty days 
upon deciding that a fair and equitable review cannot be made within 
that period, but only if the individual is advised in writing of the 
reason for the extension and the estimated date by which a final 
determination will issue. The estimated date should not be later than 
the sixtieth day (excluding Saturdays, Sundays and holidays) after 
receipt of the appeal unless unusual circumstances, as described in 
Sec. 4b.5(a), are met.
    (f) If the appeal is determined in favor of the individual, the 
final determination shall include the specific corrections or amendments 
to be made and a copy thereof shall be transmitted promptly both to the 
individual and to the Privacy Officer who issued the initial denial. 
Upon receipt of such final determination, the Privacy Officer promptly 
shall take the actions set forth in Sec. 4b.8(a)(2)(i) and (b).
    (g) If the appeal is denied, the final determination shall be 
transmitted promptly to the individual and state the reasons for the 
denial. The notice of final determination also shall inform the 
individual of the following:
    (1) The right of the individual under the Act to file a concise 
statement of reasons for disagreeing with the final determination. The 
statement ordinarily should not exceed one page and the Department 
reserves the right to reject a statement of excessive length.

[[Page 64]]

Such a statement shall be filed with the General Counsel. It should 
provide the Department control number assigned to the request, indicate 
the date of the final determination and be signed by the individual. The 
General Counsel shall acknowledge receipt of such statement and inform 
the individual of the date on which it was received;
    (2) The facts that any such disagreement statement filed by the 
individual will be noted in the disputed record, that the purposes and 
uses to which the statement will be put are those applicable to the 
record in which it is noted, and that a copy of the statement will be 
provided to persons and agencies to which the record is disclosed 
subsequent to the date of receipt of such statement;
    (3) The fact that the Department will append to any such 
disagreement statement filed by the individual, a copy of the final 
determination or summary thereof which also will be provided to persons 
and agencies to which the disagreement statement is disclosed; and,
    (4) The right of the individual to judicial review of the final 
determination under 5 U.S.C. 552a(g)(1)(A), as limited by 5 U.S.C. 
552a(g)(5).
    (h) In making the final determination, the General Counsel shall 
employ the criteria set forth in Sec. 4b.8(c) and shall deny an appeal 
only on the grounds set forth in Sec. 4b.8(e).
    (i) If an appeal is partially granted and partially denied, the 
General Counsel shall follow the appropriate procedures of this section 
as to the records within the grant and the records within the denial.
    (j) Although a copy of the final determination or a summary thereof 
will be treated as part of the individual's record for purposes of 
disclosure in instances where the individual has filed a disagreement 
statement, it will not be subject to correction or amendment by the 
individual.
    (k) The provisions of paragraphs (g)(1) through (3) of this section 
satisfy the requirements of 5 U.S.C. 552a(e)(3).

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 53 FR 26236, July 12, 1988]



Sec. 4b.10  Disclosure of record to person other than the individual to whom it pertains.

    (a) The Department may disclose a record pertaining to an individual 
to a person other than the individual to whom it pertains only in the 
following instances:
    (1) Upon written request by the individual, including authorization 
under Sec. 4b.5(f);
    (2) With the prior written consent of the individual;
    (3) To a parent or legal guardian under 5 U.S.C. 552a(h);
    (4) When required by the Act and not covered explicitly by the 
provisions of 5 U.S.C. 552a(b); and
    (5) When permitted under 5 U.S.C. 552a(b)(1) through (11), which 
read as follows:1 
---------------------------------------------------------------------------

    15 U.S.C. 552a(b)(4) has no application within the Department.
---------------------------------------------------------------------------

    (i) To those officers and employees of the agency which maintains 
the record who have a need for the record in the performance of their 
duties;
    (ii) Required under section 552 of this title;
    (iii) For a routine use as defined in paragraph (a)(7) of this 
section and described under paragraph (e)(4)(D) of this section;
    (iv) To the Bureau of the Census for purposes of planning or 
carrying out a census or survey or related activity pursuant to the 
provisions of Title 13;
    (v) To a recipient who has provided the agency with advance adequate 
written assurance that the record will be used solely as a statistical 
research or reporting record, and the record is to be transferred in a 
form that is not individually identifiable;
    (vi) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value;
    (vii) To another agency or to an instrumentality of any governmental 
jurisdiction within or under the control of the United States for a 
civil or criminal law enforcement activity if

[[Page 65]]

the activity is authorized by law, and if the head of the agency or 
instrumentality has made a written request to the agency which maintains 
the record specifying the particular portion desired and the law 
enforcement activity for which the record is sought;
    (viii) To a person pursuant to a showing of compelling circumstances 
affecting the health or safety of an individual if upon such disclosure 
notification is transmitted to the last known address of such 
individual;
    (ix) To either House of Congress, or, to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee;
    (x) To the Comptroller General, or any of his authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office; or
    (xi) Pursuant to the order of a court of competent jurisdiction.
    (b) The situations referred to in paragraph (a)(4) of this section 
include the following:
    (1) 5 U.S.C. 552a(c)(4) requires dissemination of a corrected or 
amended record or notation of a disagreement statement by the Department 
in certain circumstances;
    (2) 5 U.S.C. 552a(d) requires disclosure of records to the 
individual to whom they pertain, upon request;
    (3) 5 U.S.C. 552a(g) authorizes civil action by an individual and 
requires disclosure by the Department to the court;
    (4) Section 5(e)(2) of the Act author-izes release of any records or 
information by the Department to the Privacy Protection Study Commission 
upon request of the Chairman; and
    (5) Section 6 of the Act authorizes the Office of Management and 
Budget to provide the Department with continuing oversight and 
assistance in implementation of the Act.
    (c) The Privacy Officer shall make an accounting of each disclosure 
by him of any record contained in a system of records in accordance with 
5 U.S.C. 552a(c) (1) and (2). Except for a disclosure made under 5 
U.S.C. 552a(b)(7), the Privacy Officer shall make such accounting 
available to any individual, insofar as it pertains to that individual, 
on request submitted in accordance with Sec. 4b.4. The Privacy Officer 
shall make reasonable efforts to notify any individual when any record 
in a system of records is disclosed to any person under compulsory legal 
process, promptly upon being informed that such process has become a 
matter of public record.



Sec. 4b.11  Fees.

    (a) The only fees to be charged to or collected from an individual 
under the provisions of this part are for copying records at the request 
of the individual.
    (1) No fees shall be charged or collected for the following: Search 
for and retrieval of the records; review of the records; copying at the 
initiative of the Department without a request from the individual; 
transportation of records and personnel; and first-class postage.
    (2) It is the policy of the Department to provide an individual with 
one copy of each record corrected or amended pursuant to his or her 
request without charge as evidence of the correction or amendment.
    (3) As required by the United States Civil Service Commission in its 
published regulations implementing the Act, the Department will charge 
no fee for a single copy of a personnel record covered by that 
Commission's Government-wide published notice of systems of records.
    (b) The copying fees prescribed by paragraph (a) of this section 
are:


  $0.07  Each copy of each page, up to 8\1/2\'' x 14'', made by
          photocopy or similar process.
  $0.25  Each copy of each microform frame printed on paper.
  $0.25  Each aperture card.
  $0.25  Each 105-mm fiche.
  $7.00  Each 100' roll of 35-mm microfilm.
  $6.00  Each 100' roll of 16-mm microfilm.
  $0.20  Each page of computer printout without regard to the number of
          carbon copies concurrently printed.
 


Other copying forms (e.g., typing or printing) will be charged at direct 
cost, including personnel and equipment costs.
    (c) All copying fees shall be paid by the individual before the 
copying will be undertaken. Payments shall be made in cash or, 
preferably, by check or money order payable to ``U.S. Department of 
Commerce,'' and they

[[Page 66]]

shall be paid or sent to the office stated in the billing notice, or if 
none, to the Privacy Officer processing the request. Where appropriate, 
payment may be required in the form of certified check.
    (d) A copying fee totaling $1 or less shall be waived, but the 
copying fees for contemporaneous requests by the same individual shall 
be aggregated to determine the total fee.

A copying fee shall not be charged or collected, or alternatively, it 
may be reduced, when it is determined by the Privacy Officer, based on a 
petition therefor, that the petitioning individual is indigent and that 
Department resources permit a waiver of all or part of the fee. An 
individual is deemed to be indigent when without income or resources 
sufficient to pay the fees.
    (e) Special and additional services provided at the request of the 
individual, such as certification or authentication, postal insurance 
and special mailing arrangement costs, will be charged to the individual 
in accordance with other published regulations of the Department 
pursuant to statute (for example, 31 U.S.C. 483a).
    (f) This section applies only to individuals making requests under 
this part. To the extent an individual makes a request under the Freedom 
of Information Act, as provided in Sec. 4b.1(e) (2), (3) and (5), the 
fees provisions of this chapter shall apply. All other persons shall 
remain subject to fees and charges prescribed by other and appropriate 
authorities.



Sec. 4b.12  Penalties.

    (a) The Act provides, in pertinent part:

    Any person who knowingly and willfully requests or obtains any 
record concerning an individual from an agency under false pretenses 
shall be guilty of a misdemeanor and fined not more than $5,000. (5 
U.S.C. 552a(i)(3)).

    (b) A person who falsely or fraudulently attempts to obtain records 
under the Act also may be subject to prosecution under such other 
criminal statutes as 18 U.S.C. 494, 495 and 1001.



Sec. 4b.13  General exemptions.

    (a) Individuals may not have access to records maintained by the 
Department but which were provided by another agency which has 
determined by regulation that such information is subject to general 
exemption under 5 U.S.C. 552a(j). If such exempt records are within a 
request for access, the Department will advise the individual of their 
existence and of the name and address of the source agency. For any 
further information concerning the record and the exemption, the 
individual must contact that source agency.
    (b) The general exemptions determined to be necessary and proper 
with respect to systems of records maintained by the Department, 
including the parts of each system to be exempted, the provisions of the 
Act from which they are exempted, and the justification for the 
exemption, are as follows:
    (1) Individuals identified in Export Administration compliance 
proceedings or investigations--COMMERCE/ITA-1. Pursuant to 5 U.S.C. 
552a(j)(2), these records are hereby determined to be exempt from all 
provisions of the Act, except 5 U.S.C. 552a (b), (c) (1) and (2), (e)(4) 
(A) through (F), (e) (6), (7), (9), (10), and (11), and (i). These 
exemptions are necessary to insure the proper functioning of the law 
enforcement activity, to protect confidential sources of information, to 
fulfill promises of confidentiality, to maintain the integrity of the 
law enforcement process, to avoid premature disclosure of the knowledge 
of criminal activity and the evidentiary bases of possible enforcement 
actions, to prevent interference with law enforcement proceedings, to 
avoid disclosure of investigative techniques, and to avoid the 
endangering of law enforcement personnel. Section 7(c) of the Export 
Adminstration Act of 1969, as amended, also protects this information 
from disclosure.
    (2) Fisheries Law Enforcement Case Files--COMMERCE/NOAA-11. Pursuant 
to 5 U.S.C. 552a(j)(2), these records are hereby determined to be exempt 
from all provisions of the Act, except 5 U.S.C. 552a (b), (c) (1) and 
(2), (e) (4) (A) through (F), (e) (6), (7), (9), (10), and (11), and 
(i). These exemptions are necessary to insure the proper functioning

[[Page 67]]

of the law enforcement activity, to protect confidential sources of 
information, to fulfill promises of confidentiality, to prevent 
interference with law enforcement proceedings, to avoid the disclosure 
of investigative techniques, to avoid the endangering of law enforcement 
personnel, to avoid premature disclosure of the knowledge of criminal 
activity and the evidentiary bases of possible enforcement actions, and 
to maintain the integrity of the law enforcement process.
    (3) Investigative Records--Contract and Grant Frauds and Employee 
Criminal Misconduct--COMMERCE/DEPT.-12. Pursuant to 5 U.S.C. 552a(j)(2), 
these records are hereby determined to be exempt from all provisions of 
the Act, except 5 U.S.C. 552a (b), (c) (1) and (2), (e)(4) (A) through 
(F), (e) (6), (7), (9), (10), and (11), and (i). These exemptions are 
necessary to insure the proper functions of the law enforcement 
activity, to protect confidential sources of information, to fulfill 
promises of confidentiality, to prevent interference with law 
enforcement proceedings, to avoid the disclosure of investigative 
techniques, to avoid the endangering of law enforcement personnel, to 
avoid premature disclosure of the knowledge of criminal activity and the 
evidentiary bases of possible enforcement actions, and to maintain the 
integrity of the law enforcement process.

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 43 FR 43020, Sept. 22, 1978]



Sec. 4b.14  Specific exemptions.

    (a) Some systems of records under the Act which are maintained by 
the Department contain, from time to time, material subject to the 
exemption appearing at 5 U.S.C. 552a(k)(1), relating to national defense 
and foreign policy materials. The systems of records published in the 
Federal Register by the Department which are within this exemption are:

COMMERCE/ITA-1, COMMERCE/ITA-2, COMMERCE/ITA-3, COMMERCE/NOAA-11, 
COMMERCE/PAT-TM-4, COMMERCE/PAT-TM-6, COMMERCE/PAT-TM-7, COMMERCE/PAT-
TM-8, COMMERCE/PAT-TM-9, COMMERCE/DEPT-12, COMMERCE/DEPT-13, and 
COMMERCE/DEPT-14.


The Department hereby asserts a claim to exemption of such materials 
wherever they might appear in such systems of records, or any systems of 
records, at present or in the future. The materials would be exempt from 
5 U.S.C. 552a (c)(3), (d), (e)(1), (e)(4) (G), (H), and (I), and (f). 
The reason therefor is to protect the materials required by Executive 
order to be kept secret in the interest of the national defense and 
foreign policy.
    (b) The specific exemptions determined to be necessary and proper 
with respect to systems of records maintained by the Department, 
including the parts of each system to be exempted, the provisions of the 
Act from which they are exempted, and the justification for the 
exemption, are as follows:
    (1) Exempt under 5 U.S.C. 552a(k)(1). The systems of records exempt 
hereunder appear in paragraph (a) of this section. The claims for 
exemption of COMMERCE/DEPT-12, COMMERCE/ITA-1, and COMMERCE/NOAA-11 
under this paragraph are subject to the condition that the general 
exemption claimed in Sec. 4b.13(b)(3) is held to be invalid.
    (2) Exempt under 5 U.S.C. 552a(k)(2). The systems of records exempt 
(some only conditionally), the sections of the Act from which exempted, 
and the reasons therefor are as follows:
    (i) Individuals identified in Export Administration compliance 
proceedings or investigations--COMMERCE/ITA-1, but only on condition 
that the general exemption claimed in Sec. 4b.13(b)(1) is held to be 
invalid;
    (ii) Individuals involved in export transactions--COMMERCE/ITA-2;
    (iii) Fisheries Law Enforcement Case Files--COMMERCE/NOAA-11, but 
only on condition that the general exemption claimed in Sec. 4b.13(b)(2) 
is held to be invalid;
    (iv) Investigative Records--Contract and Grant Frauds and Employee 
Criminal Misconduct--COMMERCE/DEPT-12, but only on condition that the 
general exemption claimed in Sec. 4b.13(b)(3) is held to be invalid;
    (v) Investigative Records--Persons Within the Investigative 
Jurisdiction of the Department--COMMERCE/DEPT-13;

[[Page 68]]

    (vi) Litigation, Claims and Administrative Proceeding Records--
COMMERCE/DEPT-14; and
    (vii) Non-Registered Persons Rendering Assistance to Patent 
Applicants--COMMERCE/PAT-TM-5.

The foregoing are exempted from 5 U.S.C. 552a (c)(3), (d), (e)(1), 
(e)(4)(G), (H), and (I), and (f). The reasons for asserting the 
exemption are to prevent subjects of investigation from frustrating the 
investigatory process, to insure the proper functioning and integrity of 
law enforcement activities, to prevent disclosure of investigative 
techniques, to maintain the ability to obtain necessary information, to 
fulfill commitments made to sources to protect their identities and the 
confidentiality of information and to avoid endangering these sources 
and law enforcement personnel. Special note is taken of the fact that 
the proviso clause in this exemption imports due process and procedural 
protections for the individual. The existence and general character of 
the information exempted will be made known to the individual to whom it 
pertains.
    (3) Exempt under 5 U.S.C. 552a(k) (4). The systems of records 
exempt, the sections of the Act from which exempted, and the reasons 
therefor are as follows:
    (i) Agricultural Census Records for 1964 (partial), 1969, and 1974--
COMMERCE/CENSUS-1;
    (ii) Individual and Household Statistical Surveys and Special Census 
Studies Records--COMMERCE/CENSUS-3;
    (iii) Minority-Owned Business Enterprises Survey Records--COMMERCE/
CENSUS-4;
    (iv) Population and Housing Census Records for 1960 and 1970--
COMMERCE/CENSUS-5;
    (v) Population Census Personal Service Records for 1900 and All 
Subsequent Decennial Censuses--COMMERCE/CENSUS-6; and
    (vi) Special Censuses of Population Conducted for State and Local 
Government--COMMERCE/CENSUS-7.

The foregoing are exempted from 5 U.S.C. 552a(c)(3), (d), (e)(1), 
(e)(4)(G) (H), and (I), and (f). The reasons for asserting the exemption 
are to comply with the prescription of Title 13, United States Code, 
especially sections 8 and 9 relating to prohibitions against disclosure, 
and to avoid needless consideration of these records whose sole 
statistical use comports fully with a basic purpose of the Act, namely, 
no adverse determinations may be made from these records as to any 
identifiable individual.
    (4) Exempt under 5 U.S.C. 552a(k)(5). The systems of records exempt 
(some only conditionally), the sections of the act from which exempted, 
and the reasons therefor are as follows:
    (i) Applications to U.S. Merchant Marine Academy (USMMA)--COMMERCE/
MA-1;
    (ii) USMMA Midshipman Medical Files--COMMERCE/MA-17;
    (iii) USMMA Midshipman Personnel Files--COMMERCE/MA-18;
    (iv) USMMA Non-Appropriated fund Employees--COMMERCE/MA-19;
    (v) Applicants for the NOAA Corps--COMMERCE/NOAA-4;
    (vi) Commissioned Officer Official Personnel Folders--COMMERCE/NOAA-
7;
    (vii) Conflict of Interest Records, Appointed Officials--COMMERCE/
DEPT-3;
    (viii) Investigative Records--Contract and Grant Frauds and Employee 
Criminal Misconduct--COMMERCE/DEPT-12, but only on condition that the 
general exemption claimed in Sec. 4b.13(b)(3) is held to be invalid;
    (ix) Investigative Records--Persons Within the Investigative 
Jurisdiction of the Department--COMMERCE/DEPT-13; and
    (x) Litigation, Claims, and Administrative Proceeding Records--
COMMERCE/DEPT-14.

The foregoing are exempted from 5 U.S.C. 552a (c)(3), (d), (e)(1), 
(e)(4) (G), (H), and (I), and (f). The reasons for asserting the 
exemption are to maintain the ability to obtain candid and necessary 
information, to fulfill commitments made to sources to protect the 
confidentiality of information, to avoid endangering these sources and, 
ultimately, to facilitate proper selection or continuance of the best 
applicants

[[Page 69]]

or persons for a given position or contract. Special note is made of the 
limitation on the extent to which this exemption may be asserted. The 
existence and general character of the information exempted will be made 
known to the individual to whom it pertains.
    (c) At the present time, the Department claims no exemption under 5 
U.S.C. 552a(k) (3), (6) and (7).

[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975, as amended at 43 FR 43021, Sept. 22, 1978]

   Appendix A to Part 4b--Officials to Receive Inquiries, Requests for
             Access and Requests for Correction or Amendment
------------------------------------------------------------------------
 For records in systems of records located
                  in\1\--                          Privacy officer
------------------------------------------------------------------------
The Office of the Secretary and all         Chief, Information
 departmental staff offices.                 Management Division, Room
                                             6622, Herbert C. Hoover
                                             Building, Washington, D.C.
                                             20230.
Office of the Inspector General...........  Counsel to the Inspector
                                             General, Office of the
                                             Inspector General, Room
                                             7892, Herbert C. Hoover
                                             Building, Washington, D.C.
                                             20230.
Economic Affairs \2\......................  Privacy Act Officer, Office
                                             of Administration, Economic
                                             Affairs, Room 4079, Herbert
                                             C. Hoover Building,
                                             Washington, D.C. 20230.
Bureau of the Census......................  Associate Director for
                                             Management Services, Bureau
                                             of the Census, Room 2027,
                                             Federal Building 3,
                                             Washington, D.C. 20233.
Bureau of Export Administration...........  Privacy Act Officer, Office
                                             of Security and Management
                                             Support, Bureau of Export
                                             Administration, Room 3889,
                                             Herbert C. Hoover Building,
                                             Washington, DC 20230.
Economic Development Administration.......  Assistant Chief Counsel,
                                             Economic Development
                                             Administration, Room 7001,
                                             Herbert C. Hoover Building,
                                             Washington, D.C. 20230.
International Trade Administration........  Privacy Act Officer, Office
                                             of Organization and
                                             Management Support,
                                             International Trade
                                             Administration, Room 4102,
                                             Herbert C. Hoover Building,
                                             Washington, D.C. 20230.
Minority Business Development Agency......  Assistant Director for
                                             Operations, Minority
                                             Business Development
                                             Agency, Room 6723, Herbert
                                             C. Hoover Building,
                                             Washington, D.C. 20230.
National Institute of Standards &           Deputy Director of
 Technoloyy.                                 Administration, National
                                             Institute of Standards &
                                             Technology, Room A1105,
                                             Administration Building,
                                             Washington, D.C. 20234.
National Oceanic and Atmospheric            Director, Office of
 Administration.                             Administration, National
                                             Oceanic and Atmospheric
                                             Administration, Room 1109,
                                             Herbert C. Hoover Building,
                                             Washington, D.C. 20230.
National Telecommunications and             Director of Administration,
 Information Administration.                 National Telecommunications
                                             and Information
                                             Administration, Room 4717,
                                             Herbert C. Hoover Building,
                                             Washington, D.C. 20230.
National Technical Information Service....  Manager, Management Analysis
                                             Division, National
                                             Technical Information
                                             Service, Room 209, Forbes
                                             Building, Springfield,
                                             Virginia 22161.
Patent and Trademark Office...............  Solicitor, Patent and
                                             Trademark Office, Room
                                             12C08 Gateway 2, Crystal
                                             City, Virginia 20231.
United States Travel and Tourism            Director, Office of
 Administration.                             Management and
                                             Administration, United
                                             States Travel and Tourism
                                             Administration, Room 1524,
                                             Herbert C. Hoover Building,
                                             Washington, D.C. 20230.
------------------------------------------------------------------------
\1\ If the location of the records within the Department is unknown,
  address the inquiry to the Privacy Officer for the Office of the
  Secretary.
\2\ Economic Affairs includes: Office of the Under Secretary for
  Economic Affairs; Office of Chief Economist; Office of Strategic
  Resources; Office of Business Analysis; Bureau of Economic Analysis.
  The Bureau of the Census, and the National Technical Information
  Service, which also fall organizationally under Economic Affairs, are
  listed separately.


[51 FR 32207, Sept. 10, 1986, as amended at 53 FR 26236, July 12, 1988; 
55 FR 38314, Sept. 18, 1990; 55 FR 38983, Sept. 24, 1990]

   Appendix B to Part 4b--Systems of Records Noticed by Other Federal
 Agencies and Applicable to Records of the Department and Applicability
                          of This Part Thereto
                     [See footnotes at end of table]
------------------------------------------------------------------------
            Category of Records                 Other Federal agency
------------------------------------------------------------------------
Federal Personnel Records.................  Office of Personnel
                                             Management \1\
Federal Employee Compensation Act Program.  Department of Labor.\2\
Equal Employment Opportunity Appeal         Equal Employment Opportunity
 Complaints.                                 Commission.\3\
Formal Complaints/Appeals of Adverse        Merit Systems Protection
 Personnel Actions.                          Board.\4\
------------------------------------------------------------------------
\1\ The provisions of this part do not apply to these records covered by
  notices of systems of records published by the Office of Personnel
  Management for all agencies. The regulations of OPM alone apply.
\2\ The provisions of this part apply only initially to these records
  covered by notices of systems of records published by the U.S.
  Department of Labor for all agencies. The regulations of that
  Department attach at the point of any denial for access or for
  correction or amendment.
\3\ The provisions of this part do not apply to these records covered by
  notices of systems of records published by the Equal Employment
  Opportunity Commission for all agencies. The regulations of the
  Commission alone apply.

[[Page 70]]

 
\4\ The provisions of this part do not apply to these records covered by
  notices of systems of records published by the Merit Systems
  Protection Board for all agencies. The regulations of the Board alone
  apply.


[51 FR 32207, Sept. 10, 1986. Redesignated at 53 FR 26236, July 12, 
1988]
[GRAPHIC] [TIFF OMITTED] TC15NO91.216


[[Page 71]]


[40 FR 45621, Oct. 2, 1975; 40 FR 50662, Oct. 30, 1975; 40 FR 51168, 
Nov. 3, 1975. Redesignated at 53 FR 26236, July 12, 1988]



PART 5--OPERATION OF VENDING STANDS--Table of Contents




Sec.
5.1  Purpose.
5.2  Policy.
5.3  Assignment of functions and authorities.
5.4  Permits.
5.5  Vending machines.
5.6  Appeals.
5.7  Reports.
5.8  Approval of regulations.

    Authority: Sec. 4, 68 Stat. 663; 20 U.S.C. 107.

    Source: 28 FR 7772, July 31, 1963, unless otherwise noted.



Sec. 5.1  Purpose.

    This part prescribes regulations to assure the granting of 
preference to blind persons licensed under the provisions of the 
Randolph-Sheppard Vending Stand Act (49 Stat. 1559, as amended by the 
act of August 3, 1954, 68 Stat. 663; 20 U.S.C. 107) for the operation of 
vending stands (which term as used in this order includes vending 
machines).



Sec. 5.2  Policy.

    (a) The Department adopts the Federal policy announced in the 
Randolph-Sheppard Vending Stand Act, as amended, to provide blind 
persons with remunerative employment to enlarge the economic 
opportunities of the blind and to stimulate the blind to greater efforts 
in striving to make themselves self-supporting.
    (b) It shall be the policy of the Department to authorize blind 
persons licensed under the provisions of the Randolph-Sheppard Vending 
Stand Act, as amended to operate vending stands without any charge for 
space or necessary utilities on properties owned and occupied by the 
Department or on which the Department controls maintenance, operation, 
and protection.
    (c) The Department will cooperate with the Department of Education 
and State licensing agencies in making surveys to determine whether and 
where vending stands may be properly and profitably operated by licensed 
blind persons.
    (d) The application of a State licensing agency for a permit may be 
denied or revoked if it is determined that the interests of the United 
States would be adversely affected or the Department would be unduly 
inconvenienced by the issuance of a permit or its continuance.
    (e) Disagreements concerning the denial, revocation, or modification 
of a permit may be appealed by the State licensing agency as set forth 
in Sec. 5.6.

[28 FR 7772, July 31, 1963, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 5.3  Assignment of functions and authorities.

    (a) The Director, Office of Administrative Services, shall carry out 
the Department's responsibility to provide, in accordance with 
applicable law and regulation, the maximum opportunity for qualified 
blind persons to operate vending stands.
    (b) Subject to instructions issued by the Director, Office of 
Administrative Services, the head of each primary organization unit 
shall be responsible for implementing this program within his area.
    (c) The Director, Office of Administrative Services for the primary 
organization units located in the main Commerce building and the head of 
each other primary organization unit will make determinations with 
respect to the terms of permits including the location and operation of 
vending stands and machines in their respective areas.
    (d) Unresolved differences and significant violations of the terms 
of permits shall be reported to the State licensing agency. Where no 
corrective action is forthcoming, the matter shall be referred to the 
Office of Vocational Rehabilitation, Department of Education for 
consideration prior to further action.

[28 FR 7772, July 31, 1963, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 5.4  Permits.

    (a) No permit, lease, or other arrangement for the operation of a 
vending stand on property under control of

[[Page 72]]

the Department shall be entered into or renewed without first consulting 
the State licensing agency or equivalent authority.
    (b) The permit shall be conditioned upon the vending stand meeting 
specified standards, including standards relating to appearance, safety, 
sanitation, maintenance, and efficiency of operation. Due regard shall 
be given to laws and regulations for the public welfare which are 
applicable, or would be applicable, if the property involved was not 
owned or controlled by the Federal Government.
    (c) The permit shall specify the types of articles specified in 
section 2(a)(4) of the Act as amended (newspapers, periodicals, 
confections, tobacco products, articles dispensed automatically or in 
containers or wrappings in which they are placed before delivery to the 
vending stand). Such other related articles as the State licensing 
agency asks to be included shall be permitted to be sold, unless such 
factors as inadequacy of available facilities, safety, health, public 
welfare, or legal requirements demand otherwise.
    (d) The permit shall contain a provision that alterations made by 
other than the United States shall be approved by and conducted under 
the supervision of an appropriate official of the Department or the 
primary organization unit concerned.
    (e) The permit may contain other reasonable conditions necessary for 
the protection of the Government and prospective patrons of the stand.
    (f) The permit shall describe the location of the stand proper and 
the location of any vending machines which are operated in conjunction 
with it.



Sec. 5.5  Vending machines.

    (a) The income from any vending machines which are located within 
reasonable proximity to and are in direct competition with a vending 
stand for which a permit has been issued under these regulations shall 
be assigned to the operator of such stand.
    (b) If a vending machine vends articles of a type authorized by the 
permit and is so located that it attracts customers who would otherwise 
patronize the vending stand, such machine shall be deemed to be in 
reasonable proximity to and direct competition with the stand.



Sec. 5.6  Appeals.

    (a) In any instance where the Department of Commerce official as 
provided in Sec. 5.3(c) and the State licensing agency fail to reach 
agreement concerning the granting, revocation, or modification of a 
permit, the location, method of operation, assignment of proceeds, or 
other terms of a permit (including articles which may be sold), the 
State licensing agency shall be notified in writing by the Commerce 
official concerned that it has the right to appeal such disagreements, 
within 30 days of the notice, to the Assistant Secretary for 
Administration for investigation and final decision.
    (b) Upon receipt of a timely appeal the Assistant Secretary for 
Administration will cause a full investigation to be made. The State 
licensing agency shall be given an opportunity to present information 
pertinent to the facts and circumstances of the case. The complete 
investigation report including the recommendations of the investigating 
officer shall be submitted to the Assistant Secretary for Administration 
within 60 days from the date of the appeal.
    (c) The Assistant Secretary for Administration will render a final 
decision on the appeal within 90 days of the date of appeal.
    (d) The State licensing agency will be informed of the final 
decision on its appeal. Copies of the decision will be forwarded to the 
Department of Commerce official concerned and the Department of 
Education.

[28 FR 7772, July 31, 1963, as amended at 55 FR 53489, Dec. 31, 1990]



Sec. 5.7  Reports.

    No later than fifteen days following the end of each fiscal year the 
responsible officials set forth in Sec. 5.3(c) shall forward to the 
Director, Office of Administrative Services a report on activities under 
this order. The report shall include:
    (a) The number of applications, including requests for installations 
initiated by the Department, for vending stands received from State 
licensing agencies;

[[Page 73]]

    (b) The number of such requests accepted or approved;
    (c) The number denied, on which no appeal was made and the number 
denied on which an appeal was made; and
    (d) The number and status of any requests still pending.



Sec. 5.8  Approval of regulations.

    The provisions of this part have been approved by the Director, 
Bureau of the Budget, pursuant to Executive Order 10604, of April 22, 
1955.



PART 6--CIVIL MONETARY PENALTY INFLATION ADJUSTMENTS--Table of Contents




Sec.
6.1  Definitions.
6.2  Purpose and scope.
6.3  Limitation on First Adjustments.
6.4  Adjustments to penalties.
6.5  Effective date of adjustments.
6.6  Subsequent adjustments.

    Authority: Sec. 4, as amended, and sec. 5, Pub. L. 101-410, 104 
Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104-134, 110 Stat. 1321, 28 
U.S.C. 2461 note.

    Source: 61 FR 55093, Oct. 24, 1996, unless otherwise noted.



Sec. 6.1  Definitions.

    As used in this part:
    (a) Inflation Adjustment Act means the Federal Civil Penalties 
Inflation Adjustment Act of 1990 (Pub. L. 101-410, October 5, 1990, 104 
Stat. 890, 28 U.S.C. 2461 note).
    (b) Improvement Act means the Debt Collection Improvement Act of 
1996 (Public Law 104-134, April 26, 1996).
    (c) Amended Section Four means section 4 of the Inflation Adjustment 
Act, as amended by the Improvement Act.
    (d) Section Five means section 5 of the Inflation Adjustment Act.
    (e) Department means the Department of Commerce.
    (f) Secretary means the Secretary of the Department of Commerce.
    (g) First Adjustments means the inflation adjustments made by 
Sec. 6.4 of this part which, as provided in Sec. 6.5 of this part, are 
effective on October 23, 1996.



Sec. 6.2  Purpose and scope.

    The purpose of this part is to make the inflation adjustment, 
described in Section Five and required by Amended Section Four, of each 
minimum and maximum civil monetary penalty provided by law within the 
jurisdiction of the Department.



Sec. 6.3  Limitation on First Adjustments.

    Each of the First Adjustments may not exceed ten percent (10%) of 
the respective penalty being adjusted.



Sec. 6.4  Adjustments to penalties.

    The civil monetary penalties provided by law within the jurisdiction 
of the respective agencies or bureaus of the Department, as set forth 
below in this section, are hereby adjusted in accordance with the 
inflation adjustment procedures prescribed in Section Five, from the 
amounts of such penalties in effect prior to October 23, 1996, to the 
amounts of such penalties, as thus adjusted.
    (a) Bureau of Export Administration.
    (1) 50 U.S.C. app. 2410(c), Export Administration Act,1 
Non-national security violation: from $10,000 to $11,000.
---------------------------------------------------------------------------

    \1\ See E.O. 12851 (June 11, 1993).
---------------------------------------------------------------------------

    (2) 50 U.S.C. app. 2410(c), Export Administration Act 1 
and Section 38 Arms Export Control Act, National security violation: 
from $100,000 to $110,000.
    (3) 50 U.S.C. 1705(b), International Emergency Economic Powers Act, 
as invoked by E.O. 12924 (August 19, 1994) and E.O. 12938 (November 14, 
1994), Export Administration Regulation violation: from $10,000 to 
$11,000.
    (b) Economic Development Administration.
    (1) 19 U.S.C. 2349, Trade Act of 1974, False statement, etc.: from 
$5,000 to $5,500.
    (2) 42 U.S.C. 3220(a), Public Works and Economic Development Act of 
1965, False statement, etc.: from $10,000 to $11,000.
    (3) 42 U.S.C. 3220(b), Public Works and Economic Development Act of 
1965, Embezzlement, etc.: from $10,000 to $11,000.
    (c) Economics and Statistics Administration (ESA)/Census.
    (1) 13 U.S.C. 304, Delinquency on delayed filing of export 
documentation: from $100 per/day (up to $1,000) to $110 per/day (up to 
$1,100).

[[Page 74]]

    (2) 13 U.S.C. 305, Collection of foreign trade statistics 
violations: from $1,000 to $1,100.
    (d) ESA/Bureau of Economic Analysis.
    (1) 22 U.S.C. 3105(a), International Investment and Trade in 
Services Act, Failure to furnish information: from a minimum of $2,500 
to $2,750, and from a maximum of $25,000 to $27,500.
    (2) [Reserved]
    (e) Import Administration.
    (1) 19 U.S.C. 81s, Foreign Trade Zone violation: from $1,000 to 
$1,100.
    (2) 19 U.S.C. 1677f(f)(4), North American Free Trade Agreement 
Protective Order violation: from $100,000 to $110,000.
    (f) National Oceanic and Atmospheric Administration.
    (1) 15 U.S.C. 5623, Land Remote Sensing Policy Act of 1992 
violation: from $10,000 to $10,900.
    (2) 15 U.S.C. 5658, Land Remote Sensing Policy Act of 1992 
violation: from $10,000 to $10,900.
    (3) 16 U.S.C. 773f(3), Northern Pacific Halibut Act of 1982 
violation: from $25,000 to $27,500.
    (4) 16 U.S.C. 783, Sponge Act (1914), Violation involving catching 
or taking within specific areas: from $500 to $550.
    (5) 16 U.S.C. 957, Tuna Convention Act of 1950 (1962):
    (i) Violation of Sec. 957(a) [Fine at Sec. 957(d)]: from $25,000 to 
$27,500.
    (A) Subsequent violation of section 957(a) [Fine at Sec. 957(d)]: 
from $50,000 to $55,000.
    (B) [Reserved]
    (ii) Violation of section 957(b) [Fine at section 957(e)]: from 
$1,000 to $1,100.
    (A) Subsequent violation of Sec. 957(b) Fine at Sec. 957(e)]: from 
$5,000 to $5,500.
    (B) [Reserved]
    (iii) Violation of section 957(c) [Fine at section 957(f)]: from 
$100,000 to $110,000.
    (6) 16 U.S.C. 971e(e), Atlantic Tunas Convention Act of 1975 (1995) 
violation: from $100,000 to $100,000.
    (7) 16 U.S.C. 972f(b), Eastern Pacific Tuna Licensing Act of 1984:
    (i) Violation of section 972f(a)(1)-(3): from $25,000 to $27,500.
    (A) Subsequent violation of Sec. 972f(a)(1)-(3): from $50,000 to 
$55,000.
    (B) [Reserved]
    (ii) Violation of section 972f(a)(4)-(5): from $5,000 to $5,500.
    (A) Subsequent violation of Sec. 972f(a)(4)-(5): from $5,000 to 
$5,500.
    (B) [Reserved]
    (iii) Violation of section 972f(a)(6): from $100,000 to $110,000.
    (8) 16 U.S.C. 973f(a), South Pacific Tuna Act of 1988 violation: 
from $250,000 to $275,000.
    (9) 16 U.S.C. 1375(a)(1), Marine Mammal Protection Act of 1972:
    (i) Violation: from $10,000 to $11,000.
    (ii) Knowing violation (1981): from $20,000 to $22,000.
    (10) 16 U.S.C. 1437(c)(1), National Marine Sanctuaries Act (1992) 
violation: from $100,000 to $109,000.
    (11) 16 U.S.C. 1540(a)(1), Endangered Species Act of 1973:
    (i) Knowing violations or engaged in business of section 1538 
(a)(1)(A), (B), (C), (D), (E), or (F), (a)(2)(A), (B), (C), or (D), (c), 
(d) (other than recordkeeping or filing reports), (f), or (g) (1988): 
from $25,000 to $27,500.
    (ii) Other knowing or business-related violations (1988): from 
$12,000 to $13,200.
    (iii) Otherwise (1978): from $500 to $550.
    (12) 16 U.S.C. 1851 Note (Sec.5)(c)(1), Atlantic Striped Bass 
Conservation Act (1984) violation: from $1,000 to $1,100.
    (13) 16 U.S.C. 1858, Magnuson Fishery Conservation and Management 
Act (1990): from $100,000 to $110,000.
    (14) 16 U.S.C. 2437(a)(1), Antarctic Marine Living Resources 
Convention Act (1984):
    (i) Knowing violation: from $10,000 to $11,000.
    (ii) Violation: from $5,000 to $5,500.
    (15) 16 U.S.C. 3373(a), Lacey Act Amendments of 1981:
    (i) Violations involving possession, sale, or transport of fish/
plants/wildlife (1981): from $10,000 to $11,000.
    (ii) Marking violations of fish/plant/wildlife (1981): from $250 to 
$275.
    (iii) False labeling/knowingly (1988): from $10,000 to $11,000.
    (16) 16 U.S.C. 3606, Atlantic Salmon Convention Act of 1982 (1990): 
from $100,000 to $110,000.
    (17) 16 U.S.C. 3637, Pacific Salmon Treaty Act of 1985 (1990): from 
$100,000 to $110,000.

[[Page 75]]

    (18) 30 U.S.C. 1462(a), Deep Seabed Hard Mineral Resources Act 
(1980): from $25,000 to $27,500.
    (19) 42 U.S.C. 9152(c)(1), Ocean Thermal Energy Conversion Act of 
1980: from $25,000 to $27,500.



Sec. 6.5  Effective date of adjustments.

    The First Adjustments made by Sec. 6.4 of this part, of the 
penalties there specified, are effective on October 23, 1996, and said 
penalties, as thus adjusted by the First Adjustments made by Sec. 6.4 of 
this part, shall apply only to violations occurring after October 23, 
1996, and before the effective date of any future inflation adjustment 
thereto made subsequent to October 23, 1996, as provided in Sec. 6.6 of 
this part. The penalties specified in Sec. 6.4 of this part which became 
effective prior to October 23, 1996, shall, without any First 
Adjustments thereto, apply only to violations occurring before October 
24, 1996.



Sec. 6.6  Subsequent adjustments.

    The Secretary or his or her designee by regulation shall, at least 
once every four years after October 23, 1996, make the inflation 
adjustment, described in Section Five and required by Amended Section 
Four, of each civil monetary penalty provided by law and within the 
jurisdiction of the Department.



PART 7  [RESERVED]


PART 8--NONDISCRIMINATION IN FEDERALLY-ASSISTED PROGRAMS OF THE DEPARTMENT OF COMMERCE--EFFECTUATION OF TITLE VI OF THE CIVIL RIGHTS ACT OF 1964--Table of Contents




 Subpart A--General Provisions; Prohibitions: Nondiscrimination Clause; 
                        Applicability to Programs

Sec.
8.1  Purpose.
8.2  Application of this part.
8.3  Definitions.
8.4  Discrimination prohibited.
8.5  Nondiscrimination clause.
8.6  Applicability of this part to Department assisted programs.

                      Subpart B--General Compliance

8.7  Cooperation, compliance reports and reviews and access to records.
8.8  Complaints.
8.9  Intimidatory or retaliatory acts prohibited.
8.10  Investigations.
8.11  Procedures for effecting compliance.
8.12  Hearings.
8.13  Decisions and notices.
8.14  Judicial review.
8.15  Effect on other laws; supplementary instructions; coordination.

Appendix A to Part 8--Programs Covered By Title VI

    Authority: Sec. 602, Civil Rights Act of 1964 (42 U.S.C. 2000d-1).

    Source: 38 FR 17938, July 5, 1973, unless otherwise noted.



 Subpart A--General Provisions; Prohibitions: Nondiscrimination Clause; 
                        Applicability to Programs



Sec. 8.1  Purpose.

    The purpose of this part is to effectuate the provisions of title VI 
of the Civil Rights Act of 1964 (hereafter referred to as the ``Act'') 
to the end that no person in the United States shall, on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program receiving Federal financial assistance from the 
Department of Commerce. This part is consistent with achievement of the 
objectives of the statutes authorizing the financial assistance given by 
the Department of Commerce as provided in section 602 of the Act.



Sec. 8.2  Application of this part.

    (a) This part applies to any program for which Federal financial 
assistance is authorized under a law administered by the Department, 
including the federally assisted programs listed in Appendix A to this 
part and as said Appendix may be amended. It applies to money paid, 
property transferred, or other Federal financial assistance extended 
under any such program after January 9, 1965, pursuant to an application 
approved prior to such effective date.

[[Page 76]]

    (b) This part does not apply to (1) any Federal financial assistance 
by way of insurance or guaranty contracts, (2) money paid, property 
transferred, or other assistance extended under any such program before 
January 9, 1965, except where such assistance was subject to the title 
VI regulations of this Department or of any other agency whose 
responsibilities are now exercised by this Department, (3) any 
assistance to any individual who is the ultimate beneficiary under any 
such program, or (4) any employment practice, under any such program, of 
any employer, employment agency, or labor organization except to the 
extent described in Sec. 8.4(c). The fact that a program is not listed 
in Appendix A shall not mean, if title VI of the Act is otherwise 
applicable, that such program is not covered. Other programs under 
statutes now in force or hereinafter enacted may be added to the list by 
notice published in the Federal Register.



Sec. 8.3  Definitions.

    (a) Department means the Department of Commerce, and includes each 
and all of its operating and equivalent other units.
    (b) Secretary means the Secretary of Commerce.
    (c) United States means the States of the United States, the 
District of Columbia, Puerto Rico, the Virgin Islands, American Samoa, 
Guam, Wake Island, the Canal Zone, and the territories and possessions 
of the United States, and the term State means anyone of the foregoing.
    (d) Person means an individual in the United States who is or is 
eligible to be a participant in or an ultimate beneficiary of any 
program which receives Federal financial assistance, and includes an 
individual who is an owner or member of a firm, corporation, or other 
business or organization which is or is eligible to be a participant in 
or an ultimate beneficiary of such a program. Where a primary objective 
of the Federal financial assistance to a program is to provide 
employment, ``person'' includes employees or applicants for employment 
of a recipient or other party subject to this part under such program.
    (e) Responsible department official with respect to any program 
receiving Federal financial assistance means the Secretary or other 
official of the Department who by law or by delegation has the principal 
authority within the Department for the administration of a law 
extending such assistance. It also means any officials so designated by 
due delegation of authority within the Department to act in such 
capacity with regard to any program under this part.
    (f) Federal financial assistance includes
    (1) Grants, loans, or agreements for participation in loans, of 
Federal funds,
    (2) The grant or donation of Federal property or interests in 
property,
    (3) The sale or lease of, or the permission to use (on other than a 
casual or transient basis), Federal property or any interest in such 
property or in property in which the Federal Government has an interest, 
without consideration, or at a nominal consideration, or at a 
consideration which is reduced, for the purpose of assisting the 
recipient, or in recognition of the public interest to be served by such 
sale or lease to or use by the recipient,
    (4) Waiver of charges which would normally be made for the 
furnishing of Government services,
    (5) The detail of Federal personnel,
    (6) Technical assistance, and
    (7) Any Federal agreement, arrangement, contract, or other 
instrument which has as one of its purposes the provision of assistance.
    (g) Program includes any program, project, or activity for the 
planning or provision of services, financial aid, property, other 
benefits, or facilities for furnishing services, financial aid, 
property, or other benefits, whether provided by the recipient or by 
others through contracts or other arrangements with the recipient, with 
the aid of Federal financial assistance, or with the aid of any non-
Federal funds, property, facilities or other resources which are 
provided to meet the conditions under which Federal financial assistance 
is extended or which utilizes federally assisted property, facilities or 
resources.

[[Page 77]]

    (h) Facility includes all or any portion of structures, equipment, 
vessels, or other real or personal property or interests therein, and 
the provision of facilities includes the construction, expansion, 
renovation, remodeling, alteration, contract for use, or acquisition of 
facilities.
    (i) Recipient means any governmental, public or private agency, 
institution, organization, or other entity, or any individual, who or 
which is an applicant for Federal financial assistance, or to whom 
Federal financial assistance is extended directly or through another 
recipient for or in connection with any program. Recipient further 
includes a subgrantee, an entity which leases or operates a facility for 
or on behalf of a recipient, and any successors, assignees, or 
transferees of any kind of the recipient, but does not include any 
person who is an ultimate beneficiary under any program.
    (j) Primary recipient means any recipient which is authorized or 
required to extend or distribute Federal financial assistance to another 
recipient for the purpose of carrying out a program.
    (k) Applicant means one who submits an application, request, or plan 
required to be approved by a responsible Department official, or by a 
primary recipient, as a condition to eligibility for Federal financial 
assistance, and ``application'' means such an application, request, or 
plan.
    (l) Other parties subject to this part includes any governmental, 
public or private agency, institution, organization, or other entity, or 
any individual, who or which, like a recipient, is not to engage in 
discriminatory acts with respect to applicable persons covered by this 
part, because of his or its direct or substantial participation in any 
program, such as a contractor, subcontractor, provider of employment, or 
user of facilities or services provided under any program.



Sec. 8.4  Discrimination prohibited.

    (a) General. No person in the United States shall, on the ground of 
race, color, or national origin be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under, any program to which this part applies.
    (b) Specific discriminatory acts prohibited. (1) A recipient of 
Federal financial assistance, or other party subject to this part under 
any program to which this part applies, shall not participate, directly 
or through contractual or other arrangements, in any act or course of 
conduct which, on the ground of race, color, or national origin:
    (i) Denies to a person any service, financial aid, or other benefit 
provided under the program;
    (ii) Provides any service, financial aid, or other benefit, to a 
person which is different, or is provided in a different manner, from 
that provided to others under the program;
    (iii) Subjects a person to segregation or separate or other 
discriminatory treatment in any matter related to his receipt (or 
nonreceipt) of any such service, financial aid, property, or other 
benefit under the program.
    (iv) Restricts a person in any way in the enjoyment of services, 
facilities, or any other advantage, privilege, property, or benefit 
provided to others under the programs;
    (v) Treats a person differently from others in determining whether 
he satisfies any admission, enrollment, quota, eligibility, membership, 
or other requirement or condition which persons must meet in order to be 
provided any service, financial aid, or other benefit provided under the 
program;
    (vi) Denies a person an opportunity to participate in the program 
through the provision of property or services or otherwise, or affords 
him an opportunity to do so which is different from that afforded others 
under the program (including the opportunity to participate in the 
program as an employee but only to the extent set forth in paragraph (c) 
of this section);
    (vii) Denies a person the same opportunity or consideration given 
others to be selected or retained or otherwise to participate as a 
contractor, subcontractor, or subgrantee when a program is applicable 
thereto;
    (viii) Denies a person the opportunity to participate as a member of 
a planning or advisory body which is an integral part of the program.

[[Page 78]]

    (2) A recipient, or other party subject to this part under any 
program, in determining the types of services, financial aid, or other 
benefits, or facilities which will be provided under any such program, 
or the class of persons to whom, or the situations in which, such 
services, financial aid, other benefits, or facilities will be provided 
under any such program, or the class of persons to be afforded an 
opportunity to participate in any such program, shall not, directly or 
through contractual or other arrangements, utilize criteria or methods 
of administration which have the effect of subjecting persons to 
discrimination because of their race, color, or national origin, or have 
the effect of defeating or substantially impairing accomplishment of the 
objectives of the program as respect any persons of a particular race, 
color, or national origin.
    (3) In determining the site or location of facilities, a recipient 
or other party subject to this part may not make selections with the 
purpose or effect of excluding persons from, denying them the benefits 
of, or subjecting them to discrimination under any program to which this 
part applies, on the grounds of race, color or national origin; or with 
the purpose or effect of defeating or substantially impairing the 
accomplishment of the objectives of the Act or this part.
    (4) As used in this section, the services, financial aid, or other 
benefits provided under a program receiving Federal financial assistance 
shall be deemed to include any service, financial aid, or other benefit 
provided or made available in or through or utilizing a facility 
provided with the aid of Federal financial assistance.
    (5) The enumeration of specific forms of prohibited discrimination 
in this paragraph and paragraph (c) of this section does not limit the 
generality of the prohibition in paragraph (a) of this section.
    (6)(i) In administering a program regarding which the recipient has 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient must take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of such prior discrimination, a recipient 
in administering a program may take affirmative action to overcome the 
effects of conditions which resulted in limiting participation by 
persons of a particular race, color or national origin.
    (c) Employment practices. (1) Where a primary objective of the 
Federal financial assistance to a program to which this part applies is 
to provide employment, a recipient or other party subject to this part 
shall not, directly or through contractual or other arrangements, 
subject a person to discrimination on the ground of race, color, or 
national origin in its employment practices under such program 
(including recruitment or recruitment advertising, hiring, firing, 
upgrading, promotion, demotion, transfer, layoff, termination, rates of 
pay or other forms of compensation or benefits, selection for training 
or apprenticeship, use of facilities, and treatment of employees). Such 
recipients and other parties subject to this part shall take affirmative 
action to ensure that applicants are employed, and employees are treated 
during employment without regard to their race, color, or national 
origin. Such recipients and other parties subject to this part shall, as 
may be required by supplemental regulations, develop a written 
affirmative action program. The requirements applicable to construction 
employment under any such program shall be in addition to those 
specified in or pursuant to Part III of Executive Order 11246 or any 
Executive order which supersedes it. Federal financial assistance to 
programs under laws funded or administered by the Department which has 
as a primary objective the providing of employment include those set 
forth in Appendix A II of this part.
    (2) Where a primary objective of the Federal financial assistance to 
a program to which this part applies is not to provide employment, but 
discrimination on the grounds of race, color, or national origin, in the 
employment practices of the recipient or other party subject to this 
part, tends, on the grounds of race, color, or national origin, to 
exclude persons from participating in, to deny them the benefits of, or 
to subject them to discrimination

[[Page 79]]

under any such program, the provisions of paragraph (c)(1) of this 
section shall apply to the employment practices of the recipient or 
other party subject to this part, to the extent necessary to assure 
equality of opportunity to, and nondiscriminatory treatment of such 
persons.

[38 FR 17938, July 5, 1973; 38 FR 23777, Sept. 4, 1973]



Sec. 8.5  Nondiscrimination clause.

    (a) Applicability. Every application for, and every grant, loan, or 
contract authorizing approval of, Federal financial assistance to carry 
out a program and to provide a facility subject to this part, and every 
modification or amendment thereof, shall, as a condition to its approval 
and to the extension of any Federal financial assistance pursuant 
thereto, contain or be accompanied by an assurance that the program will 
be conducted in compliance with all requirements imposed by or pursuant 
to this part. The assurances shall be set forth in a nondiscrimination 
clause. The responsible Department official shall specify the form and 
contents of the nondiscrimination clause for each program as 
appropriate.
    (b) Contents. Without limiting its scope or language in any way, a 
nondiscrimination clause shall contain, where determined to be 
appropriate, and in an appropriate form, reference to the following 
assurances, undertakings, and other provisions:
    (1) That the recipient or other party subject to this part will not 
participate directly or indirectly in the discrimination prohibited by 
Sec. 8.4, including employment practices when a program covering such is 
involved.
    (2) That when employment practices are covered, the recipient or 
other party subject to this part will (i) in all solicitations or 
advertisements for employees placed by or for the recipient, state that 
qualified applicants will receive consideration for employment without 
regard to race, color, or national origin; (ii) notify each labor union 
or representative of workers with which it has a collective bargaining 
agreement or other contract or understanding of the recipient's 
commitments under this section; (iii) post the nondiscrimination clause 
and the notice to labor unions in conspicuous places available to 
employees and applicants for employment; and (iv) otherwise comply with 
the requirements of Sec. 8.4(c).
    (3) That in a program involving continuing Federal financial 
assistance, the recipient thereunder (i) will state that the program is 
(or, in the case of a new program, will be) conducted in compliance with 
all requirements imposed by or pursuant to this part, and (ii) will 
provide for such methods of administration for the program as are found 
by the responsible Department official to give reasonable assurance that 
all recipients of Federal financial assistance under such program and 
any other parties connected therewith subject to this part will comply 
with all requirements imposed by or pursuant to this part.
    (4) That the recipient agrees to secure the compliance or to 
cooperate actively with the Department to secure the compliance by 
others with this part and the nondiscrimination clause as may be 
directed under an applicable program. For instance, the recipient may be 
requested by the responsible Department official to undertake and agree 
(i) to obtain or enforce or to assist and cooperate actively with the 
responsible Department official in obtaining or enforcing, the 
compliance of other recipients or of other parties subject to this part 
with the nondiscrimination required by this part; (ii) to insert 
appropriate nondiscrimination clauses in the respective contracts with 
or grants to such parties; (iii) to obtain and to furnish to the 
responsible Department official such information as he may require for 
the supervision or securing of such compliance; (iv) to carry out 
sanctions for noncompliance with the obligations imposed upon recipients 
and other parties subject to this part; and (v) to comply with such 
additional provisions as the responsible Department official deems 
appropriate to establish and protect the interests of the United States 
in the enforcement of these obligations. In the event that the 
cooperating recipient becomes involved in litigation with a noncomplying 
party

[[Page 80]]

as a result of such departmental direction, the cooperating recipient 
may request the Department to enter into such litigation to protect the 
interests of the United States.
    (5) In the case of real property, structures or improvements 
thereon, or interests therein, which are acquired for a program 
receiving Federal financial assistance, or in the case where Federal 
financial assistance is provided in the form of a transfer of real 
property or interest therein from the Federal Government, the instrument 
effecting or recording the transfer shall contain a covenant running 
with the land assuring nondiscrimination for the period during which the 
real property is used for a purpose for which the Federal financial 
assistance is extended or for another purpose involving the provision of 
similar services or benefits, or for as long as the recipient retains 
ownership or possession of the property, whichever, is longer. Where no 
transfer of property is involved, but property is improved with Federal 
financial assistance, the recipient shall agree to include such a 
covenant in any subsequent transfer of such property. Where the property 
is obtained from the Federal Government, such covenant may also include 
a condition coupled with a right to be reserved by the Department to 
revert title to the property in the event of a breach of the covenant 
where, in the discretion of the responsible Department official, such a 
condition and right of reverter is appropriate to the program under 
which the real property is obtained and to the nature of the grant and 
the grantee. In such event if a transferee of real property proposes to 
mortgage or otherwise encumber the real property as security for 
financing construction of new, or improvement of existing facilities on 
such property for the purposes for which the property was transferred, 
the responsible Department official may agree, upon request of the 
transferee and if necessary to accomplish such financing, and upon such 
conditions as he deems appropriate to forebear the exercise of such 
right to revert title for so long as the lien of such mortgage or other 
encumbrance remains effective.
    (6) In programs receiving Federal financial assistance in the form, 
or for the acquisition, of real property or an interest in real property 
to the extent that rights to space on, over, or under any such property 
are included as part of the program receiving such assistance the 
nondiscrimination requirements of this part shall extend to any facility 
located wholly or in part in such space.
    (7) That a recipient shall not take action that is calculated to 
bring about indirectly what this part forbids it to accomplish directly.
    (8) Provisions specifying the extent to which like assurances will 
be required of subgrantees, contractors and subcontractors, lessees, 
transferees, successors in interest, and other participants in the 
program.
    (9) Provisions which give the United States a right to seek judicial 
enforcement of the assurances.
    (10) In the case where any assurances are required from an academic, 
a medical care, detention or correctional, or any other institution or 
facility, insofar as the assurances relate to the institution's 
practices with respect to the admission, care, or other treatment of 
persons by the institution or with respect to the opportunity of persons 
to participate in the receiving or providing of services, treatment, or 
benefits, such assurances shall be applicable to the entire institution 
or facility. That requirement may be waived by the responsible 
Department official if the party furnishing the assurances establishes 
to the satisfaction of the responsible Department official that the 
practices in designated parts or programs of the institution or facility 
will in no way affect its practices in the program of the institution or 
facility for which Federal financial assistance is or is sought to be 
provided, or affect the beneficiaries of or participants in such 
program. If in any such case the assistance is or is sought for the 
construction of a facility or part of a facility, the assurances shall 
in any event extend to the entire facility and to facilities operated in 
connection therewith.
    (11) In the case where the Federal financial assistance is in the 
form of or to aid in the acquisition of personal

[[Page 81]]

property, or real property or interest therein or structures thereon, 
the assurance shall obligate the recipients, or, in the case of a 
subsequent transfer, the transferee, for the period during which the 
property is used for a purpose for which the Federal financial 
assistance is extended or for another purpose involving the provision of 
similar services and benefits, or for as long as the recipient or 
transferee retains ownership or possession of the property, whichever is 
longer. In the case of any other type or form of assistance, the 
assurances shall be in effect for the duration of the period during 
which Federal financial assistance is extended to the program.

[38 FR 17938, July 5, 1973; 38 FR 23777, Sept. 4, 1973]



Sec. 8.6  Applicability of this part to Department assisted programs.

    The following examples illustrate the applicability of this part to 
programs which receive or may receive Federal financial assistance 
administered by the Department. The fact that a particular program is 
not listed does not indicate that it is not covered by this part, The 
discrimination referred to is that described in Sec. 8.4 against persons 
on the ground of race, color, or national origin.
    (a) Assistance to support economic development programs. 
Discrimination in which recipients and other parties subject to this 
part shall not engage, directly or indirectly, includes discrimination 
in
    (1) The letting of contracts or other arrangements for the planning, 
designing, engineering, acquisition, construction, rehabilitation, 
conversion, enlargement, installation, occupancy, use, maintenance, 
leasing, subleasing, sales, or other utilization or disposition of 
property or facilities purchased or financed in whole or in part with 
the aid of Federal financial assistance;
    (2) The acquisition of goods or services, or the production, 
preparation, manufacture, marketing, transportation, or distribution of 
goods or services in connection with a program or its operations;
    (3) The onsite operation of the project or facilities;
    (4) Services or accommodations offered to the public in connection 
with the program; and
    (5) In employment practices in connection with or which affect the 
program (as defined in Sec. 8.4(c)); in the following programs:
    (i) Any program receiving Federal financial assistance for the 
purchase or development of land and facilities (including machinery and 
equipment) for industrial or commercial usage.
    (ii) Any program receiving Federal financial assistance in the form 
of loans or direct or supplementary grants for the acquisition or 
development of land and improvements for public works, public service or 
development facility usage, and the acquisition, construction, 
rehabilitation, alteration, expansion, or improvement of such 
facilities, including related machinery and equipment.
    (iii) In any program receiving any form of technical assistance 
designed to alleviate or prevent conditions of excessive employment or 
underemployment.
    (iv) In any program receiving Federal financial assistance in the 
form of administrative expense grants.
    (b) Assistance to support the training of students. A current 
example of such assistance is that received by State maritime academies 
or colleges, by contract, of facilities (vessels), related equipment and 
funds to train merchant marine officers. In this and other student 
training programs, discrimination which is prohibited by recipients and 
other parties subject to this part includes discrimination in the 
selection of persons to be trained and in their treatment by the 
recipients in any aspect of the educational process and discipline 
during their training, or in the availability or use of any academic, 
housing, eating, recreational, or other facilities and services, or in 
financial assistance to students furnished or controlled by the 
recipients or incidental to the program. In any case where selection of 
trainees is made from a predetermined group, such as the students in an 
institution or area, the group must be selected without discrimination.

[[Page 82]]

    (c) Assistance to support mobile or other trade fairs. In programs 
in which operators of mobile trade fairs using U.S. flag vessels and 
aircraft and designed to exhibit and sell U.S. products abroad, or in 
which other trade fairs or exhibitions, receive technical and financial 
assistance, discrimination which is prohibited by recipients and other 
parties subject to this part includes discrimination in the selection or 
retention of any actual or potential exhibitors, or in access to or use 
of the services or accommodations by, or otherwise with respect to 
treatment of, exhibitors or their owners, officers, employees, or 
agents.
    (d) Assistance to support business entities eligible for trade 
adjustment assistance. In programs in which eligible business entities 
receive any measure or kind of technical, financial or tax adjustment 
assistance because of or in connection with the impact of U.S. 
international trade upon such business, discrimination which is 
prohibited by recipients and other parties subject to this part includes 
discrimination in their employment practices as defined in Sec. 8.4(c).
    (e) Assistance to support research and development and related 
activities. In programs in which individuals, educational or other 
institutions, public governmental or business entities receive Federal 
financial assistance in order to encourage or foster research or 
development activities as such, or to obtain, promote, develop, or 
protect thereby technical, scientific, environmental, or other 
information, products, facilities, resources, or services which are to 
be made available to or used by others; but where such programs do not 
constitute Government procurement of property or services, 
discrimination which is prohibited by recipients and other parties 
subject to this part includes discrimination with respect to (1) the 
choice, retention or treatment of contractors, subcontractors, 
subgrantees or of any other person; (2) the provision of services, 
facilities, or financial aid; (3) the participation of any party in the 
research activities; (4) the dissemination to or use by any person of 
the results or benefits of the research or development, whether in the 
form of information, products, services, facilities, resources, or 
otherwise. If research is performed within an educational institution 
under which it is expected that students or others will participate in 
the research as a part of their experience or training, on a compensated 
or uncompensated basis, there shall be no discrimination in admission of 
students to, or in their treatment by, that part of the school from 
which such students are drawn or in the selection otherwise of trainees 
or participants. The recipient educational institutions will be required 
to give the assurances provided in Sec. 8.5(b)(10).
    (f) Assistance to aid in the operations of vessels engaged in U.S. 
foreign commerce. In programs in which the operators of American-flag 
vessels used to furnish shipping services in the foreign commerce of the 
United States receive Federal financial assistance in the form of 
operating differential subsidies, discrimination which is prohibited by 
recipients and other parties subject to this part includes 
discrimination in soliciting, accepting or serving in any way passengers 
or shippers of cargo entitled to protection in the United States under 
the Act.



                      Subpart B--General Compliance



Sec. 8.7  Cooperation, compliance reports and reviews and access to records.

    (a) Cooperation and assistance. Each responsible Department official 
shall to the fullest extent practicable seek the cooperation of 
recipients and other parties subject to this part in obtaining 
compliance with this part and shall provide assistance and guidance to 
recipients and other parties to help them comply voluntarily with this 
part.
    (b) Compliance reports. Each recipient and other party subject to 
this part shall keep such records and submit to the responsible 
Department official timely, complete, and accurate compliance reports at 
such times and in such form and containing such information as the 
responsible Department official may determine to be necessary to enable 
him to ascertain whether the recipient or such other party has complied 
or is complying with this part. In general, recipients should have 
available for the department racial and ethnic data showing the extent 
to which

[[Page 83]]

members of minority groups are beneficiaries of federally assisted 
programs. In the case of any program under which a primary recipient 
extends Federal financial assistance to any other recipient, or under 
which a recipient is obligated to obtain or to cooperate in obtaining 
the compliance of other parties subject to this part, such other 
recipients or other parties shall also submit such compliance reports to 
the primary recipient or recipients as may be necessary to enable them 
to carry out their obligations under this part.
    (c) Access to sources of information. Each recipient or other party 
subject to this part shall permit access by the responsible Department 
official or his designee during normal business hours to such of its 
books, records, accounts, and other sources of information, and its 
facilities, as may be pertinent to ascertain compliance with this part. 
Where any information required of a recipient or other party is in the 
exclusive possession of another who fails or refuses to furnish this 
information, the recipient or other party shall so certify in its report 
and shall set forth what efforts it has made to obtain the information.
    (d) Information to beneficiaries and participants. Each recipient or 
other party subject to this part shall make available to participants, 
beneficiaries, and other interested persons such information regarding 
the provisions of this part and its applicability to the program under 
which the recipient receives Federal financial assistance, and make such 
information available to them in such manner as this part and the 
responsible Department official finds necessary to apprise such persons 
of the protections against discrimination assured them by the Act and 
this part.
    (e) Compliance review. The responsible Department official or his 
designee shall from time to time review the practices of recipients and 
other parties subject to this part to determine whether they are 
complying with this part.



Sec. 8.8  Complaints.

    (a) Filing complaints. Any person who believes himself or any 
specific class of persons to be subjected to discrimination prohibited 
by this part may by himself or by a representative file with the 
responsible Department official a written complaint. A complaint shall 
be filed not later than 180 days from the date of the alleged 
discrimination, unless the time for filing is extended by the 
responsible Department official.
    (b) [Reserved]



Sec. 8.9  Intimidatory or retaliatory acts prohibited.

    (a) No recipient or other party subject to this part shall 
intimidate, threaten, coerce, or discriminate against, any person for 
the purpose of interfering with any right or privilege secured by 
section 601 of the Act of this part, or because the person has made a 
complaint, testified, assisted, or participated in any manner in an 
investigation, proceeding, or hearing under this part.
    (b) The identity of complainants shall be kept confidential except 
to the extent necessary to carry out the purposes of this part, 
including the conduct of any investigation, hearing, or judicial or 
other proceeding arising thereunder.



Sec. 8.10  Investigations.

    (a) Making the investigation. The responsible Department official or 
his designee will make a prompt investigation whenever a compliance 
review, report, complaint, or any other information indicates a possible 
failure to comply with this part. The investigation shall include, where 
appropriate, a review of the pertinent practices and policies of the 
recipient or other party subject to this part, the circumstances under 
which the possible noncompliance with this part occurred, and other 
factors relevant to a determination as to whether there has been a 
failure to comply with this part.
    (b) Resolution of matters. (1) If an investigation pursuant to 
paragraph (a) of this section indicates a failure to comply with this 
part, the responsible Department official will so inform the recipient 
or other party subject to this part and the matter will be resolved by 
informal means whenever possible. If it has been determined that the 
matter cannot be resolved by informal means,

[[Page 84]]

action will be taken as provided for in Sec. 8.11.
    (2) If an investigation does not warrant action pursuant to 
paragraph (b)(1) of this section, the responsible Department official 
will so inform the recipient or other party subject to this part and the 
complainant, if any, in writing.



Sec. 8.11  Procedures for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this part, and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to grant or to continue Federal financial assistance or by any other 
means authorized by law. Such other means may include, but are not 
limited to, (1) a reference to the Department of Justice with a 
recommendation that appropriate proceedings be brought to enforce any 
rights of the United States under any law of the United States 
(including other titles of the Act), or any assurance or other 
contractural undertaking, and (2) any applicable proceeding under State 
or local law.
    (b) Noncompliance with Sec. 8.5. If a recipient or other party 
subject to this part fails or refuses to furnish an assurance required 
under Sec. 8.5 or otherwise fails or refuses to comply with a 
requirement imposed by or pursuant to that section, Federal financial 
assistance may be refused in accordance with the procedures of paragraph 
(c) of this section. The Department shall not be required to provide 
assistance in such a case during the pendency of the administrative 
proceedings under said paragraph except that the Department shall 
continue assistance during the pendency of such proceedings where such 
assistance is due and payable pursuant to an application or contract 
therefor approved prior to the effective date of this part.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating, or refusing to 
grant or continue Federal financial assistance shall become effective 
until (1) the responsible Department official has advised the recipient 
or other party subject to this part of his failure to comply and has 
determined that compliance cannot be secured by voluntary means, (2) 
there has been an express finding on the record, after opportunity for 
hearing, of a failure by such recipient or other party to comply with a 
requirement imposed by or pursuant to this part, (3) the action has been 
approved by the Secretary pursuant to Sec. 8.13(e), and (4) the 
expiration of 30 days after the Secretary has filed with the committee 
of the House and the committee of the Senate having legislative 
jurisdiction over the program involved, a full written report of the 
circumstances and the grounds for such action. Any action to suspend or 
terminate or to refuse to grant or to continue Federal financial 
assistance shall be limited to the particular political entity, or part 
thereof, or other recipient or other party as to whom such a finding has 
been made and shall be limited in its effect to the particular program, 
or part thereof, in which such noncompliance has been so found.
    (d) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until (1) the 
responsible Department official has determined that compliance cannot be 
secured by voluntary means, (2) the recipient or other party has been 
notified of its failure to comply and of the action to be taken to 
effect compliance, and (3) the expiration of at least 10 days from the 
mailing of such notice to the recipient or other party. During this 
period of at least 10 days additional efforts shall be made to persuade 
the recipient or other party to comply with this part and to take such 
corrective action as may be appropriate.



Sec. 8.12  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec. 8.11(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
recipient or other party subject to this part. This notice shall advise 
the recipient or other party of the action proposed to be taken, the 
specific provision under which the proposed action against it is to be 
taken,

[[Page 85]]

and the matters of fact or law asserted as the basis for this action, 
and either (1) fix a date not less than 20 days after the date of such 
notice within which the recipient or other party may request of the 
responsible Department official that the matter be scheduled for 
hearing, or (2) advise the recipient or other party that the matter in 
question has been set down for hearing at a stated place and time. The 
time and place so fixed shall be reasonable and shall be subject to 
change for cause. The complainant, if any, shall be advised of the time 
and place of the hearing. A recipient or other party may waive a hearing 
and submit written information and argument for the record. The failure 
of a recipient or other party to request a hearing under this paragraph 
of this section or to appear at a hearing for which a date has been set 
shall be deemed to be a waiver of the right to a hearing under section 
602 of the Act and Sec. 8.11(c) and consent to the making of a decision 
on the basis of such information as is available.
    (b) Time and place of hearing. Hearings shall be held at the offices 
of the Department in Washington, D.C., at a time fixed by the 
responsible Department official or hearing officer unless he determines 
that the convenience of the recipient or other party or of the 
Department requires that another place be selected. Hearings shall be 
held before the responsible Department official, or at his discretion, 
before a hearing officer.
    (c) Right to counsel. In all proceedings under this section, the 
recipient or other party and the Department shall have the right to be 
represented by counsel.
    (d) Procedures, evidence, and record. (1) The hearing, decision, and 
any administrative review thereof shall be conducted in conformity with 
5 U.S.C. 554-557 (sections 5-8 of the Administrative Procedures Act), 
and in accordance with such rules of procedure as are proper (and not 
inconsistent with this section) relating to the conduct of the hearing, 
giving of notices subsequent to those provided for in paragraph (a) of 
this section, taking of testimony, exhibits, arguments and briefs, 
requests for findings, and other related matters. Both the Department 
and the recipient or other party shall be entitled to introduce all 
relevant evidence on the issues as stated in the notice for hearing or 
as determined by the officer conducting the hearing at the outset of or 
during the hearing.
    (2) Technical rules of evidence shall not apply to hearings 
conducted pursuant to this part, but rules or principles designed to 
assure production of the most credible evidence available and to subject 
testimony to test by cross-examination shall be applied where reasonably 
necessary by the officer conducting the hearing. The hearing officer may 
exclude irrelevant, immaterial, or unduly repetitious evidence. All 
documents and other evidence offered or taken for the record shall be 
open to examination by the parties and opportunity shall be given to 
refute facts and arguments advanced on either side of the issues. A 
transcript shall be made of the oral evidence except to the extent the 
substance thereof is stipulated for the record. All decisions shall be 
based upon the hearing record and written findings shall be made.
    (e) Consolidated or joint hearings. In cases in which the same or 
related facts are asserted to constitute noncompliance with this part 
with respect to two or more programs to which this part applies, or 
noncompliance with this part and the regulations of one or more other 
Federal departments or agencies issued under Title VI of the Act, the 
Secretary may, by agreement with such other departments or agencies 
where applicable, provide for the conduct of consolidated or joint 
hearings and for the application to such hearings of rules of procedures 
not inconsistent with this part. Final decisions in such cases, insofar 
as this part is concerned, shall be made in accordance with Sec. 8.13.



Sec. 8.13  Decisions and notices.

    (a) Decision by person other than the responsible Department 
official. If the hearing is held by a hearing officer such hearing 
officer shall either make an initial decision, if so authorized, or 
certify the entire record including his recommended findings and 
proposed decision to the responsible Department official for a final 
decision, and a copy of such initial decision or certification

[[Page 86]]

shall be mailed to the recipient or other party subject to this part. 
Where the initial decision is made by the hearing officer, the recipient 
or other party may within 30 days of the mailing of such notice of 
initial decision file with the responsible Department official his 
exceptions to the initial decision, with his reasons therefor. In the 
absence of exceptions, the responsible Department official may on his 
own motion within 45 days after the initial decision serve on the 
recipient or other party a notice that he will review the decision. Upon 
the filing of such exceptions or of such notice of review, the 
responsible Department official shall review the initial decision and 
issue his own decision thereon including the reasons therefor. In the 
absence of either exceptions or a notice of review the initial decision 
shall constitute the final decision of the responsible Department 
official.
    (b) Decisions on record or review by the responsible Department 
official. Whenever a record is certified to the responsible Department 
official for decision or he reviews the decision of a hearing officer 
pursuant to paragraph (a) of this section, or whenever the responsible 
Department official conducts the hearing, the recipient or other party 
shall be given reasonable opportunity to file with him briefs or other 
written statements of its contentions, and a copy of the final decision 
of the responsible Department official shall be given in writing to the 
recipient or other party and to the complainant, if any.
    (c) Decisions on record where a hearing is waived. Whenever a 
hearing is waived pursuant to Sec. 8.12(a) a decision shall be made by 
the responsible departmental official on the record and a copy of such 
decision shall be given in writing to the recipient or other party, and 
to the complainant, if any.
    (d) Ruling required. Each decision of a hearing officer or 
responsible Department official shall set forth his ruling on each 
finding, conclusion, or exception presented, and shall identify the 
requirement or requirements imposed by or pursuant to this part with 
which it is found that the recipient or other party has failed to 
comply.
    (e) Approval by Secretary. Any final decision of a responsible 
Department official (other than the Secretary) which provides for the 
suspension or termination of, or the refusal to grant or continue, 
Federal financial assistance, or the imposition of any other sanction 
available under this part of the Act, shall promptly be transmitted to 
the Secretary, who may approve such decision, may vacate it, or remit or 
mitigate any sanction imposed.
    (f) Content of orders. The final decision may provide for suspension 
or termination of, or refusal to grant or continue, Federal financial 
assistance, in whole or in part, under the program involved, and may 
contain such terms, conditions, and other provisions as are consistent 
with and will effectuate the purposes of the Act and this part, 
including provisions designed to assure that no Federal financial 
assistance will thereafter be extended under such program to the 
recipient or other party determined by such decision to be in default in 
its performance of an assurance given by it pursuant to this part, or to 
have otherwise failed to comply with this part, unless and until it 
corrects its noncompliance and satisfies the responsible Department 
official that it will fully comply with this part.
    (g) Posttermination proceedings. (1) Any recipient or other party 
which is adversely affected by an order issued under paragraph (f) of 
this section shall be restored to full eligibility to receive Federal 
financial assistance if it satisfies the terms and conditions of that 
order for such eligibility or if it brings itself into compliance with 
this part and provides reasonable assurance that it will fully comply 
with this part.
    (2) Any recipient or other party adversely affected by an order 
entered pursuant to paragraph (f) of this section may at any time 
request the responsible Department official to restore fully its 
eligibility to receive Federal financial assistance. Any such request 
shall be supported by information showing that the recipient or other 
party has met the requirements of paragraph (g)(1) of this section. If 
the responsible Department official determines that those requirements 
have been satisfied, he shall restore such eligibility.

[[Page 87]]

    (3) If the responsible Department official denies any such request, 
the recipient or other party may submit a request for a hearing in 
writing, specifying why it believes such official to have been in error. 
It shall thereupon be given an expeditious hearing, with a decision on 
the record in accordance with rules of procedure issued by the 
responsible Department official. The recipient or other party will be 
restored to such eligibility if it proves at such a hearing that it 
satisfied the requirements of paragraph (g)(1) of this section. While 
proceedings under this paragraph are pending, the sanctions imposed by 
the order issued under paragraph (f) of this section shall remain in 
effect.



Sec. 8.14  Judicial review.

    Action taken pursuant to section 602 of the Act is subject to 
judicial review as provided in section 603 of the Act.



Sec. 8.15  Effect on other laws; supplementary instructions; coordination.

    (a) Effect on other laws. All regulations, orders, or like 
directions heretofore issued by any officer of the Department which 
impose requirements designed to prohibit any discrimination against 
individuals on the ground of race, color, or national origin under any 
program to which this part applies, and which authorizes the suspension 
or termination of or refusal to grant or to continue Federal financial 
assistance to any recipient or other party subject to this part of such 
assistance under such program for failure to comply with such 
requirements, are hereby superseded to the extent that such 
discrimination is prohibited by this part, except that nothing in this 
part shall be deemed to relieve any one of any obligations assumed or 
imposed under any such superseded regulation, order, instruction, or 
like direction prior to January 9, 1965. Nothing in this part, however, 
shall be deemed to supersede any of the following (including future 
amendments thereof):
    (1) Executive Order 11246 and regulations issued thereunder, or
    (2) Executive Order 11063 and regulations issued thereunder, or any 
other regulations or instructions, insofar as such order, regulations, 
or instructions prohibit discrimination on the ground of race, color, or 
national origin in any program or situation to which this part is 
inapplicable, or prohibit discrimination on any other ground.
    (b) Forms and instructions. Each responsible Department official 
shall issue and promptly make available to interested parties forms and 
detailed instructions and procedures for effectuating this part as 
applied to programs to which this part applies and for which he is 
responsible.
    (c) Supervision and coordination. The Secretary may from time to 
time assign to officials of the Department, or to officials of other 
departments or agencies of the Government with the consent of such 
departments or agencies, responsibilities in connection with the 
effectuation of the purposes of title VI of the Act and this part (other 
than responsibility for final decision as provided in Sec. 8.13), 
including the achievement of effective coordination and maximum 
uniformity within the Department and within the executive branch of the 
government in the application of title VI and this part to similar 
programs and in similar situations. Any action taken, determination 
made, or requirement imposed by an official of another Department or 
agency acting pursuant to an assignment of responsibility under this 
paragraph shall have the same effect as though such action had been 
taken by the responsible official of this Department.

           Appendix A to Part 8--Programs Covered by Title VI

 i. federal financial assistance to which title 15, subtitle a, part 8 
                                 applies

                   Economic Development Administration

    1. Loans, grants, technical and other assistance for public works 
and development facilities, for supplementing Federal grants-in-aid, for 
private businesses, and for other purposes, including assistance in 
connection with designated economic development districts and regions 
(Public Works and Economic Development Act of 1965, as amended, 42 
U.S.C. 3121 et seq.).
    2. Financial and technical assistance to firms to aid economic 
adjustment to the effects of increased imports in direct competition 
with firm products (Trade Act of 1974, 19 U.S.C. 2341-2354).

[[Page 88]]

    3. Assistance to communities adversely affected by increased imports 
in direct competition with products manufactured in the community area 
(Trade Act of 1974, 19 U.S.C. 2371-2374).
    4. Assistance to projects involving construction of local and State 
public facilities in order to reduce unemployment and provide State and 
local governments with badly needed public facilities (Local Public 
Works Capital Development and Assistance Act of 1976, 42 U.S.C. 6701-
6710).
    5. Trade adjustment assistance: Loans, dissemination of technical 
information (title II of the Trade Act of 1974, 19 U.S.C. 2341-2374).

                         Maritime Administration

    1. Operating differential subsidy assistance to operators of U.S. 
flag vessels engaged in U.S. foreign commerce (46 U.S.C. 1171 et seq.).
    2. Assistance to operate State maritime academies and colleges to 
train merchant marine officers (46 U.S.C. 1381-1388).
    3. Ship construction differential subsidies, direct payments 
(Merchant Marine Act of 1936, as amended, 46 U.S.C. 1151-1161).

                      National Bureau of Standards

    1. Grants to universities and other research organizations for fire 
research and safety programs (15 U.S.C. 278f).

           National Fire Prevention and Control Administration

    1. Academy planning assistance: To assist States in the development 
of training and education in the fire prevention and control area (15 
U.S.C. 2201-2219).
    2. State fire incident reporting assistance: To assist States in the 
establishment and operation of a statewide fire incident and casualty 
reporting system (15 U.S.C. 2201-2219).
    3. Public education assistance planning: Publications, audiovisual 
presentations and demonstrations, research, testing, and experimentation 
to determine the most effective means for such public education (15 
U.S.C. 2205c).
    4. Policy development assistance: Studies of the operations and 
management aspects of fire services (15 U.S.C. 2207c).

             National Oceanic and Atmospheric Administration

    1. Assistance to States, educational institutions, and the 
commercial fishing industry for the development of tuna and other latent 
fisheries (16 U.S.C. 758e).
    2. Assistance to States for the development and implementation of 
programs to protect and study certain species of marine mammals (16 
U.S.C. 1379b).
    3. Financial assistance to States with agencies which have entered 
into a cooperative agreement to assist in the preservation of threatened 
and endangered species (16 U.S.C. 1535).
    4. Assistance to coastal States for the development of estuarine 
sanctuaries to serve as field laboratories and for acquiring access to 
public beaches (16 U.S.C. 1461).
    5. Assistance to coastal States for the development, implementation, 
and administration of coastal zone management programs (16 U.S.C. 1454-
1455).
    6. Assistance to coastal States to help communities in dealing with 
the economic, social, and environmental consequences resulting from 
expanded coastal energy activity (16 U.S.C. 1456).
    7. Authority to enter into cooperative agreements with ``colleges 
and universities, with game and fish departments of the several States, 
and with nonprofit organizations relating to cooperative research 
units.'' Assistance limited to assignment of personnel, supplies, and 
incidental expenses (16 U.S.C. 753 a and b).
    8. Grants for education and training of personnel in the field of 
commercial fishing, ``to public and nonprofit private universities and 
colleges * * *'' (16 U.S.C. 760d).
    9. Grants for ``office and any other necessary space'' for the 
Northern Pacific Halibut Commission (16 U.S.C. 772).
    10. The ``Dingell Johnson Act'': Apportionment of dollars to States 
for restoration and management of sport or recreational species (16 
U.S.C. 777-777i; 777k).
    11. Authority to cooperate with and provide assistance to States in 
controlling jellyfish, etc. (16 U.S.C. 1201, 1202).
    12. Authority to cooperate with and provide assistance to certain 
States and territories in the study and control of ``Crown of Thorns'' 
starfish (16 U.S.C. 1211-1213).
    13. Technical assistance to fishing cooperatives regarding catching 
and marketing aquatic products (15 U.S.C. 521-522).
    14. Fish research and experimentation program cooperation with other 
agencies in acquisition of lands, construction of buildings, employment 
of personnel in establishing and maintaining research stations (16 
U.S.C. 778a).
    15. Assistance to upgrade commercial fishing vessels and gear (16 
U.S.C. 742c).
    16. Assistance to State projects designed for the research and 
development of commercial fisheries resources of the nation (16 U.S.C. 
779a-779f).
    17. Assistance to State and other non-Federal interests under 
cooperative agreements to conserve, develop, and enhance anadromous and 
Great Lakes Fisheries (16 U.S.C. 757a et seq.).
    18. Grants and other assistance under the National Sea Grant College 
and Program Act of 1966: To support establishment of major university 
centers for marine research, education, training, and advisory services 
(33 U.S.C. 1121-1124).

[[Page 89]]

    19. Geodetic surveys and services; advisory services; dissemination 
of technical information (33 U.S.C. 883a).
    20. Nautical charts assistance; advisory services; dissemination of 
technical information (33 U.S.C. 883a).
    21. River and flood forecast and warning services; advisory services 
(15 U.S.C. 313).
    22. Weather forecast and warning services (15 U.S.C. 311 and 313, 49 
U.S.C. 1351 and 1463).
    23. Commercial fisheries disaster assistance (16 U.S.C. 779b).
    24. Provision for the Weather Service to assist in joint projects 
``of mutual interest'' (15 U.S.C. 1525).

       National Telecommunications and Information Administration

    1. Grants for the planning and construction of public 
telecommunications facilities for the production and distribution of 
noncommercial educational and cultural radio and television programming 
and related instructional and informational materials. (Public 
Telecommunications Financing Act of 1978, 47 U.S.C. Sections 390-394).

                 Office of Minority Business Enterprise

    1. Assistance to minority business enterprises: Grants, contracts, 
advisory service, technical information (15 U.S.C. 1512; title III of 
the Public Works and Economic Development Act of 1965, as amended, 42 
U.S.C. 3151; Executive Order 11625, Oct. 13, 1971).

                  Regional Action Planning Commissions

    1. Supplemental grants to Federal grant-in-aid programs and 
technical assistance funds for planning, investigations, studies, 
training programs, and demonstration projects, including demonstrations 
in energy, transportation, health and nutrition, education and 
indigenous arts and crafts (title V of the Public Works and Economic 
Development Act of 1965, as amended, 42 U.S.C. 3181-3196).

                      United States Travel Service

    1. Assistance to strengthen the domestic and foreign commerce of the 
United States, and to promote friendly understanding and appreciation of 
the United States by encouraging foreign residents to visit the United 
States (22 U.S.C. 2121 et seq.).

                             Departmentwide

    1. Authority to make basis scientific research grants (42 U.S.C. 
1891-1893; to be superseded no later than Feb. 3, 1979, by the Federal 
Grant and Cooperative Agreement Act of 1977, Pub. L. 95-224).

 ii. a primary objective of the financial assistance authorized by the 
 following statutes, already listed above in appendix ai, is to provide 
                               employment

    1. Public Works and Economic Development Act of 1965, as amended (42 
U.S.C. 3121 et seq.).
    2. Trade Act of 1974 (19 U.S.C. 2341-2354).
    3. Local Public Works Capital Development and Assistance Act of 1976 
(42 U.S.C. 6701-6710)

[43 FR 49303, Oct. 23, 1978, as amended at 44 FR 12642, Mar. 8, 1979]



PART 8a  [RESERVED]


PART 8b--PROHIBITION OF DISCRIMINATION AGAINST THE HANDICAPPED IN FEDERALLY ASSISTED PROGRAMS OPERATED BY THE DEPARTMENT OF COMMERCE--Table of Contents




                      Subpart A--General Provisions

Sec.
8b.1  Purpose.
8b.2  Application.
8b.3  Definitions.
8b.4  Discrimination prohibited.
8b.5  Assurances required.
8b.6  Remedial action, voluntary action, and self-evaluation.
8b.7  Designation of responsible employee and adoption of grievance 
          procedures.
8b.8  Notice.
8b.9  Administrative requirements for small recipients.
8b.10  Effect of state or local law or other requirements and effect of 
          employment opportunities.

                     Subpart B--Employment Practices

8b.11  Discrimination prohibited.
8b.12  Reasonable accommodation.
8b.13  Employment criteria.
8b.14  Preemployment inquiries.
8b.15  Employment on ships.

                    Subpart C--Program Accessibility

8b.16  Discrimination prohibited.
8b.17  Existing facilities.
8b.18  New construction.

                   Subpart D--Post Secondary Education

8b.19  Application of this subpart.
8b.20  Admission and recruitment.
8b.21  Treatment of students.
8b.22  Academic adjustments.
8b.23  Housing provided by the recipient.

[[Page 90]]

8b.24  Financial and employment assistance to students.
8b.25  Nonacademic services.

                          Subpart E--Procedures

8b.26  Procedures.

    Authority: 29 U.S.C. 794.

    Source: 47 FR 17746, Apr. 23, 1982, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 8b.1  Purpose.

    Section 504 of the Rehabilitation Act of 1973, as amended, prohibits 
discrimination on the basis of handicap in any program or activity 
receiving or benefiting from Federal financial assistance. The purpose 
of this part is to implement section 504 with respect to programs and 
activities receiving or benefiting from Federal financial assistance 
from the Department of Commerce.



Sec. 8b.2  Application.

    This part applies to each recipient of Federal financial assistance 
from the Department of Commerce and to each program receiving or 
benefiting from such assistance. The requirements of this part do not 
apply to the ultimate beneficiaries of Federal financial assistance in 
the program receiving Federal financial assistance.



Sec. 8b.3  Definitions.

    As used in this part, the term:
    (a) The Act means the Rehabilitation Act of 1973, Pub. L. 93-112, as 
amended by the Rehabilitation Act Amendments of 1974, Pub. L. 93-516, 
and by the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978, Pub. L. 95-602 (codified at 29 U.S.C. 
794 (1976 & Supp. II 1978)).
    (b) Applicant for assistance means one who submits an application, 
request, or plan required to be approved by a Department official or by 
a recipient as a condition to becoming a recipient.
    (c) Department means the Department of Commerce and any of its 
constituent units authorized to provide Federal financial assistance.
    (d) Facility means all or any portion of buildings, ships, 
structures, equipment, roads, walks, parking lots, industrial parks, or 
other real or personal property or interest in such property.
    (e) Federal financial assistance means any grant, loan, contract 
(other than a procurement contract or a contract of insurance or 
guarantee), or any other arrangement by which the Department provides or 
otherwise makes available assistance in the form of:
    (1) Funds;
    (2) Services of Federal personnel; or
    (3) Real and personal property or any interest in or use of such 
property, including:
    (i) Transfers or leases of such property for less than fair market 
value or for reduced consideration; and
    (ii) Proceeds from a subsequent transfer or lease of such property 
if the Federal share of its fair market value is not returned to the 
Federal Government.
    (f) Handicap means any condition or characteristic that renders a 
person a handicapped person as defined in paragraph (g) of this section.
    (g) Handicapped person--(1) Handicapped person means any person who:
    (i) Has a physical or mental impairment which substantially limits 
one or more major life activities;
    (ii) Has a record of such an impairment; or
    (iii) Is regarded as having such an impairment.
    (2) For purposes of employment, the term ``handicapped person'' does 
not include any person who is an alcoholic or drug abuser whose current 
use of alcohol or drugs prevents that individual from performing the 
duties of the job in question, or whose employment, because of current 
alcohol or drug abuse, would constitute a direct threat to property or 
to the safety of others.
    (3) As used in paragraph (g)(1) of this section, the phrase:
    (i) Physical or mental impairment means:
    (A) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive;

[[Page 91]]

digestive; genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (B) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities;
    (C) The term ``physical or mental impairment'' includes, but is not 
limited to, such diseases and conditions as orthopedic, visual speech 
and hearing impairments, cerebral palsy, epilepsy, muscular dystrophy, 
multiple sclerosis, cancer, heart disease, diabetes, mental retardation, 
emotional illness, drug addiction and alcoholism.
    (ii) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, working, and receiving education or vocational 
training.
    (iii) Has a record of such an impairment means that the individual 
has a history of, or has been misclassified as having, a mental or 
physical impairment that substantially limits one or more major life 
activities.
    (iv) Is regarded as having an impairment means that the individual:
    (A) Has a physical or mental impairment that does not substantially 
limit major life activities, but that is treated by a recipient as 
constituting such a limitation;
    (B) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (C) Has none of the impairments defined in paragraph (g)(3)(i) of 
this section, but is treated by a recipient as having such an 
impairment.
    (h) Qualified handicapped person means:
    (1) With respect to employment, a handicapped person who, with 
reasonable accommodation, can perform the essential functions of the job 
in question;
    (2) With respect to post secondary and vocational education 
services, a handicapped person who meets the academic and technical 
standards requisite to admission or participation in the recipient's 
education program or activity;
    (3) With respect to other services, a handicapped person who meets 
the essential eligibility requirements for the receipt of such services.
    (i) Recipient means any State or its political subdivisions, any 
instrumentality of a State or its political subdivisions, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended directly or 
indirectly through another recipient, or including any successor, 
assignee, or transferee of a recipient, but excluding the ultimate 
beneficiary of the assistance.
    (j) Secretary means the Secretary of Commerce, U.S. Department of 
Commerce.
    (k) Section 504 means section 504 of the Act.
    (l) Small recipient means a recipient who serves fewer than 15 
beneficiaries and who employs fewer than 15 employees at all times 
during a grant year.



Sec. 8b.4  Discrimination prohibited.

    (a) General. No qualified handicapped individual shall, on the basis 
of handicap, be excluded from participation in, be denied the benefits 
of, or otherwise be subjected to discrimination under any program or 
activity that receives or benefits from Federal financial assistance.
    (b) Discriminatory actions prohibited. (1) A recipient, in providing 
any aid, benefit, or service, may not, directly or through contractual, 
licensing, or other arrangements, on the basis of handicap:
    (i) Deny a qualified handicapped individual the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped individual an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped individual with any aid, 
benefit, or service that is not as effective as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped individuals or to any class of handicapped individuals, 
unless such action

[[Page 92]]

is necessary to provide qualified handicapped individuals with aid, 
benefits, or services that are as effective as those provided to others;
    (v) Aid or perpetuate discrimination against a qualified handicapped 
individual by providing significant assistance to an agency, 
organization, or person that discriminates on the basis of handicap in 
providing any aid, benefit, or service to beneficiaries of the 
recipient's program;
    (vi) Deny a qualified handicapped individual the opportunity to 
participate as a member of planning or advisory boards; or
    (vii) Otherwise limit a qualified handicapped individual in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving any aid, benefits, or services.
    (2) For purposes of this part, aid, benefits, and services must 
afford handicapped individuals an equal opportunity to obtain the same 
result, to gain the same benefit, or to reach the same level of 
achievement as afforded to others, in the most integrated setting 
appropriate to the individual's needs. However, aid, benefits and 
services, to be equally effective, need not produce the identical result 
or level of achievement for handicapped and nonhandicapped individuals.
    (3) A recipient may not deny a qualified handicapped individual the 
opportunity to participate in its regular programs or activities, 
despite the existence of separate or different programs or activities 
which are established in accordance with this part.
    (4) A recipient may not, directly or through contractual or other 
arrangements, use criteria or methods of administration:
    (i) That have the effect of subjecting qualified handicapped 
individuals to discrimination on the basis of handicap;
    (ii) That have the purpose or effect of defeating or substantially 
impairing accomplishment of the objectives of the recipient's program 
with respect to handicapped individuals; or
    (iii) That perpetuate the discrimination of another recipient if 
both recipients are subject to common administrative control or are 
agencies of the same state.
    (5) In determining the geographic site or location of a facility, an 
applicant for assistance or a recipient may not make selections:
    (i) That have the effect of excluding handicapped individuals from, 
denying them the benefit of, or otherwise subjecting them to 
discrimination under any program or activity that receives or benefits 
from Federal financial assistance; or
    (ii) That have the purpose or effect of defeating or substantially 
impairing the accomplishment of the objectives of the program or 
activity with respect to handicapped individuals.
    (6) As used in this section, the aid, benefit, or service provided 
under a program or activity receiving or benefiting from Federal 
financial assistance includes any aid, benefit, or service provided in 
or through a facility that has been constructed, expanded, altered, 
leased, rented or otherwise acquired, in whole or in part, with Federal 
financial assistance.
    (7)(i) In providing services under programs of Federal financial 
assistance, recipients to which this subpart applies, except small 
recipients, shall ensure that no handicapped participant is denied the 
benefits of, excluded from participation in, or otherwise subjected to 
discrimination under the program or activity operated by the recipient 
because of the absence of auxiliary aids for participants with impaired 
sensory, manual or speaking skills. A recipient shall operate each 
program or activity to which this subpart applies so that, when viewed 
in its entirety, auxiliary aids are readily available. The Secretary may 
require small recipients to provide auxiliary aids in order to ensure 
that no handicapped participant is denied the benefits of, excluded from 
participation in, or otherwise subjected to discrimination under the 
program or activity operated by small recipients, when this would not 
significantly impair the ability of the small recipient to provide 
benefits or services.
    (ii) Auxiliary aids may include brailled and taped materials, 
interpreters, telecommunications devices, or other equally effective 
methods of making orally delivered information

[[Page 93]]

available to persons with hearing impairments, readers for persons with 
visual impairments, equipment adapted for use by persons with manual 
impairments, and other similar devices and actions. Recipients need not 
provide attendants, individually prescribed devices, readers for 
personal use or study, or other devices or services of a personal 
nature.
    (c) Programs limited by Federal law. The exclusion of non-
handicapped persons from the benefits of a program limited by Federal 
statute or Executive order to handicapped individuals, or the exclusion 
of a specific class of handicapped individuals from a program limited by 
Federal statute or Executive order to a different class of handicapped 
individuals is not prohibited by this part.
    (d) Integrated setting. Recipients shall administer programs and 
activities in the most integrated setting appropriate to the needs of 
qualified handicapped individuals.
    (e) Communications with individuals with impaired vision and 
hearing. Recipients shall ensure that communications with their 
applicants, employees and beneficiaries are available to persons with 
impaired vision or hearing. Appropriate modes of communication may 
include braille, enlarged type, sign language and telecommunications 
devices.



Sec. 8b.5  Assurances required.

    (a) Assurances. An applicant for Federal financial assistance for a 
program or activity to which this part applies shall submit an 
assurance, on a form specified by the Secretary, that the program will 
be operated in compliance with this part. An applicant may incorporate 
these assurances by reference in subsequent applications to the 
Department.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended in the form of real property or structures on the 
property, the assurance will obligate the recipient or, in the case of a 
subsequent transfer, the transferee, for the period during which the 
real property or structures are used for the purpose for which Federal 
financial assistance is extended, or for another purpose involving the 
provision of similar services or benefits.
    (2) In case of Federal financial assistance extended to provide 
personal property, the assurance will obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases, the assurance will obligate the recipient 
for the period during which Federal financial assistance is extended or 
the federally-funded program is operated, whichever is longer.
    (c) Covenants. (1) Where Federal financial assistance is provided in 
the form of real property or interest in the property from the 
Department, the instrument effecting or recording this transfer shall 
contain a covenant running with the land to assure nondiscrimination for 
the period during which the real property is used for a purpose for 
which the Federal financial assistance is extended or for another 
purpose involving the provision of similar services or benefits.
    (2) Where no transfer or property is involved but property is 
purchased or improved with Federal financial assistance, the recipient 
shall agree to include the covenant described in paragraph (c)(1) of 
this section in the instrument effecting or recording any subsequent 
transferee of the property.
    (3) Where Federal financial assistance is provided in the form of 
real property or interest in the property from the Department, the 
covenant shall also include a condition coupled with a right to be 
reserved by the Department to revert title to the property in the event 
of a breach of the covenant. If a transferee of real property proposed 
to mortgage or otherwise encumber the real property as security to 
finance construction of new, or improvement of existing, facilities on 
the property for the purposes for which the property was transferred, 
the Secretary may agree to forbear the exercise of such right to revert 
title for so long as the lien of such mortgage or other encumbrance 
remains effective. Such an agreement by the Secretary may be entered 
into only upon the request of the transferee (recipient) if it is 
necessary to accomplish such financing and upon such terms and 
conditions as the Secretary deems appropriate.

[[Page 94]]

    (d) Interagency agreements. Where funds are granted by the 
Department to another Federal agency to carry out a program under a law 
administered by the Department, and where the grant obligates the 
recipient agency to comply with the rules and regulations of the 
Department applicable to that grant the provisions of this part shall 
apply to programs and activities operated with such funds.



Sec. 8b.6  Remedial action, voluntary action, and self-evaluation.

    (a) Remedial action. (1) If the Secretary finds that a recipient has 
discriminated against persons on the basis of handicap in violation of 
section 504 or this part, the recipient shall take such remedial action 
as the Secretary deems necessary to overcome the effects of the 
discrimination.
    (2) Where a recipient is found to have discriminated against persons 
on the basis of handicap in violation of section 504 or this part and 
where another recipient exercises control over the recipient that has 
discriminated, the Secretary, where appropriate, may require either or 
both recipients to take remedial action.
    (3) The Secretary may, where necessary to overcome the effects of 
discrimination in violation of section 504 or this part, require a 
recipient to take remedial action:
    (i) With respect to handicapped individuals who would have been 
participants in the program had the discrimination not occurred; and
    (ii) With respect to handicapped persons who are no longer 
participants in the recipient's program, but who were participants in 
the program when the discrimination occurred; and
    (iii) with respect to employees and applicants for employment.
    (b) Voluntary action. A recipient may take steps, in addition to any 
action that is required by this part, to overcome the effects of 
conditions that resulted in limited participation in the recipient's 
program or activity by qualified handicapped individuals.
    (c) Self-evaluation. (1) A recipient shall, within one year of the 
effective date of this part:
    (i) Evaluate, with the assistance of interested persons, including 
handicapped individuals or organizations representing handicapped 
individuals, its current policies and practices and the effects thereof 
that do not or may not meet the requirements of this part;
    (ii) Modify, after consultation with interested persons, including 
handicapped individuals or organizations representing handicapped 
individuals, any policies and practices that do not meet the 
requirements of this part; and
    (iii) Take, after consultation with interested persons, including 
handicapped individuals or organizations representing handicapped 
individuals, appropriate remedial steps to eliminate the effects of any 
discrimination that resulted from adherence to these policies and 
practices.
    (2) A recipient, other than a small recipient, shall for at least 
three years following completion of the evaluation required under 
paragraph (c)(1) of this section, maintain on file, make available for 
public inspection, and provide to the Secretary upon request:
    (i) A list of the interested persons consulted;
    (ii) A description of areas examined and any problems identified; 
and
    (iii) A description of any modifications made and of any remedial 
steps taken.
    (3) The Secretary may, as he or she deems necessary, direct 
recipients to conduct additional self-evaluations, in accordance with 
the requirements of paragraph (c)(1) of this section.

(Approved by the Office of Management and Budget under control number 
0605-0006)

[47 FR 17746, Apr. 23, 1982, as amended at 47 FR 35472, Aug. 16, 1982]



Sec. 8b.7  Designation of responsible employee and adoption of grievance procedures.

    (a) Designation of responsible employee. A recipient, other than a 
small recipient, shall designate at least one person to coordinate its 
efforts to comply with this part.
    (b) Adoption of grievance procedures. A recipient, other than a 
small recipient, shall adopt grievance procedures that incorporate 
appropriate due process standards and that provide for the prompt and 
equitable resolution of complaints alleging any action prohibited by 
this part. Such procedures need

[[Page 95]]

not be established with respect to complaints from applicants for 
employment or from applicants for admission to post secondary 
educational institutions.



Sec. 8b.8  Notice.

    (a) A recipient, other than a small recipient, shall take 
appropriate initial and continuing steps to notify participants, 
beneficiaries, applicants and employees, including those with impaired 
vision or hearing, and unions or professional organizations holding 
collective bargaining or professional agreements with the recipient, 
that it does not discriminate on the basis of handicap in violation of 
Section 504 and of this part. The notification shall state, where 
appropriate, that the recipient does not discriminate in the admission 
or access to, or treatment or employment in, its programs and 
activities. The notification shall also include an identification of the 
responsible employee designated pursuant to Sec. 8b.7(a). A recipient 
shall make the initial notification required by this paragraph within 90 
days of the effective date of this part. Methods of initial and 
continuing notification may include the posting of notices, publications 
in newspapers and magazines, placement of notices in recipient's 
publications, and distribution of memoranda or other written 
communication. A recipient shall take appropriate steps to ensure that 
notice is available to persons with impaired vision or hearing.
    (b) If a recipient publishes or uses recruitment materials or 
publications containing general information made available to 
participants, beneficiaries, applicants, or employees, it shall include 
in those materials or publications a statement of the policy described 
in paragraph (a) of this section. A recipient may meet the requirement 
of this paragraph either by including appropriate inserts in existing 
materials and publications, or by revising and reprinting the materials 
and publications.



Sec. 8b.9  Administrative requirements for small recipients.

    The Secretary may require small recipients to comply with Secs. 8b.7 
and 8b.8, in whole or in part, when the Secretary finds a violation of 
this part or finds that such compliance will not significantly impair 
the ability of the small recipient to provide benefits or services.



Sec. 8b.10  Effect of state or local law or other requirements and effect of employment opportunities.

    (a) The obligation to comply with this part is not obviated or 
alleviated by the existence of any state or local law or other 
requirement that, on the basis of handicap, imposes prohibitions or 
limits upon the eligibility of qualified handicapped individuals to 
receive services, participate in programs, or practice any occupation or 
profession.
    (b) The obligation to comply with this part is not obviated or 
alleviated because employment opportunities in any occupation or 
profession are or may be more limited for handicapped individuals than 
for nonhandicapped persons.



                     Subpart B--Employment Practices



Sec. 8b.11  Discrimination prohibited.

    (a) General. (1) No qualified handicapped individual shall, on the 
basis of handicap, be subjected to discrimination in employment under 
any program or activity that receives or benefits from Federal financial 
assistance.
    (2) A recipient shall make all decisions concerning employment under 
any program or activity to which this part applies in a manner which 
ensures that discrimination on the basis of handicap does not occur and 
may not limit, segregate, or classify applicants or employees in any way 
that adversely affects their opportunities or status because of 
handicap.
    (3) A recipient may not participate in a contractual or other 
relationship that has the effect of subjecting qualified handicapped 
applicants or employees to discrimination prohibited by this subpart. 
The relationships referred to in this subparagraph include relationships 
with employment and referral agencies, with labor unions, with 
organizations providing or administering fringe benefits to employees of 
the recipient, and with organizations providing training and 
apprenticeship programs.

[[Page 96]]

    (b) Specific activities. The prohibition against discrimination in 
employment applies to the following activities:
    (1) Recruitment, advertising and the processing of applicants for 
employment;
    (2) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return from layoff and rehiring;
    (3) Rates of pay or any other form of compensation and changes in 
compensation; pension or other benefit the applicant or employee 
receives from any other source.



Sec. 8b.12  Reasonable accommodation.

    (a) A recipient shall make reasonable accommodation to the known 
physical or metal limitations of an otherwise qualified handicapped 
applicant or employee unless the recipient can demonstrate that the 
accommodation would impose an undue hardship on the operation of its 
program.
    (b) Reasonable accommodation may include:
    (1) Making the facilities used by the employees in the area where 
the program is conducted, including common areas used by all employees 
such as hallways, restrooms, cafeterias and lounges, readily accessible 
to and usable by handicapped persons; and
    (2) Job restructuring, part-time or modified work schedules, 
acquisition or modification of equipment or devices, the provision of 
readers or interpreters, and other similar actions.
    (c) In determining pursuant to paragraph (a) of this section whether 
an accommodation would impose an undue hardship on the operation of a 
recipient's program, factors to be considered include:
    (1) The overall size of the recipient's program with respect to 
number of employees, number of participants, number and type of 
facilities, and size of budget;
    (2) The type of the recipient's operation, including the composition 
and structure of the recipient's workforce; and
    (3) The nature and cost of the accommodation needed.
    (d) A recipient may not deny any employment opportunity to a 
qualified handicapped employee or applicant if the basis for the denial 
is the need to make reasonable accommodation to the physical or mental 
limitations of the employee or applicant.
    (e) Nothing in this paragraph shall relieve a recipient of its 
obligation to make its program accessible as required in subpart C of 
this part, or to provide auxiliary aids, as required by Sec. 8b.4(b)(7).



Sec. 8b.13  Employment criteria.

    (a) A recipient may not make use of any employment test or other 
selection criterion that screens out or tends to screen out handicapped 
individuals or any class of handicapped individuals unless;
    (1) The test score or other selection criterion, as used by the 
recipient, is shown to be job-related for the position in question; and
    (2) Alternative job-related tests or criteria that do not screen out 
or tend to screen out as many handicapped individuals are not shown by 
the Secretary to be available.
    (b) A recipient shall select and administer tests concerning 
employment so as best to ensure that, when administered to an applicant 
or employee who has a handicap that impairs sensory, manual, or speaking 
skills, the test results accurately to reflect the applicant's or 
employee's job skills aptitude, or whatever factor the test purports to 
measure, rather than reflecting the applicant's or employee's impaired 
sensory, manual, or speaking skills (except where those skills are the 
factors that the test purports to measure).



Sec. 8b.14  Preemployment inquiries.

    (a) Except as provided in paragraphs (b) and (c) of this section, a 
recipient may not conduct preemployment inquiry of an applicant for 
employment as to whether the applicant is a handicapped individual, or 
as to the nature or severity of a handicap. A recipient may, however, 
make preemployment inquiry into an applicant's ability to perform job-
related functions.
    (b) When a recipient is taking remedial action to correct the 
effects of past discrimination pursuant to Sec. 8b.6(a), when a 
recipient is taking voluntary action to overcome the effects

[[Page 97]]

of conditions that resulted in limited participation in this federally 
assisted program or activity pursuant to Sec. 8b.6(b), or when a 
recipient is taking affirmative action pursuant to section 503 of the 
Act, the recipient may invite applicants for employment to indicate 
whether and to what extent they are handicapped, Provided, That:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose or makes clear orally, if no written questionnaire is 
used, that the information requested is intended for use solely in 
connection with its remedial action obligations or its voluntary or 
affirmative action efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential as 
provided in paragraph (d) of this section, that refusal to provide it 
will not subject the applicant or employee to any adverse treatment, and 
that it will be used only in accordance with this part.
    (c) Nothing in this section shall prohibit a recipient from 
conditioning an offer of employment on the results of a medical 
examination conducted prior to the employee's entrance on duty, 
Provided, That:
    (1) All employees are subject to such an examination regardless of 
handicap, and
    (2) The results of such an examination are used only in accordance 
with the requirements of this part.
    (d) Information obtained in accordance with this section as to the 
medical condition or history of the applicant shall be collected and 
maintained on separate forms that shall be accorded confidentiality as 
medical records, except:
    (1) Employing officials may obtain the information after making a 
conditional decision to make a job offer to the applicant or the 
applicant was placed conditionally in a job pool or placed conditionally 
on an eligibility list;
    (2) Supervisors and managers may be informed regarding restrictions 
on the work or duties of qualified handicapped individuals and regarding 
necessary accommodations;
    (3) First aid and safety personnel may be informed, where 
appropriate, if the condition might require emergency treatment; and
    (4) Government officials investigating compliance with the Act shall 
be provided information upon request.



Sec. 8b.15  Employment on ships.

    No qualified handicapped individual possessing an appropriate 
license or certificate obtained from the United States Coast Guard 
pursuant to the requirements of 46 CFR 10.01-1 et seq. and 12.01-1 et 
seq. shall, on the basis of handicap, be subjected to discrimination in 
employment on ships under any program or activity to which this part 
applies.



                    Subpart C--Program Accessibility



Sec. 8b.16  Discrimination prohibited.

    No qualified handicapped individual shall, because a recipient's 
facilities are inaccessible to or unusable by handicapped individuals, 
be denied the benefits of, be excluded from participation in, or 
otherwise be subjected to discrimination under any program or activity 
to which this part applies.



Sec. 8b.17  Existing facilities.

    (a) Program accessibility. A recipient shall operate each program or 
activity to which this part applies so that the program or activity, 
when viewed in its entirety, is readily accessible to qualified 
handicapped individuals. This paragraph does not require a recipient to 
make each of its existing facilities or every part of a facility 
accessible to and usable by qualified handicapped individuals. However, 
if a particular program is available in only one location, that site 
must be made accessible or the program must be made available at an 
alternative accessible site or sites. Program accessibility requires 
nonpersonal aids to make the program accessible to mobility impaired 
persons.
    (b) Methods. A recipient may comply with the requirements of 
paragraph (a) of this section through such means as redesign of 
equipment, reassignment of classes or other services to accessible

[[Page 98]]

buildings, assignment of aides to beneficiaries, home visits, delivery 
of services at alternate accessible sites, alteration of existing 
facilities and construction of new facilities in conformance with the 
requirement of Sec. 8b.19, or any other method that results in making 
its program or activity accessible to handicapped individuals. A 
recipient is not required to make structural changes in existing 
facilities where other methods are effective in achieving compliance 
with paragraph (a) of this section. In choosing among available methods 
for meeting the requirement of paragraph (a) of this section, a 
recipient shall give priority to those methods that offer programs and 
activities to handicapped individuals in the most integrated setting 
appropriate.
    (c) If a small recipient finds, after consultation with a qualified 
handicapped individual seeking its services, that there is no method of 
complying with paragraph (a) of this section other than making a 
significant alteration in its existing facilities or facility, the small 
recipient may, as an alternative, refer the qualified handicapped 
individual to other providers of those services that are accessible at 
no additional cost to the handicapped.
    (d) Time period. A recipient shall comply with the requirement of 
paragraph (a) of this section within 60 days of the effective date of 
this part. Where structural changes in facilities are necessary, such 
changes shall be made within three years of the effective date of this 
part, but in any event as expeditiously as possible.
    (e) Transition plan. In the event that structural changes to 
facilities are necessary to meet the requirement of paragraph (a) of 
this section, a recipient shall develop, within six months of the 
effective date of this part, a transition plan setting forth the steps 
necessary to complete such changes. The plan shall be developed with the 
assistance of interested persons, including handicapped persons or 
organizations representing handicapped persons. A copy of the transition 
plan shall be made available for public inspection. The plan shall, at a 
minimum:
    (1) Identify physical obstacles in the recipient's facilities that 
limit the accessibility of its program or activity to qualified 
handicapped individuals;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
full program accessibility and, if the time period of the transition 
plan is longer than one year, identify the steps that will be taken 
during each year of the transition period; and
    (4) Indicate the person responsible for implementation of the plan.
    (f) Notice. The recipient shall adopt and implement procedures to 
ensure that interested persons, including persons with impaired vision 
or hearing, can obtain information as to the existence and location of 
services, activities and facilities that are accessible to and usable by 
qualified handicapped individuals.

(Approved by the Office of Management and Budget under control number 
0605-0006)

[47 FR 17746, Apr. 23, 1982, as amended at 47 FR 35472, Aug. 16, 1982]



Sec. 8b.18  New construction.

    (a) Design and construction. Each facility or part of a facility 
constructed by, on behalf of, or for the use of a recipient shall be 
designed and constructed in such manner that the facility or part of the 
facility is readily accessible to and usable by qualified handicapped 
individuals, if the construction was commenced after the effective date 
of this part.
    (b) Alteration. Each facility or part of a facility which is altered 
by, on behalf of, or for the use of a recipient after the effective date 
of this part of the facility shall, to the maximum extent feasible, be 
altered in such manner that the altered portion of the facility is 
readily accessible to and usable by qualified handicapped individuals.
    (c) Conformance with Uniform Federal Accessibility Standards. (1) 
Effective as of August 17, 1990, design, construction, or alteration of 
buildings in conformance with sections 3-8 of the Uniform Federal 
Accessibility Standards (UFAS) (Appendix A to 41 CFR subpart 101-19.6) 
shall be deemed to comply with the requirements of this section with 
respect to those buildings. Departures from particular technical and

[[Page 99]]

scoping requirements of UFAS by the use of other methods are permitted 
where substantially equivalent or greater access to and usability of the 
building is provided.
    (2) For purposes of this section, section 4.1.6(1)(g) of UFAS shall 
be interpreted to exempt from the requirements of UFAS only mechanical 
rooms and other spaces that, because of their intended use, will not 
require accessibility to the public or beneficiaries or result in the 
employment or residence therein of persons with physical handicaps.
    (3) This section does not require recipients to make building 
alterations that have little likelihood of being accomplished without 
removing or altering a load-bearing structural member.

[47 FR 17746, Apr. 23, 1982, as amended at 55 FR 29320, Jul. 18, 1990]



                   Subpart D--Post Secondary Education



Sec. 8b.19  Application of this subpart.

    Subpart D applies to post secondary education programs and 
activities, including post secondary vocational education programs and 
activities, that receive or benefit from Federal financial assistance 
for the operation of, such programs or activities.



Sec. 8b.20  Admission and recruitment.

    (a) General. Qualified handicapped may not, on the basis of 
handicap, be denied admission or be subjected to discrimination in 
admission or recruitment by a recipient to which this subpart applies.
    (b) Admissions. In administering its admission policies, a recipient 
to which this subpart applies:
    (1) May not apply limitations upon the number or proportion of 
handicapped individuals who may be admitted; and
    (2) May not make use of any test or criterion for admission that has 
a disproportionate, adverse effect on handicapped individuals or any 
class of handicapped individuals unless:
    (i) The test or criterion, as used by the recipient, has been 
validated as a predictor of success in the education program or activity 
in question; and
    (ii) Alternate tests or criteria that have a less disproportionate, 
adverse effect are not shown by the Secretary to be available.
    (3) Shall assure itself that (i) admissions tests are selected and 
administered so as best to ensure that, when a test is administered to 
an applicant who has a handicap that impairs sensory, manual, or 
speaking skills, the test results accurately reflect the applicant's 
aptitude or achievement level of whatever other factor the test purports 
to measure, rather than reflecting the applicant's impaired sensory, 
manual, or speaking skills (except where those skills are the factors 
that the test purports to measure); (ii) admissions tests that are 
designed for persons with impaired sensory, manual, or speaking skills 
are offered as often and in as timely a manner as are other admissions 
tests; and (iii) admissions tests are administered in facilities that, 
on the whole, are accessible to handicapped individuals; and
    (4) Except as provided in paragraph (c) of this section, may not 
make pre-admission inquiry as to whether an applicant for admission is a 
handicapped individual but, after admission, may make inquiries on a 
confidential basis as to handicaps that may require accommodation.
    (c) Pre-admission inquiry exception. When a recipient is taking 
remedial action to correct the effects of past discrimination pursuant 
to Sec. 8b.6(a) or when a recipient is taking voluntary action to 
overcome the effects of conditions that resulted in limited 
participation in its federally assisted program or activity pursuant to 
Sec. 8b.6(b), the recipient may invite applicants for admission to 
indicate whether and to what extent they are handicapped, Provided, 
That:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose or makes clear orally, if no written questionnaire is 
used, that the information requested is intended for use solely in 
connection with its remedial action obligations or its voluntary action 
efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential, that 
refusal to provide it

[[Page 100]]

will not subject the applicant to any adverse treatment, and that it 
will be used only in accordance with this part.
    (d) Validity studies. For the purpose of paragraph (b)(2) of this 
section, a recipient may base prediction equations on first year grades, 
but shall conduct periodic validity studies against the criterion of 
overall success in the education program or activity in question in 
order to monitor the general validity of the test scores.



Sec. 8b.21  Treatment of students.

    (a) General. No qualified handicapped student shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any academic research, 
occupational training, housing, health insurance, counseling, financial 
aid, physical education, athletics, recreation, transportation, other 
extracurricular, or other post secondary education program or activity 
to which this subpart applies.
    (b) A recipient to which this subpart applies that considers 
participation by students in education programs or activities not 
operated wholly by the recipient as part of, or equivalent to, education 
programs or activities operated by the recipient shall assure itself 
that the other education program or activity, as a whole, provides an 
equal opportunity for the participation of qualified handicapped 
persons.
    (c) A recipient to which this subpart applies may not, on the basis 
of handicap exclude any qualified handicapped student from any course or 
study, or other part of its education program or activity.
    (d) A recipient to which this subpart applies shall operate its 
programs and activities in the most integrated setting appropriate.



Sec. 8b.22  Academic adjustments.

    (a) Academic requirements. A recipient to which this subpart applies 
shall make such modifications to its academic requirements as are 
necessary to ensure that such requirements do not discriminate or have 
the effect of discriminating, on the basis of handicap, against a 
qualified handicapped applicant or student. Academic requirements that 
the recipient can demonstrate are essential to the program of 
instruction being pursued by such student or to any directly related 
licensing requirement will not be regarded as discriminatory within the 
meaning of this section. Modifications may include changes in the length 
of time permitted for the completion of degree requirements, 
substitution of specific courses required for the completion of degree 
requirements, and adaptation of the manner in which specific courses are 
conducted.
    (b) Other rules. A recipient to which this subpart applies may not 
impose upon handicapped students other rules, such as the prohibition of 
tape recorders in classrooms or of dog guides in campus buildings, that 
have the effect of limiting the participation of handicapped students in 
the recipient's education program or activity.
    (c) Course examinations. In its course examinations or other 
procedures for evaluating student's academic achievement in its program, 
a recipient to which this subpart applies shall provide such methods for 
evaluating the achievement of students who have a handicap that impairs 
sensory, manual, or speaking skills as will best ensure that the results 
of the evaluation represents the student's achievement in the course, 
rather than reflecting the student's impaired sensory, manual, or 
speaking skills (except where such skills are the factors that the test 
purports to measure).
    (d) Auxiliary aids. (1) A recipient to which this subpart applies 
shall ensure that no handicapped student is denied the benefits of, 
excluded from participation in, or otherwise subjected to discrimination 
under the education program or activity operated by the recipient 
because of the absence of educational auxiliary aids for students with 
impaired sensory, manual, or speaking skills. A recipient shall operate 
each program or activity to which this subpart applies so that, when 
viewed in its entirety, auxiliary aids are readily available.
    (2) Auxiliary aids may include taped text, interpreters or other 
effective methods of making orally delivered materials available to 
students with

[[Page 101]]

hearing impairments, readers in libraries for students with visual 
impairments, classroom equipment adapted for use by students with manual 
impairments, and other similar services and actions. Recipients need not 
provide attendants, individually prescribed devices, readers for 
personal use or study, or other devices or services of a personal 
nature.



Sec. 8b.23  Housing provided by the recipient.

    (a) A recipient that provides housing to its nonhandicapped students 
shall provide comparable, convenient, and accessible housing to 
handicapped students at the same cost as to others. At the end of 
transition period provided for in subpart C, such housing shall be 
available in sufficient quantity and variety so that the scope of 
handicapped students choice of living accommodations is, as a whole, 
comparable to that of nonhandicapped students.
    (b) Other housing. A recipient that assists any agency, 
organization, or person in making housing available to any of its 
students shall take such action as may be necessary to assure itself 
that such housing is, as a whole, made available in a manner that does 
not result in discrimination on the basis of handicap.



Sec. 8b.24  Financial and employment assistance to students.

    (a) Provision of financial assistance. (1) In providing financial 
assistance to qualified handicapped individuals, a recipient to which 
this subpart applies may not (i) on the basis of handicap, provide less 
assistance than is provided to nonhandicapped persons, limit eligibility 
for assistance, or otherwise discriminate or (ii) assist any entity or 
person that provides assistance to any of the recipient's students in a 
manner that discriminates against qualified handicapped individuals on 
the basis of handicap.
    (2) A recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established under wills, trust, bequest, or similar legal instruments 
that require awards to be made on the basis of factors that discriminate 
or have the effect of discriminating on the basis of handicap only if 
the overall effect of the award of scholarships, fellowships, and other 
forms of financial assistance is not discriminatory on the basis of 
handicap.
    (b) Assistance in making available outside employment. A recipient 
that assists any agency, organization, or person in providing employment 
opportunities to any of its students shall assure itself that such 
employment opportunities, as a whole, are made available in a manner 
that would not violate subpart B if they were provided by the recipient.
    (c) Employment of student by recipients. A recipient that employs 
any of its students may not do so in a manner that violates subpart B.



Sec. 8b.25  Nonacademic services.

    (a) Physical education and athletics. (1) In providing physical 
education courses and athletics and similar programs and activities to 
any of its students, a recipient to which this subpart applies may not 
discriminate on the basis of handicap. A recipient that offers physical 
education courses or that operates or sponsors intercollegiate, club, or 
intramural athletics shall provide to qualified handicapped students an 
equal opportunity for participation in these activities.
    (2) A recipient may offer to handicapped students physical education 
and athletic activities that are separate or different only if 
separation of differentiation is consistent with the requirements of 
Sec. 8b.22(d) and only if no qualified handicapped student is denied the 
opportunity to compete for teams or to participate in courses that are 
not separate or different.
    (b) Counseling and placement services. A recipient to which this 
subpart applies that provides personal, academic, or vocational 
counseling guidance, or placement services to its students shall provide 
these services without discrimination on the basis of handicap. The 
recipient shall ensure that qualified handicapped students are not 
counseled toward more restrictive career objectives than are 
nonhandicapped students with similar interests and abilities. This 
requirement does not preclude a recipient from providing factual 
information about licensing

[[Page 102]]

and certification requirements that may present obstacles to handicapped 
persons in their pursuit of particular careers.
    (c) Social organizations. A recipient that provides significant 
assistance to fraternities, sororities, or similar organizations shall 
assure itself that the membership practices of such organizations do not 
permit discrimination otherwise prohibited by this subpart.



                          Subpart E--Procedures



Sec. 8b.26  Procedures.

    The enforcement provisions applicable to Title VI of the Civil 
Rights Act of 1964 found at Secs. 8.7 through 8.15 of this subtitle 
shall apply to this part.



PART 8c--ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF COMMERCE--Table of Contents




Sec.
8c.1  Purpose.
8c.2  Application.
8c.3  Definitions.
8c.4--8c.9  [Reserved]
8c.10  Self-evaluation.
8c.11  Notice.
8c.12--8c.29  [Reserved]
8c.30  General prohibitions against discrimination.
8c.31--8c.39  [Reserved]
8c.40  Employment.
8c.41--8c.48  [Reserved]
8c.49  Program accessibility: Discrimination prohibited.
8c.50  Program accessibility: Existing facilities.
8c.51  Program accessibility: New construction and alterations.
8c.52--8c.59  [Reserved]
8c.60  Communications.
8c.61--8c.69  [Reserved]
8c.70  Compliance procedures.

    Authority: 29 U.S.C 794.

    Source: 53 FR 19277, May 27, 1988, unless otherwise noted.



Sec. 8c.1  Purpose.

    This part effectuates section 119 of the Rehabilitation, 
Comprehensive Services, and Developmental Disabilities Amendments of 
1978, which amended section 504 of the Rehabilitation Act of 1973 to 
prohibit discrimination on the basis of handicap in programs or 
activities conducted by Executive agencies or the United States Postal 
Service.



Sec. 8c.2  Application.

    This part applies to all programs or activities conducted by the 
agency except for programs or activities conducted outside the United 
States that do not involve individuals with handicaps in the United 
States.



Sec. 8c.3  Definitions.

    For purposes of this part, the term--
    Agency means the Department of Commerce.
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TDD's), interpreters, notetakers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.

[[Page 103]]

    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) ``Physical or mental impairment'' includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term ``physical or mental 
impairment'' includes, but is not limited to, such diseases and 
conditions as orthopedic, visual, speech, and hearing impairments, 
cerebral palsy, epilepsy, muscular dystrophy, multiple sclerosis, 
cancer, heart disease, diabetes, mental retardation, emotional illness, 
and drug addiction and alcoholism
    (2) ``Major life activities'' includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) ``Has a record of such an impairment'' means has a history of, 
or has been misclassified as having, a mental or physical impairment 
that substantially limits one or more major life activities.
    (4) ``Is regarded as having an impairment'' means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others 
towards such impairment; or
    (iii) Has none of the impairments defined in subparagraph (1) of 
this definition but is treated by the agency as having such an 
impairment.
    Qualified individual with handicaps means--
    (1) With respect to any agency program or activity under which a 
person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
agency can demonstrate would result in a fundamental alteration in its 
nature;
    (2) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (3) ``Qualified handicapped person'' as that term is defined for 
purposes of employment in 29 CFR 1613.702(f), which is made applicable 
to this part by Sec. 8c.40.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617); 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978) Pub. L. 95-602, 92 Stat. 2955); and the 
Rehabilitation Act Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810). 
As used in this part, section 504 applies only to programs or activities 
conducted by Executive agencies and not to federally assisted programs.

[53 FR 19277, May 27, 1988; 53 FR 25722, July 8, 1988]



Secs. 8c.4--8c.9  [Reserved]



Sec. 8c.10  Self-evaluation.

    (a) The agency shall, by July 26, 1989, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this part, and, to the extent modification of 
any such policies and practices is required, the agency shall proceed to 
make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-

[[Page 104]]

evaluation process by submitting comments (both oral and written).
    (c) The agency shall, until three years following the completion of 
the self-evaluation, maintain on file and make available for public 
inspection:
    (1) A description of areas examined and any problems identified, and
    (2) A description of any modifications made.



Sec. 8c.11  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such manner as the Secretary of 
Commerce or the Secretary's designee finds necessary to apprise such 
persons of the protections against discrimination assured them by 
section 504 and this regulation.



Secs. 8c.12--8c.29  [Reserved]



Sec. 8c.30  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits, or services 
that are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of a planning or advisory board; or
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified individual with handicaps 
the opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicaps; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program with respect to individuals with handicaps.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with handicaps 
to discrimination

[[Page 105]]

on the basis of handicap, nor may the agency establish requirements for 
the programs or activities of licensees or certified entities that 
subject qualified individuals with handicaps to discrimination on the 
basis of handicap. However, the programs or activities of entities that 
are licensed or certified by the agency are not, themselves, covered by 
this part.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Secs. 8c.31--8c.39  [Reserved]



Sec. 8c.40  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the agency. The definitions, requirements, and 
procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791), as established by the Equal Employment Opportunity Commission in 
29 CFR Part 1613, shall apply to employment in federally conducted 
programs or activities.



Secs. 8c.41--8c.48  [Reserved]



Sec. 8c.49  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 8c.50, no qualified individual 
with handicaps shall, because the agency's facilities are inaccessible 
to or unusable by individuals with handicaps, be denied the benefits of, 
be excluded from participation in, or otherwise be subjected to 
discrimination under any program or activity conducted by the agency.



Sec. 8c.50  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with handicaps; or
    (2) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with section Sec. 8c.50(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the Secretary of Commerce or the 
Secretary's designee after considering all agency resources available 
for use in the funding and operation of the conducted program or 
activity, and must be accompanied by a written statement of the reasons 
for reaching that conclusion. If an action would result in such an 
alteration or such burdens, the agency shall take any other action that 
would not result in such an alteration or such burdens but would 
nevertheless ensure that individuals with handicaps receive the benefits 
and services of the program or activity.
    (b) Methods. The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
individuals with handicaps. The agency is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance with this section. The agency, in 
making alterations to existing buildings, shall meet accessibility 
requirements

[[Page 106]]

to the extent compelled by the Architectural Barriers Act of 1968, as 
amended (42 U.S.C. 4151-4157), and any regulations implementing it. In 
choosing among available methods for meeting the requirements of this 
section, the agency shall give priority to those methods that offer 
programs and activities to qualified individuals with handicaps in the 
most integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by September 26, 1988, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by July 26, 1991, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by January 26, 1989, a transition plan setting 
forth the steps necessary to complete such changes. The agency shall 
provide an opportunity to interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its program or activities to individuals with 
handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.



Sec. 8c.51  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 8c.52--8c.59  [Reserved]



Sec. 8c.60  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applications and 
beneficiaries by telephone, telecommunication devices for deaf persons 
(TDD's) or equally effective telecommunication systems shall be used.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signs at a primary entrance to each of 
its inaccessible facilities, directing users to a location at which they 
can obtain information about accessible facilities. The international 
symbol for accessibility shall be used at each primary entrance of an 
accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In

[[Page 107]]

those circumstances where agency personnel believe that the proposed 
action would fundamentally alter the program or activity or would result 
in undue financial and administrative burdens, the agency has the burden 
of proving that compliance with Sec. 8c.60 would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration of burdens must be made by the Secretary of Commerce or the 
Secretary's designee after considering all agency resources available 
for use in the funding and operation of the conducted program or 
activity, and must be accompanied by a written statement of the reasons 
for reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, individuals with handicaps receive the benefits and 
services of the program or activity.



Secs. 8c.61--8.69  [Reserved]



Sec. 8c.70  Compliance procedures

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
Part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Chief of the Compliance Divison shall be responsible for 
coordinating implemention of this section. Complaints may be sent to 
Chief, Compliance Division, Office of Civil Rights, Room 6012, Herbert 
C. Hoover Building, 14th and Constitution Avenue, Washington, DC, 20230.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete complaints must be filed 
within 180 days of the alleged act of discrimination. The agency may 
extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), is not readily accessible to 
and usable by individuals with handicaps.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 8c.70(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the Assistant 
Secretary for Administration.
    (j) The Assistant Secretary for Administration shall notify the 
complainant of the results of the appeal within 60 days of the receipt 
of the request. If the Assistant Secretary for Administration determines 
that additional information is needed from the complainant, he or she 
shall have 60 days from the date of receipt of the additonal information 
to make his or her determination on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of the section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[53 FR 19277, May 27, 1988; 53 FR 25722, July 8, 1988]

[[Page 108]]



PART 9--PROCEDURES FOR A VOLUNTARY LABELING PROGRAM FOR HOUSEHOLD APPLIANCES AND EQUIPMENT TO EFFECT ENERGY CONSERVATION--Table of Contents




Sec.
9.0  Purpose.
9.1  Goal of program.
9.2  Definitions.
9.3  Appliances and equipment included in program.
9.4  Development of voluntary energy conservation specifications.
9.5  Participation of manufacturers.
9.6  Termination of participation.
9.7  Department of Commerce energy conservation mark.
9.8  Amendment or revision of voluntary energy conservation 
          specifications.
9.9  Consumer education.
9.10  Coordination with State and local programs.
9.11  Annual report.

    Authority: Sec. 2, 31 Stat. 1449, as amended, sec. 1, 64 Stat. 371; 
15 U.S.C. 272, Reorganization Plan No. 3 of 1946, Part VI; Message from 
the President of the United States Concerning Energy Resources, April 
18, 1973 (119 Cong. Rec. H2886).

    Source: 38 FR 29574, Oct. 26, 1973, unless otherwise noted.



Sec. 9.0  Purpose.

    The purpose of this part is to establish procedures relating to the 
Department's voluntary labeling program for household appliances and 
equipment to promote and effect energy conservation.



Sec. 9.1  Goal of program.

    (a) This program was initiated in response to the direction of 
President Nixon in his 1973 Energy Message that the Department of 
Commerce in cooperation with the Council on Environmental Quality and 
the Environmental Protection Agency develop a voluntary labeling program 
which would apply to energy-consuming home appliances.
    (b) The goal of this program is to encourage manufacturers to 
provide consumers, at the point of sale, with information on the energy 
consumption and energy efficiency of household appliances and equipment. 
Such information, presented in a uniform manner readily understandable 
to consumers, would be displayed on labels attached to or otherwise 
provided with the appliances or equipment. The labels will include a 
system intended to make it possible for consumers to compare by cost or 
otherwise the energy consumption and energy efficiency characteristics 
when purchasing household appliances and equipment and to select those 
that can effect savings in energy consumption.



Sec. 9.2  Definitions.

    (a) The term Secretary means the Secretary of Commerce.
    (b) The term manufacturer means any person engaged in the 
manufacturing or assembling of new appliances or equipment in the United 
States, or in the importing of such products for sale or resale, or any 
person whose brand or trademark appears on such products who owns such 
brand or trademark and has authorized its use on such products, if the 
brand or trademark of the person actually manufacturing or assembling 
the products does not appear on the products.
    (c) The term energy consumption means the energy resources used by 
appliances or equipment under conditions of use approximating actual 
operating conditions insofar as practical as determined through test 
procedures contained or identified in a final Voluntary Energy 
Conservation Specification published under Sec. 9.4(e).
    (d) The term energy efficiency means the energy use of appliances or 
equipment relative to their output of services, as determined through 
test procedures contained or identified in a final Voluntary Energy 
Conservation Specification published under Sec. 9.4(e).
    (e) The term consumer means the first person who purchases a new 
appliance or item of equipment for purposes other than resale.
    (f) The term class of appliance or equipment means a group of 
appliances or equipment whose functions or features are similar, and 
whose functional output covers a range that may be of interest to 
consumers.
    (g) The term Specification means a Voluntary Energy Conservation 
Specification developed under Sec. 9.4.
    (h) The term label means printed matter affixed to or otherwise 
provided with appliances or equipment and

[[Page 109]]

meeting all the requirements called for in a Voluntary Energy 
Conservation Specification published under Sec. 9.4(e).

[38 FR 29574, Oct. 26, 1973, as amended at 40 FR 33966, Aug. 13, 1975]



Sec. 9.3  Appliances and equipment included in program.

    The appliances and equipment included in this program are room and 
central air conditioners, household refrigerators, home freezers, 
clothes washers, dishwashers, clothes dryers, kitchen ranges and ovens, 
water heaters, comfort heating equipment, and television receivers. 
Additional appliances and equipment may be included in the program by 
the Secretary pursuant to rule making procedures as set out in 5 U.S.C. 
553. Individual units of appliances and equipment manufactured for 
export are not included in this program.

[38 FR 29574, Oct. 26, 1973, as amended at 40 FR 33966, Aug. 13, 1975]



Sec. 9.4  Development of voluntary energy conservation specifications.

    (a) The Secretary in cooperation with appropriate Federal agencies 
and in cooperation with affected manufacturers, distributors, retailers, 
consumers, environmentalists, and other interested parties shall develop 
proposed Specifications for the specific classes of appliances and 
equipment covered under Sec. 9.3.
    (b) Each Specification shall as a minimum include:
    (1) A description of the class of appliance or equipment covered by 
the Specification, listing the distribution of energy efficiencies for 
that class of appliance or equipment.
    (2) Listings or descriptions of test methods to be used in measuring 
the energy consumption and/or energy efficiency characteristics of the 
class of appliance or equipment.
    (3) A prototype Label and directions for displaying the Label on or 
with appliances or equipment of that class. The Label shall be 
prominent, readable, and visible and shall include information that will 
assist the consumer in comparing by cost or otherwise the energy 
consumption and/or energy efficiency characteristics of a particular 
appliance or item of equipment with all others in its class. The Label 
shall also include the Department of Commerce Energy Conservation Mark 
specified in Sec. 9.7.
    (4) Conditions for the participation of manufacturers in the 
program.
    (c) The test methods listed or described in the Specification 
pursuant to Sec. 9.4(b)(2) shall be those described in existing 
nationally-recognized voluntary standards where such methods are 
appropriate. Where appropriate test methods do not so exist, they will 
be developed by the Department of Commerce in cooperation with 
interested parties.
    (d) The Secretary upon development of a proposed Specification shall 
publish in the Federal Register a notice giving the complete text of the 
proposed Specification, and any other pertinent information, and 
inviting any interested person to submit written comments on the 
proposed Specification within 30 days after its publication in the 
Federal Register, unless another time limit is provided by the 
Secretary. Interested persons wanting to express their views in an 
informal hearing may do so if, within 15 days after the proposed 
Specification is published in the Federal Register, they request the 
Secretary to hold a hearing. Such informal hearings shall be held so as 
to give all interested persons opportunity for the oral presentation of 
data, views, or arguments in addition to the opportunity to make written 
submissions. Notice of such hearings shall be published in the Federal 
Register. A transcript shall be kept of any oral presentations.
    (e) The Secretary, after consideration of all written and oral 
comments and other materials received in accordance with paragraph (d) 
of this section, shall publish in the Federal Register within 30 days 
after the final date for receipt of comments, or as soon as practicable 
thereafter, a notice either:
    (1) Giving the complete text of a final Specification, including 
conditions of use, and stating that any manufacturer of appliances or 
equipment in the class concerned desiring voluntarily to use the Label 
and Energy Conservation Mark with such appliances or equipment must 
advise the Department of Commerce; or

[[Page 110]]

    (2) Stating that the proposed Specification will be further 
developed before final publication; or
    (3) Withdrawing the proposed Specification from further 
consideration.



Sec. 9.5  Participation of manufacturers.

    (a) Manufacturers desiring to participate in this program will so 
notify the Department of Commerce. The notification will identify the 
particular Specification to be used and the manufacturer's model numbers 
for the products to be labeled. The notification will also state that 
the manufacturer will abide by all conditions contained in the 
Specification and will desist from using the Label and Energy 
Conservation Mark if requested by the Department of Commerce under the 
provisions of Sec. 9.6.
    (b) The conditions for participation will be set out in the 
Specification and will include, but not be limited to, the following:
    (1) Prior to the use of a Label the manufacturer will make or have 
made the measurements to obtain the information required for inclusion 
on the Label and, if requested, will forward within 30 days such 
measurement data to the Department of Commerce. Such measurement data 
will be kept on file by the manufacturer or his agent for two years 
after that model of appliance or equipment is no longer manufactured 
unless otherwise provided in the Specification. The use of independent 
test laboratories or national certification programs available to any 
manufacturer is acceptable for the purposes of this program.
    (2) The manufacturer will describe the test results on the Label as 
prescribed in the Specification.
    (3) The manufacturer will display or arrange to display, in 
accordance with the appropriate Specification, the Label on or with each 
individual unit of appliance or equipment within the subject class and 
with the same brand name manufactured by him except for units exported 
from the United States. All models with the same brand name that fall 
within the class must be included in the program unless they are for 
export only.
    (4) The manufacturer agrees at his expense to comply with any 
reasonable request of the Department of Commerce to have appliances or 
equipment manufactured by him tested to determine that testing has been 
done according to the relevant Specification.
    (5) Manufacturers may reproduce the Department of Commerce Labels 
and Energy Conservation Mark in advertising provided that the entire 
Label, complete with all information required to be displayed at the 
point of retail sale, is shown legibly.



Sec. 9.6  Termination of participation.

    (a) The Department of Commerce upon finding that a manufacturer is 
not complying with the conditions of participation set out in these 
procedures or in a Specification may terminate upon 30 days notice the 
manufacturer's participation in the program: Provided, That the 
manufacturer shall first be given an opportunity to show cause why the 
participation should not be terminated. Upon receipt of a notice of 
termination, a manufacturer may request within 30 days a hearing under 
the provisions of 5 U.S.C. 558.
    (b) A manufacturer may at any time terminate his participation and 
responsibilities under this program with regard to a specific class of 
products by giving written notice to the Secretary that he has 
discontinued use of the Label and Energy Conservation Mark for all 
appliances or equipment within that class.



Sec. 9.7  Department of Commerce energy conservation mark.

    The Department of Commerce shall develop an Energy Conservation Mark 
which shall be registered in the U.S. Patent Office under 15 U.S.C. 1054 
for use on each Label described in a Specification.



Sec. 9.8  Amendment or revision of voluntary energy conservation specifications.

    The Secretary may by order amend or revise any Specification 
published under Sec. 9.4. The procedure applicable to the establishment 
of a Specification under Sec. 9.4 shall be followed in amending or 
revising such Specification. Such amendment or revision shall not

[[Page 111]]

apply to appliances or equipment manufactured prior to the effective 
date of the amendment or revision.



Sec. 9.9  Consumer education.

    The Department of Commerce, in close cooperation and coordination 
with interested Government agencies, appropriate industry trade 
associations and industry members, and interested consumers and 
environmentalists shall carry out a program to educate consumers 
relative to the significance of the labeling program. Some elements of 
this program shall also be directed toward informing retailers and other 
interested groups about the program.



Sec. 9.10  Coordination with State and local programs.

    The Department of Commerce will establish and maintain an active 
program of communication with appropriate state and local government 
offices and agencies and will furnish and make available information and 
assistance that will promote to the greatest practicable extent 
uniformity in State, local, and Federal programs for the labeling of 
household appliances and equipment to effect energy conservation.



Sec. 9.11  Annual report.

    The Secretary will prepare an annual report of activities under the 
program, including an evaluation of the program and a list of 
participating manufacturers and classes of appliances and equipment.



PART 10--PROCEDURES FOR THE DEVELOPMENT OF VOLUNTARY PRODUCT STANDARDS--Table of Contents




Sec.
10.0  General.
10.1  Initiating development of a new standard.
10.2  Funding.
10.3  Development of a proposed standard.
10.4  Establishment of the Standard Review Committee.
10.5  Development of a recommended standard.
10.6  Procedures for acceptance of a recommended standard.
10.7  Procedure when a recommended standard is not supported by a 
          consensus.
10.8  Standing Committee.
10.9  Publication of a standard.
10.10  Review of published standards.
10.11  Revision or amendment of a standard.
10.12  Editorial changes.
10.13  Withdrawal of a published standard.
10.14  Appeals.
10.15  Interpretations.
10.16  Effect of procedures.

    Authority: Sec. 2.31 Stat. 1449, as amended, sec. 1, .64 Stat 371; 
15 U.S.C. 272, Reorganization Plan No. 3 of 1946, Part VI (3 CFR 1943-
1948 Comp., p. 1065).

    Source: 51 FR 22497, June 20, 1986, unless otherwise noted.



Sec. 10.0  General.

    (a) Introduction. The Department of Commerce (hereinafter referred 
to as the ``Department'') recognizes the importance, the advantages, and 
the benefits of voluntary standards and standardization activities. Such 
standards may cover, but are not limited to, terms, classes, sizes 
(including quantities of packaged consumer commodities), dimensions, 
capacities, quality levels, performance criteria, inspection 
requirements, marking requirements, testing equipment, test procedures 
and installation procedures. Economic growth is promoted through:
    (1) Reduction of manufacturing costs, inventory costs, and 
distribution costs;
    (2) Better understanding among manufacturers, producers, or 
packagers (hereinafter referred to as producers), distributors, users, 
and consumers; and
    (3) Simplification of the purchase, installation, and use of the 
product being standardized.
    (b) Requirements for Department of Commerce sponsorship. The 
Department may sponsor the development of a voluntary Product Standard 
if, upon receipt of a request, the Department determines that:
    (1) The proposed standard is likely to have substantial public 
impact;
    (2) The proposed standard reflects the broad interest of an industry 
group or an organization concerned with the manufacture, production, 
packaging, distribution, testing, consumption, or use of the product, or 
the interest of a Federal or State agency;
    (3) The proposed standard would not duplicate a standard published 
by, or actively being developed or revised by, a private standards-
writing organization to such an extent that it would

[[Page 112]]

contain similar requirements and test methods for identical types of 
products, unless such duplication was deemed by the Department to be in 
the public interest;
    (4) Lack of government sponsorship would result in significant 
public disadvantage for legal reasons or reasons of domestic and 
international trade;
    (5) The proposed standard is not appropriate for development and 
maintenance by a private standards-writing organization; and
    (6) The proposed standard will be funded by a proponent organization 
or government agency to cover costs for administrative and technical 
support services provided by the Department.
    (c) Role of the Department. The Department assists in the 
establishment of a Voluntary Product Standard as follows:
    (1) Acts as an unbiased coordinator in the development of the 
standard;
    (2) Provides editorial assistance in the preparation of the 
standard;
    (3) Supplies such assistance and review as is required to assure the 
technical soundness of the standard;
    (4) Seeks satisfactory adjustment of valid points of disagreement;
    (5) Determines the compliance with the criteria established in these 
procedures for such voluntary standards;
    (6) Provides secretarial functions for each committee appointed by 
the Department under these procedures;
    (7) Publishes the standard as a public document;
    (8) Administers the funds for administrative and technical support 
services; and
    (9) Seeks listing for standards developed under these procedures as 
American National Standards through the American National Standards 
Institute, when deemed appropriate by the Department.
    (d) Role of producers, distributors, users, and consumers. 
Producers, distributors, users, consumers, and other interested groups 
may contribute to the development of a Voluntary Product Standard as 
follows:
    (1) Initiate and participate in the development of the standard;
    (2) Provide technical or other relevant counsel, as appropriate, 
relating to the standard;
    (3) Promote the use of, and support for, the standard; and
    (4) Assist in keeping the standard current with respect to advancing 
technology and marketing practices.
    (e) Role of the National Institute of Standards & Technology. The 
National Institute of Standards & Technology (NIST) administers these 
procedures for the Department. Any communications concerning these 
procedures (e.g., questions, clarifications, appeals) should be 
addressed to the Office of Product Standards Policy, National Institute 
of Standards & Technology, Gaithersburg, Maryland 20899.

[51 FR 22497, June 20, 1986, as amended at 55 FR 38315, Sept. 18, 1990]



Sec. 10.1  Initiating development of a new standard.

    (a) Any group or association of producers, distributors, users, or 
consumers, or a testing laboratory, or a State or Federal agency, may 
request the Department to initiate the development and publication of a 
Voluntary Product Standard under these procedures. Requests shall be in 
writing, signed by a representative of the group or agency, and 
forwarded to the Department. The initial request may be accompanied by a 
copy of a draft of the suggested standard.
    (b) The request shall include a commitment to provide sufficient 
funding to cover all costs associated with the development and 
maintenance of the proposed Voluntary Product Standard.
    (c) The Department may require additional information such as 
technical, marketing, or other appropriate data essential to discussion 
and development of the proposed standard, including, but not limited to, 
physical, mechanical, chemical, or performance characteristics, and 
production figures.
    (d) Upon receipt of an appropriate request and after a determination 
by the Department that the development of a Voluntary Product Standard 
is justified, the Department may initiate the development by requesting 
that a draft of the suggested standard be prepared by an appropriate 
committee, provided such a draft has not previously been submitted under 
paragraph (a) of this section.

[[Page 113]]

    (e) The Department may initiate the development of a Voluntary 
Product Standard, if such action is deemed by the Department to be in 
the public interest, notwithstanding the absence of a request from an 
outside source. A voluntary standard initiated by the Department shall 
be processed in accordance with all requirements of these procedures and 
shall be developed in the same manner as a voluntary standard initiated 
by any group referred to in paragraph (a) of this section.
    (f) An agreement regarding funding procedures and receipt of a 
deposit estimated by the Department to be sufficient to cover the first 
year's costs shall occur prior to the initiation of any project.



Sec. 10.2  Funding.

    Groups who represent producers, distributors, consumers or users, or 
others that wish to act or continue to act as proponent organizations 
for the development or maintenance of a Voluntary Product Standard will 
be required to pay for administrative and technical support services 
provided by the National Institute of Standards & Technology and such 
other direct or indirect costs associated with the development or 
maintenance of that standard as may be deemed appropriate by the 
Department, including costs to the Department in connection with the 
operation of the Standard Review Committee and the Standing Committee. 
Funds may also be provided by a government agency at the request of a 
proponent organization or when acting on its own behalf for the 
development or maintenance of a Voluntary Product Standard. Proponents 
of standards that meet sponsorship criteria established in these 
procedures shall furnish an initial deposit of funds sufficient to cover 
the first year's services and other costs. Estimated annual costs will 
be based on an hourly rate for salary and overhead established by the 
Department for the National Institute of Standards & Technology's 
administrative and technical support services plus estimates of direct 
costs to provide funds for such items as the travel of consumer 
representatives unable to otherwise attend committee meetings, travel 
for Department staff, and printing costs. Project funds will be reviewed 
annually. Excess funds may be refunded or applied to the next accounting 
period. Should funds from deposits be inadequate during an accounting 
period, work on the project will continue only if funds are restored to 
a level estimated adequate to complete the 12-month period.

[51 FR 22497, June 20, 1986, as amended at 55 FR 38315, Sept. 18, 1990]



Sec. 10.3  Development of a proposed standard.

    (a) A proposed standard as submitted to the Department:
    (1) Shall be based on adequate technical information, or, in the 
case of size standards (including standards covering the quantities for 
packaged consumer commodities), on adequate marketing information, or 
both, as determined to be appropriate by the Department;
    (2) Shall not be contrary to the public interest;
    (3) Shall be technically appropriate and such that conformance or 
nonconformance with the standard can be determined either during or 
after the manufacturing process by inspection or other procedures which 
may be utilized by either an individual or a testing facility competent 
in the particular field;
    (4) Shall follow the format prescribed by the National Institute of 
Standards & Technology. (Copies of the recommended format may be 
obtained from the Office of Product Standards Policy, National Institute 
of Standards & Technology, Gaithersburg, Maryland 20899.);
    (5) Shall include performance requirements if such are deemed by the 
Department to be technically sound, feasible, and practical, and the 
inclusion of such is deemed to be appropriate;
    (6) May include dimensions, sizes, material specifications, product 
requirements, design stipulations, component requirements, test methods, 
testing equipment descriptions, and installation procedures. The 
appropriateness of the inclusion in a standard of any particular item 
listed in this subparagraph shall be determined by the Department; and

[[Page 114]]

    (7) Shall be accompanied by rational statements pertaining to the 
requirements and test methods contained in the standard, if deemed 
necessary by the Department.
    (b) A proposed standard that is determined by the Department to meet 
the criteria set forth in paragraph (a) of this section may be subjected 
to further review by an appropriate individual, committee, organization, 
or agency (either government or nongovernment, but not associated with 
the proponent group).
    (c) A proposed standard may be circulated by the Department to 
appropriate producers, distributors, users, consumers, and other 
interested groups for consideration and comment as well as to others 
requesting the opportunity to comment.
    (d) The proponent group or appropriate committee which drafted the 
initial proposal under Sec. 10.1(d) shall consider all comments and 
suggestions submitted by the reviewer designated under paragraph (b) of 
this section, and those received by the Department as a result of any 
circulation under paragraph (c) of this section, and may make such 
adjustments in the proposal as are technically sound and as are believed 
to cause the standard to be generally acceptable to producers, 
distributors, users, consumers, and other interested parties. The 
proposal will then be submitted to the Department for further 
processing.

[51 FR 22497, June 20, 1986, as amended at 55 FR 38315, Sept. 18, 1990]



Sec. 10.4  Establishment of the Standard Review Committee.

    (a) The Department shall establish and appoint the members of a 
Standard Review Committee within a reasonable time after receiving a 
proposed standard. The committee shall consist of qualified 
representatives of producers, distributors, and users or consumers of 
product for which a standard is sought or any other appropriate general 
interest groups such as State and Federal agencies. When requested by 
the Standard Review Committee, the Department shall appoint one voting 
member from among the representatives of the Federal agencies, other 
than the Department of Commerce. All other representatives of Federal 
agencies on the Standard Review Committees shall be advisory nonvoting 
members. (Alternates to committee members may be designated by the 
Department.) When deemed appropriate by the Department, project funds 
under Sec. 10.2 may be made available to assure participation by 
consumer interests on the committee at required meetings.
    (b) A Standard Review Committee may remain in existence for a period 
necessary for the final development of the standard, or for 2 years, 
whichever is less.
    (c) The Department shall be responsible for the organization of the 
committee. Any formal operating procedures developed by the committee 
shall be subject to approval by the Department. The committee may 
conduct business either in a meeting or through correspondence, but only 
if a quorum participates. A quorum shall consist of two-thirds of all 
voting members of the committee. A majority of the voting members of the 
committee participating shall be required to approve any actions taken 
by the committee except for the action of recommending a standard to the 
Department, the requirements for which are contained in Sec. 10.5(b).



Sec. 10.5  Development of a recommended standard.

    (a) The Standard Review Committee, with the guidance and assistance 
of the Department and, if appropriate, the reviewer designated under 
Sec. 10.3(b), shall review a proposed standard promptly. If the 
committee finds that the proposal meets the requirements set forth in 
Sec. 10.3(a), it may recommend to the Department that the proposal be 
circulated for acceptance under Sec. 10.6. If, however, the committee 
finds that the proposal being reviewed does not meet the requirements 
set forth in Sec. 10.3(a), the committee shall change the proposal, 
after consulting with the proponent group, so that these requirements 
are met, before recommending such proposal to the Department.
    (b) The recommendation of a standard by the Standard Review 
Committee shall be approved by at least three-quarters, or rejected by 
more than one-quarter, of all of the members of the

[[Page 115]]

committee eligible to vote. The voting on the recommendation of a 
standard shall be conducted by the Department if conducted by letter 
ballot. If such voting is accomplished at a meeting of the committee, 
the balloting shall be either by roll call or by signed written ballot 
conducted by the Department or the chairman of this committee. If 
conducted by the chairman, a report of the vote shall be made to the 
Department within 15 days. If the balloting at the meeting does not 
result in either approval by at least three-quarters of all members (or 
alternates) eligible to vote (whether present or not), or rejection by 
more than one-quarter of the members (or alternates) or the committee 
eligible to vote, the balloting shall be disregarded and the Department 
shall subsequently conduct a letter ballot of all members of the 
committee.
    (c) Any member of the committee casting a negative ballot shall have 
the right to support an objection by furnishing the chairman of the 
committee and the Department with a written statement setting forth the 
basis for the objection. The written statement of objection shall be 
filed within 15 days after the date of the meeting during which the 
voting on the standard was accomplished, or, in the case of a letter 
ballot, within the time limit established for the return of the ballot.
    (d) At the time a recommended standard is submitted to the 
Department, the Chairman of the Standard Review Committee shall furnish 
a written report in support of the committee's recommendation. Such 
report shall include a statement with respect to compliance with the 
requirements as established by these procedures, a discussion of the 
manner in which any objections were resolved, and a discussion of any 
unresolved objections together with the committee's reasons for 
rejecting such unresolved objections.



Sec. 10.6  Procedures for acceptance of a recommended standard.

    (a) Upon receipt from the Standard Review Committee of a recommended 
standard and report, the Department shall give appropriate public notice 
and distribute the recommended standard for acceptance unless:
    (1) Upon a showing by any member of the committee who has voted to 
oppose the recommended standard on the basis of an unresolved objection, 
the Department determines that if such objection were not resolved, the 
recommended standard:
    (i) Would be contrary to the public interest, if published;
    (ii) Would be technically inadequate; or
    (iii) Would be inconsistent with law or established public policy; 
or
    (2) The Department determines that all criteria and procedures set 
forth herein have not been met satisfactorily or that there is a legal 
impediment to the recommended standard.
    (b) Distribution for acceptance or rejection for the purpose of 
determining general concurrence will be made to a list compiled by the 
Department, which, in the judgment of the Department, shall be 
representative of producers, distributors, and users and consumers.
    (c) Distribution for comment will be made to any party filing a 
written request with the Department, and to such other parties as the 
Department may deem appropriate, including testing laboratories and 
interested State and Federal agencies.
    (d) The Department shall analyze the recommended standard and the 
responses received under paragraphs (b) and (c) of this section. If such 
analysis indicates that the recommended standard is supported by a 
consensus, it shall be published as a Voluntary Product Standard by the 
Department: Provided, That all other requirements listed in these 
procedures have been satisfied.
    (e) The following definitions shall apply to the term used in this 
section:
    (1) ``Consensus'' means general concurrence and, in addition, no 
substantive objection deemed valid by the Department.
    (2) ``General concurrence'' means acceptance among those responding 
to the distribution made under paragraph (b) of this section in 
accordance with the conditions set forth in paragraph (f) of this 
section.

[[Page 116]]

    (3) ``Substantive objection'' means a documented objection based on 
grounds that one or more of the criteria set forth in these procedures 
has not been satisfied.
    (4) ``Average industry acceptance'' means a percentage equal to the 
sum of the percentages of acceptance obtained from responses to 
distribution of the recommended standard in the producer segment, the 
distributor segment, and the user and consumer segment, divided by 
three. No consideration will be given to volume of production or volume 
of distribution in determining average industry acceptance.
    (5) ``Producer segment'' means those persons who manufacture or 
produce the product covered by the standard.
    (6) ``Distributor segment'' means those persons who distribute at 
wholesale or retail the product covered by the standard.
    (7) ``User and consumer segment'' means those persons who use or 
consume the product covered by the standard.
    (8) ``Acceptance by volume of production'' means the weighted 
percentage of acceptance of those responding to the distribution in the 
producer segment. The weighting of each response will be made in 
accordance with the volume of production represented by each respondent.
    (9) ``Acceptance by volume of distribution'' means the weighted 
percentage of acceptance of those responding to the distribution in the 
distributor segment. The weighting of each response will be made in 
accordance with the volume of distribution represented by each 
respondent.
    (f) A recommended standard shall be deemed to be supported by 
general concurrence whenever:
    (1) An analysis of the responses to the distribution under paragraph 
(b) of this section indicates:
    (i) An average industry acceptance of not less than 75 percent;
    (ii) Acceptance of not less than 70 percent by the producer segment, 
the distributor segment, and the user and consumer segment, each segment 
being considered separately; and
    (iii) Acceptance by volume of production and acceptance by volume of 
distribution of not less than 70 percent in each case: Provided, That 
the Department shall disregard acceptance by volume of production or 
acceptance by volume of distribution or both unless, in the judgment of 
the Department, accurate figures for the volume of production or 
distribution are reasonably available and an evaluation of either or 
both of such acceptances is deemed necessary by the Department; or
    (2) The Department determines that publication of the standard is 
appropriate under the procedures set forth in paragraph (g) of this 
section and, in addition, an analysis of the responses to the 
distribution under paragraph (b) of this section indicates:
    (i) An average industry acceptance of not less than 66\2/3\ percent;
    (ii) Acceptance of not less than 60 percent by the producer segment, 
the distributor segment, and the user and consumer segment, each segment 
being considered separately; and
    (iii) Acceptance by volume of production and acceptance by volume of 
distribution of not less than 60 percent in each case: Provided, That 
the Department shall disregard acceptance by volume of production or 
acceptance by volume of distribution or both unless, in the judgment of 
the Department, accurate figures for the volume of production or 
distribution are reasonably available and an evaluation of either or 
both of such acceptances is deemed necessary by the Department.
    (g) A recommended standard which fails to achieve the acceptance 
requirements of paragraph (f)(1) of this section, but which satisfies 
the acceptance criteria of paragraph (f)(2) of this section, shall be 
returned to the Standard Review Committee for reconsideration. The 
committee, by the affirmative vote of not less than three-quarters of 
all members eligible to vote, may resubmit the recommended standard 
without change to the Department with a recommendation that the standard 
be published as a Voluntary Product Standard. The Department shall then 
conduct a public rulemaking hearing in accordance with the requirements 
of law as set forth in section 553 of Title 5, United States Code, to 
assist it in determining whether publication of the standard is in the 
public interest. If the Department determines that

[[Page 117]]

publication of the standard is in the public interest, the standard 
shall be published as a Voluntary Product Standard.



Sec. 10.7  Procedure when a recommended standard is not supported by a consensus.

    If the Department determines that a recommended standard is not 
supported by a consensus, the Department may:
    (a) Return the recommended standard to the Standard Review Committee 
for further action, with or without suggestions;
    (b) Terminate the development of the recommended standard under 
these procedures; or
    (c) Take such other action as it may deem necessary or appropriate 
under the circumstances.



Sec. 10.8  Standing Committee.

    (a) The Department shall establish and appoint the members of a 
Standing Committee prior to the publication of a standard. The committee 
may include members from the Standard Review Committee, and shall 
consist of qualified representatives of producers, distributors, and 
users or consumers of the product covered by the standard, and 
representatives of appropriate general interest groups such as 
municipal, State, and Federal agencies. When requested by the Standing 
Committee, the Department shall appoint one voting member from among the 
representatives of the Federal agencies, other than the Department of 
Commerce. When requested by the Standing Committee for PS 20-70, 
``American Softwood Lumber Standard,'' the Department shall appoint two 
voting members from among the representatives of the Federal agencies, 
other than the Department of Commerce. All other representatives of 
Federal agencies shall be advisory nonvoting members of Standing 
Committees. (Alternates to committee members may be designated by the 
Department.) When deemed appropriate by the Department, project funds 
under Sec. 10.2, may be made available to assure participation by 
consumer interests on the committee at required meetings.
    (b) Appointments to a Standing Committee may not exceed a term of 5 
years. However, the committee may be reconstituted by the Department 
whenever appropriate, and members may be reappointed by the Department 
to succeeding terms. Appointments to the committee will be terminated 
upon the withdrawal of the standard.
    (c) The Department shall be responsible for the organization of the 
committee. Any formal operating procedures developed by the committee 
shall be subject to approval by the Department. The committee may 
conduct business either in a meeting or through correspondence, but only 
if a quorum participates. A quorum shall consist of two-thirds of all 
voting members of the committee. A majority of the voting members of the 
committee participating shall be required to approve any actions taken 
by the committee except for the approval of revisions of the standard 
which shall be governed by the provisions of Sec. 10.5 (b), (c), and 
(d),
    (d) The members of a Standing Committee should be knowledgeable 
about:
    (1) The product or products covered by the standard;
    (2) The standard itself; and
    (3) Industry and trade practices relating to the standard.
    (e) The committee shall:
    (1) Keep itself informed of any advancing technology that might 
affect the standard;
    (2) Provide the Department with interpretations of provisions of the 
standard upon request;
    (3) Make recommendations to the Department concerning the 
desirability or necessity of revising or amending the standard;
    (4) Receive and consider proposals to revise or amend the standard; 
and
    (5) Recommend to the Department the revision or amendment of a 
standard.



Sec. 10.9  Publication of a standard.

    A Voluntary Product Standard published by the department under these 
procedures shall be assigned an appropriate number for purposes of 
identification and reference. Public notice shall be given regarding the 
publication and identification of the standard. A voluntary standard by 
itself has no

[[Page 118]]

mandatory or legally binding effect. Any person may choose to use or not 
to use such a standard. Appropriate reference in contracts, codes, 
advertising, invoices, announcements, product labels, and the like may 
be made to a Voluntary Product Standard published under these 
procedures. Such reference shall be in accordance with such policies as 
the Department may establish, but no product may be advertised or 
represented in any manner which would imply or tend to imply approval or 
endorsement of that product by the Department or by the Federal 
Government.



Sec. 10.10  Review of published standards.

    (a) Each standard published under these or previous procedures shall 
be reviewed regularly to determine the feasibility of transferring 
sponsorship to a private standards-writing organization. While the 
Department encourages the development of standards to replace Voluntary 
Product Standards by private standards-writing organizations, withdrawal 
of a Voluntary Product Standard, which meets the requirements of 
Sec. 10.0(b), shall not be considered until a replacement standard is 
published.
    (b) Each standard published under these or previous procedures shall 
be reviewed by the Department, with such assistance of the Standing 
Committee or others as may be deemed appropriate by the Department, 
within 5 years after initial issuance or last revision and at least 
every 5 years thereafter. The purpose of this review shall be to 
determine whether the standard has become obsolete, technically 
inadequate, no longer acceptable to or used by the industry, or 
inconsistent with law or established public policy.
    (c) If any of the above conditions is found to exist, the Department 
shall initiate action to amend, revise, or withdraw the standard in 
accordance with Sec. 10.11 or Sec. 10.13. If none is found to exist, the 
standard shall be kept in effect provided adequate funding is 
maintained.



Sec. 10.11  Revision or amendment of a standard.

    (a) A published standard shall be subject to revision or amendment 
when it is determined to be inadequate by its Standing Committee or by 
the Department of one or more of the following reasons or for any other 
appropriate reasons:
    (1) Any portion of the standard is obsolete, technically inadequate, 
or no longer generally acceptable to or used by the industry;
    (2) The standard or any part of it is inconsistent with law or 
established public policy; or
    (3) The standard or any part of it is being used to mislead users or 
consumers or is determined to be against the interest of users, 
consumers, or the public in general.
    (b) A revision of a standard shall be considered by the Department 
to include changes which are comprehensive in nature, which have a 
substantive effect on the standards, which change the level of 
performance or safety or the design characteristics of the product being 
standardized, or which cannot reasonably be injected into a standard 
without disturbing the general applicability of the standard. Each 
suggestion for revision shall be submitted by the Department to the 
Standing Committee for appropriate consideration. The Standing Committee 
shall serve the same functions in the revision of a standard as the 
Standard Review Committee serves in the development of a new standard. 
The processing of a revision of a standard shall be dependent upon the 
age of the standard as computed from its effective date and shall be 
accomplished as follows:
    (1) A proposed revision of a standard older than 5 years at the time 
such proposed revision is submitted to the Standing Committee by the 
Department shall be processed as a new standard under these procedures 
and, when approved for publication, the standard shall be republished 
and reidentified to indicate the year in which the revision became 
effective. The revised standard shall supersede the previously published 
standard.
    (2) A proposed revision of a standard less than 5 years at the time 
such proposed revision is submitted to the Standing Committee by the 
Department shall be processed as a new standard except that:

[[Page 119]]

    (i) Distribution for acceptance or rejection shall be made to an 
appropriate list of producers, distributors, and users and consumers 
compiled by the Department;
    (ii) If the revision affects only one subsection of the requirement 
section and/or only one subsection of the test methods section, it may 
be circulated separately for determining consensus and subsequently 
published as an addendum to the standard with appropriate dissemination 
and public notice of the addendum; and
    (iii) If the revision does not change the level of performance or 
safety or the design characteristics of the product being standardized, 
the standard need not be reidentified.
    (c) An amendment to a standard shall be considered by the Department 
to be any non-editorial change which is not comprehensive in nature, 
which has no substantive effect on the standard, which does not change 
the level of performance or safety or the design characteristics of the 
product being standardized, and which reasonably can be injected into a 
standard without disturbing the general applicability of the standard. 
Each suggestion for amendment shall be submitted by the Department to 
the Standing Committee for appropriate consideration. An amendment to a 
standard recommended by not less than 90 percent of the members of the 
committee eligible to vote and found acceptable by the Department, shall 
be published as an addendum (until the standard is republished) and 
distributed to acceptors of record. Public notice of the amendment shall 
be given and copies of the amendment shall be distributed to those 
filing written requests.



Sec. 10.12  Editorial changes.

    The Department may, without prior notice, make such editorial or 
other minor changes as it deems necessary to reduce ambiguity or to 
improve clarity in any proposed, recommended, or published standard, or 
revision or amendment thereof.



Sec. 10.13  Withdrawal of a published standard.

    (a) Standards published under these and previous procedures may be 
withdrawn by the Director of the National Institute of Standards & 
Technology at any time. Such action will be taken if, after consultation 
with the Standing Committee as provided in paragraph (a)(1) of this 
section and after public notice, the Director determines that the 
standard is: Obsolete; technically inadequate; no longer generally 
acceptable to and used by the industry; inconsistent with law or 
established public policy; not in the public interest; or otherwise 
inappropriate; and revision or amendment is not feasible or would serve 
no useful purpose. Additionally, a standard may be withdrawn if it 
cannot be demonstrated that a particular standard has substantial public 
impact, that it does not duplicate a standard published by a private 
standards-writing organization, or that lack of government sponsorship 
would result in significant public disadvantage for legal reasons or for 
reasons of domestic and international trade. The Director may withdraw a 
standard if costs to maintain such a standard are not reimbursed by the 
proponent or other government agencies.
    (1) Before withdrawing a standard published under these procedures, 
the Director will review the relative advantages and disadvantages of 
amendment, revision, development of a new standard, or withdrawal with 
the members of the Standing Committee, if such committee was appointed 
or reappointed within the previous five years.
    (2) Public notice of intent to withdraw an existing standard 
published under these procedures shall be given and a 30-day period will 
be provided for the filing with the Director or written objections to 
the withdrawal. Such objections will be considered and analyzed by the 
Director before a determination is made to withdraw the standard. If the 
Director determines that a particular standard does not meet the 
criteria set out in Sec. 10.0(b), the standard will be withdrawn.
    (b) The filing under paragraph (a) of this section of a request to 
retain a standard or standards shall operate to stay the withdrawal of 
such standard or standards until the Director's determination has been 
made. If the Director determines that the requested

[[Page 120]]

standard or standards shall be withdrawn, the stay will remain in 
effect, if an appeal is filed in accordance with the requirements of 
Sec. 10.14, until the decision of the Director is announced in the 
Federal Register. If, however, no appeal is received, the Director shall 
announce withdrawal of the particular standard or standards.
    (c) Notice of the withdrawal action will be published in the Federal 
Register and such withdrawal will take effect 60 days from the date the 
withdrawal notice is published.

[51 FR 22497, June 20, 1986, as amended at 55 FR 38315, Sept. 18, 1990]



Sec. 10.14  Appeals.

    (a) Any person directly affected by a procedural action taken by 
NIST or the Standard Review Committee under Secs. 10.5, 10.6 or 10.7 
regarding the development of a standard, by NIST or the Standing 
Committee under Sec. 10.10 regarding the review of a published standard, 
or under Sec. 10.11 regarding the revision of a standard, or under 
Sec. 10.13 regarding the withdrawal of a standard, may appeal such 
action.
    (b) Such appeal shall be filed in written form with the body taking 
the action complained of (NIST, the Standard Review Committee, or the 
Standing Committee) within 30 days after the date of announcement of the 
action.
    (c) If appeal is filed with the Standard Review Committee or the 
Standing Committee, the Committee shall attempt to resolve the appeal 
informally. If the appeal is filed with NIST, NIST with the consultation 
and advice of the Standard Review Committee or the Standing Committee, 
whichever is appropriate, shall attempt to resolve the appeal 
informally.
    (d) If the appeal is to the Standard Review Committee or the 
Standing Committee and the Committee is unable to resolve such an appeal 
informally, the Committee shall hold a hearing regarding the appeal. 
Announcement of the hearing shall be made to members of the Standard 
Review Committee or the Standing Committee and all the acceptors of 
record, when appropriate, as well as other known interests. Notice of 
the hearing shall be published in the Federal Register. The hearing will 
be an informal, nonadversary proceeding at which there will be no formal 
pleadings or adverse parties. Written statements will be furnished by 
witnesses prior to the hearing. A record of the hearing will be made. 
Copies of the written statements and the record of the hearing will be 
available at cost.
    (e) Those members of the Committee hearing the appeal will develop a 
recommendation to the Committee concerning the resolution of the appeal. 
NIST will review the recommendation and if found acceptable will subject 
it to a letter ballot of the Committee. Approval by three-fourths of the 
members of the Committee eligible to vote will constitute acceptance by 
the Committee and by NIST. Notice of the Committee decision will be 
published in the Federal Register.
    (f) If the appeal is to NIST and the attempt to resolve the appeal 
informally under paragraph (c) of this section is not successful, the 
Deputy Director of NIST will schedule a hearing with an appeals panel at 
an appropriate location. Announcement of the hearing shall be made to 
members of the Standard Review Committee or Standing Committee and all 
acceptors of record, when appropriate, as well as to other known 
interests. Notice of the hearing shall be published in the Federal 
Register.
    (g) The Deputy Director of NIST will name two other persons, who 
have not been directly involved in the matter in dispute and who will 
not be directly or materially affected by any decision made or to be 
made in the dispute, to sit on the panel with the Deputy Director, who 
will act as presiding officer. The presiding officer will have the right 
to exercise such authority as necessary to ensure the equitable and 
efficient conduct of the hearing and to maintain an orderly proceeding.
    (h) The hearing will be an informal, nonadversary proceeding at 
which there will be no formal pleadings or adverse parties. The hearing 
will be open to the public. Witnesses shall submit a written 
presentation for the record seven days prior to the hearing. A record 
will be made of the hearing. Copies of the written statements and the 
record of the hearing will be available at cost.

[[Page 121]]

    (i) The appeals panel will make a recommendation to the Director of 
NIST. The Director's decision on the appeal will be announced within 60 
days following the hearing and will be communicated to the complainant 
and other interested parties by letter. Notice of the Director's 
decision shall be published in the Federal Register.

[51 FR 22497, June 20, 1986, as amended at 55 FR 38315, Sept. 18, 1990]



Sec. 10.15  Interpretations.

    (a) An interpretation of a Voluntary Product Standard may be 
obtained through the submission of a written request. The request shall 
identify the specific section of the standard involved.
    (b) In the case of PS 20-70, the ``American Softwood Lumber 
Standard,'' interpretations shall be made by the American Lumber 
Standards Committee (ALSC) under the procedures developed by the ALSC 
and found acceptable to NIST.
    (c) In the case of the other Voluntary Product Standards, 
interpretations shall be made by the appropriate Standing Committees 
under procedures developed by those committees and found acceptable to 
NIST.

[51 FR 22497, June 20, 1986, as amended at 55 FR 38315, Sept. 18, 1990]



Sec. 10.16  Effect of procedures.

    Nothing contained in these procedures shall be deemed to apply to 
the development, publication, revision, amendment, or withdrawal of any 
standard which is not identified as a ``Voluntary Product Standard'' by 
the Department. The authority of the Department with respect to 
engineering standards activities generally, including the authority to 
publish appropriate recommendations not identified as ``Voluntary 
Product Standards,'' is not limited in any way by these procedures.



PART 11--UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION FOR FEDERAL AND FEDERALLY ASSISTED PROGRAMS--Table of Contents




    Authority: Section 213, Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970, Pub. L. 91-646, 84 Stat. 1894 
(42 U.S.C. 4601) as amended by the Surface Transportation and Uniform 
Relocation Assistance Act of 1987, Title IV of Pub. L. 100-17, 101 Stat. 
246-256 (42 U.S.C. 4601 note).

    Editorial Note: For additional information, see related documents 
published at 50 FR 8953, Mar. 5, 1985, 52 FR 18768, May 19, 1987, and 52 
FR 45667, Dec. 1, 1987.



Sec. 11.1  Uniform relocation and real property acquisition.

    Regulations and procedures for complying with the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 
91-646, 84 Stat. 1894, 42 U.S.C. 4601), as amended by the Surface 
Transportation and Uniform Relocation Assistance Act of 1987 (Title IV 
of Pub. L. 100-17, 101 Stat. 246-255, 42 U.S.C. 4601 note) are set forth 
in 49 CFR Part 24.

[52 FR 48018, Dec. 17, 1987 and 54 FR 8912, 8913, Mar. 2, 1989]



PART 12--FAIR PACKAGING AND LABELING--Table of Contents




Sec.
12.1  Introduction.
12.2  Undue proliferation.
12.3  Development of voluntary product standards.
12.4  Report to the Congress.

    Authority: Secs. 5(d), 5(e), 80 Stat. 1298, 15 U.S.C. 1454; sec. 3, 
Dept. Order 177 (31 FR 6746), as amended (32 FR 3110).

    Source: 32 FR 11074, July 29, 1967, unless otherwise noted.



Sec. 12.1  Introduction.

    (a) These procedures apply to the discharge of the responsibility 
given to the Secretary of Commerce by sections

[[Page 122]]

5(d) and 5(e) of the Fair Packaging and Labeling Act (Pub. L. 89-755, 80 
Stat. 1299), hereinafter called the ``Act''. The word ``Secretary'', as 
used hereinafter, shall refer to the Secretary of Commerce or his 
authorized delegate.
    (b) The Secretary does not have the responsibility or the authority 
under the Act to issue any regulations governing the packaging or 
labeling practices of private industry.
    (c) The Secretary does have the responsibility and authority to:
    (1) Determine whether the reasonable ability of consumers to make 
value comparisions with respect to any consumer commodity or reasonably 
comparable consumer commodities is impaired by undue proliferation of 
the weights, measures, or quantities in which such commodity or 
commodities are being distributed in packages for sale at retail.
    (2) Request manufacturers, packers, and distributors, where a 
determination of undue proliferation has been made, to participate in 
the development of a voluntary product standard under the procedures 
governing the Department's voluntary standards program.
    (3) Report to Congress with a recommendation as to whether 
legislation providing regulatory authority should be enacted, when after 
1 year following the date private industry has been requested to 
participate in the development of a voluntary product standard it is 
determined that such a standard will not be published, or when following 
the publication of such a standard it is determined that the standard 
has not been observed.
    (d) The Act does not furnish a detailed, definitive explanation of 
``undue proliferation''. It does, however, point out that the condition 
of ``undue proliferation'' must be one which ``impairs the reasonable 
ability of consumers to make value comparisons'' with respect to 
consumer commodities. Generally, therefore, the Department will 
determine ``undue proliferation'' on a case-by-case basis, and, 
accordingly, is establishing by these procedures an orderly process for 
such determinations.
    (e) As used hereinafter the term ``undue proliferation'' shall refer 
to such undue proliferation--of the weights, measures or quantities in 
which any consumer commodity or reasonably comparable consumer 
commodities are being distributed for sale at retail--as impairs the 
reasonable ability of consumers to make value comparisons with respect 
to such consumer commodity or commodities, as set out in section 5(d) of 
the Act.



Sec. 12.2  Undue proliferation.

    (a) Information as to possible undue proliferation. Any person or 
group, including a State or local governmental entity, is invited to 
communicate information to the Secretary concerning the possible 
existence of undue proliferation. Such communications should be in 
writing and include supporting information and explanations.
    (b) Initiation of inquiry as to undue proliferation. Upon receipt of 
information regarding the possible existence of undue proliferation, the 
Secretary will determine whether there has been a showing of good cause 
warranting an inquiry. If the Secretary determines that good cause 
exists, he shall initiate an inquiry for the purpose of finding facts 
concerning the existence of undue proliferation.
    (c) Procedures for inquiry--(1) Cooperation with State and local 
officials. Any inquiry initiated under paragraph (b) of this section may 
be conducted in cooperation with State and local weights and measures 
officials.
    (2) Participation by interested persons. The Secretary may, during 
the course of the inquiry, afford interested persons or groups an 
opportunity to submit in writing comments, data, arguments, views, or 
other information relevant to the inquiry.
    (d) Proposed determination as to existence of undue proliferation. 
(1) If, after consideration of all relevant information, the Secretary 
concludes that undue proliferation appears to exist, he shall publish a 
proposed determination to this effect. The proposed determination shall 
identify the particular consumer commodity or commodities involved and 
shall be accompanied by a concise statement of the facts upon which it 
is based.
    (2) Within 60 days after publication of the proposed determination, 
any interested party may submit in writing

[[Page 123]]

comments, data, arguments, views, or other information relevant to the 
proposed determination. All written submissions shall be made a part of 
the public record.
    (3) Within 30 days after the proposed determination has been 
published, any interested party may request in writing an oral hearing 
to present his views. The granting of such a hearing shall be at the 
discretion of the Secretary. Any such hearing shall be public and notice 
thereof shall be published at least 15 days in advance. A transcript of 
the hearing shall be made part of the public record.
    (e) Final determination as to undue proliferation. As soon as 
practicable following the conclusion of the proceedings described in 
paragraph (d) of this section, the Secretary shall either publish a 
final determination of undue proliferation, or he shall publish a notice 
withdrawing his proposed determination of undue proliferation. In no 
event shall the withdrawal of a proposed determination operate to 
preclude the initiation of another inquiry regarding the same or similar 
subject matter under paragraph (b) of this section.



Sec. 12.3  Development of voluntary product standards.

    (a) Invitation to participate in the development of a voluntary 
product standard. Whenever the Secretary publishes a final determination 
of undue proliferation under Sec. 12.2(e), he shall invite 
manufacturers, packers, and distributors of the commodity or commodities 
involved to participate in the development of a voluntary product 
standard in accordance with the terms of the Act and the Department's 
published procedures for voluntary product standards. The term 
``Voluntary Product Standard'' as used in this section means a standard 
for weights, measures or quantities in which the commodity or 
commodities are being distributed in packages for sale at retail.
    (b) Determination that voluntary product standard will not be 
published. (1) If a voluntary product standard has not been developed 
within one year from the date on which participation was invited, the 
Secretary may conclude that a voluntary product standard will not likely 
be published. Upon reaching such a conclusion, the Secretary will 
publish a proposed determination that a voluntary product standard will 
not be published.
    (2) Within 60 days after publication of the proposed determination, 
any interested party may submit in writing comments, data, arguments, 
views, or other information relevant to the proposed determination. All 
written submissions shall be made a part of the public record.
    (3) Within 30 days after the proposed determination has been 
published, any interested party may request in writing an oral hearing 
to present his views. The granting of such a hearing shall be at the 
discretion of the Secretary. Any such hearing shall be public and notice 
thereof shall be published at least 15 days in advance. A transcript of 
the hearing shall be made part of the public record.
    (4) As soon as practicable following the conclusion of the 
proceedings described in paragraphs (b)(2) and (3) of this section, the 
Secretary shall either publish a final determination that a voluntary 
product standard will not be published, or he shall publish a notice 
withdrawing his proposed determination under paragraph (b)(1) of this 
section. In no event shall the withdrawal of a proposed determination 
operate to preclude the publication of another proposed determination 
under paragraph (b)(1) of this section with respect to the same or 
similar subject matter.
    (c) Determination that a published voluntary product standard has 
not been observed. (1) Whenever the Secretary has reason to believe that 
a voluntary product standard published under these procedures is not 
being observed he shall initiate an inquiry to determine such fact.
    (2) If, on the basis of the information developed during the 
inquiry, the Secretary concludes that the voluntary product standard is 
not being observed, he shall publish a proposed determination to this 
effect. The proposed determination shall identify the particular 
standard involved and shall be accompanied by a concise statement of the 
facts upon which it is based.

[[Page 124]]

    (3) Within 60 days after publication of the proposed determination, 
any interested party may submit in writing comments, data, arguments, 
views, or other information relevant to the proposed determination. All 
written submissions shall be made a part of the public record.
    (4) Within 30 days after the proposed determination has been 
published, any interested party may request in writing an oral hearing 
to present his views. The granting of such a hearing shall be at the 
discretion of the Secretary. Any such hearing shall be public and notice 
thereof shall be published at least 15 days in advance. A transcript of 
the hearing shall be made part of the public record.
    (5) As soon as practicable following the conclusion of the 
proceedings described in paragraphs (c)(3) and (4) of this section, and 
upon consideration of all relevant information, the Secretary shall 
either publish a final determination that the voluntary product standard 
is not being observed, or he shall publish a notice withdrawing his 
proposed determination under paragraph (c)(2) of this section. In no 
event shall the withdrawal of a proposed determination operate to 
preclude the initiation of another inquiry regarding the same standard 
under paragraph (c)(1) of this section.



Sec. 12.4  Report to the Congress.

    Whenever the Secretary publishes a final determination under 
Sec. 12.3(b)(4) or Sec. 12.3(c)(5), he shall promptly report such 
determination to the Congress with a statement of the efforts that have 
been made under the voluntary standards program and his recommendation 
as to whether Congress should enact legislation providing regulatory 
authority to deal with the situation in question.



PART 13--INTERGOVERNMENTAL REVIEW OF DEPARTMENT OF COMMERCE PROGRAMS AND ACTIVITIES--Table of Contents




Sec.
13.1  Purpose.
13.2  Definitions.
13.3  Programs and activities of the Department subject to the 
          regulations.
13.4  General responsibilities under the Order.
13.5  Obligations with respect to Federal interagency coordination.
13.6  State selection of programs and activities.
13.7  Communication with state and local officials concerning the 
          Department's programs and activities.
13.8  Opportunity to comment on proposed Federal financial assistance 
          and direct Federal development.
13.9  Receipt of and response to comments.
13.10  Accommodation of intergovernmental concerns.
13.11  Obligations in interstate situations.

    Authority: Executive Order 12372, July 14, 1982, 47 FR 30959, as 
amended April 8, 1983, 48 FR 15587, sec. 401, Intergovernmental 
Cooperation Act of 1968, as amended (31 U.S.C. 6506); sec. 204, 
Demonstration Cities and Metropolitan Development Act of 1966 as amended 
(42 U.S.C. 3334).

    Source: 48 FR 29134, June 24, 1983, unless otherwise noted.

    Editorial Note: For additional information, see related documents 
published at 47 FR 57369, December 23, 1982, 48 FR 17101, April 21, 
1983, and 48 FR 29096, June 24, 1983.



Sec. 13.1  Purpose.

    (a) The regulations in this part implement Executive Order 12372, 
``Intergovernmental Review of Federal Programs,'' issued July 14, 1982 
and amended on April 8, 1983. These regulations also implement 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968 and section 204 of the Demonstration Cities and 
Metropolitan Development Act of 1966.
    (b) These regulations are intended to foster an intergovernmental 
partnership and a strengthened Federalism by relying on state processes 
and on state, areawide, regional and local coordination for review of 
proposed Federal financial assistance and direct Federal development.
    (c) These regulations are intended to aid the internal management of 
the Department, and are not intended to create any right or benefit 
enforceable at law by a party against the Department or its officers.



Sec. 13.2  Definitions.

    Department means the U.S. Department of Commerce.
    Order means Executive Order 12372, issued July 14, 1982, and amended 
April

[[Page 125]]

8, 1983 and titled ``Intergovernmental Review of Federal Programs.''
    Secretary means the Secretary of the U.S. Department of Commerce or 
an official or employee of the Department acting for the Secretary under 
a delegation of authority.
    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust 
Territory of the Pacific Islands.



Sec. 13.3  Programs and activities of the Department subject to the regulations.

    The Secretary publishes in the Federal Register a list of the 
Department's programs and activities that are subject to these 
regulations and identifies which of these are subject to the 
requirements of section 204 of the Demonstration Cities and Metropolitan 
Development Act.



Sec. 13.4  General responsibilities under the Order.

    (a) The Secretary provides opportunities for consultation by elected 
officials of those state and local governments that would provide the 
non-Federal funds for, or that would be directly affected by, proposed 
Federal financial assistance from, or direct Federal development by, the 
Department.
    (b) If a state adopts a process under the Order to review and 
coordinate proposed Federal financial assistance and direct Federal 
development, the Secretary, to the extent permitted by law:
    (1) Uses the state process to determine official views of state and 
local elected officials;
    (2) Communicates with state and local elected officials as early in 
a program planning cycle as is reasonably feasible to explain specific 
plans and actions;
    (3) Makes efforts to accommodate state and local elected officials' 
concerns with proposed Federal financial assistance and direct Federal 
development that are communicated through the state process;
    (4) Allows the states to simplify and consolidate existing federally 
required state plan submissions;
    (5) Where state planning and budgeting systems are sufficient and 
where permitted by law, encourages the substitution of state plans for 
federally required state plans;
    (6) Seeks the coordination of views of affected state and local 
elected officials in one state with those of another state when proposed 
Federal financial assistance or direct Federal development has an impact 
on interstate metropolitan urban centers or other interstate areas; and
    (7) Supports state and local governments by discouraging the 
reauthorization or creation of any planning organization which is 
federally-funded, which has a limited purpose, and which is not 
adequately representative of, or accountable to, state or local elected 
officials.



Sec. 13.5  Obligations with respect to Federal interagency coordination.

    The Secretary, to the extent practicable, consults with and seeks 
advice from all other substantially affected Federal departments and 
agencies in an effort to assure full coordination between such agencies 
and the Department regarding programs and activities covered under these 
regulations.



Sec. 13.6  State selection of programs and activities.

    (a) A state may select any program or activity published in the 
Federal Register in accordance with Sec. 13.3 of this part for 
intergovernmental review under these regulations. Each state, before 
selecting programs and activities, shall consult with local elected 
officials.
    (b) Each state that adopts a process shall notify the Secretary of 
the Department's programs and activities selected for that process.
    (c) A state may notify the Secretary of changes in its selections at 
any time. For each change, the state shall submit to the Secretary an 
assurance that the state has consulted with elected local elected 
officials regarding the change. The Department may establish deadlines 
by which states are required to inform the Secretary of changes in their 
program selections.

[[Page 126]]

    (d) The Secretary uses a state's process as soon as feasible, 
depending on individual programs and activities, after the Secretary is 
notified of its selections.



Sec. 13.7  Communication with state and local officials concerning the Department's programs and activities.

    (a) For those programs and activities covered by a state process 
under Sec. 13.6, the Secretary, to the extent permitted by law:
    (1) Uses the state process to determine views of state and local 
elected officials; and,
    (2) Communicates with state and local elected officials, through the 
state process, as early in a program planning cycle as is reasonably 
feasible to explain specific plans and actions.
    (b) The Secretary provides notice to directly affected state, 
areawide, regional, and local entities in a state of proposed Federal 
financial assistance or direct Federal development if:
    (1) The state has not adopted a process under the Order; or
    (2) The assistance or development involves a program or activity not 
selected for the state process. This notice may be made by publication 
in the Federal Register or other appropriate means, which the Department 
in its discretion deems appropriate.



Sec. 13.8  Opportunity to comment on proposed Federal financial assistance and direct Federal development.

    (a) Except in unusual circumstances, the Secretary gives state 
processes or directly affected state, areawide, regional and local 
officials and entities at least:
    (1) 30 days from the date established by the Secretary to comment on 
proposed Federal financial assistance in the form of noncompeting 
continuation awards; and
    (2) 60 days from the date established by the Secretary to comment on 
proposed direct Federal development or Federal financial assistance 
other than noncompeting continuation awards.
    (b) This section also applies to comments in cases in which the 
review, coordination, and communication with the Department have been 
delegated.
    (c) Applicants for programs and activities subject to section 204 of 
the Demonstration Cities and Metropolitan Act shall allow areawide 
agencies a 60-day opportunity for review and comment.



Sec. 13.9  Receipt of and response to comments.

    (a) The Secretary follows the procedures in Sec. 13.10 if:
    (1) A state office or official is designated to act as a single 
point of contact between a state process and all Federal agencies; and
    (2) That office or official transmits a state process recommendation 
for a program selected under Sec. 13.6.
    (b)(1) The single point of contact is not obligated to transmit 
comments from state, areawide, regional or local officials and entities 
where there is no state process recommendation.
    (2) If a state process recommendation is transmitted by a single 
point of contact, all comments from state, areawide, regional, and local 
officials and entities that differ from it must also be transmitted.
    (c) If a state has not established a process, or is unable to submit 
a state process recommendation, state, areawide, regional and local 
officials and entities may submit comments either to the applicant or to 
the Department.
    (d) If a program or activity is not selected for a state process, 
state, areawide, regional and local officials and entities may submit 
comments either to the applicant or to the Department. In addition, if a 
state process recommendation for a nonselected program or activity is 
transmitted to the Department by the single point of contact, the 
Secretary follows the procedures of Sec. 13.10 of this part.
    (e) The Secretary considers comments which do not constitute a state 
process recommendation submitted under these regulations and for which 
the Secretary is not required to apply the procedures of Sec. 13.10 of 
this part, when such comments are provided by a single point of contact, 
by the applicant, or directly to the Department by a commenting party.

[[Page 127]]



Sec. 13.10  Accommodation of intergovernmental concerns.

    (a) If a state process provides a state process recommendation to 
the Department through its single point of contact, the Secretary 
either:
    (1) Accepts the recommendation;
    (2) Reaches a mutually agreeable solution with the state process; or
    (3) Provides the single point of contact with a written explanation 
of the decision in such form as the Secretary in his or her discretion 
deems appropriate. The Secretary may also supplement the written 
explanation by providing the explanation to the single point of contact 
by telephone, other telecommunication, or other means.
    (b) In any explanation under paragraph (a)(3) of this section, the 
Secretary informs the single point of contact that:
    (1) The Department will not implement its decision for at least ten 
days after the single point of contact receives the explanation; or
    (2) The Secretary has reviewed the decision and determined that, 
because of unusual circumstances, the waiting period of at least ten 
days is not feasible.
    (c) For purposes of computing the waiting period under paragraph 
(b)(1) of this section, a single point of contact is presumed to have 
received written notification 5 days after the date of mailing of such 
notification.



Sec. 13.11  Obligations in interstate situations.

    (a) The Secretary is responsible for:
    (1) Identifying proposed Federal financial assistance and direct 
Federal development that have an impact on interstate areas;
    (2) Notifying appropriate officials and entities in states which 
have adopted a process and which select the Department's program or 
activity.
    (3) Making efforts to identify and notify the affected state, 
areawide, regional, and local officials and entities in those states 
that have not adopted a process under the Order or do not select the 
Department's program or activity;
    (4) Responding pursuant to Sec. 13.10 of this part if the Secretary 
receives a recommendation from a designated areawide agency transmitted 
by a single point of contact, in cases in which the review, 
coordination, and communication with the Department have been delegated.
    (b) The Secretary uses the procedures in Sec. 13.10 if a state 
process provides a state process recommendation to the Department 
through a single point of contact.



   PART 14--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NON-PROFIT, AND COMMERCIAL 
ORGANIZATIONS--Table of Contents




                           Subpart A--General

Sec.
14.1  Purpose.
14.2  Definitions.
14.3  Effect on other issuances.
14.4  Deviations.
14.5  Subawards.
14.6  Availability of OMB circulars.

                    Subpart B--Pre-Award Requirements

14.10  Purpose.
14.11  Pre-award policies.
14.12  Forms for applying for Federal assistance.
14.13  Debarment and suspension.
14.14  High risk special award conditions.
14.15  Metric system of measurement.
14.16  Resource Conservation and Recovery Act (RCRA).
14.17  Certifications and representations.
14.18  Taxpayer identification number.

                   Subpart C--Post-Award Requirements

                    Financial and Program Management

14.20  Purpose of financial and program management.
14.21  Standards for financial management systems.
14.22  Payment.
14.23  Cost sharing or matching.
14.24  Program income.
14.25  Revision of budget and program plans.
14.26  Non-Federal audits.
14.27  Allowable costs.
14.28  Period of availability of funds.

                           Property Standards

14.30  Purpose of property standards.
14.31  Insurance coverage.
14.32  Real property.
14.33  Federally-owned and exempt property.

[[Page 128]]

14.34  Equipment.
14.35  Supplies and other expendable property.
14.36  Intangible property.
14.37  Property trust relationship.

                          Procurement Standards

14.40  Purpose of procurement standards.
14.41  Recipient responsibilities.
14.42  Codes of conduct.
14.43  Competition.
14.44  Procurement procedures.
14.45  Cost and price analysis.
14.46  Procurement records.
14.47  Contract administration.
14.48  Contract provisions.

                           Reports and Records

14.50  Purpose of reports and records.
14.51  Monitoring and reporting program performance.
14.52  Financial reporting.
14.53  Retention and access requirements for records.

                       Termination and Enforcement

14.60  Purpose of termination and enforcement.
14.61   Termination.
14.62   Enforcement.

                 Subpart D--After-the-Award Requirements

14.70   Purpose.
14.71   Closeout procedures.
14.72   Subsequent adjustments and continuing responsibilities.
14.73   Collection of amounts due.

Appendix A to Part 14--Contract Provisions

    Authority: 5 U.S.C. 301.

    Source: 63 FR 47156, Sept. 4, 1998, unless otherwise noted.



                           Subpart A--General



Sec. 14.1  Purpose.

    This part establishes uniform administrative requirements for 
Department of Commerce (DoC) grants and agreements awarded to 
institutions of higher education, hospitals, other non-profit, and 
commercial organizations. The Grants Officer shall incorporate this part 
by reference into financial assistance awards made to organizations to 
which it will be applied. The DoC shall not impose additional or 
inconsistent requirements, except as provided in Secs. 14.4, and 14.14 
or unless specifically required by Federal statute or executive order. 
This part applies to grants and agreements awarded to foreign 
governments, organizations under the jurisdiction of foreign 
governments, and international organizations unless otherwise determined 
by the Grants Officer after coordination with the appropriate program 
officials. Uniform requirements for State, local, and tribal governments 
are in 15 CFR part 24, Uniform Administrative Requirements for Grants 
and Cooperative Agreements to State and Local Governments. Non-profit 
organizations that implement Federal programs for the States are also 
subject to State requirements.



Sec. 14.2  Definitions.

    (a) Accrued expenditures means the charges incurred by the recipient 
during a given period requiring the provision of funds for:
    (1) Goods and other tangible property received;
    (2) Services performed by employees, contractors, subrecipients, and 
other payees; and
    (3) Other amounts becoming owed under programs for which no current 
services or performance is required.
    (b) Accrued income means the sum of:
    (1) Earnings during a given period from services performed by the 
recipient, and goods and other tangible property delivered to 
purchasers; and
    (2) Amounts becoming owed to the recipient for which no current 
services or performance is required by the recipient.
    (c) Acquisition cost of equipment means the net invoice price of the 
equipment, including the cost of modifications, attachments, 
accessories, or auxiliary apparatus necessary to make the property 
usable for the purpose for which it was acquired. Other charges, such as 
the cost of installation, transportation, taxes, duty or protective in-
transit insurance, shall be included or excluded from the unit 
acquisition cost in accordance with the recipient's regular accounting 
practices.
    (d) Advance means a payment made by electronic funds transfer, 
Treasury check, or other appropriate payment mechanism to a recipient 
upon its request either before outlays are made by the recipient or 
through the use of predetermined payment schedules.

[[Page 129]]

    (e) Assistant Secretary means the DoC Chief Financial Officer and 
Assistant Secretary for Administration who has been delegated by the 
Secretary of Commerce the responsibility for developing and implementing 
policies, standards, and procedures for the administration of financial 
assistance programs of the DoC.
    (f) Award means financial assistance that provides support or 
stimulation to accomplish a public purpose. Awards include grants and 
other agreements in the form of money or property in lieu of money, by 
the Federal Government to an eligible recipient. The term does not 
include: technical assistance, which provides services instead of money; 
other assistance in the form of loans, loan guarantees, interest 
subsidies, or insurance; direct payments of any kind to individuals; 
and, contracts which are required to be entered into and administered 
under procurement laws and regulations.
    (g) Cash contributions means the recipient's cash outlay, including 
the outlay of money contributed to the recipient by third parties.
    (h) Closeout means the process by which the Grants Officer 
determines that all applicable administrative actions and all required 
work of the award have been completed by the recipient and the DoC.
    (i) Contract means a procurement contract under an award or 
subaward, and a procurement subcontract under a recipient's or 
subrecipient's contract.
    (j) Cost sharing or matching means that portion of project or 
program costs not borne by the Federal Government.
    (k) Date of completion means the date on which all work under an 
award is completed or the date on the award document, or any supplement 
or amendment thereto, on which Federal sponsorship ends.
    (l) Disallowed costs means those charges to an award that the Grants 
Officer determines to be unallowable, in accordance with the applicable 
Federal cost principles or other terms and conditions contained in the 
award.
    (m) DoC operating unit means an organizational unit of the 
Department that has the authority to fund financial assistance awards.
    (n) Equipment means tangible nonexpendable personal property 
including exempt property charged directly to the award having a useful 
life of more than one year and an acquisition cost of $5000 or more per 
unit. However, consistent with recipient policy, lower limits may be 
established.
    (o) Excess property means property under the control of the DoC 
that, as determined by the Grants Officer after coordination with the 
authorized property official, is no longer required for DoC needs or the 
discharge of its responsibilities.
    (p) Exempt property means tangible personal property acquired in 
whole or in part with Federal funds, where the DoC has statutory 
authority to vest title in the recipient without further obligation to 
the Federal Government. An example of exempt property authority is 
contained in the Federal Grant and Cooperative Agreement Act (31 U.S.C. 
6306), for property acquired under an award to conduct basic or applied 
research by a non-profit institution of higher education or non-profit 
organization whose principal purpose is conducting scientific research.
    (q) Federal awarding agency means the Federal agency that provides 
an award to the recipient.
    (r) Federal funds authorized means the total amount of Federal funds 
obligated by the Federal Government for use by the recipient. This 
amount may include any authorized carryover of unobligated funds from 
prior funding periods when permitted by agency regulations or agency 
implementing instructions.
    (s) Federal share of real property, equipment, or supplies means 
that percentage of the property's acquisition costs and any improvement 
expenditures paid with Federal funds.
    (t) Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    (u) Grants Officer means the DoC official with the delegated 
authority to award, amend, administer, closeout, suspend, and/or 
terminate grants and cooperative agreements and make related 
determinations and findings.
    (v) Intangible property and debt instruments means, but is not 
limited to, trademarks, copyrights, patents and

[[Page 130]]

patent applications and such property as loans, notes and other debt 
instruments, lease agreements, stock and other instruments of property 
ownership, whether considered tangible or intangible.
    (w) Obligations means the amounts of orders placed, contracts and 
grants awarded, services received and similar transactions during a 
given period that require payment by the recipient during the same or a 
future period.
    (x) Outlays or expenditures means charges made to the project or 
program. They may be reported on a cash or accrual basis. For reports 
prepared on a cash basis, outlays are the sum of cash disbursements for 
direct charges for goods and services, the amount of indirect expense 
charged, the value of third party in-kind contributions applied and the 
amount of cash advances and payments made to subrecipients. For reports 
prepared on an accrual basis, outlays are the sum of cash disbursements 
for direct charges for goods and services, the amount of indirect 
expense incurred, the value of in-kind contributions applied, and the 
net increase (or decrease) in the amounts owed by the recipient for 
goods and other property received, for services performed by employees, 
contractors, subrecipients and other payees and other amounts becoming 
owed under programs for which no current services or performance are 
required.
    (y) Personal property means property of any kind except real 
property. It may be tangible, having physical existence, or intangible, 
having no physical existence, such as copyrights, patents, or 
securities.
    (z) Prior approval means written approval by an authorized official 
evidencing prior consent.
    (aa) Program income means gross income earned by the recipient that 
is directly generated by a supported activity or earned as a result of 
the award (see exclusions in Sec. 14.24 (e) and (h)). Program income 
includes, but is not limited to, income from fees for services 
performed, the use or rental of real or personal property acquired under 
federally-funded projects, the sale of commodities or items fabricated 
under an award, license fees and royalties on patents and copyrights, 
and interest on loans made with award funds. Interest earned on advances 
of Federal funds is not program income. Except as otherwise provided in 
DoC regulations or the terms and conditions of the award, program income 
does not include the receipt of principal on loans, rebates, credits, 
discounts, etc., or interest earned on any of them.
    (bb) Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles, incurred by a recipient and the 
value of the contributions made by third parties in accomplishing the 
objectives of the award during the project period.
    (cc) Project period means the period established in the award 
document during which Federal sponsorship begins and ends.
    (dd) Property means, unless otherwise stated, real property, 
equipment, intangible property and debt instruments.
    (ee) Real property means land, including land improvements, 
structures and appurtenances thereto, but excludes movable machinery and 
equipment.
    (ff) Recipient means an organization receiving financial assistance 
directly from the DoC to carry out a project or program. The term 
includes public and private institutions of higher education, public and 
private hospitals, and other quasi-public and private non-profit 
organizations such as, but not limited to, community action agencies, 
research institutes, educational associations, and health centers. The 
term may include commercial organizations, foreign or international 
organizations (such as agencies of the United Nations) which are 
recipients, subrecipients, or contractors or subcontractors of 
recipients or subrecipients at the discretion of the DoC. The term does 
not include government-owned contractor-operated facilities or research 
centers providing continued support for mission-oriented, large-scale 
programs that are government-owned or controlled, or are designated as 
federally-funded research and development centers.
    (gg) Research and development means all research activities, both 
basic and applied, and all development activities that are supported at 
universities, colleges, other non-profit, and commercial

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institutions. ``Research'' is defined as a systematic study directed 
toward fuller scientific knowledge or understanding of the subject 
studied. ``Development'' is the systematic use of knowledge and 
understanding gained from research directed toward the production of 
useful materials, devices, systems, or methods, including design and 
development of prototypes and processes. The term research also includes 
activities involving the training of individuals in research techniques 
where such activities utilize the same facilities as other research and 
development activities and where such activities are not included in the 
instruction function.
    (hh) Small awards means a grant or cooperative agreement not 
exceeding the small purchase threshold fixed at 41 U.S.C. 403(11) 
(currently $100,000).
    (ii) Subaward means an award of financial assistance in the form of 
money, or property in lieu of money, made under an award by a recipient 
to an eligible subrecipient or by a subrecipient to a lower tier 
subrecipient. The term includes financial assistance when provided by 
any legal agreement, even if the agreement is called a contract, but 
does not include procurement of goods and services nor does it include 
any form of assistance which is excluded from the definition of 
``award'' in paragraph (f) of this section.
    (jj) Subrecipient means the legal entity to which a subaward is made 
and which is accountable to the recipient for the use of the funds 
provided. The term may include foreign or international organizations 
(such as agencies of the United Nations) at the discretion of the DoC.
    (kk) Supplies means all personal property excluding equipment, 
intangible property, and debt instruments as defined in this section, 
and inventions of a contractor conceived or first actually reduced to 
practice in the performance of work under a funding agreement (``subject 
inventions''), as defined in 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts, and Cooperative Agreements.''
    (ll) Suspension means an action taken by the Grants Officer after 
coordination with the DoC operating unit that temporarily withdraws 
Federal sponsorship under an award, pending corrective action by the 
recipient or pending a decision to terminate the award by the Grants 
Officer. Suspension of an award is a separate action from suspension 
under DoC regulations at 15 CFR part 26 implementing E.O.s 12549 and 
12689, ``Debarment and Suspension.''
    (mm) Termination means the cancellation by the Grants Officer of 
Federal sponsorship, in whole or in part, under an agreement at any time 
prior to the date of completion.
    (nn) Third party in-kind contributions means the value of non-cash 
contributions provided by non-Federal third parties. Third party in-kind 
contributions may be in the form of real property, equipment, supplies 
and other expendable property, and the value of goods and services 
directly benefiting and specifically identifiable to the project or 
program.
    (oo) Unliquidated obligations, for financial reports prepared on a 
cash basis, means the amount of obligations incurred by the recipient 
that have not been paid. For reports prepared on an accrued expenditure 
basis, they represent the amount of obligations incurred by the 
recipient for which an outlay has not been recorded.
    (pp) Unobligated balance means the portion of the funds authorized 
by the DoC that has not been obligated by the recipient and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.
    (qq) Unrecovered indirect cost means the difference between the 
amount awarded and the amount which could have been awarded under the 
recipient's approved negotiated indirect cost rate.
    (rr) Working capital advance means a procedure whereby funds are 
advanced to the recipient to cover its estimated disbursement needs for 
a given initial period.



Sec. 14.3  Effect on other issuances.

    For awards subject to this part, all administrative requirements of 
codified program regulations, program manuals, handbooks and other 
nonregulatory materials which are inconsistent with the requirements of 
this

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part shall be superseded, except to the extent they are required by 
statute, or authorized in accordance with the deviations provision in 
Sec. 14.4.



Sec. 14.4  Deviations.

    The Office of Management and Budget (OMB) may grant exceptions for 
classes of grants or recipients subject to the requirements of this part 
when exceptions are not prohibited by statute. However, in the interest 
of maximum uniformity, exceptions from the requirements of this part 
shall be permitted only in unusual circumstances. The Assistant 
Secretary may apply more restrictive requirements to a class of 
recipients when approved by OMB. The Assistant Secretary may apply less 
restrictive requirements when awarding small awards, except for those 
requirements which are statutory. Exceptions on a case-by-case basis may 
also be made by the Assistant Secretary. An exception made on a case-by-
case basis will apply to a single award.



Sec. 14.5  Subawards.

    Unless sections of this part specifically exclude subrecipients from 
coverage, the provisions of this part shall be applied to subrecipients 
performing work under awards if such subrecipients are institutions of 
higher education, hospitals, other non-profit, or commercial 
organizations. This part also applies to subrecipients performing work 
under awards if the subrecipients are foreign governments, organizations 
under the jurisdiction of foreign governments, and international 
organizations unless otherwise determined by the Grants Officer. State 
and local government subrecipients are subject to the provisions of 
regulations implementing the grants management common rule, ``Uniform 
Administrative Requirements for Grants and Cooperative Agreements to 
State and Local Governments,'' (15 CFR part 24).



Sec. 14.6  Availability of OMB circulars.

    OMB circulars cited in this part are available from the Office of 
Management and Budget (OMB) by writing to the Executive Office of the 
President, Publications Service, 725 17th Street, NW, Suite 200, 
Washington DC 20503.



                    Subpart B--Pre-Award Requirements



Sec. 14.10  Purpose.

    Sections 14.11 through 14.18 prescribe forms and instructions and 
other pre-award matters to be used in applying for Federal awards.



Sec. 14.11  Pre-award policies.

    (a) Use of grants and cooperative agreements, and contracts. In each 
instance, the Grants Officer after coordination with the DoC operating 
unit shall decide on the appropriate award instrument (i.e., grant, 
cooperative agreement, or contract). The Federal Grant and Cooperative 
Agreement Act (31 U.S.C. 6301-08) governs the use of grants, cooperative 
agreements and contracts. A grant or cooperative agreement shall be used 
only when the principal purpose of a transaction is to accomplish a 
public purpose of support or stimulation authorized by Federal statute. 
The statutory criterion for choosing between grants and cooperative 
agreements is that for the latter, ``substantial involvement is expected 
between the executive agency and the State, local government, or other 
recipient when carrying out the activity contemplated in the 
agreement.'' Contracts shall be used when the principal purpose is 
acquisition of property or services for the direct benefit or use of the 
Federal Government.
    (b) Public notice and priority setting. The DoC operating units 
shall notify the public of their intended funding priorities for 
discretionary grant programs, unless funding priorities are established 
by Federal statute. At a minimum, public notices shall be published in 
the Federal Register.



Sec. 14.12  Forms for applying for Federal assistance.

    (a) The DoC operating units shall comply with the applicable report 
clearance requirements of 5 CFR part 1320, ``Controlling Paperwork 
Burdens on the Public,'' with regard to all forms used by the DoC 
operating units in place of or as a supplement to the Standard Form 424 
(SF-424) series.
    (b) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by the DoC.

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    (c) For Federal programs covered by E.O. 12372, ``Intergovernmental 
Review of Federal Programs,'' the applicant shall complete the 
appropriate sections of the SF-424 (Application for Federal Assistance) 
indicating whether the application was subject to review by the State 
Single Point of Contact (SPOC). The name and address of the SPOC for a 
particular State can be obtained from the DoC or the Catalog of Federal 
Domestic Assistance. The SPOC shall advise the applicant whether the 
program for which application is made has been selected by that State 
for review.
    (d) DoC operating units that do not use the SF-424 form should 
indicate whether the application is subject to review by the State under 
E.O. 12372.



Sec. 14.13  Debarment and suspension.

    The DoC and recipients shall comply with the nonprocurement 
debarment and suspension common rule implementing E.O.s 12549 and 12689, 
``Debarment and Suspension,'' which is implemented by DoC at 15 CFR part 
26. This common rule restricts subawards and contracts with certain 
parties that are debarred, suspended or otherwise excluded from or 
ineligible for participation in Federal assistance programs or 
activities.



Sec. 14.14  High risk special award conditions.

    If an applicant or recipient: has a history of poor performance, is 
not financially stable, has a management system that does not meet the 
standards prescribed in this part, has not conformed to the terms and 
conditions of a previous award, or is not otherwise responsible, the 
Grants Officer may impose additional requirements as needed, provided 
that such applicant or recipient is notified in writing as to: the 
nature of the additional requirements, the reason why the additional 
requirements are being imposed, the nature of the corrective action 
needed, the time allowed for completing the corrective actions, and the 
method for requesting reconsideration of the additional requirements 
imposed. Any special conditions shall be promptly removed once the 
conditions that prompted them have been corrected.



Sec. 14.15  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act (15 U.S.C. 205) declares that the metric system is 
the preferred measurement system for U.S. trade and commerce. The Act 
requires each Federal agency to establish a date or dates in 
consultation with the Secretary of Commerce, when the metric system of 
measurement will be used in the agency's procurements, grants, and other 
business-related activities. Metric implementation may take longer where 
the use of the system is initially impractical or likely to cause 
significant inefficiencies in the accomplishment of federally-funded 
activities. The DoC shall follow the provisions of E.O. 12770, ``Metric 
Usage in Federal Government Programs.''



Sec. 14.16  Resource Conservation and Recovery Act (RCRA).

    Under RCRA (Pub. L. 94-580, 42 U.S.C. 6962), any State agency or 
agency of a political subdivision of a State which is using appropriated 
Federal funds must comply with section 6002. Section 6002 requires that 
preference be given in procurement programs to the purchase of specific 
products containing recycled materials identified in guidelines 
developed by the Environmental Protection Agency (EPA) (40 CFR parts 
247-254). Accordingly, State and local institutions of higher education, 
hospitals, non-profit, and commercial organizations that receive direct 
Federal awards or other Federal funds shall give preference in their 
procurement programs funded with Federal funds to the purchase of 
recycled products pursuant to the EPA guidelines.



Sec. 14.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, Grants Officers 
may allow recipients to submit certifications and representations 
required

[[Page 134]]

by statute, executive order, or regulation on an annual basis, if the 
recipients have ongoing and continuing relationships with the agency. 
When authorized, annual certifications and representations shall be 
signed by responsible officials with the authority to ensure recipients' 
compliance with the pertinent requirements.



Sec. 14.18  Taxpayer identification number.

    In accordance with the provisions of the Debt Collection Improvement 
Act of 1996 (31 U.S.C. 7701), the taxpayer identifying number will be 
required from applicants for grants and cooperative agreements funded by 
the DoC. This number may be used for purposes of collecting and 
reporting on any delinquent amounts arising from awards made under this 
part.



                   Subpart C--Post-Award Requirements

                    Financial and Program Management



Sec. 14.20  Purpose of financial and program management.

    Sections 14.21 through 14.28 prescribe standards for financial 
management systems, methods for making payments and rules for: 
satisfying cost sharing and matching requirements, accounting for 
program income, budget revision approvals, conducting audits, 
determining allowability of cost, and establishing fund availability.



Sec. 14.21  Standards for financial management systems.

    (a) The Grants Officer shall require recipients to relate financial 
data to performance data and develop unit cost information whenever 
practical.
    (b) Recipients' financial management systems shall provide for the 
following:
    (1) Accurate, current and complete disclosure of the financial 
results of each federally-sponsored project or program in accordance 
with the reporting requirements set forth in Sec. 14.52. If the Grants 
Officer requires reporting on an accrual basis from a recipient that 
maintains its records on other than an accrual basis, the recipient 
shall not be required to establish an accrual accounting system. These 
recipients may develop such accrual data for its reports on the basis of 
an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for federally-sponsored activities. These records shall contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, outlays, income and interest.
    (3) Effective control over and accountability for all funds, 
property and other assets. Recipients shall adequately safeguard all 
such assets and assure they are used solely for authorized purposes.
    (4) Comparison of outlays with budget amounts for each award. 
Whenever appropriate, financial information should be related to 
performance and unit cost data.
    (5) Written procedures to minimize the time elapsing between the 
transfer of funds to the recipient from the U.S. Treasury and the 
issuance or redemption of checks, warrants or payments by other means 
for program purposes by the recipient. To the extent that the provisions 
of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern, 
payment methods of State agencies, instrumentalities, and fiscal agents 
shall be consistent with CMIA Treasury-State Agreements or the CMIA 
default procedures codified at 31 CFR part 205, ``Withdrawal of Cash 
from the Treasury for Advances under Federal Grant and Other Programs.''
    (6) Written procedures for determining the reasonableness, 
allocability and allowability of costs in accordance with the provisions 
of the applicable Federal cost principles and the terms and conditions 
of the award.
    (7) Accounting records including cost accounting records that are 
supported by source documentation.
    (c) Where the DoC guarantees or insures the repayment of money 
borrowed by the recipient, the Grants Officer may require adequate 
bonding and insurance if the bonding and insurance requirements of the 
recipient are not deemed adequate to protect the interest of the Federal 
Government.
    (d) The Grants Officer may require adequate fidelity bond coverage 
where the recipient lacks sufficient coverage

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to protect the Federal Government's interest.
    (e) Where bonds are required in the situations described above, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''



Sec. 14.22  Payment.

    (a) Payment methods shall minimize the time elapsing between the 
transfer of funds from the United States Treasury and the issuance or 
redemption of checks, warrants, or payment by other means by the 
recipients. Payment methods of State agencies or instrumentalities shall 
be consistent with Treasury-State CMIA agreements or default procedures 
codified at 31 CFR part 205. Federal payments to recipients shall be 
made by electronic funds transfer in accordance with the Debt Collection 
Improvement Act of 1996, unless waived in accordance with the provisions 
of this Act.
    (b) Recipients are to be paid in advance, provided they maintain or 
demonstrate the willingness to maintain: written procedures that 
minimize the time elapsing between the transfer of funds and 
disbursement by the recipient, and financial management systems that 
meet the standards for fund control and accountability as established in 
Sec. 14.21. Advances of funds to a recipient organization shall be 
limited to the minimum amounts needed and be timed to be in accordance 
with the actual, immediate cash requirements of the recipient 
organization in carrying out the purpose of the approved program or 
project. The timing and amount of advances of funds shall be as close as 
is administratively feasible to the actual disbursements by the 
recipient organization for direct program or project costs and the 
proportionate share of any allowable indirect costs.
    (c) Whenever possible, advances may be consolidated to cover 
anticipated cash needs for all awards made by the DoC operating unit to 
the recipient.
    (1) Advance payment mechanisms include, but are not limited to, 
electronic funds transfer and Treasury check when the electronic funds 
transfer requirement is waived.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients may submit requests for advances and reimbursements 
on a monthly basis.
    (d) Requests for advance payment shall be submitted on SF-270, 
``Request for Advance or Reimbursement,'' or other forms as may be 
authorized by OMB. This form is not to be used when advance payments are 
made to the recipient automatically through the use of a predetermined 
payment schedule or if precluded by special DoC instructions for 
electronic funds transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. The Grants Officer may also 
use this method on any construction agreement, or if the major portion 
of the construction project is accomplished through private market 
financing or Federal loans, and the Federal assistance constitutes a 
minor portion of the project.
    (1) When the reimbursement method is used, the DoC shall make 
payment within 30 days after receipt of the billing, unless the billing 
is improper.
    (2) Recipients are authorized to submit request for reimbursement at 
least monthly when electronic funds transfers are not used.
    (f) If a recipient cannot meet the criteria for advance payments and 
the Grants Officer after coordination with the operating unit has 
determined that reimbursement is not feasible because the recipient 
lacks sufficient working capital, the Grants Officer may authorize 
payment on a working capital advance basis. Under this procedure, the 
Grants Officer shall provide for advancing funds to the recipient to 
cover its estimated disbursement needs for an initial period generally 
geared to the awardee's disbursing cycle. Thereafter, payments shall be 
provided by reimbursing the recipient for its actual cash disbursements. 
The working capital advance method of payment shall not be used for 
recipients unwilling or unable to provide timely advances to their 
subrecipient to meet the subrecipient's actual cash disbursements.
    (g) To the extent available, recipients shall disburse funds 
available from repayments to and interest earned on a

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revolving fund, program income, rebates, refunds, contract settlements, 
audit recoveries and interest earned on such funds before requesting 
additional payments.
    (h) Unless otherwise required by statute, Grants Officers shall not 
withhold payments for proper charges made by recipients at any time 
during the project period unless paragraph (h) (1) or (2) of this 
section apply.
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or Federal reporting 
requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States as defined in OMB Circular A-129, ``Managing Federal 
Credit Programs.'' Under such conditions, the Grants Officer may, upon 
reasonable notice, inform the recipient that payments shall not be made 
for obligations incurred after a specified date until the conditions are 
corrected or the indebtedness to the Federal Government is liquidated.
    (i) Standards governing the use of banks and other institutions as 
depositories of funds advanced under awards are as follows.
    (1) Except for situations described in paragraph (i)(2) of this 
section, the DoC shall not require separate depository accounts for 
funds provided to a recipient or establish any eligibility requirements 
for depositories for funds provided to a recipient. However, recipients 
must be able to account for the receipt, obligation and expenditure of 
funds.
    (2) Advances of Federal funds shall be deposited and maintained in 
insured accounts whenever possible.
    (j) Consistent with the national goal of expanding the opportunities 
for women-owned and minority-owned business enterprises, recipients 
shall be encouraged to use women-owned and minority-owned banks (a bank 
which is owned at least 50 percent by women or minority group members).
    (k) Recipients shall maintain advances of Federal funds in interest 
bearing accounts, unless paragraph (k) (1), (2) or (3) of this section 
apply.
    (1) The recipient receives less than $120,000 in Federal awards per 
year.
    (2) The best reasonably available interest bearing account would not 
be expected to earn interest in excess of $250 per year on Federal cash 
balances.
    (3) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (l) For those entities where CMIA and its implementing regulations 
do not apply, interest earned on Federal advances deposited in interest 
bearing accounts shall be remitted annually to Department of Health and 
Human Services, Payment Management System, Rockville, MD 20852. Interest 
amounts up to $250 per year may be retained by the recipient for 
administrative expense. State universities and hospitals shall comply 
with CMIA, as it pertains to interest. If an entity subject to CMIA uses 
its own funds to pay pre-award costs for discretionary awards without 
prior written approval from the Grants Officer, it waives its right to 
recover the interest under CMIA.
    (m) Except as noted elsewhere in this part, only the following forms 
shall be authorized for the recipients in requesting advances and 
reimbursements. Grants Officers shall not require more than an original 
and two copies of these forms.
    (1) SF-270, Request for Advance or Reimbursement. DoC has adopted 
the SF-270 as a standard form for all nonconstruction programs when 
predetermined advance methods are not used. The Grants Officer, however, 
may waive the requirement to use the SF-270 for requesting funds under 
grants and cooperative agreements. Grants Officers have the option of 
using this form for construction programs in lieu of the SF-271, 
``Outlay Report and Request for Reimbursement for Construction 
Programs.''
    (2) SF-271, Outlay Report and Request for Reimbursement for 
Construction Programs. DoC has adopted the SF-271 as the standard form 
to be used for requesting reimbursement for construction programs. 
However, the Grants Officer may substitute the SF-270 when the Grants 
Officer determines that the SF-270 provides adequate information to meet 
Federal needs.

[[Page 137]]



Sec. 14.23  Cost sharing or matching.

    (a) All contributions, including cash and third party in-kind, shall 
be accepted as part of the recipient's cost sharing or matching when 
such contributions meet all of the following criteria:
    (1) Are verifiable from the recipient's records.
    (2) Are not included as contributions for any other federally-
assisted project or program.
    (3) Are necessary and reasonable for proper and efficient 
accomplishment of project or program objectives.
    (4) Are allowable under the applicable cost principles.
    (5) Are not paid by the Federal Government under another award, 
except where authorized by Federal statute to be used for cost sharing 
or matching.
    (6) Are provided for in the approved budget.
    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching only with the prior approval of the Grants Officer.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If DoC authorizes recipients to donate buildings or land for 
construction/facilities acquisition projects or long-term use, the value 
of the donated property for cost sharing or matching shall be the lesser 
of paragraph (c) (1) or (2).
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation.
    (2) The current fair market value. However, when there is sufficient 
justification, the Grants Officer may approve the use of the current 
fair market value of the donated property, even if it exceeds the 
certified value at the time of donation to the project.
    (d) Volunteer services furnished by professional and technical 
personnel, consultants, and other skilled and unskilled labor may be 
counted as cost sharing or matching if the service is an integral and 
necessary part of an approved project or program. Rates for volunteer 
services shall be consistent with those paid for similar work in the 
recipient's organization. In those instances in which the required 
skills are not found in the recipient organization, rates shall be 
consistent with those paid for similar work in the labor market in which 
the recipient competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, allowable, and allocable 
may be included in the valuation.
    (e) When an employer other than the recipient furnishes the services 
of an employee, these services shall be valued at the employee's regular 
rate of pay (plus an amount of fringe benefits that are reasonable, 
allowable, and allocable, but exclusive of overhead costs), provided 
these services are in the same skill for which the employee is normally 
paid.
    (f) Donated supplies may include such items as expendable equipment, 
office supplies, laboratory supplies or workshop and classroom supplies. 
Value assessed to donated supplies included in the cost sharing or 
matching share shall be reasonable and shall not exceed the fair market 
value of the property at the time of the donation.
    (g) The method used for determining cost sharing or matching for 
donated equipment, buildings and land for which title passes to the 
recipient may differ according to the purpose of the award, if paragraph 
(g) (1) or (2) of this section applies.
    (1) If the purpose of the award is to assist the recipient in the 
acquisition of equipment, buildings or land, the total value of the 
donated property may be claimed as cost sharing or matching.
    (2) If the purpose of the award is to support activities that 
require the use of equipment, buildings or land, normally only 
depreciation or use charges for equipment and buildings may be made. 
However, the full value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that the Grants Officer 
has approved the charges.
    (h) The value of donated property shall be determined in accordance 
with the usual accounting policies of the recipient, with the following 
qualifications:

[[Page 138]]

    (1) The value of donated land and buildings shall not exceed its 
fair market value at the time of donation to the recipient as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the recipient.
    (2) The value of donated equipment shall not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space shall not exceed the fair rental 
value of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment shall not exceed its fair rental 
value.
    (5) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties:
    (i) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees.
    (ii) The basis for determining the valuation for personal service, 
material, equipment, buildings and land shall be documented.



Sec. 14.24  Program income.

    (a) The standards set forth in this section shall apply in requiring 
recipient organizations to account for program income related to 
projects financed in whole or in part with Federal funds.
    (b) Except as provided in paragraph (h) of this section, program 
income earned during the project period shall be retained by the 
recipient and, in accordance with DoC regulations or the terms and 
conditions of the award, shall be used in one or more of the ways listed 
in the following:
    (1) Added to funds committed to the project by the DoC and recipient 
and used to further eligible project objectives.
    (2) Used to finance the non-Federal share of the project.
    (3) Deducted from the total project allowable cost in determining 
the net allowable costs on which the Federal share of costs is based.
    (c) When an agency authorizes the disposition of program income as 
described in paragraph (b)(1) or (b)(2) of this section, program income 
in excess of any limits stipulated shall be used in accordance with 
paragraph (b)(3) of this section.
    (d) In the event that the DoC does not specify in its regulations or 
the terms and conditions of the award how program income is to be used, 
paragraph (b)(1) of this section shall apply automatically to all 
projects or programs.
    (e) Unless DoC regulations or the terms and conditions of the award 
provide otherwise, recipients shall have no obligation to the Federal 
Government regarding program income earned after the end of the project 
period.
    (f) Costs incident to the generation of program income may be 
deducted from gross income to determine program income, provided these 
costs have not been charged to the award.
    (g) Proceeds from the sale of property shall be handled in 
accordance with the requirements of the Property Standards (See 
Secs. 14.30 through 14.37).
    (h) Unless DoC regulations or the terms and conditions of the award 
provide otherwise, recipients shall have no obligation to the Federal 
Government with respect to program income earned from license fees and 
royalties for copyrighted material, patents, patent applications, 
trademarks, and inventions produced under an award. However, Patent and 
Trademark Amendments (35 U.S.C. 18) apply to inventions made under an 
experimental, developmental, or research award.



Sec. 14.25  Revision of budget and program plans.

    (a) The budget plan is the financial expression of the project or 
program as approved during the award process. It may include either the 
Federal and non-Federal share, or only the Federal share, depending upon 
DoC requirements. It shall be related to performance for program 
evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget and 
program plans, and request prior approvals for budget and program plan 
revisions, in accordance with this section.

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    (c) For nonconstruction awards, recipients shall request prior 
approvals from the Grants Officer for one or more of the following 
program or budget related reasons. Approvals will be provided in writing 
by the Grants Officer.
    (1) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (2) Change in a key person specified in the application or award 
document.
    (3) The absence for more than three months, or a 25 percent 
reduction in time devoted to the project, by the approved project 
director or principal investigator.
    (4) The need for additional Federal funding.
    (5) The transfer of amounts budgeted for indirect costs to absorb 
increases in direct costs, or vice versa, if approval is required by the 
DoC.
    (6) The inclusion, unless waived by the DoC, of costs that require 
prior approval in accordance with OMB Circular A-21, ``Cost Principles 
for Educational Institutions,'' OMB Circular A-122, ``Cost Principles 
for Non-Profit Organizations,'' 45 CFR part 74 Appendix E, ``Principles 
for Determining Costs Applicable to Research and Development under 
Grants and Contracts with Hospitals,'' or 48 CFR part 31, ``Contract 
Cost Principles and Procedures,'' as applicable.
    (7) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (8) Unless described in the application and funded in the approved 
awards, the subaward, transfer or contracting out of any work under an 
award. This provision does not apply to the purchase of supplies, 
material, equipment or general support services.
    (d) For nonconstruction awards, no other prior approval requirements 
for specific items may be imposed unless a deviation has been approved 
by OMB.
    (e) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, the Grants Officer may waive cost-related and 
administrative prior written approvals required by this part and OMB 
Circulars A-21 and A-122. Such waivers may include authorizing 
recipients to do any one or more of the following:
    (1) Incur pre-award costs 90 calendar days prior to award or more 
than 90 calendar days with the prior approval of the Grants Officer 
after coordination with the DoC operating unit. All pre-award costs are 
incurred at the recipient's risk (i.e., the DoC is under no obligation 
to reimburse such costs if for any reason the recipient does not receive 
an award or if the award is less than anticipated and inadequate to 
cover such costs).
    (2) Initiate a one-time extension of the expiration date of the 
award of up to 12 months unless one or more of the following conditions 
apply. For one-time extensions, the recipient must notify the Grants 
Officer in writing with the supporting reasons and revised expiration 
date at least 10 days before the expiration date specified in the award. 
This one-time extension may not be exercised merely for the purpose of 
using unobligated balances.
    (i) The terms and conditions of award prohibit the extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent funding 
periods.
    (4) For awards that support research, unless the DoC provides 
otherwise in the award or in the DoC regulations, the prior approval 
requirements described in paragraph (e) of this section are 
automatically waived (i.e., recipients need not obtain such prior 
approvals) unless one of the conditions included in paragraph (e)(2) of 
this section applies.
    (f) The recipient may not transfer funds among direct cost 
categories or programs, functions and activities for construction or 
nonconstruction awards in which the cumulative amount of such transfers 
exceeds or is expected to exceed 10 percent of the total budget as last 
approved by the Grants Officer. This does not prohibit the recipient 
from requesting Grants Officer approval for revisions to the budget. No 
transfers are permitted that would cause any Federal appropriation or 
part thereof to be used for purposes

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other than those consistent with the original intent of the 
appropriation.
    (g) All other changes to nonconstruction budgets, except for the 
changes described in paragraph (j) of this section, do not require prior 
approval.
    (h) For construction awards, recipients shall request prior written 
approval promptly from the Grants Officer for budget revisions whenever 
paragraph (h) (1), (2) or (3) apply. Approvals will be provided in 
writing by the Grants Officer.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in Sec. 14.27.
    (i) For construction awards, no other prior approval requirements 
for specific items may be imposed unless a deviation has been approved 
by OMB.
    (j) When the DoC makes an award that provides support for both 
construction and nonconstruction work, the Grants Officer may require 
the recipient to request prior approval from the Grants Officer before 
making any fund or budget transfers between the two types of work 
supported. Approvals will be provided in writing by the Grants Officer.
    (k) For both construction and nonconstruction awards, the DoC shall 
require recipients to notify the Grants Officer in writing promptly 
whenever the amount of Federal authorized funds is expected to exceed 
the needs of the recipient for the project period by more than $5000 or 
five percent of the Federal award, whichever is greater. This 
notification shall not be required if an application for additional 
funding is submitted for a continuation award.
    (l) When requesting approval for budget revisions, recipients shall 
use the budget forms that were used in the application unless the Grants 
Officer indicates a letter of request suffices.
    (m) Within 30 calendar days from the date of receipt of the request 
for budget revisions, DoC shall review the request and the Grants 
Officer shall notify the recipient in writing whether the budget 
revisions have been approved. If the revision is still under 
consideration at the end of 30 calendar days, the Grants Officer shall 
inform the recipient in writing of the date when the recipient may 
expect the decision.



Sec. 14.26  Non-Federal audits.

    (a) Recipients and subrecipients that are institutions of higher 
education or other non-profit organizations (including hospitals) shall 
be subject to the audit requirements contained in the Single Audit Act 
Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, 
``Audits of States, Local Governments, and Non-Profit Organizations.''
    (b) State and local governments shall be subject to the audit 
requirements contained in the Single Audit Act Amendments of 1996 (31 
U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of States, 
Local Governments, and Non-Profit Organizations.''
    (c) For-profit hospitals not covered by the audit provisions of 
revised OMB Circular A-133 shall be subject to the audit requirements as 
stipulated in the award document.
    (d) Commercial and other organizations not covered by paragraph (a), 
(b), or (c) of this section shall be subject to the audit requirements 
as stipulated in the award document or the prime recipient as stipulated 
in the sub-award document.



Sec. 14.27  Allowable costs.

    For each kind of recipient, there is a set of Federal principles for 
determining allowable costs. Allowability of costs shall be determined 
in accordance with the cost principles applicable to the entity 
incurring the costs. Thus, allowability of costs incurred by State, 
local or federally-recognized Indian tribal governments is determined in 
accordance with the provisions of OMB Circular A-87, ``Cost Principles 
for State, Local and Indian Tribal Governments.'' The allowability of 
costs incurred by non-profit organizations is determined in accordance 
with the provisions of OMB Circular A-122, ``Cost

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Principles for Non-Profit Organizations.'' The allowability of costs 
incurred by institutions of higher education is determined in accordance 
with the provisions of OMB Circular A-21, ``Cost Principles for 
Educational Institutions.'' The allowability of costs incurred by 
hospitals is determined in accordance with the provisions of Appendix E 
of 45 CFR part 74, ``Principles for Determining Costs Applicable to 
Research and Development Under Grants and Contracts with Hospitals.'' 
The allowability of costs incurred by commercial organizations and those 
non-profit organizations listed in Attachment C to Circular A-122 is 
determined in accordance with the provisions of the Federal Acquisition 
Regulation (FAR) at 48 CFR part 31.



Sec. 14.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
grant only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by the Grants 
Officer.

                           Property Standards



Sec. 14.30  Purpose of property standards.

    Sections 14.31 through 14.37 set forth uniform standards governing 
management and disposition of property furnished by the Federal 
Government whose cost was charged to a project supported by a Federal 
award. The DoC shall require recipients to observe these standards under 
awards and shall not impose additional requirements, unless specifically 
required by Federal statute. The recipient may use its own property 
management standards and procedures provided it observes the provisions 
of Secs. 14.31 through 14.37.



Sec. 14.31  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with Federal funds as 
provided to property owned by the recipient. Federally-owned property 
need not be insured unless required by the terms and conditions of the 
award.



Sec. 14.32  Real property.

    The DoC award shall prescribe requirements for recipients concerning 
the use and disposition of real property acquired in whole or in part 
under awards. Unless otherwise provided by statute, such requirements, 
at a minimum, shall contain the following:
    (a) Title to real property shall vest in the recipient subject to 
the condition that the recipient shall use the real property for the 
authorized purpose of the project as long as it is needed, provided 
that, in lieu of title, with the approval of the Grants Officer, the 
recipient may hold a leasehold or other interest in the property 
appropriate to the project purpose. The recipient shall not dispose of 
or encumber the property or any interest therein without approval of the 
Grants Officer.
    (b) The recipient shall obtain written approval by the Grants 
Officer for the use of real property in other federally-sponsored 
projects when the recipient determines that the property is no longer 
needed for the purpose of the original project. Use in other projects 
shall be limited to those under federally-sponsored projects (i.e., 
awards) or programs that have purposes consistent with those authorized 
for support by the DoC.
    (c) When the real property is no longer needed as provided in 
paragraphs (a) and (b) of this section, the recipient shall request 
disposition instructions from the DoC or its successor Federal awarding 
agency. The responsible Federal agency shall observe one or more of the 
following disposition instructions:
    (1) The recipient may be permitted to retain title without further 
obligation to the Federal Government after it compensates the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal participation in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by the Grants Officer and pay the Federal Government 
for that percentage of the current fair market value of the property 
attributable to the Federal participation in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
from the

[[Page 142]]

sales proceeds). When the recipient is authorized or required to sell 
the property, proper sales procedures shall be established that provide 
for competition to the extent practicable and result in the highest 
possible return.
    (3) The recipient may be directed to transfer title to the property 
to the Federal Government or to an eligible third party provided that, 
in such cases, the recipient shall be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.



Sec. 14.33  Federally-owned and exempt property.

    (a) Federally-owned property. (1) Title to federally-owned property 
remains vested in the Federal Government. Recipients shall submit 
annually an inventory listing of federally-owned property in their 
custody to the DoC operating unit. Upon completion of the award or when 
the property is no longer needed, the recipient shall report the 
property to the DoC operating unit for further Federal agency 
utilization.
    (2) If the DoC operating unit has no further need for the property, 
it shall be declared excess and reported to the General Services 
Administration, unless the DoC has statutory authority to dispose of the 
property by alternative methods (e.g., the authority provided by the 
Federal Technology Transfer Act (15 U.S.C. 3710(I)) to donate research 
equipment to educational and non-profit organizations in accordance with 
E.O. 12821, ``Improving Mathematics and Science Education in Support of 
the National Education Goals.'') Appropriate instructions shall be 
issued to the recipient by the Grants Officer.
    (b) Exempt property. When statutory authority exists, the DoC has 
the option to vest title to property acquired with Federal funds in the 
recipient without further obligation to the Federal Government and under 
conditions the DoC considers appropriate. Such property is ``exempt 
property.'' Should the DoC not establish conditions, title to exempt 
property upon acquisition shall vest in the recipient without further 
obligation to the Federal Government.



Sec. 14.34  Equipment.

    (a) Title to equipment acquired by a recipient with Federal funds 
shall vest in the recipient, subject to conditions of this section.
    (b) The recipient shall not use equipment acquired with Federal 
funds to provide services to non-Federal outside organizations for a fee 
that is less than private companies charge for equivalent services, 
unless specifically authorized by Federal statute, for as long as the 
Federal Government retains an interest in the equipment.
    (c) The recipient shall use the equipment in the project or program 
for which it was acquired as long as needed, whether or not the project 
or program continues to be supported by Federal funds and shall not 
encumber the property without approval of the DoC. When no longer needed 
for the original project or program, the recipient shall use the 
equipment in connection with its other federally-sponsored activities, 
in the following order of priority:
    (1) Activities sponsored by the DoC operating unit which funded the 
original project;
    (2) Activities sponsored by other DoC operating units; then
    (3) Activities sponsored by other Federal awarding agencies.
    (d) During the time that equipment is used on the project or program 
for which it was acquired, the recipient shall make it available for use 
on other projects or programs if such other use will not interfere with 
the work on the project or program for which the equipment was 
originally acquired. First preference for such other use shall be given 
to other projects or programs sponsored by the DoC operating unit that 
financed the equipment; second preference shall be given to projects or 
programs sponsored by other DoC operating units, and third preference 
shall be given to projects or programs sponsored by other Federal 
awarding agencies. If the equipment is owned by the Federal Government, 
use on other activities not sponsored by the Federal Government shall be 
permissible if authorized by the Grants Officer after coordination with 
the DoC operating unit. User charges shall be treated as program income.

[[Page 143]]

    (e) When acquiring replacement equipment, the recipient may use the 
equipment to be replaced as trade-in or sell the equipment and use the 
proceeds to offset the costs of the replacement equipment subject to the 
approval of the Grants Officer after coordination with the DoC operating 
unit.
    (f) The recipient's property management standards for equipment 
acquired with Federal funds and federally-owned equipment shall include 
all of the following:
    (1) Equipment records shall be maintained accurately and shall 
include the following information:
    (i) A description of the equipment.
    (ii) Manufacturer's serial number, model number, Federal stock 
number, national stock number, or other identification number.
    (iii) Source of the equipment, including the award number.
    (iv) Whether title vests in the recipient or the Federal Government.
    (v) Acquisition date (or date received, if the equipment was 
furnished by the Federal Government) and cost.
    (vi) Information from which one can calculate the percentage of 
Federal participation in the cost of the equipment (not applicable to 
equipment furnished by the Federal Government).
    (vii) Location and condition of the equipment and the date the 
information was reported.
    (viii) Unit acquisition cost.
    (ix) Ultimate disposition data, including date of disposal and sales 
price or the method used to determine current fair market value where a 
recipient compensates the DoC for its share.
    (2) Equipment owned by the Federal Government shall be identified to 
indicate Federal ownership.
    (3) A physical inventory of equipment shall be taken and the results 
reconciled with the equipment records at least once every two years. Any 
differences between quantities determined by the physical inspection and 
those shown in the accounting records shall be investigated to determine 
the causes of the difference. The recipient shall, in connection with 
the inventory, verify the existence, current utilization, and continued 
need for the equipment.
    (4) A control system shall be in effect to insure adequate 
safeguards to prevent loss, damage, or theft of the equipment. Any loss, 
damage, or theft of equipment shall be investigated and fully 
documented; if the equipment was owned by the Federal Government, the 
recipient shall promptly notify the Grants Officer.
    (5) Adequate maintenance procedures shall be implemented to keep the 
equipment in good condition.
    (6) Where the recipient is authorized or required to sell the 
equipment, proper sales procedures shall be established which provide 
for competition to the extent practicable and result in the highest 
possible return.
    (g) When the recipient no longer needs the equipment, the equipment 
may be used for other activities in accordance with the following 
standards. Equipment with a current per-unit fair market value of less 
than $5000 may be retained, sold, or otherwise disposed of with no 
further obligation to the awarding agency. For equipment with a current 
per unit fair market value of $5000 or more, the recipient may retain 
the equipment for other uses provided that compensation is made to the 
DoC operating unit or its successor. The amount of compensation shall be 
computed by applying the percentage of Federal participation in the cost 
of the original project or program to the current fair market value of 
the equipment. If the recipient has no need for the equipment, the 
recipient shall request disposition instructions from the Grants 
Officer. The Grants Officer shall determine whether the equipment can be 
used to meet the agency's requirements. If no requirement exists within 
that agency, the availability of the equipment shall be reported to the 
General Services Administration by the Grants Officer to determine 
whether a requirement for the equipment exists in other Federal 
agencies. The Grants Officer shall issue instructions to the recipient 
no later than 120 calendar days after the recipient's request and the 
following procedures shall govern:
    (1) If so instructed or if disposition instructions are not issued 
within 120 calendar days after the recipient's request, the recipient 
shall sell the

[[Page 144]]

equipment and reimburse the DoC an amount computed by applying to the 
sales proceeds the percentage of Federal participation in the cost of 
the original project or program. However, the recipient shall be 
permitted to deduct and retain from the Federal share $500 or ten 
percent of the proceeds, whichever is less, for the recipient's selling 
and handling expenses.
    (2) If the recipient is instructed to ship the equipment elsewhere, 
the recipient shall be reimbursed by the Federal Government by an amount 
which is computed by applying the percentage of the recipient's 
participation in the cost of the original project or program to the 
current fair market value of the equipment, plus any reasonable shipping 
or interim storage costs incurred.
    (3) If the recipient is instructed to otherwise dispose of the 
equipment, the recipient shall be reimbursed by the DoC for such costs 
incurred in its disposition.
    (h) The DoC reserves the right to transfer the title to the Federal 
Government or to a third party named by the Federal Government when such 
third party is otherwise eligible under existing statutes. Such transfer 
shall be subject to the following standards:
    (1) The equipment shall be appropriately identified in the award or 
otherwise made known to the recipient in writing.
    (2) The Grants Officer shall issue disposition instructions within 
120 calendar days after receipt of a final inventory. The final 
inventory shall list all equipment acquired with grant funds and 
federally-owned equipment. If the Grants Officer fails to issue written 
disposition instructions within the 120 calendar day period, the 
recipient shall apply the standards of this section, as appropriate.
    (3) When the DoC exercises its right to take title, the equipment 
shall be subject to the provisions for federally-owned equipment.



Sec. 14.35  Supplies and other expendable property.

    (a) Title to supplies and other expendable property shall vest in 
the recipient upon acquisition. If there is a residual inventory of 
supplies exceeding $5000 in total aggregate value upon termination or 
completion of the project or program and the supplies are not needed for 
any other federally-sponsored project or program, the recipient shall 
retain the supplies for use on non-Federal sponsored activities or sell 
them, but shall, in either case, compensate the Federal Government for 
its share. The amount of compensation shall be computed in the same 
manner as for equipment.
    (b) The recipient shall not use supplies acquired with Federal funds 
to provide services to non-Federal outside organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute as long as the Federal 
Government retains an interest in the supplies.



Sec. 14.36  Intangible property.

    (a) The recipient may copyright any work that is subject to 
copyright and was developed, or for which ownership was purchased, under 
an award. The DoC reserves a royalty-free, nonexclusive and irrevocable 
right to reproduce, publish, or otherwise use the work for Federal 
purposes, and to authorize others to do so.
    (b) Recipients are subject to applicable regulations governing 
patents and inventions, including government-wide regulations issued by 
the DoC at 37 CFR part 401, ``Rights to Inventions Made by Nonprofit 
Organizations and Small Business Firms Under Government Grants, 
Contracts and Cooperative Agreements.''
    (c) Unless waived by the DoC, the Federal Government has the right 
to:
    (1) Obtain, reproduce, publish or otherwise use the data first 
produced under an award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes.
    (d) Title to intangible property and debt instruments acquired under 
an award or subaward vests upon acquisition in the recipient. The 
recipient shall use that property for the originally-authorized purpose, 
and the recipient shall not encumber the property without written 
approval from the Grants Officer. When no longer needed for the 
originally authorized purpose,

[[Page 145]]

disposition of the intangible property shall occur in accordance with 
the provisions of Sec. 14.34(g).



Sec. 14.37  Property trust relationship.

    Real property, equipment, intangible property and debt instruments 
that are acquired or improved with Federal funds shall be held in trust 
by the recipient as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. The Grants 
Officer may require recipients to record liens or other appropriate 
notices of record to indicate that personal or real property has been 
acquired or improved with Federal funds and that use and disposition 
conditions apply to the property.

                          Procurement Standards



Sec. 14.40  Purpose of procurement standards.

    Sections 14.41 through 14.48 set forth standards for use by 
recipients in establishing procedures for the procurement of supplies 
and other expendable property, equipment, real property and other 
services with Federal funds. These standards are furnished to ensure 
that such materials and services are obtained in an effective manner and 
in compliance with the provisions of applicable Federal statutes and 
executive orders. No additional procurement standards or requirements 
shall be imposed by the DoC upon recipients, unless specifically 
required by Federal statute or executive order or approved by OMB.



Sec. 14.41  Recipient responsibilities.

    The standards contained in this section do not relieve the recipient 
of the contractual responsibilities arising under its contract(s). The 
recipient is the responsible authority, without recourse to the DoC, 
regarding the settlement and satisfaction of all contractual and 
administrative issues arising out of procurements entered into in 
support of an award or other agreement. This includes disputes, claims, 
protests of award, source evaluation or other matters of a contractual 
nature. Matters concerning violation of statute are to be referred to 
such Federal, State or local authority as may have proper jurisdiction.



Sec. 14.42  Codes of conduct.

    The recipient shall maintain written standards of conduct governing 
the performance of its employees engaged in the award and administration 
of contracts. No employee, officer, or agent shall participate in the 
selection, award, or administration of a contract supported by Federal 
funds if a real or apparent conflict of interest would be involved. Such 
a conflict would arise when the employee, officer, or agent, any member 
of his or her immediate family, his or her partner, or an organization 
which employs or is about to employ any of the parties indicated herein, 
has a financial or other interest in the firm selected for an award. The 
officers, employees, and agents of the recipient shall neither solicit 
nor accept gratuities, favors, or anything of monetary value from 
contractors, or parties to subagreements. However, recipients may set 
standards for situations in which the financial interest is not 
substantial or the gift is an unsolicited item of nominal value. The 
standards of conduct shall provide for disciplinary actions to be 
applied for violations of such standards by officers, employees, or 
agents of the recipient.



Sec. 14.43  Competition.

    All procurement transactions shall be conducted in a manner to 
provide, to the maximum extent practical, open and free competition. The 
recipient shall be alert to organizational conflicts of interest as well 
as noncompetitive practices among contractors that may restrict or 
eliminate competition or otherwise restrain trade. In order to ensure 
objective contractor performance and eliminate unfair competitive 
advantage, contractors that develop or draft specifications, 
requirements, statements of work, invitations for bids and/or requests 
for proposals shall be excluded from competing for such procurements. 
Awards shall be made to the bidder or offeror whose bid or offer is 
responsive to the solicitation and is most advantageous to the 
recipient, price, quality and other factors considered. Solicitations 
shall clearly set

[[Page 146]]

forth all requirements that the bidder or offeror shall fulfill in order 
for the bid or offer to be evaluated by the recipient. Any and all bids 
or offers may be rejected when it is in the recipient's interest to do 
so.



Sec. 14.44  Procurement procedures.

    (a) All recipients shall establish written procurement procedures. 
These procedures shall provide for, at a minimum, that:
    (1) Recipients avoid purchasing unnecessary items;
    (2) Where appropriate, an analysis is made of lease and purchase 
alternatives to determine which would be the most economical and 
practical procurement for the Federal Government; and
    (3) Solicitations for goods and services provide for all of the 
following:
    (i) A clear and accurate description of the technical requirements 
for the material, product or service to be procured. In competitive 
procurements, such a description shall not contain features which unduly 
restrict competition.
    (ii) Requirements which the bidder/offeror must fulfill and all 
other factors to be used in evaluating bids or proposals.
    (iii) A description, whenever practicable, of technical requirements 
in terms of functions to be performed or performance required, including 
the range of acceptable characteristics or minimum acceptable standards.
    (iv) The specific features of ``brand name or equal'' descriptions 
that bidders are required to meet when such items are included in the 
solicitation.
    (v) The acceptance, to the extent practicable and economically 
feasible, of products and services dimensioned in the metric system of 
measurement.
    (vi) Preference, to the extent practicable and economically 
feasible, for products and services that conserve natural resources and 
protect the environment and are energy efficient.
    (b) Positive efforts shall be made by recipients to utilize small 
businesses, minority-owned firms, and women's business enterprises, 
whenever possible. Recipients of Federal awards shall take all of the 
following steps to further this goal:
    (1) Ensure that small businesses, minority-owned firms, and women's 
business enterprises are used to the fullest extent practicable.
    (2) Make information on forthcoming opportunities available and 
arrange time frames for purchases and contracts to encourage and 
facilitate participation by small businesses, minority-owned firms, and 
women's business enterprises.
    (3) Consider in the contract process whether firms competing for 
larger contracts intend to subcontract with small businesses, minority-
owned firms, and women's business enterprises.
    (4) Encourage contracting with consortiums of small businesses, 
minority-owned firms and women's business enterprises when a contract is 
too large for one of these firms to handle individually.
    (5) Use the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the DoC's 
Minority Business Development Agency in the solicitation and utilization 
of small businesses, minority-owned firms and women's business 
enterprises.
    (c) The type of procuring instruments used (e.g., fixed price 
contracts, cost reimbursable contracts, purchase orders, and incentive 
contracts) shall be determined by the recipient but shall be appropriate 
for the particular procurement and for promoting the best interest of 
the program or project involved. The ``cost-plus-a-percentage-of-cost'' 
or ``percentage of construction cost'' methods of contracting shall not 
be used.
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be given 
to such matters as contractor integrity, record of past performance, 
financial and technical resources or accessibility to other necessary 
resources. In certain circumstances, contracts with certain parties are 
restricted by agencies' implementation of E.O.s 12549 and 12689, 
``Debarment and Suspension,'' as implemented by DoC regulations at 15 
CFR part 26.

[[Page 147]]

    (e) Recipients shall, on request, make available for the Grants 
Officer, pre-award review and procurement documents, such as request for 
proposals or invitations for bids, independent cost estimates, etc., 
when any of the following conditions apply:
    (1) A recipient's procurement procedures or operation fails to 
comply with the procurement standards in this part.
    (2) The procurement is expected to exceed the small purchase 
threshold fixed at 41 U.S.C. 403 (11) (currently $100,000) and is to be 
awarded without competition or only one bid or offer is received in 
response to a solicitation.
    (3) The procurement, which is expected to exceed the small purchase 
threshold, specifies a ``brand name'' product.
    (4) The proposed award over the small purchase threshold is to be 
awarded to other than the apparent low bidder under a sealed bid 
procurement.
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the amount of the small 
purchase threshold.



Sec. 14.45  Cost and price analysis.

    Some form of cost or price analysis shall be made and documented in 
the procurement files in connection with every procurement action. Price 
analysis may be accomplished in various ways, including the comparison 
of price quotations submitted, market prices and similar indicia, 
together with discounts. Cost analysis is the review and evaluation of 
each element of cost to determine reasonableness, allocability and 
allowability.



Sec. 14.46  Procurement records.

    Procurement records and files for purchases in excess of the small 
purchase threshold shall include the following at a minimum:
    (a) Basis for contractor selection;
    (b) Justification for lack of competition when competitive bids or 
offers are not obtained; and
    (c) Basis for award cost or price.



Sec. 14.47  Contract administration.

    A system for contract administration shall be maintained to ensure 
contractor conformance with the terms, conditions and specifications of 
the contract and to ensure adequate and timely follow up of all 
purchases. Recipients shall evaluate contractor performance and 
document, as appropriate, whether contractors have met the terms, 
conditions and specifications of the contract.



Sec. 14.48  Contract provisions.

    The recipient shall include, in addition to provisions to define a 
sound and complete agreement, the following provisions in all contracts. 
The following provisions shall also be applied to subcontracts:
    (a) Contracts in excess of the small purchase threshold shall 
contain contractual provisions or conditions that allow for 
administrative, contractual, or legal remedies in instances in which a 
contractor violates or breaches the contract terms, and provide for such 
remedial actions as may be appropriate.
    (b) All contracts in excess of the small purchase threshold shall 
contain suitable provisions for termination by the recipient, including 
the manner by which termination shall be effected and the basis for 
settlement. In addition, such contracts shall describe conditions under 
which the contract may be terminated for default as well as conditions 
where the contract may be terminated because of circumstances beyond the 
control of the contractor.
    (c) Except as otherwise required by statute, an award that requires 
the contracting (or subcontracting) for construction or facility 
improvements shall provide for the recipient to follow its own 
requirements relating to bid guarantees, performance bonds, and payment 
bonds unless the construction contract or subcontract exceeds $100,000. 
For those contracts or subcontracts exceeding $100,000, the DoC may 
accept the bonding policy and requirements of the recipient, provided 
the Grants Officer has made a determination that the Federal 
Government's interest is adequately protected. If such a determination 
has not been made, the minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid

[[Page 148]]

price. The ``bid guarantee'' shall consist of a firm commitment such as 
a bid bond, certified check, or other negotiable instrument accompanying 
a bid as assurance that the bidder shall, upon acceptance of his bid, 
execute such contractual documents as may be required within the time 
specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by statute of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (4) Where bonds are required in the situations described in this 
part, the bonds shall be obtained from companies holding certificates of 
authority as acceptable sureties pursuant to 31 CFR part 223, ``Surety 
Companies Doing Business with the United States.''
    (d) All negotiated contracts (except those for less than the small 
purchase threshold) awarded by recipients shall include a provision to 
the effect that the recipient, the DoC, the Comptroller General of the 
United States, or any of their duly authorized representatives, shall 
have access to any books, documents, papers and records of the 
contractor which are directly pertinent to a specific program for the 
purpose of making audits, examinations, excerpts and transcriptions.
    (e) All contracts, including small purchases, awarded by recipients 
and their contractors shall contain the procurement provisions of 
Appendix A to this part, as applicable.

                           Reports and Records



Sec. 14.50  Purpose of reports and records.

    Sections 14.51 through 14.53 set forth the procedures for monitoring 
and reporting on the recipient's financial and program performance and 
the necessary standard reporting forms. They also set forth record 
retention requirements.



Sec. 14.51  Monitoring and reporting program performance.

    (a) Recipients are responsible for managing and monitoring each 
project, program, subaward, function or activity supported by the award. 
Recipients shall monitor subawards to ensure subrecipients have met the 
audit requirements as delineated in Sec. 14.26.
    (b) The Grants Officer after coordination with the DoC operating 
unit shall prescribe the frequency with which the performance reports 
shall be submitted. Except as provided in paragraph (f) of this section, 
performance reports shall not be required more frequently than quarterly 
or, less frequently than annually. Annual reports shall be due 90 
calendar days after the grant year; quarterly or semi-annual reports 
shall be due 30 days after the reporting period. The Grants Officer may 
require annual reports before the anniversary dates of multiple year 
awards in lieu of these requirements. The final performance reports are 
due 90 calendar days after the expiration or termination of the award.
    (c) If inappropriate, a final technical or performance report shall 
not be required after completion of the project.
    (d) When required, performance reports shall generally contain, for 
each award, brief information on each of the following:
    (1) A comparison of actual accomplishments with the goals and 
objectives established for the period, the findings of the investigator, 
or both. Whenever appropriate and the output of programs or projects can 
be readily quantified, such quantitative data should be related to cost 
data for computation of unit costs.
    (2) Reasons why established goals were not met, if appropriate.
    (3) Other pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (e) Recipients shall not be required to submit more than the 
original and two copies of performance reports.
    (f) Recipients shall immediately notify the DoC operating unit of 
developments that have a significant impact

[[Page 149]]

on the award-supported activities. Also, notification shall be given in 
the case of problems, delays, or adverse conditions which materially 
impair the ability to meet the objectives of the award. This 
notification shall include a statement of the action taken or 
contemplated, and any assistance needed to resolve the situation.
    (g) The DoC may make site visits, as needed.
    (h) Federal awarding agencies shall comply with clearance 
requirements of 5 CFR part 1320 when requesting performance data from 
recipients.



Sec. 14.52  Financial reporting.

    (a) The following forms or such other forms as may be approved by 
OMB are authorized for obtaining financial information from recipients:
    (1) SF-269 or SF-269A, Financial Status Report.
    (i) Each DoC award shall require recipients to use the SF-269 or SF-
269A to report the status of funds for all nonconstruction projects or 
programs. The DoC, however, has the option of not requiring the SF-269 
or SF-269A when the SF-270, Request for Advance or Reimbursement, or SF-
272, Report of Federal Cash Transactions, is determined to provide 
adequate information to meet its needs, except that a final SF-269 or 
SF-269A shall be required at the completion of the project when the SF-
270 is used only for advances.
    (ii) The DoC shall prescribe whether the report shall be on a cash 
or accrual basis. If the DoC requires accrual information and the 
recipient's accounting records are not normally kept on the accrual 
basis, the recipient shall not be required to convert its accounting 
system, but shall develop such accrual information through best 
estimates based on an analysis of the documentation on hand.
    (iii) The DoC shall determine the frequency of the Financial Status 
Report for each project or program, considering the size and complexity 
of the particular project or program. However, the report shall not be 
required more frequently than quarterly or less frequently than 
annually. A final report shall be required at the completion of the 
agreement.
    (iv) The DoC shall require recipients to submit the SF-269 or SF-
269A (an original and no more than two copies) no later than 30 days 
after the end of each specified reporting period for quarterly and semi-
annual reports, and 90 calendar days for annual and final reports. 
Extensions of reporting due dates may be approved by the Grants Officer 
upon request of the recipient.
    (2) SF-272, Report of Federal Cash Transactions.
    (i) When funds are advanced to recipients the DoC shall require each 
recipient to submit the SF-272 and, when necessary, its continuation 
sheet, SF-272a. The DoC shall use this report to monitor funds advanced 
to recipients and to obtain disbursement information for each agreement 
with the recipients.
    (ii) The DoC may require forecasts of Federal funds requirements in 
the ``Remarks'' section of the report.
    (iii) When practical and deemed necessary, the DoC may require 
recipients to report in the ``Remarks'' section the amount of advances 
received in excess of three days. Recipients shall provide short 
narrative explanations of actions taken to reduce the excess balances.
    (iv) Recipients shall be required to submit not more than the 
original and two copies of the SF-272 15 calendar days following the end 
of each quarter. The Grants Officer may require a monthly report from 
those recipients receiving advances totaling $1 million or more per 
year.
    (v) The Grants Officer may waive the requirement for submission of 
the SF-272 for any one of the following reasons:
    (A) When monthly advances do not exceed $25,000 per recipient, 
provided that such advances are monitored through other forms contained 
in this section;
    (B) If, in the Grants Officer's opinion, the recipient's accounting 
controls are adequate to minimize excessive Federal advances; or
    (C) When the electronic payment mechanisms provide adequate data.
    (b) When the DoC needs additional information or more frequent 
reports, the following shall be observed:

[[Page 150]]

    (1) When additional information is needed to comply with legislative 
requirements, the Grants Officer shall issue instructions to require 
recipients to submit such information under the ``Remarks'' section of 
the reports.
    (2) When the DoC determines that a recipient's accounting system 
does not meet the standards in Sec. 14.21, additional pertinent 
information to further monitor awards may be obtained upon written 
notice to the recipient until such time as the system is brought up to 
standard. The DoC, in obtaining this information, shall comply with 
report clearance requirements of 5 CFR part 1320.
    (3) Grants Officers are encouraged to shade out any line item on any 
report if not necessary.
    (4) The DoC may accept the identical information from the recipients 
in machine readable format or computer printouts or electronic outputs 
in lieu of prescribed formats.
    (5) The DoC may provide computer or electronic outputs to recipients 
when such expedites or contributes to the accuracy of reporting.



Sec. 14.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to recipients. The DoC shall not impose any 
other record retention or access requirements upon recipients.
    (b) Financial records, supporting documents, statistical records, 
and all other records pertinent to an award shall be retained for a 
period of three years from the date of submission of the final 
expenditure report or, for awards that are renewed quarterly or 
annually, from the date of the submission of the quarterly or annual 
financial report, as authorized by the DoC. The only exceptions are the 
following:
    (1) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records shall be retained until all 
litigation, claims or audit findings involving the records have been 
resolved and final action taken.
    (2) Records for real property and equipment acquired with Federal 
funds shall be retained for 3 years after final disposition.
    (3) When records are transferred to or maintained by the DoC, the 3-
year retention requirement is not applicable to the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc. as 
specified in paragraph (g) of this section.
    (c) Copies of original records may be substituted for the original 
records if authorized by the DoC.
    (d) The Grants Officer after coordination with the DoC operating 
unit shall request transfer of certain records to its custody from 
recipients when it determines that the records possess long term 
retention value. However, in order to avoid duplicate recordkeeping, a 
DoC operating unit or Grants Officer may make arrangements for 
recipients to retain any records that are continuously needed for joint 
use.
    (e) The DoC, the Inspector General, Comptroller General of the 
United States, or any of their duly authorized representatives, have the 
right of timely and unrestricted access to any books, documents, papers, 
or other records of recipients that are pertinent to the awards, in 
order to make audits, examinations, excerpts, transcripts and copies of 
such documents. This right also includes timely and reasonable access to 
a recipient's personnel for the purpose of interview and discussion 
related to such documents. The rights of access in this paragraph are 
not limited to the required retention period, but shall last as long as 
records are retained.
    (f) Unless required by statute, no DoC operating unit shall place 
restrictions on recipients that limit public access to the records of 
recipients that are pertinent to an award, except when the DoC operating 
unit can demonstrate that such records shall be kept confidential and 
would have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) if the records had belonged to the DoC 
operating unit.
    (g) Paragraphs (g)(1) and (g)(2) of this section apply to the 
following types of documents, and their supporting records: indirect 
cost rate computations or proposals, cost allocation

[[Page 151]]

plans, and any similar accounting computations of the rate at which a 
particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (1) If the recipient submits to the Federal awarding agency 
responsible for negotiating the recipient's indirect cost rate or the 
subrecipient submits to the recipient the proposal, plan, or other 
computation to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts on the date of 
such submission.
    (2) If the recipient is not required to submit to the cognizant 
Federal awarding agency or the subrecipient is not required to submit to 
the recipient the proposal, plan, or other computation for negotiation 
purposes, then the 3-year retention period for the proposal, plan, or 
other computation and its supporting records starts at the end of the 
fiscal year (or other accounting period) covered by the proposal, plan, 
or other computation.

                       Termination and Enforcement



Sec. 14.60  Purpose of termination and enforcement.

    Sections 14.61 and 14.62 set forth uniform suspension, termination 
and enforcement procedures.



Sec. 14.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraph 
(a)(1), (2) or (3) apply.
    (1) By the Grants Officer, if a recipient materially fails to comply 
with the terms and conditions of an award.
    (2) By the Grants Officer with the consent of the recipient, in 
which case the two parties shall agree upon the termination conditions, 
including the effective date and, in the case of partial termination, 
the portion to be terminated.
    (3) By the recipient upon sending to the Grants Officer written 
notification setting forth the reasons for such termination, the 
effective date, and, in the case of partial termination, the portion to 
be terminated. However, if the Grants Officer determines in the case of 
partial termination that the reduced or modified portion of the grant 
will not accomplish the purposes for which the grant was made, it may 
terminate the grant in its entirety under either paragraph (a)(1) or 
(2).
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 14.71(a), including those for property 
management as applicable, shall be considered in the termination of the 
award, and provision shall be made for continuing responsibilities of 
the recipient after termination, as appropriate.



Sec. 14.62  Enforcement.

    (a) Remedies for noncompliance. If a recipient materially fails to 
comply with the terms and conditions of an award, whether stated in a 
Federal statute, regulation, assurance, application, or notice of award, 
the Grants Officer may, in addition to imposing any of the special 
conditions outlined in Sec. 14.14, take one or more of the following 
actions, as appropriate in the circumstances:
    (1) Temporarily withhold payments of funds pending correction of the 
deficiency by the recipient or more severe enforcement action by the 
Grants Officer after coordination with the DoC operating unit.
    (2) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (3) Wholly or partly suspend or terminate the current award.
    (4) Withhold further awards for the project or program.
    (5) Take other remedies that may be legally available.
    (b) Hearings and appeals. In taking an enforcement action, the 
awarding agency shall provide the recipient an opportunity for hearing, 
appeal, or other administrative proceeding to which the recipient is 
entitled under any statute or regulation applicable to the action 
involved.
    (c) Effects of suspension and termination. Costs of a recipient 
resulting from obligations incurred by the recipient during a suspension 
or after termination of an award are not allowable unless the awarding 
agency expressly authorizes them in the notice

[[Page 152]]

of suspension or termination or subsequently. Other recipient costs 
during suspension or after termination which are necessary and not 
reasonably avoidable are allowable if paragraphs (c) (1) and (2) of this 
section apply.
    (1) The costs result from obligations which were properly incurred 
by the recipient before the effective date of suspension or termination, 
are not in anticipation of it, and in the case of a termination, are 
noncancellable.
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to debarment 
and suspension under E.O.s 12549 and 12689 and the DoC implementing 
regulations (see Sec. 14.13) at 15 CFR part 26.



                 Subpart D--After-the-Award Requirements



Sec. 14.70  Purpose.

    Sections 14.71 through 14.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.



Sec. 14.71  Closeout procedures.

    (a) Recipients shall submit, within 90 calendar days after the date 
of completion of the award, all financial, performance, and other 
reports as required by the terms and conditions of the award. The Grants 
Officer may approve extensions when requested by the recipient.
    (b) Unless the Grants Officer authorizes an extension, a recipient 
shall liquidate all obligations incurred under the award not later than 
90 calendar days after the funding period or the date of completion as 
specified in the terms and conditions of the award or in agency 
implementing instructions.
    (c) The Grants Officer shall authorize and the DoC shall make prompt 
payments to a recipient for allowable reimbursable costs under the award 
being closed out.
    (d) The recipient shall promptly refund any balances of unobligated 
funds that the DoC has advanced or paid and that is not authorized to be 
retained by the recipient for use in other projects. OMB Circular A-129 
governs unreturned amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, the 
Grants Officer shall make a settlement for any upward or downward 
adjustments to the Federal share of costs after closeout reports are 
received.
    (f) The recipient shall account for any real and personal property 
acquired with Federal funds or received from the Federal Government in 
accordance with Secs. 14.31 through 14.37.
    (g) In the event a final audit has not been performed prior to the 
closeout of an award, the DoC shall retain the right to recover an 
appropriate amount after fully considering the recommendations on 
disallowed costs resulting from the final audit.



Sec. 14.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the DoC to disallow costs and recover funds on the 
basis of a later audit or other review.
    (2) The obligation of the recipient to return any funds due as a 
result of later refunds, corrections, or other transactions.
    (3) Audit requirements in Sec. 14.26.
    (4) Property management requirements in Secs. 14.31 through 14.37.
    (5) Records retention as required in Sec. 14.53.
    (b) After closeout of an award, a relationship created under an 
award may be modified or ended in whole or in part with the consent of 
the DoC and the recipient, provided the responsibilities of the 
recipient referred to in Sec. 14.73(a), including those for property 
management as applicable, are considered and provisions made for 
continuing responsibilities of the recipient, as appropriate.

[[Page 153]]



Sec. 14.73  Collection of amounts due.

    (a) Any funds paid to a recipient in excess of the amount to which 
the recipient is finally determined to be entitled under the terms and 
conditions of the award constitute a debt to the Federal Government. If 
not paid within a reasonable period after the demand for payment, the 
Grants Officer may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the recipient; or
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, the DoC shall charge 
interest on an overdue debt in accordance with 4 CFR Chapter II, 
``Federal Claims Collection Standards.''

               Appendix A to Part 14--Contract Provisions

    All contracts, awarded by a recipient including small purchases, 
shall contain the following provisions as applicable:
    1. Equal Employment Opportunity--All contracts shall contain a 
provision requiring compliance with E.O. 11246, ``Equal Employment 
Opportunity,'' as amended by E.O. 11375, ``Amending Executive Order 
11246 Relating to Equal Employment Opportunity,'' and as supplemented by 
regulations at 41 CFR part 60, ``Office of Federal Contract Compliance 
Programs, Equal Employment Opportunity, Department of Labor.''
    2. Copeland ``Anti-Kickback'' Act (18 U.S.C. 874 and 40 U.S.C. 
276c)--All contracts and subgrants in excess of $2000 for construction 
or repair awarded by recipients and subrecipients shall include a 
provision for compliance with the Copeland ``Anti-Kickback'' Act (18 
U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR 
part 3, ``Contractors and Subcontractors on Public Building or Public 
Work Financed in Whole or in Part by Loans or Grants from the United 
States''). The Act provides that each contractor or subrecipient shall 
be prohibited from inducing, by any means, any person employed in the 
construction, completion, or repair of public work, to give up any part 
of the compensation to which he is otherwise entitled. The recipient 
shall report all suspected or reported violations to the DoC operating 
unit.
    3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)--When 
required by Federal program legislation, all construction contracts 
awarded by the recipients and subrecipients of more than $2000 shall 
include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 
276a to a-7) and as supplemented by Department of Labor regulations (29 
CFR part 5, ``Labor Standards Provisions Applicable to Contracts 
Governing Federally Financed and Assisted Construction''). Under this 
Act, contractors shall be required to pay wages to laborers and 
mechanics at a rate not less than the minimum wages specified in a wage 
determination made by the Secretary of Labor. In addition, contractors 
shall be required to pay wages not less than once a week. The recipient 
shall place a copy of the current prevailing wage determination issued 
by the Department of Labor in each solicitation and the award of a 
contract shall be conditioned upon the acceptance of the wage 
determination. The recipient shall report all suspected or reported 
violations to the DoC operating unit.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)--Where applicable, all contracts awarded by recipients in excess of 
$2000 for construction contracts and in excess of $2500 for other 
contracts that involve the employment of mechanics or laborers shall 
include a provision for compliance with Sections 102 and 107 of the 
Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as 
supplemented by Department of Labor regulations (29 CFR part 5). Under 
Section 102 of the Act, each contractor shall be required to compute the 
wages of every mechanic and laborer on the basis of a standard work week 
of 40 hours. Work in excess of the standard work week is permissible 
provided that the worker is compensated at a rate of not less than 1\1/
2\ times the basic rate of pay for all hours worked in excess of 40 
hours in the work week. Section 107 of the Act is applicable to 
construction work and provides that no laborer or mechanic shall be 
required to work in surroundings or under working conditions which are 
unsanitary, hazardous or dangerous. These requirements do not apply to 
the purchases of supplies or materials or articles ordinarily available 
on the open market, or contracts for transportation or transmission of 
intelligence.
    5. Rights to Inventions Made Under a Contract or Agreement--
Contracts or agreements for the performance of experimental, 
developmental, or research work shall provide for the rights of the 
Federal Government and the recipient in any resulting invention in 
accordance with 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms Under Government 
Grants, Contracts and Cooperative Agreements,'' and any implementing 
regulations issued by the awarding agency.
    6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251 et seq.), as amended--Contracts 
and subgrants of amounts in excess of $100,000 shall contain a provision 
that requires the recipient to agree to comply with

[[Page 154]]

all applicable standards, orders or regulations issued pursuant to the 
Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution 
Control Act as amended (33 U.S.C. 1251 et seq.). Violations shall be 
reported to the DoC operating unit and the Regional Office of the 
Environmental Protection Agency (EPA).
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors who 
apply or bid for an award of $100,000 or more shall file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier shall also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the recipient.
    8. Debarment and Suspension (E.O.s 12549 and 12689)--No contract 
shall be made to parties listed on the General Services Administration's 
List of Parties Excluded from Federal Procurement or Nonprocurement 
Programs in accordance with E.O.s 12549 and 12689, ``Debarment and 
Suspension'' as implemented by DoC regulations at 15 CFR part 26. This 
list contains the names of parties debarred, suspended, or otherwise 
excluded by agencies, and contractors declared ineligible under 
statutory or regulatory authority other than E.O. 12549. Contractors 
with awards that exceed the small purchase threshold shall provide the 
required certification regarding its exclusion status and that of its 
principal employees.



PART 15--LEGAL PROCEEDINGS--Table of Contents




                      Subpart A--Service of Process

Sec.
15.1  Scope and purpose.
15.2  Definitions.
15.3  Acceptance of service of process.

  Subpart B--Testimony by Employees and the Production of Documents in 
                            Legal Proceedings

15.11  Scope.
15.12  Definitions.
15.13  Demands for testimony or production of documents: Department 
          policy.
15.14  Demand for testimony or production of documents: Department 
          procedures.
15.15  Procedures when a Department employee receives a subpoena.
15.16  Legal proceedings between private litigants: Expert or opinion 
          testimony.
15.17  Demands or requests in legal proceedings for records protected by 
          confidentiality statutes.
15.18  Testimony of Department employees in proceedings involving the 
          United States.

  Subpart C--Involuntary Child and Spousal Support Allotments of NOAA 
                             Corps Officers

15.21  Purpose.
15.22  Applicability and scope.
15.23  Definitions.
15.24  Policy.
15.25  Procedures.

Subpart D--Statement of Policy and Procedures Regarding Indemnification 
                   of Department of Commerce Employees

15.31  Policy.
15.32  Procedures for the handling of lawsuits against Department 
          employees arising within the scope of their office or 
          employment.

    Authority: 5 U.S.C. 301; 15 U.S.C. 1501, 1512, 1513, 1515 and 1518; 
Reorganization Plan No. 5 of 1950; 3 CFR, 1949-1953 Comp., p. 1004; 44 
U.S.C. 3101; subpart C is issued under 37 U.S.C. 101, 706; 15 U.S.C. 
1673; 42 U.S.C. 665.

    Editorial Note: Nomenclature changes to part 15 appear at 62 FR 
19669, Apr. 23, 1997.



                      Subpart A--Service of Process

    Source: 53 FR 41318, Oct. 21, 1988, unless otherwise noted. 
Redesignated at 62 FR 19669, Apr. 23, 1997.



Sec. 15.1  Scope and purpose.

    (a) This subpart sets forth the procedures to be followed when a 
summons or complaint is served on the Department, a component, or the 
Secretary or a Department employee in his or her official capacity.
    (b) This subpart is intended to ensure the orderly execution of the 
affairs of the Department and not to impede any legal proceeding.
    (c) This subpart does not apply to subpoenas. The procedures to be 
followed with respect to subpoenas are set out in subpart B.
    (d) This subpart does not apply to service of process made on a 
Department employee personally on matters not related to official 
business of the

[[Page 155]]

Department or to the official responsibilities of the Department 
employee.

[53 FR 41318, Oct. 21, 1988. Redesignated and amended at 62 FR 19669, 
19670, Apr. 23, 1997]



Sec. 15.2  Definitions.

    For the purpose of this subpart:
    (a) General Counsel means the General Counsel of the United States 
Department of Commerce or other Department employee to whom the General 
Counsel has delegated authority to act under this subpart, or the chief 
legal officer (or designee) of the Department of Commerce component 
concerned.
    (b) Component means Office of the Secretary or an operating unit of 
the Department as defined in Department Organization Order 1-1.
    (c) Department means the Department of Commerce.
    (d) Department employee means any officer or employee of the 
Department, including commissioned officers of the National Oceanic and 
Atmospheric Administration.
    (e) Legal proceeding means a proceeding before a tribunal 
constituted by law, including a court, an administrative body or 
commission, or an administrative law judge or hearing officer.
    (f) Official business means the authorized business of the 
Department.
    (g) Secretary means Secretary of Commerce.



Sec. 15.3  Acceptance of service of process.

    (a) Except as otherwise provided in this subpart, any summons or 
complaint to be served in person or by registered or certified mail or 
as otherwise authorized by law on the Department, a component or the 
Secretary or a Department employee in their official capacity, shall be 
served on the General Counsel of the United States Department of 
Commerce, Washington, DC 20230.
    (b) Any summons or complaint to be served in person or by registered 
or certified mail or as otherwise authorized by law on the Patent and 
Trademark Office or the Commissioner of Patents and Trademarks or an 
employee of the Patent and Trademark Office in his or her official 
capacity, shall be served on the Solicitor for the Patent and Trademark 
Office or a Department employee designated by the Solicitor.
    (c) Except as otherwise provided in this subpart, any component or 
Department employee served with a summons or complaint shall immediately 
notify and deliver the summons or complaint to the office of the General 
Counsel. Any employee of the Patent and Trademark Office served with a 
summons or complaint shall immediately notify and deliver the summons or 
complaint to the office of the Solicitor.
    (d) Any Department employee receiving a summons or complaint shall 
note on the summons or complaint the date, hour, and place of service 
and whether service was by personal delivery or by mail.
    (e) When a legal proceeding is brought to hold a Department employee 
personally liable in connection with an action taken in the conduct of 
official business, rather than liable in an official capacity, the 
Department employee by law is to be served personally with process. 
Service of process in this case is inadequate when made upon the General 
Counsel or the Solicitor or their designees. Except as otherwise 
provided in this subpart, a Department employee sued personally for an 
action taken in the conduct of official business shall immediately 
notify and deliver a copy of the summons or complaint to the office of 
the General Counsel. Any employee of the Patent and Trademark Office 
sued personally for an action taken in the conduct of official business 
shall immediately notify and deliver a copy of the summons or complaint 
to the Office of the Solicitor.
    (f) A Department employee sued personally in connection with 
official business may be represented by the Department of Justice at its 
discretion. See 28 CFR 50.15 and 50.16 (1987).
    (g) The General Counsel or Solicitor or Department employee 
designated by either, when accepting service of process for a Department 
employee in an official capacity, shall endorse on the Marshal's or 
server's return of service form or receipt for registered or certified 
mail the following statement: ``Service accepted in official capacity 
only.'' The statement may be placed on

[[Page 156]]

the form or receipt with a rubber stamp.
    (h) Upon acceptance of service or receiving notification of service, 
as provided in this section, the General Counsel and Solicitor shall 
take appropriate steps to protect the rights of the Department, 
component, the Secretary or Department employee involved.



  Subpart B--Testimony by Employees and the Production of Documents in 
                            Legal Proceedings

    Source:  60 FR 9291, Feb. 17, 1995, unless otherwise noted. 
Redesignated at 62 FR 19669, Apr. 23, 1997.



Sec. 15.11  Scope.

    (a) This subpart sets forth the policies and procedures of the 
Department of Commerce regarding the testimony of employees, and former 
employees, as witnesses in legal proceedings and the production or 
disclosure of information contained in Department of Commerce documents 
for use in legal proceedings pursuant to a request, order, or subpoena 
(collectively referred to in this subpart as a ``demand'').
    (b) This subpart does not apply to any legal proceeding in which an 
employee is to testify while on leave status, regarding facts or events 
that are unrelated to the official business of the Department.
    (c) This subpart in no way affects the rights and procedures 
governing public access to records pursuant to the Freedom of 
Information Act, the Privacy Act or the Trade Secrets Act..
    (d) This subpart is not intended to be relied upon to, and does not, 
create any right or benefit, substantive or procedural, enforceable at 
law by any party against the United States.



Sec. 15.12  Definitions.

    For the purpose of this subpart:
    (a) Agency counsel means the chief legal officer (or his/her 
designee) of an agency within the Department of Commerce.
    (b) Component means Office of the Secretary or an operating unit of 
the Department as defined in Department Organization Order 1-1.
    (c) Demand means a request, order, or subpoena for testimony or 
documents for use in a legal proceeding.
    (d) Department means the United States Department of Commerce and 
its constituent agencies.
    (e) Document means any record, paper and other property held by the 
Department, including without limitation, official letters, telegrams, 
memoranda, reports, studies, calendar and diary entries, maps, graphs, 
pamphlets, notes, charts, tabulations, analyses, statistical or 
informational accumulations, any kind of summaries of meetings and 
conversations, film impressions, magnetic tapes and sound or mechanical 
reproductions.
    (f) Employee means all current or former employees or officers of 
the Department, including commissioned officers of the National Oceanic 
and Atmospheric Administration and any other individual who has been 
appointed by, or subject to the supervision, jurisdiction or control of 
the Secretary of the Department of Commerce.
    (g) General Counsel means the General Counsel of the Department or 
other Department employee to whom the General Counsel has delegated 
authority to act under this subpart.
    (h) Legal proceeding means all pretrial, trial and post trial stages 
of all existing or reasonably anticipated judicial or administrative 
actions, hearings, investigations, or similar proceedings before courts, 
commissions, boards or other tribunals, foreign or domestic. This phrase 
includes all phases of discovery as well as responses to formal or 
informal requests by attorneys or others involved in legal proceedings.
    (i) Official business means the authorized business of the 
Department.
    (j) Secretary means the Secretary of the Department of Commerce.
    (k) Solicitor means the Solicitor of the Patent and Trademark 
Office.
    (l) Testimony means a statement in any form, including personal 
appearances before a court or other legal tribunal, interviews, 
depositions, telephonic, televised, or videotaped statements or any 
responses given during discovery or similar proceedings, which

[[Page 157]]

response would involve more than the production of documents.
    (m) United States means the Federal Government, its departments and 
agencies, and individuals acting on behalf of the Federal Government.



Sec. 15.13  Demand for testimony or production of documents: Department policy.

    No employee shall in response to a demand, produce any documents, or 
provide testimony regarding any information relating to, or based upon 
Department of Commerce documents, or disclose any information or produce 
materials acquired as part of the performance of that employee's 
official duties, or because of that employee's official status without 
the prior authorization of the General Counsel, or the Solicitor, or the 
appropriate agency counsel. The reasons for this policy are as follows:
    (a) To conserve the time of Department employees for conducting 
official business;
    (b) To minimize the possibility of involving the Department in 
controversial issues that are not related to the Department's mission;
    (c) To prevent the possibility that the public will misconstrue 
variances between personal opinions of Department employees and 
Department policy;
    (d) To avoid spending the time and money of the United States for 
private purposes;
    (e) To preserve the integrity of the administrative process; and
    (f) To protect confidential, sensitive information and the 
deliberative process of the Department.



Sec. 15.14  Demand for testimony or production of documents: Department procedures.

    (a) Whenever a demand for testimony or for the production of 
documents is made upon an employee, the employee shall immediately 
notify the General Counsel (Room 5890, U. S. Department of Commerce, 
Washington, DC 20230, (202) 482-1067) or appropriate agency counsel. 
When a demand for testimony or for the production of documents is made 
upon an employee of the Patent and Trademark Office, the employee should 
immediately notify the Solicitor, by phone, (703) 305-9035; by mailed 
addressed Solicitor, Box 8, Patent and Trademark Office, Washington, DC 
20231; or in person to 2121 Crystal Drive, Crystal Park 2, Suite 918, 
Arlington, Virginia 22215.
    (b) A Department employee may not give testimony, produce documents, 
or answer inquiries from a person not employed by the Department 
regarding testimony or documents subject to a demand or a potential 
demand under the provisions of this subpart without the approval of the 
General Counsel, or the Solicitor, or the appropriate agency counsel. A 
Department employee shall immediately refer all inquiries and Demands to 
the General Counsel, or the Solicitor, or appropriate agency counsel. 
Where appropriate, the General Counsel, or the Solicitor, or appropriate 
agency counsel, may instruct the Department employee, orally or in 
writing, not to give testimony or produce documents.
    (c)(1) Demand for testimony or documents. A demand for the testimony 
of a Department employee shall be addressed to the General Counsel, Room 
5890, Department of Commerce, Washington, DC 20230 or appropriate agency 
counsel. A demand for testimony of an employee of the Patent and 
Trademark Office shall be mail addressed to the Solicitor, Box 8, Patent 
and Trademark Office, Washington, DC 20231; or in person to 2121 Crystal 
Drive, Crystal Park 2, Suite 918, Arlington, Virginia 22215.
    (2) Subpoenas. A subpoena for testimony by a Department employee or 
a document shall be served in accordance with the Federal Rules of Civil 
or Criminal Procedure or applicable state procedure and a copy of the 
subpoena shall be sent to the General Counsel, or the Solicitor, or 
appropriate agency counsel.
    (3) Affidavit. Except when the United States is a party, every 
demand shall be accompanied by an affidavit or declaration under 28 
U.S.C. 1746 or, if an affidavit is not feasible, a statement setting 
forth the title of the legal proceeding, the forum, the requesting 
party's interest in the legal proceeding, the reason for the demand, a 
showing that the desired testimony or document is not reasonably 
available from

[[Page 158]]

any other source, and if testimony is requested, the intended use of the 
testimony, a general summary of the desired testimony, and a showing 
that no document could be provided and used in lieu of testimony. The 
purpose of this requirement is to assist the General Counsel, or the 
Solicitor, or appropriate agency counsel in making an informed decision 
regarding whether testimony or the production of a document(s) should be 
authorized.
    (d) A certified copy of a document for use in a legal proceeding may 
be provided upon written request and payment of applicable fees. Written 
requests for certification shall be addressed to the agency counsel for 
the component having possession, custody, or control of the document. 
Unless governed by another applicable provision of law or component 
regulation, the applicable fee includes charges for certification and 
reproduction as set out in 15 CFR part 4.9. Other reproduction costs and 
postage fees, as appropriate, must also be borne by the requester.
    (e) The Secretary retains the authority to authorize and direct 
testimony in those cases where a statute or Presidential order mandates 
a personal decision by the Secretary.
    (f) The General Counsel, or the Solicitor, or appropriate agency 
counsel may consult or negotiate with an attorney for a party or the 
party if not represented by an attorney, to refine or limit a demand so 
that compliance is less burdensome or obtain information necessary to 
make the determination required by paragraph (b) of this section. 
Failure of the attorney to cooperate in good faith to enable the General 
Counsel, or the Solicitor, or the Secretary, or the appropriate agency 
counsel to make an informed determination under this subpart may serve, 
where appropriate, as a basis for a determination not to comply with the 
demand.
    (g) A determination under this subpart to comply or not to comply 
with a demand is not an assertion or waiver of privilege, lack of 
relevance, technical deficiency or any other ground for noncompliance.
    (h) The General Counsel, or the Solicitor, or appropriate agency 
counsel may waive any requirements set forth under this section when 
circumstances warrant.



Sec. 15.15  Procedures when a Department employee receives a subpoena.

    (a) A Department employee who receives a subpoena shall immediately 
forward the subpoena to the General Counsel, or the appropriate agency 
counsel. In the case of an employee of the Patent and Trademark Office, 
the subpoena shall immediately be forwarded to the Solicitor. The 
General Counsel, or the Solicitor, or appropriate agency counsel will 
determine the extent to which a Department employee will comply with the 
subpoena.
    (b) If an employee is served with a subpoena that the General 
Counsel, or the Solicitor, or appropriate agency counsel determines 
should not be complied with, the General Counsel, Solicitor or 
appropriate agency counsel will attempt to have the subpoena withdrawn 
or modified. If this cannot be done, the General Counsel, Solicitor or 
appropriate agency counsel will attempt to obtain Department of Justice 
representation for the employee and move to have the subpoena modified 
or quashed. If, because of time constraints, this is not possible prior 
to the compliance date specified in the subpoena, the employee should 
appear at the time and place set forth in the subpoena. If legal counsel 
cannot appear on behalf of the employee, the employee should produce a 
copy of the Department's regulations and inform the legal tribunal that 
he/she has been advised by counsel not to provide the requested 
testimony and/or produce documents. If the legal tribunal rules that the 
demand in the subpoena must be complied with, the employee shall 
respectfully decline to comply with the demand. United States ex rel. 
Touhy v. Ragen, 340 U. S. 462 (1951).
    (c) Where the Department employee is an employee of the Office of 
the Inspector General, the Inspector General in consultation with the 
General Counsel, will make a determination under paragraphs (a) and (b) 
of this section.

[[Page 159]]



Sec. 15.16  Legal proceedings between private litigants: Expert or opinion testimony.

    In addition to the policies and procedures as outlined in 
Secs. 15.11 through 15.16, the following applies to legal proceedings 
between private litigants:
    (a) If a Department employee is authorized to give testimony in a 
legal proceeding not involving the United States, the testimony, if 
otherwise proper, shall be limited to facts within the personal 
knowledge of the Department employee. Employees, with or without 
compensation, shall not provide expert testimony in any legal 
proceedings regarding Department information, subjects or activities 
except on behalf of the United States or a party represented by the 
United States Department of Justice. However, upon a showing by the 
requester that there are exceptional circumstances and that the 
anticipated testimony will not be adverse to the interest of the 
Department or the United States, the General Counsel, or the Solicitor, 
or appropriate agency counsel may, in writing grant special 
authorization for the employee to appear and give the expert or opinion 
testimony.
    (b)(1) If, while testifying in any legal proceeding, an employee is 
asked for expert or opinion testimony regarding official DOC 
information, subjects or activities, which testimony has not been 
approved in advance in accordance with the regulations in this subpart, 
the witness shall:
    (i) Respectfully decline to answer on the grounds that such expert 
or opinion testimony is forbidden by the regulations in this subpart;
    (ii) Request an opportunity to consult with the General Counsel, or 
the Solicitor, or appropriate agency counsel before giving such 
testimony; and
    (iii) Explain that upon such consultation, approval for such 
testimony may be provided.
    (2) If the witness is then ordered by the body conducting the 
proceeding to provide expert or opinion testimony regarding official DOC 
information, subjects or activities without the opportunity to consult 
with either the General Counsel, or the Solicitor, or appropriate agency 
counsel, the witness shall respectfully refuse to provide such 
testimony. See United States ex rel. Touhy v. Ragen, 340 U. S. 462 
(1951).
    (c) If an employee is unaware of the regulations in this subpart and 
provides expert or opinion testimony regarding official DOC information, 
subjects or activities in a legal proceeding without the aforementioned 
consultation, the witness shall, as soon after testifying as possible, 
inform the General Counsel, or the Solicitor, or appropriate agency 
counsel that such testimony was given and provide a written summary of 
the expert or opinion testimony provided.

[60 FR 9291, Feb. 17, 1995. Redesignated and amended at 62 FR 19669, 
19670, Apr. 23, 1997]



Sec. 15.17  Demands or requests in legal proceedings for records protected by confidentiality statutes.

    Demands in legal proceedings for the production of records, or for 
the testimony of Department employees regarding information protected by 
the Privacy Act, 5 U.S.C. 552a, the Trade Secrets Act, 18 U.S.C. 1905 or 
other confidentiality statutes, must satisfy the requirements for 
disclosure set forth in those statutes before the records may be 
provided or testimony given. The General Counsel, or the Solicitor, or 
appropriate agency counsel should first determine if there is a legal 
basis to provide the testimony or records sought under applicable 
confidentiality statutes before applying Secs. 15.11 through 15.18. 
Where an applicable confidentiality statute mandates disclosure, 
Secs. 15.11 through 15.18 will not apply.

[60 FR 9291, Feb. 17, 1995. Redesignated and amended at 62 FR 19669, 
19670, Apr. 23, 1997]



Sec. 15.18  Testimony of Department employees in proceedings involving the United States.

    The following applies in legal proceedings in which the United 
States is a party:
    (a) A Department employee may not testify as an expert or opinion 
witness for any other party other than the United States.
    (b) Whenever, in any legal proceeding involving the United States, a 
request is made by an attorney representing or acting under the 
authority of the United States, the General Counsel, or

[[Page 160]]

the Solicitor, or appropriate agency counsel will make all necessary 
arrangements for the Department employee to give testimony on behalf of 
the United States. Where appropriate, the General Counsel, or the 
Solicitor, or appropriate agency counsel may require reimbursement to 
the Department of the expenses associated with a Department employee 
giving testimony on behalf of the United States.



  Subpart C--Involuntary Child and Spousal Support Allotments of NOAA 
                             Corps Officers

    Source: 53 FR 15548, May 2, 1988, unless otherwise noted. 
Redesignated at 62 FR 19669, Apr. 23, 1997.



Sec. 15.21  Purpose.

    This subpart provides implementing policies governing involuntary 
child or child and spousal support allotments for officers of the 
uniformed service of the National Oceanic and Atmospheric Administration 
(NOAA), and prescribes applicable procedures.



Sec. 15.22  Applicability and scope.

    This subpart applies to Commissioned Officers of the NOAA Corps on 
active duty.



Sec. 15.23  Definitions.

    (a) Active duty. Full-time duty in the NOAA Corps.
    (b) Authorized person. Any agent or attorney of any state having in 
effect a plan approved under part D of title IV of the Social Security 
Act (42 U.S.C. 651-664), who has the duty or authority to seek recovery 
of any amounts owed as child or child and spousal support (including, 
when authorized under the state plan, any official of a political 
subdivision); and the court that has authority to issue an order against 
a member for the support and maintenance of a child or any agent of such 
court.
    (c) Child support. Periodic payments for the support and maintenance 
of a child or children, subject to and in accordance with state or local 
law. This includes but is not limited to, payments to provide for 
health, education, recreation, and clothing or to meet other specific 
needs of such a child or children.
    (d) Designated official. The official who is designated to receive 
notices of failure to make payments from an authorized person (as 
defined in paragraph (b) of this section). For the Department of 
Commerce this official is the Assistant General Counsel for 
Administration.
    (e) Notice. A court order, letter, or similar documentation issued 
by an authorized person providing notification that a member has failed 
to make periodic support payments under a support order.
    (f) Spousal support. Periodic payments for the support and 
maintenance of a spouse or former spouse, in accordance with state and 
local law. It includes, but is not limited to, separate maintenance, 
alimony while litigation continues, and maintenance. Spousal support 
does not include any payment for transfer of property or its value by an 
individual to his or her spouse or former spouse in compliance with any 
community property settlement, equitable distribution of property, or 
other division of property between spouses or former spouses.
    (g) Support order. Any order for the support of any person issued by 
a court of competent jurisdiction or by administrative procedures 
established under state law that affords substantial due process and is 
subject to judicial review. A court of competent jurisdiction includes: 
(1) Indian tribal courts within any state, territory, or possession of 
the United States and the District of Columbia; and (2) a court in any 
foreign country with which the United States has entered into an 
agreement that requires the United States to honor the notice.



Sec. 15.24  Policy.

    (a) It is the policy of the Department of Commerce to require 
Commissioned Officers of the NOAA Corps on active duty to make 
involuntary allotments from pay and allowances as payment of child, or 
child and spousal, support payments when the officer has failed to make 
periodic payments under a support order in a total amount equal to the 
support payable for two months or longer. Failure to make such payments

[[Page 161]]

shall be established by notice from an authorized person to the 
designated official. Such notice shall specify the name and address of 
the person to whom the allotment is payable. The amount of the allotment 
shall be the amount necessary to comply with the support order. If 
requested, the allotment may include arrearages as well as amounts for 
current support, except that the amount of the allotment, together with 
any other amounts withheld for support from the officer as a percentage 
of pay, shall not exceed the limits prescribed in section 303 (b) and 
(c) of the Consumer Credit Protection Act (15 U.S.C. 1673). An allotment 
under this subpart shall be adjusted or discontinued upon notice from an 
authorized person.
    (b) Notwithstanding the above, no action shall be taken to require 
an allotment from the pay and allowances of any officer until such 
officer has had a consultation with an attorney from the Office of the 
Assistant General Counsel for Administration, in person, to discuss the 
legal and other factors involved with respect to the officer's support 
obligation and his/her failure to make payments. Where it has not been 
possible, despite continuing good faith efforts to arrange such a 
consultation, the allotment shall start the first pay period beginning 
after 30 days have elapsed since the notice required in paragraph (d)(1) 
of Sec. 15.25 is given to the affected officer.

[53 FR 15548, May 2, 1988. Redesignated and amended at 62 FR 19669, 
19670, Apr. 23, 1997]



Sec. 15.25  Procedures.

    (a) Service of notice. (1) An authorized person shall send to the 
designated official a signed notice that includes:
    (i) A statement that delinquent support payments equal or exceed the 
amount of support payable for 2 months under a support order, and a 
request that an allotment be initiated pursuant to 42 U.S.C. 665.
    (ii) A certified copy of the support order.
    (iii) The amount of the monthly support payment. Such amount may 
include arrearages, if a support order specifies the payment of such 
arrearages. The notice shall indicate how much of the amount payable 
shall be applied toward liquidation of the arrearages.
    (iv) Sufficient information identifying the officer to enable 
processing by the designated official. The following information is 
requested:
    (A) Full name;
    (B) Social Security Number;
    (C) Date of birth; and
    (D) Duty station location.
    (v) The full name and address of the allottee. The allottee shall be 
an authorized person, the authorized person's designee, or the recipient 
named in the support order.
    (vi) Any limitations on the duration of the support allotment.
    (vii) A certificate that the official sending the notice is an 
authorized person.
    (viii) A statement that delinquent support payments are more than 12 
weeks in arrears, if appropriate.
    (2) The notice shall be accomplished by certified or registered 
mail, return receipt requested, or by personal service, upon the 
appropriate designated official, who shall note the date and time of 
receipt on the notice.
    (3) The notice is effective when it is received in the office of the 
designated official.
    (4) When the information submitted is not sufficient to identify the 
officer, the notice shall be returned directly to the authorized person 
with an explanation of the deficiency. However, prior to returning the 
notice if there is sufficient time, an attempt should be made to inform 
the authorized person who caused the notice to be served, that it will 
not be honored unless adequate information is supplied.
    (5) Upon receipt of effective notice of delinquent support payments, 
together with all required supplementary documents and information, the 
designated official shall identify the officer from whom moneys are due 
and payable. The allotment shall be established in the amount necessary 
to comply with the support order and to liquidate arrearages if provided 
by a support order when the maximum amount to be allotted under this 
provision, together with any other moneys withheld for support from the 
officer, does not exceed:

[[Page 162]]

    (i) 50 percent of the officer's disposable earnings for any month 
where the officer asserts by affidavit or other acceptable evidence, 
that he/she is supporting a spouse and/or dependent child, other than a 
party in the support order. When the officer submits evidence, copies 
shall be sent to the authorized person, together with notification that 
the officer's support claim will be honored.
    If the support claim is contested by the authorized person, that 
authorized person may refer this matter to the appropriate court or 
other authority for resolution.
    (ii) 60 percent of the officer's disposable earnings for any month 
where the officer fails to assert by affidavit or other acceptable 
evidence that he/she is supporting a spouse and/or dependent child.
    (iii) Regardless of the limitations above, an additional 5 percent 
of the officer's disposable earnings shall be withheld when it is stated 
in the notice that the officer is in arrears in an amount equivalent to 
12 or more weeks' support.
    (b) Disposable earnings. The following moneys are subject to 
inclusion in computation of the officer's disposable earnings:
    (1) Basic pay.
    (2) Special pay (including enlistment and reenlistment bonuses).
    (3) Accrued leave payments (basic pay portions only).
    (4) Aviation career incentive pay.
    (5) Incentive pay for Hazardous Duty.
    (6) Readjustment pay.
    (7) Diving pay.
    (8) Sea pay.
    (9) Severance pay (including disability severance pay).
    (10) Retired pay (including disability retired pay).
    (c) Exclusions. In determining the amount of any moneys due from or 
payable by the United States to any individual, there shall be excluded 
amounts which are:
    (1) Owed by the officer to the United States.
    (2) Required by law to be deducted from the remuneration or other 
payment involved, including, but not limited to:
    (i) Amounts withheld from benefits payable under Title II of the 
Social Security Act where the withholding is required by law.
    (ii) Federal employment taxes.
    (3) Properly withheld for federal and state income tax purposes if 
the withholding of the amounts is authorized by law and if amounts 
withheld are not greater than would be the case if the individual 
claimed all dependents to which he/she were entitled. The withholding of 
additional amounts pursuant to section 3402(i) of Title 26 of the United 
States Code may be permitted only when the officer presents evidence of 
a tax obligation which supports the additional withholding.
    (4) Deducted for servicemen's Group Life Insurance coverage.
    (5) Advances of pay that may be due and payable by the officer at 
some future date.
    (d) Officer notification. (1) As soon as possible, but not later 
than 15 calendar days after the date of receipt of notice, the 
designated official shall send to the officer, at his/her duty station 
or last known address, written notice:
    (i) That notice has been received from an authorized person, 
including a copy of the documents submitted;
    (ii) Of the maximum limitations set forth, with a request that the 
officer submit supporting affidavits or other documentation necessary 
for determining the applicable percentage limitation;
    (iii) That the officer may submit supporting affidavits or other 
documentation as evidence that the information contained in the notice 
is in error;
    (iv) That by submitting supporting affidavits or other necessary 
documentation, the officer consents to the disclosure of such 
information to the party requesting the support allotment;
    (v) Of the amount or percentage that will be deducted if the officer 
fails to submit the documentation necessary to enable the designated 
official to respond to the notice within the prescribed time limits;
    (vi) That legal counsel will be provided by the Office of the 
Assistant General Counsel for Administration; and

[[Page 163]]

    (vii) Of the date that the allotment is scheduled to begin.
    (2) The officer shall be provided with the following:
    (i) A consultation in person with an attorney from the Office of the 
Assistant General Counsel for Administration, to discuss the legal and 
other factors involved with the officer's support obligation and his/her 
failures to make payment.
    (ii) Copies of any other documents submitted with the notice.
    (3) The Office of the Assistant General Counsel for Administration 
will make every effort to see that the officer receives a consultation 
concerning the support obligation and the consequences of failure to 
make payments within 30 days of the notice required in paragraph (d)(1). 
In the event such consultation is not possible, despite continuing good 
faith efforts to arrange a consultation, no action shall be taken to 
require an allotment from the pay and allowances of any NOAA Corps 
Officer until 30 days have elapsed after the notice described in 
paragraph (d)(1) is given to the affected officer.
    (4) If, within 30 days of the date of the notice, the officer has 
furnished the designated official affidavits or other documentation 
showing the information in the notice to be in error, the designated 
official shall consider the officer's response. The designated official 
may return to the authorized person, without action, the notice for a 
statutorily required support allotment together with the member's 
affidavit and other documentation, if the member submits substantial 
proof of error, such as:
    (i) The support payments are not delinquent.
    (ii) The underlying support order in the notice has been amended, 
superseded, or set aside.
    (e) Absence of funds. (1) When notice is served and the identified 
officer is found not to be entitled to moneys due from or payable by 
NOAA, the designated official shall return the notice to the authorized 
person, and advise that no moneys are due from or payable by NOAA to the 
named individual.
    (2) Where it appears that moneys are only temporarily exhausted or 
otherwise unavailable, the authorized person shall be fully advised as 
to why, and for how long, the money will be unavailable.
    (3) In instances where the officer separates from active duty 
service, the authorized person shall be informed by the Office of 
Commissioned Personnel, NOAA Corps that the allotment is discontinued.
    (4) Payment of statutorily required allotments shall be enforced 
over other voluntary deductions and allotments when the gross amount of 
pay and allowances is not sufficient to permit all authorized deductions 
and collections.
    (f) Allotment of funds. (1) The authorized person or allottee shall 
notify the designated official promptly if the operative court order 
upon which the allotment is based is vacated, modified, or set aside. 
The designated official shall also be notified of any events affecting 
the allottee's eligibility to receive the allotment, such as the former 
spouse's remarriage, if a part of the payment is for spousal support, 
and notice of a change in eligibility for child support payments under 
circumstances of death, emancipation, adoption, or attainment of 
majority of a child whose support is provided through the allotment.
    (2) An allotment established under this Directive shall be adjusted 
or discontinued upon notice from the authorized person.
    (3) Neither the Department of Commerce nor any officer or employee 
thereof, shall be liable for any payment made from moneys due from, or 
payable by, the Department of Commerce to any individuals pursuant to 
notice regular on its face, if such payment is made in accordance with 
this subpart. If a designated official receives notice based on support 
which, on its face, appears to conform to the law of the jurisdiction 
from which it was issued, the designated official shall not be required 
to ascertain whether the authority that issued the orde had obtained 
personal jurisdiction over the member.
    (4) Effective date of allotment. The allotment shall start with the 
first pay period beginning after the officer has had a consultation with 
an attorney from the Office of the Assistant General Counsel for 
Administration but

[[Page 164]]

not later than the first pay period beginning after 30 days have elapsed 
since the notice required in paragraph (d)(1) of this section is given 
to the affected officer. The Department of Commerce shall not be 
required to vary its normal NOAA Corps allotment payment cycle to comply 
with the notice.
    (g) Designated official. Notice should be sent to: The Assistant 
General Counsel for Administration, Office of the General Counsel, U.S. 
Department of Commerce, Washington, DC 20230, (202) 377-5387.



Subpart D--Statement of Policy and Procedures Regarding Indemnification 
                   of Department of Commerce Employees

    Source: 62 FR 19670, Apr. 23, 1997, unless otherwise noted.



Sec. 15.31  Policy.

    (a) The Department of Commerce may indemnify a present or former 
Department employee who is personally named as a defendant in any civil 
suit in state or federal court, or other legal proceeding seeking 
damages against a present or former Department employee personally, for 
any verdict, judgment or other monetary award which is rendered against 
such employee, provided that the conduct giving rise to the verdict, 
judgment or award was taken within the scope of his/her employment and 
that such indemnification is in the interest of the Department as 
determined by the Secretary or his/her designee.
    (b) The Department may settle or compromise a personal damage claim 
against a present or former employee by the payment of available funds 
at any time provided the alleged conduct giving rise to the personal 
property claim was taken within the employee's scope of employment and 
such settlement is in the interest of the Department as determined by 
the Secretary or his/her designee.
    (c) Absent exceptional circumstances, as determined by the Secretary 
or his/her designee, the Department will not consider a request either 
to indemnify or to settle a personal damage claim before entry of an 
adverse verdict, judgment or award.
    (d) Any payment under this section either to indemnify a present or 
former Department employee or to settle a personal damage claim shall be 
contingent upon the availability of appropriated funds of the Department 
of Commerce.



Sec. 15.32  Procedures for the handling of lawsuits against Department employees arising within the scope of their office or employment.

    The following procedures shall be followed in the event that a civil 
action or proceeding is brought, in any court, against a present or 
former employee of the Department (or against his/her estate) for 
personal injury, loss of property or death, resulting from the 
Department employee's activities while acting within the scope of his/
her office or employment:
    (a) After being served with process or pleadings in such an action 
or proceeding, the employee (or the executor(rix) or administrator(rix)) 
of the estate shall within five (5) calendar days of receipt, deliver 
all such process and pleadings or an attested true copy thereof, 
together with a fully detailed report of the circumstances of the 
incident giving rise to the court action or proceeding to the General 
Counsel. Where appropriate, the General Counsel, or his/her designee, 
may request that the Department of Justice provide legal representation 
for the present or former Department employee.
    (b)(1) Only if a present or former employee of the Department has 
satisfied the requirements of paragraph (a) of this section in a timely 
fashion, may the employee subsequently request indemnification to 
satisfy a verdict, judgment, or award entered against that employee.
    (2) No request for indemnification will be considered unless the 
employee has submitted a written request, with appropriate 
documentation, including copies of the verdict, judgment, appeal bond, 
award, or settlement proposal through the employee's supervisory chain 
to the head of the employee's component. The written request will

[[Page 165]]

include an explanation by the employee of how the employee was working 
within the scope of employment and whether the employee has insurance or 
any other source of indemnification.
    (3) The head of the component or his/her designee will forward the 
employee's request with a recommendation to the General Counsel for 
review. The request for indemnification shall include a detailed 
analysis of the basis for the recommendation. The head of the component 
will also certify to the General Counsel that the component has funds 
available to pay the indemnification.
    (c) The General Counsel or his/her designee will review the 
circumstances of the incident giving rise to the action or proceeding, 
and all data bearing upon the question of whether the employee was 
acting within the scope of his/her employment. Where appropriate, the 
agency shall seek the views of the Department of Justice and/or the U.S. 
Attorney for the district embracing the place where the action or 
proceeding is brought.
    (d) The General Counsel shall forward the request, the accompanying 
documentation, and the General Counsel's recommendation to the Secretary 
or his/her designee for decision.



PART 16--PROCEDURES FOR A VOLUNTARY CONSUMER PRODUCT INFORMATION LABELING PROGRAM--Table of Contents




Sec.
16.1  Purpose.
16.2  Description and goal of program.
16.3  Definitions.
16.4  Finding of need to establish a specification for labeling a 
          consumer product.
16.5  Development of performance information labeling specifications.
16.6  Establishment of fees and charges.
16.7  Participation in program.
16.8  Termination of participation.
16.9  Rules governing designated agents.
16.10  The Department of Commerce Mark.
16.11  Amendment or revision of a performance information labeling 
          specification.
16.12  Consumer education.
16.13  Coordination with State and local programs.
16.14  Annual report.

    Authority: Sec. 2, 31 Stat. 1449, as amended; sec. 1, 64 Stat. 371, 
(15 U.S.C. 272); Re-organization Plan No. 3 of 1946, Part VI.

    Source: 42 FR 26648, May 25, 1977, unless otherwise noted.



Sec. 16.1  Purpose.

    The purpose of this part is to establish procedures under which a 
voluntary consumer product information labeling program administered by 
the Department of Commerce will function.



Sec. 16.2  Description and goal of program.

    (a) The Department's Voluntary Consumer Product Information Labeling 
Program makes available to consumers, at the point of sale, information 
on consumer product performance in an understandable and useful form so 
as to facilitate accurate consumer purchasing decisions and enhance 
consumer satisfaction. It also educates consumers, distributors and 
retailers in the use of the product performance information displayed 
and provides manufacturers and other persons who participate in the 
program with an opportunity to convey to the public the particular 
advantages of their products. These objectives are accomplished by:
    (1) Selecting or developing standardized test methods by which 
selected product performance characteristics can be measured;
    (2) Developing labeling methods by which information concerning 
product performance can be transmitted in useful form to consumers at 
the point of sale;
    (3) Encouraging manufacturers and other participants in the program 
voluntarily to test and label their products according to the selected 
or developed methods; and
    (4) Encouraging consumers through various informational and 
educational programs to utilize the product performance information 
provided.
    (b) The program involves voluntary labeling by enrolled participants 
of selected categories of consumer products with information concerning 
selected performance characteristics of those products. The performance 
characteristics selected are those that are of demonstrable importance 
to consumers, that consumers cannot evaluate

[[Page 166]]

through mere inspection of the product, and that can be measured 
objectively and reported understandably to consumers. The consumer 
products covered include those for which incorrect purchase decision can 
result in financial loss, dissatisfaction, or inconvenience. The program 
seeks to avoid the duplication of other Federal programs under which 
performance characteristics are labeled by exempting those performance 
characteristics from this program. However, where the Federal agency 
concerned agrees, the Department of Commerce may include information 
about those performance characteristics in CPILP labels if, by doing so, 
product comparison at the point of sale is simplified for consumers, and 
the complexity of product labeling is reduced for the manufacturers by 
enabling them to comply with the labeling requirements of other Federal 
agencies through participation in CPILP.
    (c) For selected categories of consumer products, the program 
includes advertising guidelines covering situations where quantitative 
performance values are stated in advertising or where qualitative 
comparisons are made of the performance of different products.

[42 FR 26648, May 25, 1977, as amended at 43 FR 8255, Mar. 1, 1978]



Sec. 16.3  Definitions.

    (a) The term Secretary means the Secretary of Commerce or her 
designee.
    (b) The term consumer means the first person who purchases a 
consumer product for purposes other than resale.
    (c) The term participant means a manufacturer, assembler or private 
brand labeler of consumer products or an importer of such products for 
resale and who participates in the program.
    (d) The term consumer product means any article produced or 
distributed for sale to a consumer for the use, consumption, or 
enjoyment of such consumer. The term does not include products 
customarily intended primarily for business, commercial, or industrial 
use.
    (e) The term person means an individual; a manufacturer; 
distributor; retailer; importer; private brand labeler; government 
agency at the Federal (including any agency of the Department of 
Commerce), State and local level; consumer organization; trade 
association; standards writing body; professional society; testing 
laboratory; or educational institution.
    (f) The term performance characteristic means a performance 
characteristic of a consumer product that can be measured in an 
objective manner with respect to a given consumer product.
    (g) The term Specification means a Performance Information Labeling 
Specification developed under Sec. 16.5.
    (h) The term label means printed matter affixed to or otherwise 
provided with a consumer product and containing all of the performance 
characteristics as prescribed by the Specification applicable to that 
product.
    (i) The term designated agent means a person as defined in paragraph 
(e) of this section, who has been designated by the Secretary to carry 
out appropriate operational procedures on behalf of more than one 
participant in this program in accordance with rules set out under 
Sec. 16.9.



Sec. 16.4  Finding of need to establish a specification for labeling a consumer product.

    (a) Any person may request the Secretary to find that there is a 
need to label a particular consumer product with information concerning 
one or more specific performance characteristics of that product.
    (b) Such a request shall be in writing and will, to the extent 
practicable, include the following information:
    (1) Identification of the consumer product;
    (2) Extent that the product identified in paragraph (b)(1) of this 
section is used by the public and, if known, what the production or 
sales volume is of such product;
    (3) Nature and extent of difficulty experienced by consumers in 
making informed purchase decisions because of a lack of knowledge 
regarding the performance characteristics of the identified consumer 
product;

[[Page 167]]

    (4) Potential or actual loss to consumers as a result of an 
incorrect decision based on an inadequate understanding of the 
performance characteristics of the identified consumer product;
    (5) Extent of incidence of consumer complaints arising from or 
reasonably traceable to lack of knowledge regarding the performance 
characteristics of the identified consumer product;
    (6) If known, whether there currently exist test methods which could 
be used to test the performance characteristics of the identified 
consumer product and an identification of those test methods;
    (7) Reasons why it is felt, in cases where existing test methods are 
identified in responding to paragraph (b)(6) of this section, that such 
test methods are suitable for making objective measurements of the 
performance characteristics of the identified consumer product; and
    (8) Estimated cost to participants to test and label the product.
    (c) The Secretary may ask for more information to support a request 
made under paragraph (a) of this section if she feels it is necessary to 
do so, or, if she deems it to be in the public interest, may develop 
such information herself as by consultation on a one-time basis with 
consumers, consumer organizations, and others. The Secretary shall act 
expeditiously on all requests and shall notify the requester of her 
decision in writing. If the Secretary determines that there is no need 
to establish a Specification for labeling the requested consumer product 
performance characteristics, or because of a lack of resources, she will 
decline to act further on the request. In those instances where the 
Secretary declines a request, she shall state the reasons for so 
declining.
    (d) If the Secretary finds that a need exists to establish a 
Specification for labeling a consumer product under this program, she 
shall publish a notice in the Federal Register setting out such finding 
and its basis and stating that she is developing a proposed 
Specification in accordance with Sec. 16.5.



Sec. 16.5  Development of performance information labeling specifications.

    (a) If the Secretary makes a finding of need pursuant to Sec. 16.4, 
she will publish a proposed Performance Information Labeling 
Specification in the Federal Register with a notice giving the complete 
text of the proposed Specification and any other pertinent information. 
The notice will invite any interested person to submit written comments 
on the proposed Specification within 45 days after its publication in 
the Federal Register, unless another time limit is provided by the 
Secretary. Interested persons wanting to express their views in an 
informal hearing may do so, if within 15 days after the proposed 
Specification is published in the Federal Register, they request the 
Secretary to hold a hearing. Such informal hearings shall be held so as 
to give all interested persons an opportunity for the oral presentation 
of data, views, or arguments in addition to the opportunity to make 
written submissions. Notice of such hearings shall be published in the 
Federal Register. A transcript shall be kept of any oral presentations.
    (b) Each Specification shall as a minimum include:
    (1) A description of the performance characteristics of the consumer 
product covered;
    (2) An identification by reference of the test methods to be used in 
measuring the performance characteristics. The test methods, where they 
exist and are deemed appropriate for inclusion in the particular 
Specification involved, shall be those which are described in 
nationally-recognized voluntary standards. Where appropriate test 
methods do not exist, they will be developed by the Department of 
Commerce in cooperation with interested parties and set out in full in 
the Specification;
    (3) A prototype label and directions for displaying the label on or 
with the consumer product concerned. Such directions will not prohibit 
the display of additional information by the participant on space 
adjacent to the marked boundaries of the label; and
    (4) Conditions of participation.
    (c) The Secretary, after consideration of all written and oral 
comments and

[[Page 168]]

other materials received in accordance with paragraph (a) of this 
section, shall publish in the Federal Register within 30 days after the 
final date for receipt of comments, or as soon as practicable 
thereafter, a notice either:
    (1) Giving the complete text of a final Specification, including 
conditions of use, and stating that any prospective participant in the 
program desiring voluntarily to use the Department of Commerce Mark 
developed under Sec. 16.10 must advise the Department of Commerce: or
    (2) Stating that the proposed Specification will be further 
developed before final publication; or
    (3) Withdrawing the proposed Specification from further 
consideration.



Sec. 16.6  Establishment of fees and charges.

    (a) The Secretary in conjunction with the use of the Working Capital 
Fund of the National Institute of Standards & Technology, as authorized 
under section 12 of the Act of March 3, 1901, as amended (15 U.S.C. 
278b), for this program, shall establish fees and charges for use of the 
Department of Commerce Label and Mark on each product. Such fees and 
charges shall be related to the number of units of products labeled, 
where appropriate. The fees and charges established by the Secretary, 
which may be revised by her when she deems it appropriate to do so, 
shall be in amounts calculated to make the operation of this program as 
self-sufficient as reasonable. A separate notice will be published in 
the Federal Register simultaneously with the notice of each proposed 
Specification referred to in Sec. 16.5(a). Such notice will set out a 
schedule of estimated fees and charges the Secretary proposes to 
establish. The notice would be furnished for informational and guidance 
purposes only in order that the public may evaluate the proposed 
Specification in light of the expected fees to be charged.
    (b) At such time as the Secretary publishes the notice announcing 
the final Specification referred to in Sec. 16.5(c)(1), she shall 
simultaneously publish a separate notice in the Federal Register setting 
forth the final schedule of fees that will be charged participants in 
the program. The effective date of such final schedule of fees shall be 
the same as the date on which the final Specification takes effect.
    (c) Revisions, if any, to the fees and charges established by the 
Secretary under paragraph (b) of this section shall be published in 
subsequent Federal Register notices and shall take effect not less than 
thirty (30) days after the date of publication of such notice.
    (d) The establishment of fees and charges under this section may, at 
any time, be suspended by the Secretary for any length of time.

[42 FR 26648, May 25, 1977, as amended at 42 FR 57686, Nov. 4, 1977; 55 
FR 38315, Sept. 18, 1990]



Sec. 16.7  Participation in program.

    (a) Any manufacturer, assembler, or private brand labeler of 
consumer products or importer of such products for resale, desiring to 
participate in this program will so notify the Secretary. The 
notification will identify the particular Specification to be used and 
the prospective participant's identification and model numbers for the 
products to be labeled. The notification must include a statement that 
if accepted as a participant in the program by the Secretary, the 
prospective participant will:
    (1) Abide by all conditions imposed by these procedures:
    (2) Abide by the conditions contained in the Specification, as 
prescribed in paragraph (d) of this section;
    (3) Pay the fees and charges established by the Secretary; and
    (4) Desist from using the Department of Commerce label and Mark if 
his participation is terminated under Sec. 16.8.
    (b) The Secretary shall act expeditiously on all requests to 
participate in the program and shall notify each prospective participant 
of her decision in writing. In those instances where the Secretary 
declines a request, she shall state the reasons for so declining.
    (c) If a prospective participant seeking to participate in the 
program is notified by the Secretary that she proposes to deny that 
prospective participant the right to participate, that prospective 
participant shall have thirty (30) days from the receipt of such 
notification to request a hearing under the

[[Page 169]]

provisions of 5 U.S.C. 556. The Secretary's proposed denial shall become 
final through the issuance of a written decision to such prospective 
participant in the event that he does not appeal such notification by 
the end of the thirty (30) day period. If however, such prospective 
participant requests a hearing within that thirty (30) day period, the 
Secretary's proposed denial shall be stayed pending the outcome of the 
hearing held pursuant to 5 U.S.C. 556.
    (d) The conditions set out in each Specification will include, but 
not be limited to, the following:
    (1) Prior to the use of a Label, the participant will make or have 
made the measurements to obtain the information required for inclusion 
on the Label and, if requested, will forward within 30 days such 
measurement data to the Secretary. Such measurement data will be kept on 
file by the participant or his agent for two years after that product is 
no longer manufactured unless otherwise provided in the Specification.
    (2) The participant will describe the test results on the Label as 
prescribed in the Specification.
    (3) The participant will display or arrange to display, in 
accordance with the appropriate Specification, the Label on or with each 
individual product of the type covered except for units exported from 
the U.S. Participants who utilized more than one brand name may 
participate by labeling some or all of the brand names. All models with 
the same brand name must be included in the program unless they are for 
export only.
    (4) The participant agrees at his expense to comply with any 
reasonable request of the Secretary to have consumer products 
manufactured, assembled, imported, or privately brand labeled by him 
tested to determine that testing has been done according to the relevant 
Specification.
    (5) Participants may reproduce the Department of Commerce Label and 
Mark in advertising: Provided, That the entire Label, complete with all 
information required to be displayed at the point of retail sale, is 
shown legibly and is not combined or associated directly with any other 
mark or logo.



Sec. 16.8  Termination of participation.

    (a) The Secretary upon finding that a participant is not complying 
with the conditions set out in these procedures or in a Specification 
may terminate upon 30 days notice the participant's right to continue 
his participation in the program: Provided, That the participant shall 
first by given an opportunity to show cause why the participation should 
not be terminated.
    (b) Upon receipt of a notice from the Secretary of the proposed 
termination, which notice shall set forth the reasons for such proposed 
termination, the participant shall have thirty (30) days from the date 
of receipt of such notification to request a hearing under the 
provisions of 5 U.S.C. 556. The Secretary's proposed termination shall 
become final through the issuance of a written decision to the 
participant in the event such participant does not appeal the proposed 
termination within the thirty (30) day period. If, however, the 
participant requests a hearing within the thirty (30) day period, the 
Secretary's proposed termination shall be stayed pending the outcome of 
the hearing held pursuant to 5 U.S.C. 556.
    (c) A participant may at any time terminate his participation and 
responsibilities under this program with regard to a specific type of 
product by giving written notice to the Secretary that he has 
discontinued use of the Department of Commerce Label and Mark for all 
consumer products of the type involved.



Sec. 16.9  Rules governing designated agents.

    (a) The following rules, requirements and tasks shall be applicable 
with respect to the seeking of designated agent status and the 
performance of that role after such status has been obtained. Each 
person desiring to be designated as a designated agent under this 
program shall:
    (1) Make written application to the Secretary;
    (2) Provide appropriate information showing his qualifications to 
represent members within a given product area and that more than one 
prospective participant in that product area is agreeable to such 
representation; and

[[Page 170]]

    (3) Agree to service any participant in this program in the agent's 
cognizant product area whether or not such participant is a member of 
the organization or body which that agent represents.
    (b) The Secretary may require a person seeking designated agent 
status to supply further information before granting such status to that 
person. The Secretary will notify each person seeking designated agent 
status, in writing, as expeditiously as possible after evaluating such 
person's application.
    (c) Each person granted designated agent status shall:
    (1) Provide the Secretary with a list of the participants that the 
designated agent services under the program. The Secretary shall also be 
provided an updated list as soon thereafter as may be practicable 
whenever there are any changes in the list;
    (2) Collect fees and charges from the participants serviced under 
this program, consolidate such sums, and transmit those fees and charges 
required under Sec. 16.6 to the Secreatry;
    (3) Distribute Department of Commerce Marks developed under 
Sec. 16.10 or instructions for the printing of such Marks to the 
participants that the designated agent services under this program;
    (4) Gather and consolidate such statistical information as may be 
required by the Secretary from individual participants serviced;
    (5) Provide the Secretary with reports, including the consolidate 
statistical information referred to in paragraph (c)(4) of this section, 
as may be called for by her, relative to the activities of the 
participants the designated agent is servicing; and
    (6) Perform any additional tasks mutually agreed upon by the 
designated agent and the Secretary.
    (d) If a person seeking designated agent status is notified by the 
Secretary that she proposes to deny that person such status, that person 
shall have thirty (30) days from the date of receipt of such 
notification to request a hearing under the provisions of 5 U.S.C. 556. 
The Secretary's proposed denial shall become final through the issuance 
of a written decision to such person in the event that he does not 
appeal such notification by the end of that thirty (30) day period. If, 
however, such person requests a hearing within that thirty (30) day 
period, the Secretary proposed denial shall be stayed pending the 
outcome of the hearing held pursuant to 5 U.S.C. 556.
    (e) If the Secretary finds that a designated agent has violated the 
terms of paragraph (c) of this section, she may, after consultations 
with such designated agent, notify such person that she proposes to 
revoke his status as a designated agent.
    (f) Upon receipt of a notice from the Secretary of the proposed 
revocation, which notice shall set forth the reasons for such proposed 
revocation, the designated agent shall have thirty (30) days from the 
date of receipt of such notification to request a hearing under the 
provisions of U.S.C. 556. The Secretary's proposed revocation shall 
become final through the issuance of a written decision to the 
designated agent in the event such designated agent does not appeal the 
proposed revocation within that thirty (30) day period. If, however, the 
designated agent requires a hearing within that thirty (30) day period, 
the Secretary's proposed revocation shall be stayed pending the outcome 
of the hearing held pursuant to 5 U.S.C. 556.



Sec. 16.10  The Department of Commerce Mark.

    The Department of Commerce shall develop a Mark which shall be 
registered in the U.S. Patent and Trademark Office under 15 U.S.C. 1054 
for use on each Label described in a Specification.



Sec. 16.11  Amendment or revision of a performance information labeling specification.

    The Secretary may by order amend or revise any Specification 
published under Sec. 16.5. The procedure applicable to the establishment 
of a Specification under Sec. 16.5 shall be followed in amending or 
revising such Specification. Such amendment or revision shall not apply 
to consumer products manufactured prior to the effective date of the 
amendment or revision.

[[Page 171]]



Sec. 16.12  Consumer education.

    The Secretary, in close cooperation and coordination with interested 
Government agencies, appropriate trade associations and industry 
members, consumer organizations, and other interested persons shall 
carry out a program to educate consumers relative to the significance of 
the labeling program. Some elements of this program shall also be 
directed toward informing retailers and other interested groups about 
the program.



Sec. 16.13  Coordination with State and local programs.

    The Secretary will establish and maintain an active program of 
communication with appropriate State and local government offices and 
agencies and will furnish and make available information and assistance 
that will promote uniformity in State and local programs for the 
labeling of performance characteristics of consumer products.



Sec. 16.14  Annual report.

    The Secretary will prepare an annual report of activities under the 
program, including an evaluation of the program and a list of 
participants, designated agents, and types of consumer products covered.



PART 17--LICENSING OF GOVERNMENT-OWNED INVENTIONS IN THE CUSTODY OF THE DEPARTMENT OF COMMERCE--Table of Contents




     Subpart A--Licensing of Rights in Domestic Patents and Patent 
                              Applications

Sec.
17.1  Licensing rules.

Subpart B--Licensing of Rights in Foreign Patents and Patent Applications  
[Reserved]

   Subpart C--Appeal Procedures for Licensing Department of Commerce 
                                 Patents

17.21  Purpose.
17.22  Definitions.
17.23  Authority to grant licenses.
17.24  Persons who may appeal.
17.25  Procedures.
17.26  Adjudicatory.

    Authority: Sec. 205(c), 63 Stat. 390 (40 U.S.C. 486(c)).

    Editorial Note: 41 CFR Part 101-4 referred to in this part was 
removed at 50 FR 28402, July 12, 1985.



     Subpart A--Licensing of Rights in Domestic Patents and Patent 
                              Applications



Sec. 17.1  Licensing rules.

    (a) The Government-wide rules for the licensing of rights in 
domestic patents and patent applications vested in the United States of 
America, found at 41 CFR 101-4.1, are applicable to all such licensing 
activities of the Department of Commerce, subject to the following minor 
clarifications:
    (1) The term ``Government agency'' as defined at 41 CFR 101-4.102(c) 
means the United States Department of Commerce or a designated operating 
unit within the Department.
    (2) The term ``The head of the Government agency'', as defined at 41 
CFR 101-4.102(d), means the Secretary of Commerce or a designee.
    (b) [Reserved]

[42 FR 54415, Oct. 6, 1977]

Subpart B--Licensing of Rights in Foreign Patents and Patent Applications  
[Reserved]



   Subpart C--Appeal Procedures for Licensing Department of Commerce 
                                 Patents

    Source: 49 FR 7986, Mar. 5, 1984, unless otherwise noted.



Sec. 17.21  Purpose.

    This subpart describes the terms, conditions and procedures under 
which a party may appeal from a decision of the Director of the National 
Technical Information Service concerning the grant, denial, 
interpretation, modification or termination of a license of any patent 
in the custody of the Department of Commerce.



Sec. 17.22  Definitions.

    (a) 41 CFR Part 101-4 shall mean the General Services Administration 
Final Rule concerning ``Patents: Licensing of

[[Page 172]]

Federally Owned Inventions'' which was originally published in the 
Federal Register, volume 47, number 152, Friday, August 6, 1982 at pages 
34148 through 34151.
    (b) Director shall mean the Director of the National Technical 
Information Service, and operating agency within the U.S. Department of 
Commerce.
    (c) Under Secretary means the Under Secretary for Technology who is 
an officer appointed by the President and confirmed by the Senate and is 
an official to whom the Director reports within the Department of 
Commerce.

[49 FR 7986, Mar. 5, 1984, as amended at 55 FR 38983, Sept. 24, 1990]



Sec. 17.23  Authority to grant licenses.

    The Director has been duly delegated authority to make any decision 
or determination concerning the granting, denial, interpretation, 
modification or termination of any license of any patent in the custody 
and control of the U.S. Department of Commerce. The decision and 
determination of the Director is final and conclusive on behalf of this 
Department unless the procedures for appeal set forth below are 
initiated.



Sec. 17.24  Persons who may appeal.

    The following person(s) may appeal to the Under Secretary any 
decision or determination concerning the grant, denial, interpretation, 
modification or termination of a license:
    (a) A person whose application for a license has been denied;
    (b) A licensee whose license has been modified or terminated in 
whole or in part; or
    (c) A person who has timely filed a written objection in response to 
the notice published in the Federal Register as required by 41 CFR 101-
4.104-3(a)(1)(c)(i) or 101-4.104-3(b)(1)(i) and who can demonstrate to 
the satisfaction of the Under Secretary that such person may be damaged 
by the Director's determination.

[49 FR 7986, Mar. 5, 1984, as amended at 55 FR 38983, Sept. 24, 1990]



Sec. 17.25  Procedures.

    (a) Any appellant party(ies) who was denied a license by the 
Director under Sec. 17.24(a) shall not be entitled to an adversary 
hearing. Such party(ies) shall file appropriate documents no later than 
30 days from the receipt of the Director's decision unless the Under 
Secretary grants for good cause an extension of time. The notice, in 
concise and brief terms, should state the grounds for appeal and include 
copies of all pertinent documents. Accompanying the notice should be 
concise arguments as to why the Director's decision should be rejected 
or modified.
    (b) The Under Secretary shall render a written opinion within 30 
days of receiving all required documentation in a non-adversary appeal.
    (c) Judicial review is available as the law permits.

[49 FR 7986, Mar. 5, 1984, as amended at 55 FR 38983, Sept. 24, 1990]



Sec. 17.26  Adjudicatory.

    (a) Any appellant party who seeks review of the Director's decision 
based upon a modification or termination of a license by the Director 
under Sec. 17.24(b), or who has filed a timely objection and can 
demonstrate damages as provided in Sec. 17.24(c), shall be entitled to 
an adversary hearing in accord with the provisions of the Administrative 
Procedures Act (5 U.S.C. 554-557). A party may waive an adversary 
hearing by filing a written waiver with the Under Secretary.
    (b) When an adversary hearing is required under Sec. 17.24 (b) or 
(c) the Under Secretary shall appoint as promptly as possible an 
Administrative Law Judge who shall hold hearings no later than 45 days 
from the date of the appointment. The hearings will be conducted in 
conformity with the objectives of the Administrative Procedure Act. The 
Administrative Law Judge shall submit a written recommendation to the 
Under Secretary no later than 30 days subsequent to the hearing and/or 
the filing of any required written arguments or documentation.
    (c) The Under Secretary shall render a final written decision on 
behalf of the Department based upon the appeal file which shall include 
the hearing record, exhibits, written submissions of the party(ies), and 
the recommendation of the Administrative Law Judge. The Under 
Secretary's decision shall include the reasons which form the basis

[[Page 173]]

of the determination. The final decision may uphold, overrule, or modify 
the Director's decision or take any action deemed appropriate.
    (d) Judicial review is available as the law permits.

[49 FR 7986, Mar. 5, 1984, as amended at 55 FR 38983, Sept. 24, 1990]



PART 18--ATTORNEY'S FEES AND OTHER EXPENSES--Table of Contents




                           General Provisions

Sec.
18.1  Purpose of these rules.
18.2  Definitions.
18.3  When the Act applies.
18.4  Proceedings covered.
18.5  Eligibility of applicants.
18.6  Standards for awards.
18.7  Allowable fees and expenses.
18.8  Rulemaking on maximum rates for attorney fees.
18.9  Awards against other agencies.
18.10  Delegations of authority.

                  Information Required from Applicants

18.11  Contents of application.
18.12  Net worth exhibit.
18.13  Documentation of fees and expenses.
18.14  When an application may be filed.

                 Procedures for Considering Applications

18.15  Filing and service of documents.
18.16  Answer to application.
18.17  Reply.
18.18  Comments by other parties.
18.19  Settlement.
18.20  Further proceedings.
18.21  Decision.
18.22  Agency review.
18.23  Judical review.
18.24  Payment of award.

    Authority: 5 U.S.C. 504(c)(1).

    Source: 47 FR 13510, Mar. 31, 1982, unless otherwise noted.

                           General Provisions



Sec. 18.1  Purpose of these rules.

    The Equal Access to Justice Act, 5 U.S.C. 504 (called ``the Act'' in 
this part), provides for the award of attorney fees and other expenses 
to eligible individuals and entities who are parties to certain 
administrative proceedings (called ``adversary adjudications'') before 
the Department of Commerce (the word Department includes its component 
agencies). An eligible party may receive an award when it prevails over 
the Department, unless the Department's position in the proceeding was 
substantially justified or special circumstances make an award unjust. 
The rules in this part describe the parties that are eligible for awards 
and the Department's proceedings that are covered by the Act. They also 
explain how to apply for awards, and the procedures and standards that 
the Department will use to make them.



Sec. 18.2  Definitions.

    As used in this part:
    (a) Adversary adjudication means an adjudication under 5 U.S.C. 554 
in which the position of the United States is represented by counsel or 
otherwise, but excludes an adjudication for the purpose of establishing 
or fixing a rate or for the purpose of granting or renewing a license.
    (b) Adjudicative officer means the official, without regard to 
whether the official is designated as an administrative law judge, a 
hearing officer or examiner, or otherwise, who presided at the adversary 
adjudication.



Sec. 18.3  When the Act applies.

    The Act applies to any adversary adjudication pending or commenced 
before the Department on or after August 5, 1985. It also applies to any 
adversary adjudication commenced on or after October 1, 1984, and 
finally disposed of before August 5, 1985, provided that an application 
for fees and expenses, as described in Secs. 18.11 through 18.14 of this 
part, has been filed with the Department within 30 days after August 5, 
1985, and to any adversary adjudication pending on or commenced on or 
after October 1, 1981, in which an application for fees and other 
expenses was timely filed and was dismissed for lack of jurisdiction.

[53 FR 6798, Mar. 3, 1988]



Sec. 18.4  Proceedings covered.

    (a) The Act applies to adversary adjudications conducted by the 
Department and to appeals of decisions of contracting officers of the 
Department made pursuant to section 6 of the Contract Disputes Act of 
1978 (41 U.S.C. 605) before agency boards of contract appeals as 
provided in section 8 of that

[[Page 174]]

Act (41 U.S.C. 607). Adversary adjudications conducted by the Department 
are adjudications under 5 U.S.C. 554 in which the position of this or 
any other agency of the United States, or any component of an agency, is 
presented by an attorney or other representative who enters an 
appearance and participates in the proceeding. Pursuant to section 8(c) 
of the Contract Disputes Act (41 U.S.C. 607(c)), the Department has 
arranged for appeals from decisions by contracting officers of the 
Department to be decided by the General Services Administration Board of 
Contract Appeals. This Board, in accordance with its own procedures, 
shall be responsible for making determinations on applications pursuant 
to the Act relating to appeals to the Board from decisions of 
contracting officers of the Department. Such determinations are final, 
subject to appeal under Sec. 18.23. Any proceeding in which the 
Department may prescribe a lawful present or future rate is not covered 
by the Act. Proceedings to grant or renew licenses are also excluded, 
but proceedings to modify, suspend, or revoke licenses are covered if 
they are otherwise ``adversary adjudications.'' The Department 
proceedings covered are:
    (1) Department-wide. (i) Title VI Civil Rights hearings conducted by 
the Department under 42 U.S.C. 2000d-1 and 15 CFR 8.12(d).
    (ii) Handicap discrimination hearings conducted by the Department 
under 29 U.S.C. 794(a) and 15 CFR 8.12(d).
    (2) National Oceanic and Atmospheric Administration (``NOAA'')
    (i) Proceedings concerning suspension, revocation, or modification 
of a permit or license issued by NOAA.
    (ii) Proceedings to assess civil penalties under any of the statutes 
administered by NOAA.
    (3) International Trade Administration. Enforcement proceedings 
under the AntiBoycott provisions of the Export Administration Act of 
1979, 50 U.S.C. app. 2407.
    (4) Patent and Trademark Office. Disbarment proceedings of attorneys 
and agents under 35 U.S.C. 32.
    (b) The Department may also designate a proceeding not listed in 
paragraph (a) of this section as an adversary adjudication for purposes 
of the Act by so stating in an order initiating the proceeding or 
designating the matter for hearing. The Department's failure to 
designate a proceeding as an adversary adjudication shall not preclude 
the filing of an application by a party who believes the proceeding is 
covered by the Act; whether the proceeding is covered will then be an 
issue for resolution in proceedings on the application.
    (c) If a proceeding includes both matters covered by the Act and 
matters specifically excluded from coverage, any award made will include 
only fees and expenses related to covered issues.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6798, Mar. 3, 1988]



Sec. 18.5  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks an award. The term ``party'' is defined 
in 5 U.S.C. 551(3). The applicant must show that it meets all conditions 
of eligibility set out in this part.
    (b) The types of eligible applicants are as follows:
    (1) An individual with a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees; and
    (5) Any other partnership, corporation, association, unit of local 
government, or organization with a net worth of not more than $7 million 
and not more than 500 employees.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated.
    (d) An applicant who owns an unincorporated business will be 
considered as an ``individual'' rather than a ``sole owner of an 
unincorporated business'' if the issues on which the applicant

[[Page 175]]

prevails are related primarily to personal interests rather than to 
business interests.
    (e) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless the adjudicative officer determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
adjudicative officer may determine that financial relationships of the 
applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (g) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6798, Mar. 3, 1988]



Sec. 18.6  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses incurred in connection with a proceeding, or in a significant 
and discrete substantive portion of the proceedings, unless the position 
of the Department over which the applicant has prevailed was 
substantially justified. The position of the Department includes, in 
addition to the position taken by the Department in the adversary 
adjudication, the action or failure to act by the Department upon which 
the adversary adjudication is based. The burden of proof that an award 
should not be made to an eligible prevailing applicant because the 
Department's position was substantially justified is on the agency 
counsel.
    (b) An award will be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding or if special circumstances 
make the award sought unjust.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.7  Allowable fees and expenses.

    (a) Awards will be based on rates customarily charged by persons 
engaged in the business of acting as attorneys, agents and expert 
witnesses, even if the services were made available without charge or at 
a reduced rate to the applicant.
    (b) No award for the fee of an attorney or agent under this rule may 
exceed $75.00 per hour. No award to compensate an expert witness may 
exceed the highest rate at which the Department pays expert witnesses. 
However, an award may also include the reasonable expenses of the 
attorney, agent, or witness as a separate item, if the attorney, agent, 
or witness ordinarily charges clients separately for such expenses.
    (c) In determining the reasonableness of the fee sought for an 
attorney, agent, or expert witness, the adjudicative officer shall 
consider the following:
    (1) If the attorney, agent, or witness is in private practice, his 
or her customary fee for similar services, or, if an employee of the 
applicant, the fully allocated cost of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceedings; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (d) The reasonable cost of any study, analysis, engineering report, 
test, project, or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the service does not exceed 
the prevailing rate for similar services, and the study or

[[Page 176]]

other matter was necessary for preparation of the applicant's case.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.8  Rulemaking on maximum rates for attorney fees.

    (a) If warranted by an increase in the cost of living or by special 
circumstances (such as limited availability of attorneys qualified to 
handle certain types of proceedings), the Department may adopt 
regulations providing that attorney fees may be awarded at a rate higher 
than the ceiling set forth in Sec. 18.7(b) in some or all of the types 
of proceedings covered by this part. The Department will conduct any 
rulemaking proceedings for this purpose under the informal rulemaking 
procedures of the Administrative Procedure Act.
    (b) Any person may file with the Department a petition for 
rulemaking to increase the maximum rate for attorney fees. The petition 
should be sent to the General Counsel, Department of Commerce, 14th 
Street and Constitution Avenue, Room 5870, Washington, D.C. 20230. The 
petition should identify the rate the petitioner believes the Department 
should establish and the types of proceedings in which the rate should 
be used. It should also explain fully the reasons why higher rate is 
warranted. The Department will respond to the petition within 60 days 
after it is filed, by initiating a rulemaking proceeding, denying the 
petition, or taking other appropriate action.



Sec. 18.9  Awards against other agencies.

    If an applicant is entitled to an award because it prevailed over 
another agency of the United States that participated in a proceeding 
before the Department and took a position that was not substantially 
justified, the award or an appropriate portion of the award shall be 
made against that agency.



Sec. 18.10  Delegations of authority.

    The Secretary delegates to the General Counsel the authority to take 
final action on matters pertaining to the Act.

                  Information Required from Applicants



Sec. 18.11  Contents of application.

    (a) An application for an award of fees and expenses under the Act 
shall identify the applicant and the proceeding for which an award is 
sought. The application shall show that the applicant has prevailed and 
identify the position of the Department or other agency in the 
proceeding that the applicant alleges was not substantially justified. 
Unless the applicant is an individual, the application shall also state 
the number of employees of the applicant and describe briefly the type 
and purpose of its organization or business.
    (b) The application shall also include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants, including their affiliates). 
However, an applicant may omit this statement if:
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code (26 U.S.C. 501(c)(3)), or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualifies under 
such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)) and 
includes a copy of its charter or articles of incorporation.
    (c) The application shall state the amount of fees and expenses for 
which an award is sought.
    (d) The application may also include any other matters that the 
applicant wishes the adjudicative officer to consider in determining 
whether and in what amount an award should be made.
    (e) The application shall be signed by the applicant or an 
authorized officer or attorney of the applicant. It shall also contain 
or be accompanied by a written verification under oath or

[[Page 177]]

under penalty of perjury that the information provided in the 
application is true and correct.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.12  Net worth exhibit.

    (a) Each applicant except a qualified tax-exempt organization or 
cooperative association must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
defined in Sec. 18.5(f) of this part) when the proceeding was initiated. 
Unless regulations issued by a component of the Department establish 
particular requirements, the exhibit may be in any form convenient to 
the applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities and is sufficient to determine 
whether the applicant qualifies under the standards in this part. The 
adjudicative officer may require an applicant to file additional 
information to determine its eligibility for an award.
    (b) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, an applicant that objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure may submit 
that portion of the exhibit directly to the adjudicative officer in a 
sealed envelope labeled ``Confidential Financial Information,'' 
accompanied by a motion to withhold the information from public 
disclosure. The motion shall describe the information sought to be 
withheld and explain, in detail, why it falls within one or more of the 
specific exemptions from mandatory disclosure under the Freedom of 
Information Act, 5 U.S.C. 552(b)(1)-(9), why public disclosure of the 
information would adeversely affect the applicant, and why disclosure is 
not required in the public interest. The material in question shall be 
served on counsel representing the agency against which the applicant 
seeks an award, but need not be served on any other party to the 
proceeding. If the adjudicative officer finds that the information 
should not be withheld from disclosure, it shall be placed in the public 
record of the proceeding. Otherwise, any request to inspect or copy the 
exhibit shall be disposed of in accordance with the Department's 
established procedures under the Freedom of Information Act (15 CFR Part 
4).

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.13  Documentation of fees and expenses.

    The application shall be accompanied by full documentation of the 
fees and expenses, including the cost of any study, analysis, 
engineering report, test, project, or similar matter for which an award 
is sought. A separate itemized statement shall be submitted for each 
professional firm or individual whose services are covered by the 
application, showing the hours spent in connection with the proceeding 
by each individual, a description of the specific services performed, 
the rate at which each fee has been computed, any expenses for which 
reimbursement is sought, the total amount claimed, and the total amount 
paid or payable by the applicant or by any other person or entity for 
the services provided. The adjudicative officer may require the 
applicant to provide vouchers, receipts, or other substantiation for any 
expenses claimed.



Sec. 18.14  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the proceeding or in a significant and discrete substantive portion 
of the proceeding, but in no case later than 30 days after the 
Department's final disposition of the proceeding.
    (b) For purposes of this rule, final disposition means the date on 
which a decision or order disposing of the merits of the proceeding or 
any other complete resolution of the proceeding, such as a settlement or 
voluntary dismissal, becomes final and unappealable, both within the 
agency and to the courts.
    (c) If review or reconsideration is sought or taken of a decision as 
to which an applicant believes it has prevailed, proceedings for the 
award of fees shall be stayed pending final disposition of the 
underlying controversy.

[[Page 178]]

When the United States appeals the underlying merits of an adversary 
adjudication to a court, no decision on an application for fees and 
other expenses in connection with that adversary adjudication shall be 
made until a final and unreviewable decision is rendered by the court on 
the appeal or until the underlying merits of the case have been finally 
determined pursuant to the appeal.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]

                 Procedures for Considering Applications



Sec. 18.15  Filing and service of documents.

    Any application for an award or other pleading or document related 
to an application shall be filed and served on all parties to the 
proceeding in the same manner as other pleadings in the proceeding, 
except as provided in Sec. 18.12(b) for confidential financial 
information.



Sec. 18.16  Answer to application.

    (a) Within 30 calendar days after service of an application, counsel 
representing the agency against which an award is sought may file an 
answer to the application. Unless agency counsel requests an extension 
of time for filing (an extension for an additional 30 days is available 
as a matter of right) or files a statement of intent to negotiate under 
paragraph (b) of this section, failure to file an answer within the 30 
calendar day period may be treated as a consent to the award requested.
    (b) If agency counsel and the applicant believe that the issues in 
the fee application can be settled, they may jointly file a statement of 
their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 30 days, 
and further extensions may be granted by the adjudicative officer upon 
request by agency counsel and the applicant.
    (c) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of the agency 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, agency counsel shall include 
with the answer either supporting affidavits or a request for further 
proceedings under Sec. 18.20.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.17  Reply.

    Within 15 calendar days after service of an answer, the applicant 
may file a reply. If the reply is based on any alleged facts not already 
in the record of the proceeding, the applicant shall include with the 
reply either supporting affidavits or a request for further proceedings 
under Sec. 18.20.



Sec. 18.18  Comments by other parties.

    Any party to a proceeding other than the applicant and the agency 
counsel may file comments on an application within 30 calendar days 
after it is served or on an answer within 15 calendar days after it is 
served. A commenting party may not participate further in proceedings on 
the application unless the adjudicative officer determines that the 
public interest requires such participation in order to permit full 
exploration of matters raised in the comments.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.19  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of the award before final action on the application, either in 
connection with a settlement of the underlying proceeding, or after the 
underlying proceeding has been concluded, in accordance with the 
component agency's standard settlement procedure. If a prevailing party 
and agency counsel agree on a proposed settlement of an award before an 
application has been filed, the application shall be filed with the 
proposed settlement.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.20  Further proceedings.

    (a) Ordinarily, the determination of an award will be made on the 
basis of the written record. However, on request of either the applicant 
or agency counsel, or on his or her own initiative,

[[Page 179]]

the adjudicative officer may order further proceedings, such as an 
informal conference, oral argument, additional written submissions or, 
as to issues other than substantial justification (such as the 
applicant's eligibility or substantiation of fees and expenses), 
pertinent discovery or an evidentiary hearing. Such further proceedings 
shall be held only when necessary for full and fair resolution of the 
issues arising from the application, and shall be conducted as promptly 
as possible. Whether or not the position of the agency was substantially 
justified shall be determined on the basis of the administrative record, 
as a whole, which is made in the adversary adjudication for which fees 
and other expenses are sought.
    (b) A request that the adjudicative officer order further 
proceedings under this section shall specifically identify the 
information sought or the disputed issues and shall explain why the 
additional proceedings are necessary to resolve the issues.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.21  Decision.

    The adjudicative officer shall issue an initial decision on the 
application within 30 calendar days after completion of proceedings on 
the application. The initial decision of the adjudicative officer shall 
include written findings and conclusions on the applicant's eligibility 
and status as a prevailing party, and an explanation of the reasons for 
any difference between the amount requested and the amount awarded. The 
decision shall also include, if at issue, findings on whether the 
Department's position was substantially justified, whether the applicant 
unduly protracted the proceedings, or whether special circumstances make 
an award unjust. If the applicant has sought an award against more than 
one agency, the decision shall allocate responsibility for payment of 
any award made among the agencies, and shall explain the reasons for the 
allocation made.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6799, Mar. 3, 1988]



Sec. 18.22  Agency review.

    Either the applicant or agency counsel may file a petition for 
review of the initial decision on the fee application, or the Department 
may decide to review the decision on its own initiative. The petition 
must be filed with the General Counsel, Office of the Assistant General 
Counsel for Administration, Rm. 5882, U.S. Department of Commerce, 14th 
Street and Pennsylvania Avenue NW., Washington, DC 20230, not later than 
30 calendar days after the initial decision is issued. For purposes of 
this section, a document will be considered filed with the General 
Counsel as of the date of the postmark (or for government penalty mail, 
as shown by a certificate of mailing), if mailed, or if not mailed, as 
of the date actually delivered to the Office of General Counsel. A 
petition for review must be accompanied by a full written statement in 
support thereof, including a precise statement of why the petitioner 
believes the initial decision should be reversed or modified, and proof 
of service upon all parties. A response to the petition may be filed by 
another party to the proceeding and must be filed with the General 
Counsel at the above address not more than 30 calendar days after the 
date of service of the petition for review. The General Counsel may 
request any further submissions deemed helpful in resolving the petition 
for review. If neither the applicant nor agency counsel seeks review and 
the Department does not take review on its own initiative, the initial 
decision on the application shall become a final decision of the 
Department 30 calendar days after it is issued. Whether to review a 
decision is a matter within the discretion of the General Counsel. If 
review is taken, the General Counsel will issue the Department's final 
decision on the application or remand the application to the 
adjudicative officer for further proceedings. The standard of review 
exercised by the General Counsel shall be that which was required for 
the highest level of Departmental review which could have been exercised 
on the underlying covered proceeding.

[53 FR 6799, Mar. 3, 1988]

[[Page 180]]



Sec. 18.23  Judicial review.

    Judicial review of final agency decisions on awards may be sought as 
provided in 5 U.S.C. 504(c)(2).



Sec. 18.24  Payment of award.

    An applicant seeking payment of an award by the Department shall 
submit a copy of the final decision granting the award, accompanied by a 
certification that the applicant will not seek review of the decision in 
the United States courts to the General Counsel, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Room 5870, 
Washington, D.C. 20230. The Department will pay the amount awarded to 
the applicant within 60 calendar days, unless judicial review of the 
award or of the underlying decision of the adversary adjudication has 
been sought by the applicant or any other party to the proceeding.

[47 FR 13510, Mar. 31, 1982, as amended at 53 FR 6800, Mar. 3, 1988]



PART 19--REFERRAL OF DEBTS TO THE IRS FOR TAX REFUND OFFSET--Table of Contents




Sec.
19.1  Purpose.
19.2  Applicability and scope.
19.3  Administrative charges.
19.4  Notice requirement before offset.
19.5  Review within the Department.
19.6  Departmental determination.
19.7  Stay of offset.

    Authority: 31 U.S.C. 3720A; Public Law 98-369; 98 Stat. 1153.

    Source: 58 FR 39653, July 26. 1993, unless otherwise noted.



Sec. 19.1  Purpose.

    This part establishes procedures for the Department of Commerce 
(DOC) to refer past-due debts to the Internal Revenue Service (IRS) for 
offset against the income tax refunds of persons owing debts to the DOC. 
It specifies the agency procedures and the rights of the debtor 
applicable to claims for payment of debts owed to the DOC.



Sec. 19.2  Applicability and scope.

    (a) These regulations implement 31 U.S.C. 3720A which authorizes the 
IRS to reduce a tax refund by the amount of a past-due legally 
enforceable debt owed to the United States.
    (b) For purposes of this section, a past-due legally enforceable 
debt referable to the IRS is a debt which is owed to the United States 
and:
    (1) Except in the case of a judgment debt, has been delinquent for 
at least three months but has not been delinquent for more than ten 
years at the time the offset is made;
    (2) Cannot be currently collected pursuant to the salary offset 
provisions of 5 U.S.C. 5514(a)(1);
    (3) Is ineligible for administrative offset under 31 U.S.C. 3716(a) 
by reason of 31 U.S.C. 3716(c)(2) or cannot be collected by 
administrative offset under 31 U.S.C. 3716(a) by the Department against 
amounts payable to or on behalf of the debtor by or on behalf of the 
Department;
    (4) With respect to which, the DOC has given the taxpayer at least 
60 days from the date of notification to present evidence that all or 
part of the debt is not past-due or legally enforceable, the DOC has 
considered evidence presented by such taxpayer, and has determined that 
an amount of such debt is past-due and legally enforceable;
    (5) Has been disclosed by the DOC to a consumer reporting agency as 
authorized by 31 U.S.C. 3711(f), unless a consumer reporting agency 
would be prohibited from using such information by 15 U.S.C. 1681c, or 
unless the amount of the debt does not exceed $100.00;
    (6) With respect to which, the DOC has notified or has made a 
reasonable attempt to notify the taxpayer that the debt is past-due and, 
unless repaid within 60 days thereafter, will be referred to the IRS for 
offset against any overpayment of taxes;
    (7) Is at least $25.00;
    (8) With respect to which, all other requirements of 31 U.S.C. 3720A 
and the Department of the Treasury regulations codified at 26 CFR 
301.6402-6 relating to the eligibility of a debt for tax refund offset 
have been satisfied.



Sec. 19.3  Administrative charges.

    In accordance with 4 CFR part 102, all administrative charges 
incurred in connection with the referral of a debt to the IRS shall be 
assessed on the debt

[[Page 181]]

and thus increase the amount of the offset.



Sec. 19.4  Notice requirement before offset.

    A request for a reduction of an IRS tax refund will be made only 
after the DOC makes a determination that an amount is owed and past-due 
and provides the debtor with sixty (60) days written notice. The DOC's 
notice of intention to collect by IRS tax refund offset (Notice of 
Intent) will include:
    (a) The amount of the debt;
    (b) A statement that unless the debt is repaid within sixty (60) 
days from the date of the DOC's Notice of Intent, DOC intends to collect 
the debt by requesting that the IRS reduce any amounts payable to the 
debtor as refunds of Federal taxes paid by an amount equal to the amount 
of the debt plus accumulated interest and other charges;
    (c) A statement that the debtor has the right to present evidence 
that all or part of the debt is not pass-due or legally enforceable;
    (d) A mailing address for forwarding any written correspondence and 
a contact name and phone number for any questions.



Sec. 19.5  Review within the Department.

    (a) Notification by debtor. A debtor who receives a Notice of Intent 
has the right to present evidence that all or part of the debt is not 
past-due or not legally enforceable. To exercise this right, the debtor 
must:
    (1) Send a written request for a review of the evidence to the 
address provided in the notice.
    (2) State in the request the amount disputed and the reasons why the 
debtor believes that the debt is not past-due or legally enforceable.
    (3) Include in the request any documents which the debtor wishes to 
be considered or state that additional information will be submitted 
within the remainder of the sixty (60) day period.
    (b) Submission of evidence. The debtor may submit evidence showing 
that all or part of the debt is not past-due or not legally enforceable 
along with the notification required by paragraph (a) of this section. 
Failure to submit the notification and evidence within sixty (60) days 
will result in an automatic referral of the debt to the IRS without 
further action by the DOC.
    (c) Review of the evidence. DOC will consider all available evidence 
related to the debt. Within 30 days of the debtor's complete and timely 
response, if feasible, DOC will notify the debtor whether DOC has 
sustained, amended, or canceled its determination that the debt is past-
due and legally enforceable.



Sec. 19.6  Departmental determination.

    (a) Following review of the evidence, DOC will issue a written 
decision which will include the supporting rationale for the decision.
    (b) If DOC either sustains or amends its determination, it shall 
notify the debtor of its intent to refer the debt to the IRS for offset 
against the debtor's Federal income tax refund. If DOC cancels its 
original determination, the debt will not be referred to the IRS.



Sec. 19.7  Stay of offset.

    If the debtor timely notifies the DOC that he or she is exercising 
the right described in Sec. 19.5(a) and timely submits evidence in 
accordance with Sec. 19.5(b), any notice to the IRS will be stayed until 
the issuance of a written decision which sustains or amends the DOC's 
original determination.



PART 20--NONDISCRIMINATION ON THE BASIS OF AGE IN PROGRAMS OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents




                           Subpart A--General

Sec.
20.1  The purpose of DOC's age discrimination regulations.
20.2  Programs to which these regulations apply.
20.3  Definitions.

         Subpart B--Standards for Determining Age Discrimination

20.4  Rules against age discrimination.
20.5  Exceptions to the rules.
20.6  Burden of proof.

[[Page 182]]

              Subpart C--Responsibilities of DOC Recipients

20.7  General responsibilities.
20.8  Notice to subrecipients.
20.9  Information requirements.

   Subpart D--Investigation, Conciliation, and Enforcement Procedures

20.10  Compliance reviews.
20.11  Complaints.
20.12  Mediation.
20.13  Investigation.
20.14  Prohibition against intimidation or retaliation.
20.15  Compliance procedure.
20.16  Hearings, decisions, post-termination proceedings.
20.17  Remedial action by recipients.
20.18  Alternative funds disbursal procedure.
20.19  Private lawsuits after exhaustion of administrative remedies.

    Authority: Age Discrimination Act of 1975, as amended, 42 U.S.C. 
sec. 6101 et seq. and the government-wide regulations implementing the 
Act, 45 CFR Part 90.

    Source: 51 FR 28926, Aug. 13, 1986, unless otherwise noted.



                           Subpart A--General



Sec. 20.1  The purpose of DOC's age discrimination regulations.

    The purpose of these regulations is to set out DOC's policies and 
procedures under the Age Discrimination Act of 1975 and the general age 
discrimination regulations at 45 CFR Part 90. The Act and the general 
regulations prohibit discrimination on the basis of age in programs or 
activities receiving Federal financial assistance. The Act and the 
general regulations permit federally assisted programs and activities, 
and recipients of Federal funds, to continue to use age distinctions and 
factors other than age which meet the requirements of the Act and its 
implementing regulations.



Sec. 20.2  Programs to which these regulations apply.

    (a) The Act and these regulations apply to each DOC recipient and to 
each program or activity operated by the recipient which receives or 
benefits from Federal financial assistance provided by any entity of 
DOC.
    (b) The Act and these regulations do not apply to:
    (1) An age distinction contained in that part of a Federal, State, 
or local statute or ordinance adopted by an elected, general purpose 
legislative body which:
    (i) Provides benefits or assistance to persons based on age; or
    (ii) Establishes criteria for participation in age-related terms; or
    (iii) Describes intended beneficiaries or target groups in age-
related terms.
    (2) Any employment practice or any employer, employment agency, 
labor organization, or any labor-management joint apprenticeship 
training program, except for any program or activity receiving Federal 
financial assistance for public service employment.



Sec. 20.3  Definitions.

    As used in these regulations, the following terms are defined as 
follows:
    (a) Act means the Age Discrimination Act of 1975, as amended (Title 
III of Pub. L. 94-135).
    (b) Action means any act, activity, policy, rule, standard, or 
method of administration; or the use of any policy, rule, standard, or 
method of administration.
    (c) Age means how old a person is, or the number of years from the 
date of a person's birth.
    (d) Age distinction means any action using age or an age-related 
term.
    (e) Age-related term means a word or words which necessarily imply a 
particular age or range of ages (for example: ``children,'' ``adult,'' 
``older persons,'' but not ``student'').
    (f) Agency means a Federal department or agency that is empowered to 
extend financial assistance.
    (g) DOC means the U.S. Department of Commerce.
    (h) Federal financial assistance means any grant, entitlement, loan, 
cooperative agreement, contract (other than a procurement contract or a 
contract of insurance or guaranty), or any other arrangement by which 
the agency provides or otherwise makes available assistance in the form 
of:
    (1) Funds; or
    (2) Services of Federal personnel; or
    (3) Real and personal property or any interest in or use of 
property, including:

[[Page 183]]

    (i) Transfers or leases of property for less than fair market value 
or for reduced considerations; and
    (ii) Proceeds from a subsequent transfer or lease of property if the 
Federal share of its fair market value is not returned to the Federal 
Government.
    (i) Normal operation means the operation of a program or activity 
without significant changes that would impair its ability to meet its 
objectives.
    (j) Recipient means any State or its political subdivision, any 
instrumentality of a State or its political sub-division, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended, directly or 
through another recipient. Recipient includes any successor, assignee, 
or transferee, but excludes the ultimate beneficiary of the assistance.
    (k) Secretary means the Secretary of Commerce or his or her 
designee.
    (l) Statutory objective means any purpose of a program or activity 
expressly stated in any Federal statute, State statute, or local statute 
or ordinance adopted by an elected, general purpose legislative body.
    (m) Subrecipient means any of the entities in the definition of 
``recipient'' to which a recipient extends or passes on Federal 
financial assistance. A subrecipient is generally regarded as a 
recipient of Federal financial assistance and has all the duties of a 
recipient in these regulations.
    (n) United States means the fifty States, the District of Columbia, 
Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the 
Canal Zone, the Northern Marianas, and the territories and possessions 
of the United States.



         Subpart B--Standards for Determining Age Discrimination



Sec. 20.4  Rules against age discrimination.

    The rules stated in this section are limited by the exceptions 
contained in Sec. 20.5.
    (a) General rule: No person in the United States shall, on the basis 
of age, be excluded from participation in, be denied the benefits of, or 
be subjected to discrimination under any program or activity receiving 
Federal financial assistance.
    (b) Specific rules: A recipient may not, in any program or activity 
receiving Federal financial assistance, directly or through contractual 
licensing, or other arrangements, use age distinctions or take any other 
actions which have the effect, on the basis of age, of:
    (1) Excluding individuals from, denying them the benefits of, or 
subjecting them to discrimination under, a program or activity receiving 
Federal financial assistance, or
    (2) Denying or limiting individuals in their opportunity to 
participate in any program or activity receiving Federal financial 
assistance.
    (c) The specific forms of age discrimination listed in paragaph (b) 
of this section do not necessarily constitute a complete list.
    (d) If a recipient operating a program provides special benefits to 
the elderly or to children, such use of age distinctions shall be 
presumed to be necessary to the normal operation of the program, 
notwithstanding the provisions of Sec. 20.5.



Sec. 20.5  Exceptions to the rules.

    (a) Normal operations or statutory objective of any program or 
activity. A recipient is permitted to take an action otherwise 
prohibited by Sec. 20.4 if the action reasonably considers age as a 
factor necessary to the normal operation or the achievement of any 
statutory objective of a program or activity. An action meets this 
standard if:
    (1) Age is used as a measure or approximation of one or more other 
characteristics; and
    (2) The other characteristic(s) must be measured or approximated in 
order for the normal operation of the program or activity to continue, 
or to achieve any statutory objective or the program or activity; and
    (3) The other characteristic(s) can be reasonably measured or 
approximated by the use of age; and
    (4) The other characteristic(s) are impractical to measure directly 
on an individual bases.

[[Page 184]]

    (b) Reasonable factors other than age. A recipient is permitted to 
take an action otherwise prohibited by Sec. 20.4 which is based on a 
factor other than age, even though that action may have a 
disproportionate effect on persons of different ages. An action may be 
based on a factor other than age only if the factor bears a direct and 
substantial relationship to the normal operation of the program or 
activity or to the achievement of a statutory objective.



Sec. 20.6  Burden of proof.

    The burden of proving that an age distinction or other action falls 
within the exceptions outlined in Sec. 20.5 is on the recipient of 
Federal financial assistance.



              Subpart C--Responsibilities of DOC Recipients



Sec. 20.7  General responsibilities.

    Each DOC recipient has primary responsibility to ensure that its 
programs and activities are in compliance with the Act, the general 
regulations, and these regulations, and shall take steps to eliminate 
violation of the Act.
    (a) Each DOC recipient will provide an assurance that the program 
for which it is receiving Federal financial assistance will be conducted 
in compliance with all requirements for the Act and these and other DOC 
regulations. A recipient also has responsibility to maintain records, 
provide information, and to afford DOC reasonable access to its records 
and facilities to the extent necessary to determine whether it is in 
compliance with the Act and these regulations.
    (b) Recipient assessment of age distinctions. (1) To assess the 
recipient's compliance with the Act, DOC may, as part of a compliance 
review under Sec. 20.10 or a complaint investigation under Sec. 20.11, 
require a recipient employing the equivalent or 15 or more employees, to 
complete, in a manner specified by the responsible Department official, 
a written self-evaluation of any age distinction imposed in its program 
or activity receiving Federal financial assistance from DOC.
    (2) Whenever an assessment indicates a violation of the Act and the 
DOC regulations, the recipient shall take corrective action.



Sec. 20.8  Notice to subrecipients.

    Where a recipient passes on Federal financial assistant from DOC to 
subrecipients, the recipient shall give subrecipients written notice of 
their obligations under the Act and these regulations.



Sec. 20.9  Information requirements.

    Upon DOC's request, each recipient shall provide access and make 
information available for DOC to determine whether the recipient is 
complying with the Act and these regulations.



   Subpart D--Investigation, Conciliation, and Enforcement Procedures



Sec. 20.10  Compliance reviews.

    (a) DOC may conduct compliance reviews and pre-award reviews or use 
other similar procedures that will permit it to investigate and correct 
violations of the Act and these regulations. DOC may conduct such review 
even in the absence of a complaint against a recipient. The review may 
be as comprehensive as necessary to determine whether a violation of the 
Act and these regulations has occurred.
    (b) If a compliance review of pre-award review indicates a violation 
of the Act or these regulations, DOC will attempt to achieve voluntary 
compliance with the Act. If voluntary compliance cannot be achieved, DOC 
will arrange for enforcement as described in Sec. 20.15.



Sec. 20.11  Complaints.

    (a) Any person, individually, or as a member of a class, or on 
behalf of others, may file a complaint with DOC alleging discrimination 
prohibited by the Act or these regulations based on an action occurring 
on or after July 1, 1979. A complainant shall file a complaint within 
180 days from the date the complainant first had knowledge of the 
alleged act of discrimination. However, for good cause shown, DOC may 
extend this time limit.
    (b) DOC will attempt to facilitate the filing of complaints wherever 
possible,

[[Page 185]]

including taking the following measures:
    (1) Accepting as a sufficient complaint, any written statement 
which: identifies the parties involved and the date the complainant 
first had knowledge of the alleged violation; describes generally the 
action or practice complained of; and is signed by the complainant;
    (2) Freely permitting a complainant to add information to the 
complaint to meet the requirements of a sufficient complaint;
    (3) Considering as the filing date, the date on which a complaint is 
sufficient to be processed;
    (4) Notifiying the complainant and the recipient of their rights and 
obligations under the compliant procedure, including the right to have a 
representative at all stages of the process;
    (5) Notifying the complainant and the recipient (or their 
representatives) of their right to contact DOC for information and 
assistance regarding the complaint resolution process.
    (c) DOC will return to the complainant any complaint outside the 
jurisdiction of these regulations, and will state the reason(s) why it 
is outside the jurisdiction of these regulations.



Sec. 20.12  Mediation.

    (a) DOC will refer to a mediation service designated by the 
Secretary all sufficient complaints that:
    (1) Fall within the jurisdiction of the Act and these regulations, 
unless the age distinction complained of is clearly within an exception; 
and
    (2) Contain all information necessary for further processing.
    (b) Both the complainant and the recipient shall participate in the 
mediation process to the extent necessary to reach an agreement or to 
make an informed judgment that an agreement is not possible.
    (c) If the complainant and the recipient reach an agreement, the 
mediator shall prepare a written statement of the agreement and have the 
complainant and the recipient sign it. The mediator shall send a copy of 
the agreement to DOC. DOC will take no further action on the complaint 
unless the complainant or the recipient fails to comply with the 
agreement.
    (d) The mediator is required to protect the confidentiality of all 
information obtained in the course of the mediation process. No mediator 
shall testify in any adjudicative proceeding, produce any document, or 
otherwise disclose any information obtained, in the course of the 
mediation process without prior approval of the head or the mediation 
service.
    (e) The mediation will proceed for a maximum of 60 days after a 
complaint is filed with DOC. Mediation ends if:
    (1) 60 days elapse from the time DOC receives the complaint; or
    (2) Prior to the end of that 60-day period, an agreement is reached; 
or
    (3) Prior to the end of that 60-day period, the mediator determines 
that an agreement cannot be reached.
    (f) The mediator shall return unresolved complaints to DOC.



Sec. 20.13  Investigation.

    (a) Informal investigation:
    (1) DOC will investigate complaints that are unresolved after 
mediation or are reopended because of a violation of a mediation 
agreement.
    (2) As part of the initial investigation, DOC will use informal 
factfinding methods, including joint or separate discussions with the 
complainant and recipient, to establish the facts and, if possible, 
settle the complaint on terms that are mutually agreeable to the 
parties. DOC may seek the assistance of any involved State program 
agency.
    (3) DOC will put any agreement in writing and have it signed by the 
parties and an authorized offical at DOC.
    (4) The settlement shall not affect the operation of any other 
enforcement effort of DOC, including compliance reviews and 
investigation or other complaints which may involve the recipient.
    (5) The settlement is not a finding of discrimination against a 
recipient.
    (b) Formal investigation: If DOC cannot resolve the complaint 
through informal investigation, it will begin to develop formal findings 
through further investigation of the complaint. If the investigation 
indicates a violation of these regulations, DOC will attempt to obtain 
voluntary compliance. If DOC cannot obtain voluntary compliance, it

[[Page 186]]

will begin enforcement as described in Sec. 8a.15.



Sec. 20.14  Prohibition against intimidation or retaliation.

    A recipient may not engage in acts of intimidation or retaliation 
against any person who:
    (a) Attempts to assert a right protected by the Act or these 
regulations; or
    (b) Cooperates in any mediation, investigation, hearing, or other 
part of DOC's investigation, conciliation, and enforcement process.



Sec. 20.15  Compliance procedure.

    (a) DOC may enforce the Act and these regulations by:
    (1) Terminating the Federal financial assistance to the recipient 
under the program or activity found to have violated the Act or these 
regulations. The determination of the recipient's violation may be made 
only after a recipient has had an opportunity for a hearing on the 
record before an administrative law judge. If a case is settled during 
mediation, or prior to hearing, Federal financial assistance to the 
program will not be terminated.
    (2) Any other means authorized by law including but not limited to:
    (i) Referral to the Department of Justice for proceedings to enforce 
any rights of the United States or obligations of the recipient created 
by the Act or these regulations.
    (ii) Use of any requirement of or referral to any Federal, State, or 
local government agency that will have the effect of correcting a 
violation of the Act or these regulations.
    (b) DOC will limit any termination under this section to the 
particular recipient and particular program or activity or part of such 
program and activity DOC finds in violation of these regulations. DOC 
will not base any part of a termination on a finding with respect to any 
program or activity of the recipient which does not receive Federal 
financial assistance from DOC.
    (c) DOC will take no action under paragraph (a) until:
    (1) The head of the organization providing the financial assistance 
has advised the recipient of its failure to comply with the Act and 
these regulations and has determined that voluntary compliance cannot be 
obtained.
    (2) Thirty days have elapsed after the Secretary has sent a written 
report of the circumstances and grounds of the action to the committees 
of the Congress having legislative jurisdiction over the Federal program 
or activity involved. The Secretary will file a report whenever any 
action is taken under paragraph (a).
    (d) DOC also may defer granting new Federal financial assistance to 
a recipient when a hearing under Sec. 20.16 is initiated.
    (1) New Federal financial assistance from DOC includes all 
assistance for which DOC requires an application or approval, including 
renewal or continuation of existing activities, or authorization of new 
activities, during the deferral period. New Federal financial assistance 
from DOC does not include increases in funding as a result of changed 
computation of formula awards or assistance approved prior to the 
beginning of a hearing under Sec. 20.16.
    (2) DOC will not begin a deferral until the recipient has received a 
notice of an opportunity for a hearing under Sec. 20.16. DOC will not 
continue a deferral for more than 60 days unless a hearing has begun 
within that time, or the time for beginning the hearing has been 
extended by mutual consent of the recipient and the head of the 
organization providing Federal financial assistance. DOC will not 
continue a deferral for more than 30 days after the close of the 
hearing, unless the hearing results in a finding against the recipient.
    (3) DOC will limit any deferral to the particular recipient and 
particular program or activity or part of such program or activity DOC 
finds in violation of these regulations. DOC will not base any part of a 
deferral on a finding with respect to any program or activity of the 
recipient which does not, and would not in connection with the new 
funds, receive Federal financial assistance for DOC.



Sec. 20.16  Hearings, decisions, post-termination proceedings.

    Certain DOC procedural provisions applicable to Title VI of the 
Civil

[[Page 187]]

Rights Act of 1964 apply to DOC enforcement of these regulations. They 
are found in 15 CFR Part 8, Sec. 8.12 and Sec. 8.13.



Sec. 20.17  Remedial action by recipients.

    (a) Where DOC finds that a recipient has discriminated on the basis 
of age, the recipient shall take any remedial action that DOC may 
require to overcome the effects of the discrimination. If another 
recipient exercises control over the recipient that has discriminated, 
DOC may require both recipients to take remedial action.
    (b) Even in the absence of a finding of discrimination, a recipient 
may take affirmative action to overcome the effects of conditions that 
resulted in limited participation in the recipient's program or activity 
on the basis of age.



Sec. 20.18  Alternative funds disbursal procedure.

    (a) When, under the provisions of these regulations, DOC terminates 
the funding of a recipient, the Secretary may, using undisbursed funds 
from the terminated award, make a new award to an alternate recipient, 
i.e. any public or non-profit private organization or agency, or State 
or political subdivision of the State.
    (b) The Secretary will require any alternate recipient to 
demonstrate:
    (1) The ability to comply with these regulations; and
    (2) The ability to achieve the goals of the Federal statute 
authorizing the program or activity.



Sec. 20.19  Private lawsuits after exhaustion of administrative remedies.

    (a) A complainant may file a civil action following the exhaustion 
of administrative remedies under the Act. Administrative remedies are 
exhausted if:
    (1) 180 days have elapsed since the complainant filed the complaint 
and DOC has made no finding with regard to the complaint; or
    (2) DOC issues any finding in favor of the recipient.
    (b) If DOC fails to make a finding within 180 days or issues a 
finding in favor of recipient, DOC shall:
    (1) Promptly advise the complainant of this fact; and
    (2) Advise the complainant of his or her right to bring civil action 
for injunctive relief; and
    (3) Inform the complainant that:
    (i) The complainant may bring a civil action only in a United States 
district court for the district in which the recipient is located or 
transacts business;
    (ii) A complainant prevailing in a civil action has the right to be 
awarded the costs of the action, including reasonable attorney's fees, 
but that the complainant must demand these costs in the complaint;
    (iii) Before commencing the action, the complainant shall give 30 
days notice by registered mail to the Secretary, the Attorney General of 
the United States, and the recipient;
    (iv) The notice shall contain the alleged violation of the Act, the 
relief requested, the court in which the complainant is bringing the 
action, and whether or not attorney's fees are demanded in the event the 
complainant prevails; and
    (v) The complainant may not bring an action if the same alleged 
violation of the Act by the same recipient is the subject of a pending 
action in any court of the United States.



PART 21--ADMINISTRATIVE OFFSET--Table of Contents




Sec.
21.1  Definitions.
21.2  Purpose and scope.
21.3  Department responsibilities.
21.4  Notification requirements before offset.
21.5  Exceptions to notification requirements.
21.6  Written agreement to repay debt.
21.7  Review of Department records related to the debt.
21.8  Review within the Department of a determination of indebtedness.
21.9  Types of reviews.
21.10  Review procedures.
21.11  Determination of indebtedness.
21.12  Coordinating administrative offset within the Department and with 
          other Federal agencies.
21.13  Procedures for administrative offset: single debts.
21.14  Procedures for administrative offset: multiple debts.
21.15  Administrative offset against amounts payable from Civil Service 
          Retirement and Disability Fund.
21.16  Collection against a judgment.
21.17  Liquidation of collateral.
21.18  Collection in installments.

[[Page 188]]

21.19  Additional administrative collection action.

    Authority: 31 U.S.C. 3716; 4 CFR Part 102.

    Source: 51 FR 47005, Dec. 30, 1986, unless otherwise noted.



Sec. 21.1  Definitions.

    For purposes of this subpart:
    (a) The term administrative offset means satisfying a debt by 
withholding of money payable by the Department to, or held by the 
Department on behalf of a person, to satisfy a debt owed the Federal 
Government by that person.
    (b) The term person includes individuals, businesses, organizations 
and other entities, but does not include any agency of the United 
States, or any State or local government.
    (c) The terms claim and debt are deemed synonymous and 
interchangeable. They refer to an amount of money or property which has 
been determined by an appropriate agency official to be owed to the 
United States from any person, organization, or entity, except another 
Federal agency, a State or local government, or Indian Tribal 
Government.
    (d) Agency means:
    (1) An Executive department, military department, Government 
corporation, or independent establishment as defined in 5 U.S.C. 101, 
102, 103, or 104, respectively.
    (2) The United States Postal Service; or
    (3) The Postal Rate Commission.
    (e) Debtor means the same as ``person.''
    (f) Department means the Department of Commerce.
    (g) Secretary means the Secretary of the Department of Commerce.
    (h) Assistant Secretary for Administration means the Assistant 
Secretary for Administration of the Department of Commerce.
    (i) United States includes an ``agency'' of the United States.
    (j) Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by a person to the United States.
    (k) Departmental unit means an individual operating or 
administrative component within the Department of Commerce.
    (l) Departmental unit head means the head of an individual operating 
or administrative component within the Department of Commerce 
responsible for debt collection.
    (m) Notice of Intent means a demand notice sent by the Department to 
the debtor indicating not only the amount due, but also the Department's 
intent to offset all or some of the amount due from other source(s) of 
Federal payment(s) that may be due the debtor.
    (n) Workout group means Departmental debt collection specialist(s) 
assigned to collection of a delinquent debt when the claim is 30 or more 
days past due.



Sec. 21.2  Purpose and scope.

    (a) The regulations in this subpart establish procedures to 
implement section 10 of the Debt Collection Act of 1982 (Pub. L. 97-
365), 31 U.S.C. 3716. Among other things, this statute authorizes the 
heads of each agency to collect a claim arising under an agency program 
by means of administrative offset, except that no claim may be collected 
by such means if outstanding for more than 10 years after the agency's 
right to collect the debt first accrued, unless facts material to the 
Government's right to collect the debt were not known and could not 
reasonably have been known by the official or officials of the 
Government who were charged with the responsibility to discover and 
collect such debts.
    (b) Unless otherwise provided for by statute, these regulations do 
not apply to an agency of the United States, a State government, or unit 
of general local government. In addition, these procedures do not apply 
to debts arising under the Internal Revenue Code (26 U.S.C. 1-9602), the 
Social Security Act (42 U.S.C. 301-1397f), the tariff laws of the United 
States; or to contracts covered by the Contract Dispute Act of 1978 (41 
U.S.C. 601-613).
    (c) The regulations cover debts owed to the United States from any 
person, organization or entity, including debts owed by current and 
former Department employee, or other Federal employees, while employed 
in one capacity or another by the Department of Commerce.

[[Page 189]]

    (d) Debts or payments which are not subject to administrative offset 
under 31 U.S.C. 3716, unless otherwise provided for by contract or law, 
may be collected by administrative offset under the common law or other 
applicable statutory authority.
    (e) Departmental unit head (and designees) will use administrative 
offset to collect delinquent claims which are certain in amount in every 
instance and which collection is determined to be feasible and not 
prohibited by law.



Sec. 21.3  Department responsibilities.

    (a) Each Departmental unit which has delinquent debts owed under its 
program is responsible for collecting its claims by means of 
administrative offset when appropriate and best suited to further and 
protect all the Government's interests.
    (b) The Departmental unit head (or designee) will determine the 
feasibility and cost effectiveness of collection by administrative 
offset on a case-by-case basis, exercising sound discretion in pursuing 
such offsets, and will consider the following:
    (1) The debtor's financial condition;
    (2) Whether offset would substantially interfere with or defeat the 
purposes of the Federal program authorizing the payments against which 
offset is comtemplated; and
    (3) Whether offset best serves to further and protect all of the 
interests of the United States.
    (c) Before advising the debtor that the delinquent debt will be 
subject to administrative offset, the Departmental unit workout group 
shall review the claim and determine that the debt is valid and overdue. 
In the case where a debt arises under the programs of two or more 
Department of Commerce units, or in such other instances as the 
Assistant Secretary for Administration or his/her designee may deem 
appropriate, the Assistant Secretary, or his or her designee, may 
determine which Departmental unit workout group or official(s) shall 
have responsibility for carrying out the provisions of this subpart.
    (d) Administrative offset shall be considered by Department units 
only after attempting to collect a claim under section 3(a) of the 
Federal Claims Collection Act of 1966, as amended; except that no claim 
under this Act that has been outstanding for more than 10 years after 
the debt first accrued may be collected by means of administrative 
offset, unless facts, material to the right to collect the debt, were 
not known and could not reasonably have been known by the official of 
the Department who was charged with the responsibility to discover and 
collect such debts. When the debt first accrued should be determined 
according to existing laws regarding the accrual of debts, such as under 
28 U.S.C. 2415.



Sec. 21.4  Notification requirements before offset.

    A debt is considered delinquent by the Department if it is not paid 
within 15 days of the due date, or if there is no due date, within 30 
days of the billing date.
    (a) The Departmental unit head (and designees) responsible for 
carrying out the provisions of this subpart with respect to the debt 
shall ensure that appropriate written demands are sent to the debtor in 
terms which inform the debtor of the consequences of failure to 
cooperate in payment of the debt. The first demand letter should be sent 
within ten (10) days after the date the debt becomes delinquent. A total 
of three progressively stronger written demand letters, at not more than 
30 calendar day intervals, will normally be made unless (1) a response 
to the first or second demand indicates that a further demand would be 
futile; (2) the debtor's response does not require any or immediate 
rebuttal; and/or (3) the bureau determines to pursue offset under the 
procedures specified in 4 CFR 102.3, Collection by Administrative 
Offset. In determining the timing of the demand letters, Departmental 
unit heads should give due regard to the need to act promptly; so as a 
general rule, if it is necessary to refer the debt to the Department of 
Justice for action, such referral can be made within one year of the 
final determination of the facts and the amount of the debt. When 
Departmental unit heads (and designees) deem it appropriate to protect 
the Government's interests (for example, to prevent the statute of 
limitations, 28 U.S.C. 2415, from expiring),

[[Page 190]]

written demand for payment may be preceded by other appropriate 
collection actions (also see Sec. 21.10(c)).
    (b) The Department official responsible for collection of the debt 
(generally an accounting or finance officer) shall ensure that an 
initial written demand notice is sent to the debtor, informing such 
debtor of:
    (1) The amount and basis for the indebtedness and whatever rights 
the debtor may have to seek review within the Department;
    (2) The applicable standards for assessing interest, penalties, and 
administrative costs (4 CFR 102.13);
    (3) That the debtor has a right to inspect and copy Department 
records related to the debt, as determined by responsible Departmental 
official(s), and that such request to inspect and copy must be 
postmarked or received by the Department no later than 30 days after the 
date of the (first) demand letter;
    (4) The name, mailing address, and telephone number of the 
Department workout group employee who can provide a full explanation of 
the claim and answer all related questions, as well as explain 
procedures to the debtor for inspecting and copying records related to 
the debt.
    (c) The responsible Department officials shall exercise due care to 
insure that demand letters are mailed or hand delivered on the same day 
that they are actually dated. If evidence suggests that the debtor is no 
longer located at the address of record, reasonable action shall be 
taken by the Departmental unit workout group to obtain a current 
address, including skip-trace assistance from the Internal Revenue 
Service and/or private sector credit reporting bureaus.
    (d) Where applicable, the Departmental unit workout group must 
inform the debtor in a second demand letter, (Notice of Intent) of:
    (1) The nature and amount of the debt;
    (2) That the Department intends to collect the debt by 
administrative offset until the debt and all accumulated interest and 
other charges are paid in full;
    (3) That the debtor has a right to obtain review within the 
Department of the initial determination of indebtedness, and that such 
request to have a review of the basis of indebtedness must be postmarked 
or received by the Department no later than 30 days after the date of 
the second demand letter (Notice of Intent); and
    (4) That the debtor may enter into a written agreement with the 
responsible Department official(s) to repay the debt if such a request 
is made and received by the Department no later than 30 days after the 
date of the second demand letter (Notice of Intent).

If the sum of the proposed offset does not fully cover the amount of the 
debt owed, the Departmental unit workout group shall also include in 
this second demand letter (Notice of Intent) the notice provisions to 
debtors required by the Debt Collection Act of 1982, and other 
regulations of the Department, pertaining to disclosure of the 
delinquent debt to credit reporting agencies, referral to private 
collection agencies, salary offset, possible Internal Revenue Service 
offset of tax refunds, and referral of the debt to the Justice 
Department for action to the extent inclusion of such is appropriate and 
practical.
    (5) That if payment or a request for review is not received within 
the 30-day period, the offset process will be initiated.



Sec. 21.5  Exceptions to notification requirements.

    (a) In cases where the notice specified in Sec. 21.4 has previously 
been provided to the debtor in connection with the same debt under some 
other proceeding, such as a final audit resolution determination, the 
Department is not required to duplicate those requirements before 
effecting administrative offset.
    (b) If the time before payment is to be made to the debtor does not 
reasonably permit the completion of the procedures specified in 
Sec. 21.4, and failure to take offset would substantially prejudice the 
Government's ability to collect the debt, then administrative offset 
action will be taken without notification. The offset will be promptly 
followed by the completion of the procedures specified in Sec. 21.4 
(also see Sec. 21.10(c)).

[[Page 191]]



Sec. 21.6  Written agreement to repay debt.

    (a) A debtor will be provided with an opportunity to enter into a 
written agreement with the responsible Departmental official(s) to repay 
the debt owed if the following conditions are met and if specific 
conditions exist that limit his or her ability to immediately repay the 
debt.
    (1) Notification by debtor. The debtor may, in response to the first 
written demand or Notice of Intent, propose a written agreement for 
delayed lump sum or installment payments to repay the debt as an 
alternative to administrative offset. Any debtor who wishes to do this 
must submit a proposed written agreement signed by the debtor to repay 
the debt, including interest, penalties, and administrative costs 
determined by the Department as due. This proposed written agreement 
must be received by the workout group individual specified in 
Sec. 21.4(b)(4) within 60 calendar days of the date of the Department's 
initial written demand letter, or if in response to the Notice of 
Intent, within 30 calendar days of the date of the Department's Notice 
of Intent.
    (2) Department response. In response to timely notification by the 
debtor as described in paragraph (a)(1) of this section, the 
Departmental unit head (or designee) will notify the debtor within 30 
calendar days whether the debtor's proposed written agreement for 
repayment is acceptable. It is within the discretion of the Departmental 
unit head (or designee) to accept a repayment agreement instead of 
proceeding by offset. However, if the debt is delinquent and the debtor 
has not disputed its existence or amount, the Departmental unit head (or 
designee) should accept a repayment agreement instead of offset only if 
the debtor is able to establish that offset would result in undue 
financial hardship or would be against equity and good conscience. 
Before accepting a repayment agreement, the Departmental unit head (or 
designee) will also consider factors such as the financial statements 
provided by the debtor, the amount of the debt, the length of the 
proposed repayment period (generally not to exceed 3 years), whether the 
debtor is willing to sign a confess-judgment note or give collateral, 
and past dealings with the debtor. In making this determination, the 
Departmental unit head (or designee) will balance the Department's 
interest in collecting the debt against the financial hardship to the 
debtor (see Sec. 21.18). A Departmental unit head (or designee) may deem 
a repayment plan to be abrogated if the debtor should, after the 
repayment plan is signed, fail to comply with the terms of the plan.
    (b) [Reserved]



Sec. 21.7  Review of Department records related to the debt.

    (a) Notification by debtor. A debtor who intends to inspect or copy 
Department records related to the debt must send a letter to the 
Departmental unit workout group employee specified in Sec. 21.4(b)(4) 
stating his or her intentions. The letter must be postmarked or received 
by the Department within 30 calendar days of the date of the 
Department's first demand letter.
    (b) Department response. In response to timely notification by the 
debtor as described in paragraph (a) of this section, the Departmental 
unit workout group will notify the debtor within 10 days of the request 
of the location and time when the debtor may inspect or copy agency 
records related to the debt, as well as provide the debtor with the name 
and telephone number of the contact person who may provide assistance to 
the debtor for ensuring that copies are made of all appropriate 
documents related to the debt. The debtor may also request that such 
records be copied and mailed. The responsible Department official(s) 
will provide access to records within 15 days from the date of the 
debtor's request for access, or mail the records to the debtor within 
such time period. Mailing of records by Departmental official(s) will be 
by certified or registered mail. The debtor will have 25 days from the 
date of access or 30 days from the date the records were mailed, to 
review the records and pay the debt or to petition the Department of a 
review of the determination of indebtedness.

[[Page 192]]



Sec. 21.8  Review within the Department of a determination of indebtedness.

    (a) Notification by debtor. A debtor who receives an initial demand 
for payment under the procedures, or a Notice of Intent (see 
Sec. 21.4(d)), has the right to request Department review of the 
determination of indebtedness. To exercises this right, the debtor must 
send a letter requesting review to the Departmental unit workout group 
individual identified in Sec. 21.4(b)(4). The letter must explain why 
the debtor seeks review and must be postmarked within 60 calendar days 
of the date of the first demand letter, (or 30 days from the Notice of 
Intent), or if a request has been made by the debtor to copy or have 
relevant records mailed, within the calendar-day time period provided in 
Sec. 21.7(b), above.
    (b) Department response. In response to a timely request for review 
of the initial determination of indebtedness, the Departmental unit head 
(or designee) will notify the debtor whether review will be by (1) oral 
hearing, or (2) by administrative review of the record. The notice to 
the debtor will include the procedures (see Sec. 21.11) used by 
Departmental officials for administrative review of the record, or will 
include information on the date, location and procedures to be used if 
review is by an oral hearing.



Sec. 21.9  Types of reviews.

    The Department will provide the debtor with an opportunity for an 
oral hearing, or an administrative review of the documentation relating 
to the debt, under the following conditions.
    (a) Oral hearing. The Departmental unit head (or designee) will 
provide the debtor with a reasonable opportunity for hearing if:
    (1) An applicable statute authorizes or requires the Department to 
consider waiver of the indebtedness, the debtor requests waiver of the 
indebtedness involved, and the waiver determination turns on credibility 
or veracity; or
    (2) The debtor requests reconsideration of the debt and the 
Departmental unit head (or designee) determines that the question of the 
indebtedness cannot be resolved by review of the documentary evidence.

An oral hearing need not be a formal (evidentiary type) hearing. 
However, hearing officials should carefully document all significant 
matters discussed at the hearing.
    (b) Administrative review of written record. Unless the Departmental 
unit head (or designee) determines that an oral hearing is required (see 
paragraph (a) of this section), the unit head (or designee) will provide 
for a review of the written record(s) (a review of the documentary 
evidence related to the debt, in the form of a ``paper hearing'').



Sec. 21.10  Review procedures.

    (a) The oral hearing will be conducted as follows:
    (1) The hearing official will take necessary steps to ensure that 
the hearing is conducted in a fair and expeditious manner. If necessary, 
the hearing officer may administer oaths of affirmation.
    (2) The hearing official need not use the formal rules of evidence 
with regard to admissibility of evidence or the use of evidence once 
admitted. However, parties may object to clearly irrelevant material.
    (3) The hearing official will record all significant matters 
discussed at the hearing. There will be no ``official'' record or 
transcript provided for these hearings.
    (4) A debtor may represent himself or herself or may be represented 
by an attorney or other person. The Department will be represented by 
the General Counsel or his designee.
    (5) The General Counsel (or designee) will proceed first by 
presenting evidence on the relevant issues. The debtor then presents his 
or her evidence regarding these issues. The General Counsel then may 
offer evidence to rebut or clarify the evidence introduced by the 
debtor.
    (b) Administrative review of the record: The Departmental unit head 
(or designee) will designate an official of the Department as hearing 
official who will review administrative determinations of indebtedness 
which are not reviewable under criteria provided in Sec. 21.9(a) for 
justifying an oral hearing. The hearing official will review all 
material related to the debt which is in the possession of the 
Department. The

[[Page 193]]

hearing official will make a determination based upon a review of this 
written record, which may include a request for reconsideration of the 
determination of indebtedness, or such other relevant material submitted 
by the debtor.
    (c) The Department may effect an administrative offset against a 
payment to be made to a debtor prior to the completion of any of the due 
process procedures required by this section, if failure to take the 
offset would substantially prejudice the Department's ability to collect 
the debt. For example, if the time before the payment is to be made to 
the debtor by another Federal department or agency would not reasonably 
permit the completion of due process procedures, the offset may be 
accomplished by the Department. Such offset prior to completion of due 
process review hearing will be promptly followed by the completion of 
review and decision by the hearing official on the validity of the debt. 
Amounts recovered by offset in these instances, but later found not owed 
to the agency, will be promptly refunded.



Sec. 21.11  Determination of indebtedness.

    (a) Following the hearing or the review of the record, the hearing 
official will issue a written decision which includes the supporting 
rationale for the decision. The decision of the hearing official is the 
Department unit's final action with regard to the particular 
administrative offset.
    (b) Copies of the hearing official's decision will be distributed to 
the General Counsel (or designee) for the Department, the Director of 
the Department's Office of Finance and Federal Assistance, the 
appropriate Departmental unit accounting/finance officer, the debtor and 
the debtor's attorney or other representative, if applicable.
    (c) If appropriate, this decision shall inform the debtor of the 
scheduled date on or after which administrative offset will begin. The 
decision shall also, if appropriate, indicate any changes in the 
information to the extent such information differs from that provided in 
the initial notification under Sec. 21.4.



Sec. 21.12  Coordinating administrative offset within the Department and with other Federal agencies.

    Departmental units will cooperate with other Federal departments and 
agencies in effecting collection by administrative offset. Whenever 
possible, Departmental units should comply with requests from within the 
Department and from other Federal agencies to initiate administrative 
offset procedures to collect debts owed the United States, unless the 
requesting office or agency has not complied with the Federal Claims 
Collections Standards, or the agency's implementing regulations, or the 
request would otherwise be contrary to law or the best interests of the 
United States.
    (a) When the Department is owed the debt. When the Department is 
owed a debt, but another Federal agency is responsible for making the 
payment to the debtor against which administrative offset is sought, the 
other agency will not initiate the requested administrative offset until 
the Department provides responsible officials at that agency with a 
written certification that the debtor owes the Department a debt 
(including the amount and basis for the debt and the due date of the 
payment) and that the Department has complied with the applicable 
provisions of Part 102, ``Standards for the Administrative Collection of 
Claims,'' of the Federal Claims Collection Standards, as well as the 
Department's implementing regulations on administrative offsets.
    (b) When another agency is owed the debt. The Department may 
administratively offset money it owes to a person who is indebted to 
another agency if requested to do so by that agency. Such a request must 
be accompanied by a certification by the requesting agency that the 
person owes the debt (including the amount and basis for the debt) and 
that the creditor agency has complied with the applicable Federal Claims 
Collection Standards, as well as the agency implementing regulations on 
administrative offsets. The request from another Federal agency for 
Department cooperation in the offset should be sent to:


[[Page 194]]


Director, Office of Finance and Federal Assistance, Room 6827, Herbert 
C. Hoover Building, Washington, DC 20230



Sec. 21.13  Procedures for administrative offset: single debts.

    (a) Administrative offset will commence 31 days after the date of 
the Notice of Intent, unless the debtor has requested a hearing (see 
Sec. 21.8) or has entered into a repayment agreement (see Sec. 21.6).
    (b) When there is review of the debt within the Department, 
administrative offset will begin after the hearing officer's 
determination has been issued under Sec. 21.11 and a copy of the 
determination is received by the Departmental unit's accounting or 
finance office, except for the provision provided in Sec. 21.10(c) when 
immediate action is determined necessary to ensure the Department's 
position in collection of the delinquent debt.



Sec. 21.14  Procedures for administrative offset: multiple debts.

    The Departmental units will follow the procedures identified in 
(Sec. 21.13) for the administrative offset of a single debt. However, 
when collecting multiple debts by administrative offset, responsible 
Departmental officials should apply the recovered amounts to those debts 
in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, paying 
special attention to applicable statutes of limitations.



Sec. 21.15  Administrative offset against amounts payable from Civil Service Retirement and Disability Fund.

    (a) Unless otherwise prohibited by law, the Department may request 
that monies which are due and payable to a debtor from the Civil Service 
Retirement and Disability Fund be administratively offset in reasonable 
amounts in order to collect debts owed to the United States by the 
debtor. Such requests shall be made by the Departmental unit workout 
officials to the appropriate officials of the Office of Personnel 
Management (OPM) in accordance with their regulations and procedures.
    (b) When making a request for administrative offset under paragraph 
(a) of the section, the responsible workout group debt collection 
official shall include a written certification that:
    (1) The debtor owes the United States a debt, including the amount 
and basis for the debt;
    (2) The Department has complied with all applicable statutes, 
regulations, and procedures of the Office of Personnel Management; and
    (3) The Department has complied with the requirements of the 
applicable provisions of the Federal Claims Collection Standards and 
these regulations, including any required hearing or review.
    (c) If a Departmental unit workout group decides to request 
administrative offset under paragraph (a) of this section, the 
responsible debt collection official should make the request as soon as 
practical after completion of the applicable due process procedures so 
the Office of Personnel Management may identify and ``flag'' the 
debtor's account in anticipation of the time when the debtor becomes 
eligible and requests to receive payments from the fund. This will 
satisfy any requirement that offset be initiated prior to expiration of 
the applicable statute of limitations. At such time as the debtor makes 
a claim for payments from the fund, and if at least a year has elapsed 
since the administrative offset request was originally made, the debtor 
should be permitted to offer a satisfactory repayment plan in lieu of 
offset upon establishing to the appropriate Departmental unit head (or 
designee) that changed financial circumstances would render the offset 
unjust.
    (d) If the Department collects part or all of the debt by other 
means before deductions are made or completed under paragraph (a) of 
this section, the Department official responsible for collecting the 
debt will act promptly to modify or terminate the agency's request for 
administrative offset under paragraph (a) of this section.
    (e) In accordance with procedures established by the Office of 
Personnel Management, the Department may request an offset from the 
Civil Service Retirement and Disability Fund prior to completion of due 
process procedures.

[[Page 195]]



Sec. 21.16  Collection against a judgment.

    Collection by administrative offset against a judgment obtained by a 
debtor against the United States shall be accomplished in accordance 
with 31 U.S.C. 3728.



Sec. 21.17  Liquidation of collateral.

    If the Department holds security or collateral which may be 
liquidated through the exercise of a power of sale in the security 
instrument, or a nonjudicial foreclosure, liquidation should be 
accomplished by such procedures if the debtor fails to pay the debt 
within a reasonable time after demand or pursuant to the contract of the 
parties, unless the cost of disposing of the collateral would be 
disproportionate to its value or special circumstances require judicial 
foreclosure. The Department collection official should provide the 
debtor with reasonable notice of the sale, an accounting of any surplus 
proceeds, and any other procedures required by contract or law. 
Collection from other sources, including liquidation of security or 
collateral, is not a prerequisite to requiring payment by a surety or 
insurance concern unless such action is expressly required by statute or 
contract.



Sec. 21.18  Collection in installments.

    (a) Whenever feasible, and unless otherwise provided by law, debts 
owed to the United States, together with interest, penalties, and 
administrative costs should be collected in one lump sum. This is true 
whether the debt is being collected by administrative offset or by 
another method, including voluntary payment. However, if the debtor is 
financially unable to pay the indebtedness in one lump sum, the 
responsible Departmental official(s) may accept repayment in regular 
installments (See Sec. 21.6). Prior to approving such repayments, 
financial statements shall be required from the debtor who represents 
that he/she is unable to pay the debt in one lump sum. A responsible 
Departmental official who agrees to accept payment in regular 
installments should obtain a legally enforceable written agreement from 
the debtor which specifies all of the terms of the arrangement and which 
contains a provision accelerating the debt in the event the debtor 
defaults. The size and frequency of installment payments should bear a 
reasonable relationship to the size of the debt and the debtor's ability 
to pay. If possible, the installment payments should be sufficient in 
size and frequency to liquidate the Government's claim in not more than 
three years. Installment payments of less than $50 per month should be 
accepted only if justifiable on the grounds of financial hardship or for 
some other reasonable cause. If the debt is an unsecured claim for 
administrative collection, attempts should be made to obtain an executed 
confess-judgment note, comparable to the Department of Justice Form USA-
70a, from a debtor when the total amount of the deferred installments 
will exceed $750. Such notes may be sought when an unsecured obligation 
of a lesser amount is involved. When attempting to obtain confess-
judgment notes, Departmental units should provide their debtors with 
written explanation of the consequences of signing the note, and should 
maintain documentation sufficient to demonstrate that the debtor has 
signed the note knowingly and voluntarily. Security for deferred 
payments other than a confess-judgment note may be accepted in 
appropriate cases. A Departmental units head (or designee) may accept 
installment payments notwithstanding the refusal of a debtor to execute 
a confess-judgment note or to give other security.
    (b) If the debtor owes more than one debt and designates how a 
voluntary installment payment is to be applied as among those debts, 
that designation must be followed. If the debtor does not designate the 
application of the payment, the Department debt collection official 
should apply payments to the various debts in accordance with the best 
interests of the United States, as determined by the facts and 
circumstances of the particular case, paying special attention to 
applicable statutes of limitations.



Sec. 21.19  Additional administrative collection action.

    Nothing contained in this subpart is intended to preclude the 
utilization of any other administrative remedy which may be available.

[[Page 196]]



PART 22--SALARY OFFSET--Table of Contents




Sec.
22.1  Scope.
22.2  Definitions.
22.3  Pay subject to offset.
22.4  Determination of indebtedness.
22.5  Notice requirements before offset.
22.6  Request for hearing-prehearing submission(s).
22.7  Hearing procedures.
22.8  Written decision following a hearing.
22.9  Standards for determining extreme financial hardship.
22.10  Review of Departmental records related to the debt.
22.11  Coordinating offset with another Federal agency.
22.12  Procedures for salary offset--When deductions may begin.
22.13  Procedures for salary offset--Types of collection.
22.14  Procedures for salary offset--Methods of collection.
22.15  Procedures for salary offset--Imposition of interest, penalties, 
          and administrative costs.
22.16  Non-waiver of rights.
22.17  Refunds.

    Authority: 5 U.S.C. 5514; 5 CFR 550.1104.

    Source: 52 FR 7, Jan. 2, 1987, unless otherwise noted.



Sec. 22.1  Scope.

    (a) These regulations provide Department procedures for collection 
by salary offset of a Federal employee's pay to satisfy certain debts 
owed the Government.
    (b) These regulations apply to collections by the Secretary from:
    (1) Federal employees who owe debts to the Department; and
    (2) Current employees of the Department who owe debts to other 
agencies.
    (c) These regulations do not apply to debts or claims arising under 
the Internal Revenue Code of 1954, as amended (26 U.S.C. 1 et seq.); the 
Social Security Act (42 U.S.C. 301 et seq.); the tariff laws of the 
United States; or to any case where collection of a debt by salary 
offset is explicitly provided for or prohibited by another statute 
(e.g., travel advances in 5 U.S.C. 5705 and employee training expenses 
in 5 U.S.C. 4108).
    (d) These regulations do not apply to any adjustment to pay arising 
out of an employee's election of coverage or a change in coverage under 
a Federal benefits program requiring periodic deductions from pay, if 
the amount to be recovered was accumulated over four pay periods or 
less.
    (e) Nothing in these regulations precludes the compromise, 
suspension, or termination of collection actions where appropriate.



Sec. 22.2  Definitions.

    (a) Agency means:
    (1) An Executive department, military department, Government 
corporation, or independent establishment as defined in 5 U.S.C. 101, 
102, 103, and 104, respectively;
    (2) The United States Postal Service;
    (3) The Postal Rate Commission;
    (4) An agency or court of the judicial branch; and
    (5) An agency of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives.
    (b) Creditor agency means the agency to which the debt is owed.
    (c) Days means calendar days.
    (d) Debt means:
    (1) An amount of money owed the United States from sources which 
include loans insured or guaranteed by the United States; from fees, 
leases, rents, royalties, services, sales of real or personal property, 
overpayments, penalties, damages, fines and forfeitures (except those 
arising under the Uniform Code of Military Justice);
    (2) An amount owed to the United States by an employee for pecuniary 
losses, including, but not limited to:
    (i) Theft, misuse, or loss of Government funds;
    (ii) False claims for services and travel;
    (iii) Illegal or unauthorized obligations and expenditures of 
Government appropriations;
    (iv) Authorization of the use of Government owned or leased 
equipment, facilities, supplies, and services for other than official or 
approved purposes;
    (v) Vehicle accidents where the employee is determined to be liable 
for the repair or replacement of a Government owned or leased vehicle; 
and
    (vi) Erroneous entries on accounting records or reports for actions 
for which the employee can be held liable.

[[Page 197]]

    (e) Department or DOC means the United States Department of 
Commerce.
    (f) Disposable pay means the amount that remains from an employee's 
Federal pay after required deductions for Federal, State and local 
income taxes; Social Security taxes, including Medicare taxes; Federal 
retirement programs; premiums for basic life and health insurance 
benefits; and such other deductions that are required by law to be 
withheld.
    (g) Employee means:
    (1) A civilian employee as defined in 5 U.S.C. 2105;
    (2) A member of the Armed Forces or Reserves of the United States, 
or of a uniformed service, including a commissioned officer of the 
National Oceanic and Atmospheric Administration;
    (3) An employee of the United States Postal Service or the Postal 
Rate Commission;
    (4) An employee of an agency or court of the judicial branch; and
    (5) An employee of the legislative branch, including the U.S. Senate 
and the U.S. House of Representatives.
    (h) FCCS means the Federal Claims Collection Standards jointly 
published by the Department of Justice and the General Accounting Office 
at 4 CFR 101.1 et seq.
    (i) Offset means a deduction from the disposable pay of an employee 
to satisfy a debt with or without the employee's consent.
    (j) Pay means basic pay, special pay, incentive pay, retired pay, 
retainer pay, or, in the case of an employee not entitled to basic pay, 
other authorized pay.
    (k) Paying agency means the agency employing the individual and 
authorizing his or her current pay.
    (l) Payroll office means the Departmental or other office providing 
payroll services to the employee.
    (m) Secretary means the Secretary of Commerce, or his/her designee.



Sec. 22.3  Pay subject to offset.

    (a) An offset from an employee's pay may not exceed 15 percent of 
the employee's disposable pay, unless the employee agrees in writing to 
a larger offset amount.
    (b) An offset from pay shall be made at the officially established 
pay intervals from the employee's current pay account.
    (c) If an employee retires, resigns, or is discharged, or if his or 
her employment period or period of active duty otherwise ends, an offset 
may be made from subsequent payment on any amount due to the individual 
from the Federal Government.



Sec. 22.4  Determination of indebtedness.

    In determining that an employee is indebted, the Secretary will 
review the debt to make sure that it is valid and past due.



Sec. 22.5  Notice requirements before offset.

    Except as provided in Sec. 22.1, deductions will not be made unless 
the Secretary provides the employee with a minimum of 30 calendar days 
written notice. This Notice of Intent to offset an employee's salary 
(Notice of Intent) will state:
    (a) That the Secretary has reviewed the records relating to the 
claim and has determined that a debt is owed, the amount of the debt, 
and the facts giving rise to the debt;
    (b) The Secretary's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest are paid in full;
    (c) The amount, frequency, approximate beginning date, and duration 
of the intended deductions;
    (d) An explanation of the Department's requirements concerning 
interest, penalties and administrative costs unless such payments are 
excused in accordance with Sec. 22.15;
    (e) The employee's right to inspect and to request and receive a 
copy of Department records relating to the debt;
    (f) The right to a hearing conducted by an administrative law judge 
of the Department or a hearing official, not under the control of the 
Secretary, on the Secretary's determination of the debt, the amount of 
the debt, or the repayment schedule (i.e., the percentage of disposable 
pay to be deducted each pay period), so long as a petition is

[[Page 198]]

filed by the employee as prescribed by the Secretary;
    (g) The method and time period for requesting a hearing;
    (h) That the timely filing of a petition for hearing will stay the 
collection proceedings; (See Sec. 22.6);
    (i) That a final decision on the hearing will be issued at the 
earliest practical date, but not later than 60 days after the filing of 
the petition requesting the hearing, unless the employee requests and 
the hearing official grants a delay in the proceedings;
    (j) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made; and
    (k) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. 7501 et seq., 
5 CFR Part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002 or 
any other applicable statutory authority.
    (l) Unless there are applicable contractual or statutory provisions 
to the contrary, amounts paid on or deducted for the debt which are 
later waived or found not owed to the United States will be promptly 
refunded to the employee.



Sec. 22.6  Request for hearing-prehearing submission(s).

    (a) An employee must file a petition for a hearing in accordance 
with the instructions in the Notice of Intent. This petition must be 
filed by the time stated in the notice described in Sec. 22.5 if an 
employee wants a hearing concerning:
    (1) The existence or amount of the debt; or
    (2) The Secretary's proposed offset schedule.
    (b) If the employee files his or her required submissions within 5 
days after the deadline date established under Sec. 22.5 and the hearing 
official finds that the employee has shown good cause for failure to 
comply with the deadline date, the hearing official may find that an 
employee has not waived his or her right to a hearing.



Sec. 22.7  Hearing procedures.

    (a) The hearing will be presided over by either:
    (1) A Department administrative law judge; or
    (2) A hearing official not under the control of the Secretary.
    (b) The hearing shall conform to Sec. 102.3(c) of the Federal Claims 
Collection Standards (4 CFR 102.3(c)).
    (c)(1) If the Secretary's determination regarding the existence or 
amount of the debt is contested, the burden is on the employee to 
demonstrate that the Secretary's determination was erroneous.
    (2) If the hearing official finds the Secretary's determination of 
the amount of the debt was erroneous, the hearing official shall 
indicate the amount owed by the employee, if any.
    (d)(1) If the Secretary's offset schedule is contested, the burden 
is on the employee to demonstrate that the payments called for under the 
Secretary's schedule will produce an extreme financial hardship for the 
employee under Sec. 22.9.
    (2) If the hearing official finds that the payments called for under 
the Secretary's offset schedule will produce an extreme financial 
hardship for the employee, the hearing official shall establish an 
offset schedule that will result in the repayment of the debt in the 
shortest period of time without producing an extreme financial hardship 
for the employee.



Sec. 22.8  Written decision following a hearing.

    (a) The hearing official shall issue to the Secretary and the 
employee a written opinion stating his or her decision, with a rationale 
supporting that decision, as soon as practicable after the hearing, but 
not later than 60 days after the employee files the petition requesting 
the hearing as provided in Sec. 22.5(i).
    (b) The written decision following a hearing will include:
    (1) A statement of the facts presented to support the nature and 
origin of the alleged debt;

[[Page 199]]

    (2) The hearing official's analysis, findings, and conclusions, in 
light of the hearing, concerning the employee's or the Department's 
grounds;
    (3) The amount and validity of the alleged debt; and
    (4) The repayment schedule if applicable.
    (c) In determining whether the Secretary's determination of the 
existence or amount of the employee's debt was erroneous, the hearing 
official is governed by the relevant Federal statutes and regulations 
authorizing and implementing the programs giving rise to the debt, and 
by State law, if relevant.



Sec. 22.9  Standards for determining extreme financial hardship.

    (a)(1) An offset produces an extreme financial hardship for an 
employee if the offset prevents the employee from meeting the costs 
necessarily incurred for essential subsistence expenses of the employee 
and his or her spouse and dependents.
    (2) Ordinarily, essential subsistence expenses include only costs 
incurred for food, housing, clothing, transportation, and medical care.
    (b) In determining whether an offset would prevent the employee from 
meeting the essential subsistence expenses described in paragraph (a) of 
this section, the hearing official shall require that the employee 
submit a detailed financial statement showing assets, liabilities, 
income and expenses.



Sec. 22.10  Review of Departmental records related to the debt.

    (a) Notification by employee. An employee who intends to inspect or 
copy Departmental records related to the debt must make arrangements in 
conformance with the instructions in the Notice of Intent.
    (b) Secretary's response. In response to a timely request submitted 
by the debtor, as described in paragraph (a) of this section, the 
Secretary will notify the employee of the location and time when the 
employee may inspect and copy Departmental records related to the debt.



Sec. 22.11  Coordinating offset with another Federal agency.

    (a) When Commerce is owed the debt. When the Department is owed a 
debt by an employee of another agency, the Department will submit a 
written request to the paying agency to begin salary offset. This 
request will include certification as to the debt (including the amount 
and basis of the debt and the due date of the payment) and that the 
Department has complied with these regulations.
    (b) When another agency is owed the debt. The Department will use 
salary offset against one of its employees who is indebted to another 
agency if requested to do so by that agency. Such a request must be 
accompanied by a certification by the requesting agency that the person 
owes the debt (including the amount) and that the procedural 
requirements of 5 U.S.C. 5514 and 5 CFR part 550, subpart K, have been 
met.
    (c) Requests by another Federal Department or agency for Department 
cooperation in offsetting the salary of one of its employees must be 
directed to the Director for Personnel and Civil Rights, Room 5001, U.S. 
Department of Commerce, Herbert C. Hoover Building, 14th and 
Constitution Ave., NW., Washington, DC 20230.



Sec. 22.12  Procedures for salary offset--When deductions may begin.

    (a) Deductions to liquidate an employee's debt will be by the method 
and in the amount stated in the Secretary's Notice of Intent to collect 
from the employee's current pay.
    (b) If the employee filed a timely petition for hearing, deductions 
will begin after the hearing official has provided the employee with a 
hearing, and the final written decision is in favor of the Secretary.
    (c) If an employee retires or resigns before collection of the 
amount of the indebtedness is completed, the remaining indebtedness will 
be collected according to the procedures for administrative offset (15 
CFR 21).

[[Page 200]]



Sec. 22.13  Procedures for salary offset--Types of collection.

    A debt will be collected in a lump-sum or in installments. 
Collection will be by lump-sum collections unless the amount of the debt 
exceeds 15 percent of disposable pay. In these cases, deduction will be 
by installments.



Sec. 22.14  Procedures for salary offset--Methods of collection.

    (a) General. A debt will be collected by deductions at officially 
established pay intervals from an employee's current pay account, unless 
the employee and the Secretary agree to alternative arrangements for 
repayment.
    (b) Installment deductions. Installment deductions will be made over 
a period not greater than the anticipated period of employment. The size 
and frequency of installment deductions will bear a reasonable relation 
to the size of the debt and the employee's ability to pay. However, the 
amount deducted for any period will not exceed 15 percent of the 
disposable pay from which the deduction is made; unless the employee has 
agreed in writing to the deduction of a greater amount. If possible, the 
installment payment will be sufficient in size and frequency to 
liquidate the debt in three years. Installment payments of less than $25 
per pay period or $50 a month will be accepted only in the most unusual 
circumstances.
    (c) Sources of deductions. The Department will make deductions from 
the employee's pay.



Sec. 22.15  Procedures for salary offset--Imposition of interest, penalties, and administrative costs.

    These charges will be made on installment payments in accordance 
with the Office of Personnel Management regulations (5 CFR 550.1104(n)) 
and the requirements contained in the FCCS (4 CFR 102.13).



Sec. 22.16  Non-waiver of rights.

    So long as there are no statutory or contractual provisions to the 
contrary, no employee involuntary payment (of all or a portion of a 
debt) collected under these regulations will be interpreted as a waiver 
of any rights that the employee may have under 5 U.S.C. 5514, these 
implementing regulations, or any other provision of contract or law.



Sec. 22.17  Refunds.

    The Department will refund promptly to the appropriate individual 
amounts offset under these regulations when:
    (a) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (b) The Department is directed by an administrative or judicial 
order to refund amounts deducted from the employee's current pay.



PART 23--USE OF PENALTY MAIL IN THE LOCATION AND RECOVERY OF MISSING CHILDREN--Table of Contents




Sec.
23.1  Purpose.
23.2  Contact person.
23.3  Plan.
23.4  Cost and percentage estimates.
23.5  Report to the Office of Juvenile Justice and Delinquency 
          Prevention.
23.6  Definitions.
23.7  Notice to Department of Commerce organizational units of 
          implementation and procedures.

    Authority: 39 U.S.C. 3220(a)(2); 5 U.S.C. 301.

    Source: 51 FR 46614, Dec. 24, 1986, unless otherwise noted.



Sec. 23.1  Purpose.

    These regulations are intended to comply with 39 U.S.C. 3220(a)(2), 
and the Office of Juvenile Justice and Delinquency Prevention (OJJDP) 
guidelines (50 FR 46622), to assist in the location and recovery of 
missing children through the use of penalty mail.



Sec. 23.2  Contact person.

    Tim Coss, Office of Administrative Services Operations, U.S. 
Department of Commerce (H2063), 14th and Constitution Ave., NW., 
Washington, DC 20230, Telephone (202) 377-2108.



Sec. 23.3  Plan.

    (a) The Department of Commerce will supplement and expand the 
national effort to assist in the location and recovery of missing 
children through the economical use of missing

[[Page 201]]

children information in domestic penalty mail directed to the public and 
Federal employees.
    (b) The Department of Commerce may include, on or inside authorized 
types of penalty mail, pictures and biographical data related to missing 
children, provided such use is determined to be cost effective. The 
authorized types of penalty mail include:
    (1) All envelopes; and
    (2) Self-mailer publications (newsletters, bulletins, etc.) with a 
shelf-life of no more than 90 days.
    (c) The manner in which pictures and biographical data may be used 
includes:
    (1) Printing on envelopes at the time they are initially printed 
with the United States Postal Service (USPS) required postal code 
identification;
    (2) Printed inserts that are placed in envelopes along with other 
mailing material;
    (3) Stickers that are printed and placed on envelopes prior to 
mailing; and
    (4) Printing as part of the content of self-mailers such as bureau 
newsletters, bulletins, etc.
    (d) Missing children information will not be placed on letter-size 
envelopes in the areas described as the ``Penalty Indicia Area,'' ``OCR 
Read Area,'' ``Bar Code Read Area,'' and ``Return Address Area'' per 
Appendix A of the OJJDP guidelines.
    (e) The National Center for Missing and Exploited Children (National 
Center) will be the sole source from which the Department of Commerce 
will obtain the camera-ready and other photographic and biographical 
materials for use by organizational units. Photographs which were 
reasonably current as of the time of the child's disappearance shall be 
the only acceptable form of visual media or pictorial likeness used on 
or in penalty mail.
    (f) The Department of Commerce will remove all printed penalty mail 
envelopes and other materials from circulation or other use (i.e., use 
or destroy) within 90 days of notification by the National Center of the 
need to withdraw penalty mail envelopes and other materials related to a 
particular child from circulation. The Department of Commerce will not 
include missing children information on blank pages or covers of items 
such as those to be included in the Superintendent of Documents' Sales 
Program, or to be distributed to Depository Libraries, as such material 
generally could not be withdrawn from use within 90 days of 
notification. The National Center will be responsible for immediately 
notifying the Department Contact Person, in writing, of the need to 
withdraw from circulation penalty mail envelopes and other materials 
related to a particular child.
    (g) The Department of Commerce will give priority:
    (1) To penalty mail that is addressed to the public for receipt in 
the United States, its territories and possessions; and
    (2) To inter- and intra-agency publications and other media that 
will be widely disseminated to and viewed by Federal employees.
    (h) All suggestions and/or recommendations for innovative, cost-
effective techniques should be forwarded to the Department Contact 
Person. The Department Contact Person shall conduct biannual meetings of 
departmental representatives to discuss the current plan and 
recommendations for future plans.
    (i) This shall be the sole regulation implementing this program for 
the Department of Commerce.



Sec. 23.4  Cost and percentage estimates.

    It is estimated that this program will cost the Department of 
Commerce $39,530 in the first year. It is the Department of Commerce's 
estimate that 9% of its penalty mail will transmit missing children 
photographs and information when the program is fully implemented.



Sec. 23.5  Report to the Office of Juvenile Justice and Delinquency Prevention.

    The Department of Commerce will compile and submit a consolidated 
report to OJJDP, by June 30, 1987, on its experience in implementation 
of 39 U.S.C. 3220(a) (2), the OJJDP guidelines, and the Department of 
Commerce's regulation. This report will cover the period from December 
24, 1986

[[Page 202]]

through March 31, 1987, and provide detail on:
    (a) The Department of Commerce's experience in implementation 
(including problems encountered), successful and/or innovative methods 
adopted to use missing children photographs and information on or in 
penalty mail, the estimated number of pieces of penalty mail containing 
such information, and the percentage of total penalty mail directed to 
the public which included missing children information.
    (b) The estimated total cost to implement the program, with 
supporting detail, and
    (c) Recommendations for changes in the program to make it more 
effective.



Sec. 23.6  Definitions.

    (a) Operating units. Bureaus and other organizational entities 
outside the Office of the Secretary charged with carrying out specified 
substantive functions (i.e., programs).
    (b) Organizational units. The organizational units within the 
Department of Commerce are:

Office of the Secretary
Bureau of Economic Analysis
Economic Development Administration
Bureau of the Census
International Trade Administration
Minority Business Development Agency
National Bureau of Standards
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
National Technical Information Service
Patent and Trademark Office
United States Travel and Tourism Administration



Sec. 23.7  Notice to Department of Commerce organizational units of implementation and procedures.

    Following are roles and responsibilities for the program within the 
Department of Commerce.
    (a) The Department Contact Person shall:
    (1) Serve as the Department of Commerce's sole representative for 
ordering materials, including camera-ready negatives, from the National 
Center,
    (2) Serve as the Department of Commerce's sole supplier of materials 
to Operating Units,
    (3) Maintain a current list of personnel within each Operating Unit 
who are authorized to order materials,
    (4) Notify Operating Units whenever permission to use information on 
a missing child has been withdrawn,
    (5) Ensure that only current missing children materials are 
distributed to Operating Units, and that only those requests from 
authorized departmental representatives are filled,
    (6) Prepare all required departmental reports on the program,
    (7) Promulgate any departmentwide operating instructions deemed 
appropriate for the program, and
    (8) Chair biannual meetings of departmental representatives to 
discuss the program and identify additional opportunities to use the 
missing children data with penalty mail.
    (b) The Head of each Operating Unit (and for the Office of the 
Secretary, the Director of the Office of Administrative Services 
Operations), or his/her representative, shall:
    (1) Designate a single person to act as the Operating Unit's 
representative to the Department for requesting and controlling missing 
children materials and receiving notification to withdraw materials from 
use (an alternative may be designated to act in the representative's 
absence),
    (2) Provide the Department Contact Person with the name, title, 
telephone number, and room number of the Operating Unit's representative 
for the program (and also for the alternate, if one is designated), and 
notify the Department of changes when they occur,
    (3) Ensure that the shelf-life of printed penalty mail materials 
containing missing children information is limited to a maximum of three 
months,
    (4) Ensure that information on a child is not used once permission 
has been withdrawn and the shelf-life for the material would keep the 
information available for greater than 90 days after the date that 
permission to use it was withdrawn,
    (5) Direct that the Operating Unit representative (or alternate) 
order missing children information, as appropriate, only from the 
Department Contact Person,

[[Page 203]]

    (6) Comply with policies, procedures, and operating instructions 
issued by the Department,
    (7) Maintain necessary information to prepare required reports and 
submit them in accordance with requirements,
    (8) Provide only current camera-ready and other photographic and 
biographical materials to printers, including those at the 
Administrative Support Centers, and
    (9) Otherwise determine and control the use of missing children 
materials and information by the Operating Unit.
    (c) The Director of each Administrative Support Center, or his/her 
representatives, shall:
    (1) Cooperate with serviced Operating Units to promote the use of 
missing children information on penalty mail,
    (2) As directed by an Operating Unit, utilize camera-ready and other 
photographic and biographical material provided by the Operating Unit in 
preparation of material for use with penalty mail, and
    (3) Assure that any printing performed or procured under its 
direction is in accordance with the type of material and the manner of 
presentation as prescribed in this regulation.



PART 24--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents




                           Subpart A--General

Sec.
24.1  Purpose and scope of this part.
24.2  Scope of subpart.
24.3  Definitions.
24.4  Applicability.
24.5  Effect on other issuances.
24.6  Additions and exceptions.

                    Subpart B--Pre-Award Requirements

24.10  Forms for applying for grants.
24.11  State plans.
24.12  Special grant or subgrant conditions for ``high-risk'' grantees.

                   Subpart C--Post-Award Requirements

                        Financial Administration

24.20  Standards for financial management systems.
24.21  Payment.
24.22  Allowable costs.
24.23  Period of availability of funds.
24.24  Matching or cost sharing.
24.25  Program income.
24.26  Non-Federal audit.

                    Changes, Property, and Subawards

24.30  Changes.
24.31  Real property.
24.32  Equipment.
24.33  Supplies.
24.34  Other property.
24.35  Subawards to debarred and suspended parties.
24.36  Procurement.
24.37  Subgrants.

              Reports, Records, Retention, and Enforcement

24.40  Monitoring and reporting program performance.
24.41  Financial reporting.
24.42  Retention and access requirements for records.
24.43  Enforcement.
24.44  Termination for convenience.

                 Subpart D--After-the-Grant Requirements

24.50  Closeout.
24.51  Later disallowances and adjustments.
24.52  Collection of amounts due.

Subpart E--Entitlements [Reserved]

    Authority: 5 U.S.C. 301.

    Source: 53 FR 8048, 8087, Mar. 11, 1988, unless otherwise noted.

    Editorial Note: For additional information, see related documents 
published at 49 FR 24958, June 18, 1984, 52 FR 20178, May 29, 1987, and 
53 FR 8028, March 11, 1988.



                           Subpart A--General



Sec. 24.1  Purpose and scope of this part.

    This part establishes uniform administrative rules for Federal 
grants and cooperative agreements and subawards to State, local and 
Indian tribal governments.



Sec. 24.2  Scope of subpart.

    This subpart contains general rules pertaining to this part and 
procedures for control of exceptions from this part.



Sec. 24.3  Definitions.

    As used in this part:
    Accrued expenditures mean the charges incurred by the grantee during

[[Page 204]]

a given period requiring the provision of funds for: (1) Goods and other 
tangible property received; (2) services performed by employees, 
contractors, subgrantees, subcontractors, and other payees; and (3) 
other amounts becoming owed under programs for which no current services 
or performance is required, such as annuities, insurance claims, and 
other benefit payments.
    Accrued income means the sum of: (1) Earnings during a given period 
from services performed by the grantee and goods and other tangible 
property delivered to purchasers, and (2) amounts becoming owed to the 
grantee for which no current services or performance is required by the 
grantee.
    Acquisition cost of an item of purchased equipment means the net 
invoice unit price of the property including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
property usable for the purpose for which it was acquired. Other charges 
such as the cost of installation, transportation, taxes, duty or 
protective in-transit insurance, shall be included or excluded from the 
unit acquisition cost in accordance with the grantee's regular 
accounting practices.
    Administrative requirements mean those matters common to grants in 
general, such as financial management, kinds and frequency of reports, 
and retention of records. These are distinguished from programmatic 
requirements, which concern matters that can be treated only on a 
program-by-program or grant-by-grant basis, such as kinds of activities 
that can be supported by grants under a particular program.
    Awarding agency means (1) with respect to a grant, the Federal 
agency, and (2) with respect to a subgrant, the party that awarded the 
subgrant.
    Cash contributions means the grantee's cash outlay, including the 
outlay of money contributed to the grantee or subgrantee by other public 
agencies and institutions, and private organizations and individuals. 
When authorized by Federal legislation, Federal funds received from 
other assistance agreements may be considered as grantee or subgrantee 
cash contributions.
    Contract means (except as used in the definitions for grant and 
subgrant in this section and except where qualified by Federal) a 
procurement contract under a grant or subgrant, and means a procurement 
subcontract under a contract.
    Cost sharing or matching means the value of the third party in-kind 
contributions and the portion of the costs of a federally assisted 
project or program not borne by the Federal Government.
    Cost-type contract means a contract or subcontract under a grant in 
which the contractor or subcontractor is paid on the basis of the costs 
it incurs, with or without a fee.
    Equipment means tangible, nonexpendable, personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or 
more per unit. A grantee may use its own definition of equipment 
provided that such definition would at least include all equipment 
defined above.
    Expenditure report means: (1) For nonconstruction grants, the SF-269 
``Financial Status Report'' (or other equivalent report); (2) for 
construction grants, the SF-271 ``Outlay Report and Request for 
Reimbursement'' (or other equivalent report).
    Federally recognized Indian tribal government means the governing 
body or a governmental agency of any Indian tribe, band, nation, or 
other organized group or community (including any Native village as 
defined in section 3 of the Alaska Native Claims Settlement Act, 85 Stat 
688) certified by the Secretary of the Interior as eligible for the 
special programs and services provided by him through the Bureau of 
Indian Affairs.
    Government means a State or local government or a federally 
recognized Indian tribal government.
    Grant means an award of financial assistance, including cooperative 
agreements, in the form of money, or property in lieu of money, by the 
Federal Government to an eligible grantee. 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

[[Page 205]]

does not include assistance, such as a fellowship or other lump sum 
award, which the grantee is not required to account for.
    Grantee means the government to which a grant is awarded and which 
is accountable for the use of the funds provided. The grantee is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document.
    Local government means a county, municipality, city, town, township, 
local public authority (including any public and Indian housing agency 
under the United States Housing Act of 1937) school district, special 
district, intrastate district, council of governments (whether or not 
incorporated as a nonprofit corporation under State law), any other 
regional or interstate government entity, or any agency or 
instrumentality of a local government.
    Obligations means the amounts of orders placed, contracts and 
subgrants awarded, goods and services received, and similar transactions 
during a given period that will require payment by the grantee during 
the same or a future period.
    OMB means the United States Office of Management and Budget.
    Outlays (expenditures) mean charges made to the project or program. 
They may be reported on a cash or accrual basis. For reports prepared on 
a cash basis, outlays are the sum of actual cash disbursement for direct 
charges for goods and services, the amount of indirect expense incurred, 
the value of in-kind contributions applied, and the amount of cash 
advances and payments made to contractors and subgrantees. For reports 
prepared on an accrued expenditure basis, outlays are the sum of actual 
cash disbursements, the amount of indirect expense incurred, the value 
of inkind contributions applied, and the new increase (or decrease) in 
the amounts owed by the grantee for goods and other property received, 
for services performed by employees, contractors, subgrantees, 
subcontractors, and other payees, and other amounts becoming owed under 
programs for which no current services or performance are required, such 
as annuities, insurance claims, and other benefit payments.
    Percentage of completion method refers to a system under which 
payments are made for construction work according to the percentage of 
completion of the work, rather than to the grantee's cost incurred.
    Prior approval means documentation evidencing consent prior to 
incurring specific cost.
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment.
    Share, when referring to the awarding agency's portion of real 
property, equipment or supplies, means the same percentage as the 
awarding agency's portion of the acquiring party's total costs under the 
grant to which the acquisition costs under the grant to which the 
acquisition cost of the property was charged. Only costs are to be 
counted--not the value of third-party in-kind contributions.
    State means any of the several States of the United States, the 
District of Columbia, the Commonwealth of Puerto Rico, any territory or 
possession of the United States, or any agency or instrumentality of a 
State exclusive of local governments. The term does not include any 
public and Indian housing agency under United States Housing Act of 
1937.
    Subgrant means an award of financial assistance in the form of 
money, or property in lieu of money, made under a grant by a grantee to 
an eligible subgrantee. The term includes financial assistance when 
provided by contractual legal agreement, but does not include 
procurement purchases, nor does it include any form of assistance which 
is excluded from the definition of grant in this part.
    Subgrantee means the government or other legal entity to which a 
subgrant is awarded and which is accountable to the grantee for the use 
of the funds provided.
    Supplies means all tangible personal property other than equipment 
as defined in this part.
    Suspension means depending on the context, either (1) temporary 
withdrawal of the authority to obligate grant funds pending corrective 
action by the grantee or subgrantee or a decision to terminate the 
grant, or (2) an

[[Page 206]]

action taken by a suspending official in accordance with agency 
regulations implementing E.O. 12549 to immediately exclude a person from 
participating in grant transactions for a period, pending completion of 
an investigation and such legal or debarment proceedings as may ensue.
    Termination means permanent withdrawal of the authority to obligate 
previously-awarded grant funds before that authority would otherwise 
expire. It also means the voluntary relinquishment of that authority by 
the grantee or subgrantee. Termination does not include: (1) Withdrawal 
of funds awarded on the basis of the grantee's underestimate of the 
unobligated balance in a prior period; (2) Withdrawal of the unobligated 
balance as of the expiration of a grant; (3) Refusal to extend a grant 
or award additional funds, to make a competing or noncompeting 
continuation, renewal, extension, or supplemental award; or (4) voiding 
of a grant upon determination that the award was obtained fraudulently, 
or was otherwise illegal or invalid from inception.
    Terms of a grant or subgrant mean all requirements of the grant or 
subgrant, whether in statute, regulations, or the award document.
    Third party in-kind contributions mean property or services which 
benefit a federally assisted project or program and which are 
contributed by non-Federal third parties without charge to the grantee, 
or a cost-type contractor under the grant agreement.
    Unliquidated obligations for reports prepared on a cash basis mean 
the amount of obligations incurred by the grantee that has not been 
paid. For reports prepared on an accrued expenditure basis, they 
represent the amount of obligations incurred by the grantee for which an 
outlay has not been recorded.
    Unobligated balance means the portion of the funds authorized by the 
Federal agency that has not been obligated by the grantee and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.



Sec. 24.4  Applicability.

    (a) General. Subparts A through D of this part apply to all grants 
and subgrants to governments, except where inconsistent with Federal 
statutes or with regulations authorized in accordance with the exception 
provision of Sec. 24.6, or:
    (1) Grants and subgrants to State and local institutions of higher 
education or State and local hospitals.
    (2) The block grants authorized by the Omnibus Budget Reconciliation 
Act of 1981 (Community Services; Preventive Health and Health Services; 
Alcohol, Drug Abuse, and Mental Health Services; Maternal and Child 
Health Services; Social Services; Low-Income Home Energy Assistance; 
States' Program of Community Development Block Grants for Small Cities; 
and Elementary and Secondary Education other than programs administered 
by the Secretary of Education under Title V, Subtitle D, Chapter 2, 
Section 583--the Secretary's discretionary grant program) and Titles I-
III of the Job Training Partnership Act of 1982 and under the Public 
Health Services Act (Section 1921), Alcohol and Drug Abuse Treatment and 
Rehabilitation Block Grant and Part C of Title V, Mental Health Service 
for the Homeless Block Grant).
    (3) Entitlement grants to carry out the following programs of the 
Social Security Act:
    (i) Aid to Needy Families with Dependent Children (Title IV-A of the 
Act, not including the Work Incentive Program (WIN) authorized by 
section 402(a)19(G); HHS grants for WIN are subject to this part);
    (ii) Child Support Enforcement and Establishment of Paternity (Title 
IV-D of the Act);
    (iii) Foster Care and Adoption Assistance (Title IV-E of the Act);
    (iv) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and 
XVI-AABD of the Act); and
    (v) Medical Assistance (Medicaid) (Title XIX of the Act) not 
including the State Medicaid Fraud Control program authorized by section 
1903(a)(6)(B).
    (4) Entitlement grants under the following programs of The National 
School Lunch Act:
    (i) School Lunch (section 4 of the Act),
    (ii) Commodity Assistance (section 6 of the Act),

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    (iii) Special Meal Assistance (section 11 of the Act),
    (iv) Summer Food Service for Children (section 13 of the Act), and
    (v) Child Care Food Program (section 17 of the Act).
    (5) Entitlement grants under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk (section 3 of the Act), and
    (ii) School Breakfast (section 4 of the Act).
    (6) Entitlement grants for State Administrative expenses under The 
Food Stamp Act of 1977 (section 16 of the Act).
    (7) A grant for an experimental, pilot, or demonstration project 
that is also supported by a grant listed in paragraph (a)(3) of this 
section;
    (8) Grant funds awarded under subsection 412(e) of the Immigration 
and Nationality Act (8 U.S.C. 1522(e)) and subsection 501(a) of the 
Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 
1809), for cash assistance, medical assistance, and supplemental 
security income benefits to refugees and entrants and the administrative 
costs of providing the assistance and benefits;
    (9) Grants to local education agencies under 20 U.S.C. 236 through 
241-1(a), and 242 through 244 (portions of the Impact Aid program), 
except for 20 U.S.C. 238(d)(2)(c) and 240(f) (Entitlement Increase for 
Handicapped Children); and
    (10) Payments under the Veterans Administration's State Home Per 
Diem Program (38 U.S.C. 641(a)).
    (b) Entitlement programs. Entitlement programs enumerated above in 
Sec. 24.4(a) (3) through (8) are subject to subpart E.



Sec. 24.5  Effect on other issuances.

    All other grants administration provisions of codified program 
regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with this part are superseded, except 
to the extent they are required by statute, or authorized in accordance 
with the exception provision in Sec. 24.6.



Sec. 24.6  Additions and exceptions.

    (a) For classes of grants and grantees subject to this part, Federal 
agencies may not impose additional administrative requirements except in 
codified regulations published in the Federal Register.
    (b) Exceptions for classes of grants or grantees may be authorized 
only by OMB.
    (c) Exceptions on a case-by-case basis and for subgrantees may be 
authorized by the affected Federal agencies.



                    Subpart B--Pre-Award Requirements



Sec. 24.10  Forms for applying for grants.

    (a) Scope. (1) This section prescribes forms and instructions to be 
used by governmental organizations (except hospitals and institutions of 
higher education operated by a government) in applying for grants. This 
section is not applicable, however, to formula grant programs which do 
not require applicants to apply for funds on a project basis.
    (2) This section applies only to applications to Federal agencies 
for grants, and is not required to be applied by grantees in dealing 
with applicants for subgrants. However, grantees are encouraged to avoid 
more detailed or burdensome application requirements for subgrants.
    (b) Authorized forms and instructions for governmental 
organizations. (1) In applying for grants, applicants shall only use 
standard application forms or those prescribed by the granting agency 
with the approval of OMB under the Paperwork Reduction Act of 1980.
    (2) Applicants are not required to submit more than the original and 
two copies of preapplications or applications.
    (3) Applicants must follow all applicable instructions that bear OMB 
clearance numbers. Federal agencies may specify and describe the 
programs, functions, or activities that will be used to plan, budget, 
and evaluate the work under a grant. Other supplementary instructions 
may be issued only with the approval of OMB to the extent required under 
the Paperwork Reduction Act of 1980. For any standard form, except the 
SF-424 facesheet, Federal agencies may shade out or instruct the 
applicant to disregard any line item that is not needed.

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    (4) When a grantee applies for additional funding (such as a 
continuation or supplemental award) or amends a previously submitted 
application, only the affected pages need be submitted. Previously 
submitted pages with information that is still current need not be 
resubmitted.



Sec. 24.11  State plans.

    (a) Scope. The statutes for some programs require States to submit 
plans before receiving grants. Under regulations implementing Executive 
Order 12372, ``Intergovernmental Review of Federal Programs,'' States 
are allowed to simplify, consolidate and substitute plans. This section 
contains additional provisions for plans that are subject to regulations 
implementing the Executive order.
    (b) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (c) Assurances. In each plan the State will include an assurance 
that the State shall comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in the 
plan, the State may:
    (1) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (2) Repeat the assurance language in the statutes or regulations, or
    (3) Develop its own language to the extent permitted by law.
    (d) Amendments. A State will amend a plan whenever necessary to 
reflect: (1) New or revised Federal statutes or regulations or (2) a 
material change in any State law, organization, policy, or State agency 
operation. The State will obtain approval for the amendment and its 
effective date but need submit for approval only the amended portions of 
the plan.



Sec. 24.12  Special grant or subgrant conditions for ``high-risk'' grantees.

    (a) A grantee or subgrantee may be considered ``high risk'' if an 
awarding agency determines that a grantee or subgrantee:
    (1) Has a history of unsatisfactory performance, or
    (2) Is not financially stable, or
    (3) Has a management system which does not meet the management 
standards set forth in this part, or
    (4) Has not conformed to terms and conditions of previous awards, or
    (5) Is otherwise not responsible; and if the awarding agency 
determines that an award will be made, special conditions and/or 
restrictions shall correspond to the high risk condition and shall be 
included in the award.
    (b) Special conditions or restrictions may include:
    (1) Payment on a reimbursement basis;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given funding period;
    (3) Requiring additional, more detailed financial reports;
    (4) Additional project monitoring;
    (5) Requiring the grantee or subgrantee to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) If an awarding agency decides to impose such conditions, the 
awarding official will notify the grantee or subgrantee as early as 
possible, in writing, of:
    (1) The nature of the special conditions/restrictions;
    (2) The reason(s) for imposing them;
    (3) The corrective actions which must be taken before they will be 
removed and the time allowed for completing the corrective actions, and
    (4) The method of requesting reconsideration of the conditions/
restrictions imposed.



                   Subpart C--Post-Award Requirements

                        Financial Administration



Sec. 24.20  Standards for financial management systems.

    (a) A State must expand and account for grant funds in accordance 
with State laws and procedures for expending and accounting for its own 
funds.

[[Page 209]]

Fiscal control and accounting procedures of the State, as well as its 
subgrantees and cost-type contractors, must be sufficient to--
    (1) Permit preparation of reports required by this part and the 
statutes authorizing the grant, and
    (2) Permit the tracing of funds to a level of expenditures adequate 
to establish that such funds have not been used in violation of the 
restrictions and prohibitions of applicable statutes.
    (b) The financial management systems of other grantees and 
subgrantees must meet the following standards:
    (1) Financial reporting. Accurate, current, and complete disclosure 
of the financial results of financially assisted activities must be made 
in accordance with the financial reporting requirements of the grant or 
subgrant.
    (2) Accounting records. Grantees and subgrantees must maintain 
records which adequately identify the source and application of funds 
provided for financially-assisted activities. These records must contain 
information pertaining to grant or subgrant awards and authorizations, 
obligations, unobligated balances, assets, liabilities, outlays or 
expenditures, and income.
    (3) Internal control. Effective control and accountability must be 
maintained for all grant and subgrant cash, real and personal property, 
and other assets. Grantees and subgrantees must adequately safeguard all 
such property and must assure that it is used solely for authorized 
purposes.
    (4) Budget control. Actual expenditures or outlays must be compared 
with budgeted amounts for each grant or subgrant. Financial information 
must be related to performance or productivity data, including the 
development of unit cost information whenever appropriate or 
specifically required in the grant or subgrant agreement. If unit cost 
data are required, estimates based on available documentation will be 
accepted whenever possible.
    (5) Allowable cost. Applicable OMB cost principles, agency program 
regulations, and the terms of grant and subgrant agreements will be 
followed in determining the reasonableness, allowability, and 
allocability of costs.
    (6) Source documentation. Accounting records must be supported by 
such source documentation as cancelled checks, paid bills, payrolls, 
time and attendance records, contract and subgrant award documents, etc.
    (7) Cash management. Procedures for minimizing the time elapsing 
between the transfer of funds from the U.S. Treasury and disbursement by 
grantees and subgrantees must be followed whenever advance payment 
procedures are used. Grantees must establish reasonable procedures to 
ensure the receipt of reports on subgrantees' cash balances and cash 
disbursements in sufficient time to enable them to prepare complete and 
accurate cash transactions reports to the awarding agency. When advances 
are made by letter-of-credit or electronic transfer of funds methods, 
the grantee must make drawdowns as close as possible to the time of 
making disbursements. Grantees must monitor cash drawdowns by their 
subgrantees to assure that they conform substantially to the same 
standards of timing and amount as apply to advances to the grantees.
    (c) An awarding agency may review the adequacy of the financial 
management system of any applicant for financial assistance as part of a 
preaward review or at any time subsequent to award.



Sec. 24.21  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which a Federal agency will make payments to grantees, and 
grantees will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment shall 
minimize the time elapsing between the transfer of funds and 
disbursement by the grantee or subgrantee, in accordance with Treasury 
regulations at 31 CFR Part 205.
    (c) Advances. Grantees and subgrantees shall be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.

[[Page 210]]

    (d) Reimbursement. Reimbursement shall be the preferred method when 
the requirements in paragraph (c) of this section are not met. Grantees 
and subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, Federal agencies 
shall not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, the awarding agency's payments 
to the grantee or subgrantee will be based on the grantee's or 
subgrantee's actual rate of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and the 
Federal agency has determined that reimbursement is not feasible because 
the grantee lacks sufficient working capital, the awarding agency may 
provide cash or a working capital advance basis. Under this procedure 
the awarding agency shall advance cash to the grantee to cover its 
estimated disbursement needs for an initial period generally geared to 
the grantee's disbursing cycle. Thereafter, the awarding agency shall 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment shall not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees shall disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees shall disburse program income, rebates, refunds, 
contract settlements, audit recoveries and interest earned on such funds 
before requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, awarding agencies shall not withhold payments for proper 
charges incurred by grantees or subgrantees unless--
    (i) The grantee or subgrantee has failed to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, shall be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 24.43(c).
    (3) A Federal agency shall not make payment to grantees for amounts 
that are withheld by grantees or subgrantees from payment to contractors 
to assure satisfactory completion of work. Payments shall be made by the 
Federal agency when the grantees or subgrantees actually disburse the 
withheld funds to the contractors or to escrow accounts established to 
assure satisfactory completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee shall maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 
450), grantees and subgrantees shall promptly, but at least quarterly, 
remit interest earned on advances to the Federal agency. The grantee or 
subgrantee may keep interest amounts up to $100 per year for 
administrative expenses.



Sec. 24.22  Allowable costs.

    (a) Limitation on use of funds. Grant funds may be used only for:
    (1) The allowable costs of the grantees, subgrantees and cost-type 
contractors, including allowable costs in the

[[Page 211]]

form of payments to fixed-price contractors; and
    (2) Reasonable fees or profit to cost-type contractors but not any 
fee or profit (or other increment above allowable costs) to the grantee 
or subgrantee.
    (b) Applicable cost principles. For each kind of organization, there 
is a set of Federal principles for determining allowable costs. 
Allowable costs will be determined in accordance with the cost 
principles applicable to the organization incurring the costs. The 
following chart lists the kinds of organizations and the applicable cost 
principles.

------------------------------------------------------------------------
           For the costs of a--                Use the principles in--
------------------------------------------------------------------------
State, local or Indian tribal government..  OMB Circular A-87.
Private nonprofit organization other than   OMB Circular A-122.
 an (1) institution of higher education,
 (2) hospital, or (3) organization named
 in OMB Circular A-122 as not subject to
 that circular.
Educational institutions..................  OMB Circular A-21.
For-profit organization other than a        48 CFR Part 31. Contract
 hospital and an organization named in OBM   Cost Principles and
 Circular A-122 as not subject to that       Procedures, or uniform cost
 circular.                                   accounting standards that
                                             comply with cost principles
                                             acceptable to the Federal
                                             agency.
------------------------------------------------------------------------



Sec. 24.23  Period of availability of funds.

    (a) General. Where a funding period is specified, a grantee may 
charge to the award only costs resulting from obligations of the funding 
period unless carryover of unobligated balances is permitted, in which 
case the carryover balances may be charged for costs resulting from 
obligations of the subsequent funding period.
    (b) Liquidation of obligations. A grantee must liquidate all 
obligations incurred under the award not later than 90 days after the 
end of the funding period (or as specified in a program regulation) to 
coincide with the submission of the annual Financial Status Report (SF-
269). The Federal agency may extend this deadline at the request of the 
grantee.



Sec. 24.24  Matching or cost sharing.

    (a) Basic rule: Costs and contributions acceptable. With the 
qualifications and exceptions listed in paragraph (b) of this section, a 
matching or cost sharing requirement may be satisfied by either or both 
of the following:
    (1) Allowable costs incurred by the grantee, subgrantee or a cost-
type contractor under the assistance agreement. This includes allowable 
costs borne by non-Federal grants or by others cash donations from non-
Federal third parties.
    (2) The value of third party in-kind contributions applicable to the 
period to which the cost sharing or matching requirements applies.
    (b) Qualifications and exceptions--(1) Costs borne by other Federal 
grant agreements. Except as provided by Federal statute, a cost sharing 
or matching requirement may not be met by costs borne by another Federal 
grant. This prohibition does not apply to income earned by a grantee or 
subgrantee from a contract awarded under another Federal grant.
    (2) General revenue sharing. For the purpose of this section, 
general revenue sharing funds distributed under 31 U.S.C. 6702 are not 
considered Federal grant funds.
    (3) Cost or contributions counted towards other Federal costs-
sharing requirements. Neither costs nor the values of third party in-
kind contributions may count towards satisfying a cost sharing or 
matching requirement of a grant agreement if they have been or will be 
counted towards satisfying a cost sharing or matching requirement of 
another Federal grant agreement, a Federal procurement contract, or any 
other award of Federal funds.
    (4) Costs financed by program income. Costs financed by program 
income, as defined in Sec. 24.25, shall not count towards satisfying a 
cost sharing or matching requirement unless they are expressly permitted 
in the terms of the assistance agreement. (This use of general program 
income is described in Sec. 24.25(g).)
    (5) Services or property financed by income earned by contractors. 
Contractors under a grant may earn income from the activities carried 
out under the contract in addition to the amounts earned from the party 
awarding the contract. No costs of services or property supported by 
this income may count toward satisfying a cost sharing or matching 
requirement unless other

[[Page 212]]

provisions of the grant agreement expressly permit this kind of income 
to be used to meet the requirement.
    (6) Records. Costs and third party in-kind contributions counting 
towards satisfying a cost sharing or matching requirement must be 
verifiable from the records of grantees and subgrantee or cost-type 
contractors. These records must show how the value placed on third party 
in-kind contributions was derived. To the extent feasible, volunteer 
services will be supported by the same methods that the organization 
uses to support the allocability of regular personnel costs.
    (7) Special standards for third party in-kind contributions. (i) 
Third party in-kind contributions count towards satisfying a cost 
sharing or matching requirement only where, if the party receiving the 
contributions were to pay for them, the payments would be allowable 
costs.
    (ii) Some third party in-kind contributions are goods and services 
that, if the grantee, subgrantee, or contractor receiving the 
contribution had to pay for them, the payments would have been an 
indirect costs. Costs sharing or matching credit for such contributions 
shall be given only if the grantee, subgrantee, or contractor has 
established, along with its regular indirect cost rate, a special rate 
for allocating to individual projects or programs the value of the 
contributions.
    (iii) A third party in-kind contribution to a fixed-price contract 
may count towards satisfying a cost sharing or matching requirement only 
if it results in:
    (A) An increase in the services or property provided under the 
contract (without additional cost to the grantee or subgrantee) or
    (B) A cost savings to the grantee or subgrantee.
    (iv) The values placed on third party in-kind contributions for cost 
sharing or matching purposes will conform to the rules in the succeeding 
sections of this part. If a third party in-kind contribution is a type 
not treated in those sections, the value placed upon it shall be fair 
and reasonable.
    (c) Valuation of donated services--(1) Volunteer services. Unpaid 
services provided to a grantee or subgrantee by individuals will be 
valued at rates consistent with those ordinarily paid for similar work 
in the grantee's or subgrantee's organization. If the grantee or 
subgrantee does not have employees performing similar work, the rates 
will be consistent with those ordinarily paid by other employers for 
similar work in the same labor market. In either case, a reasonable 
amount for fringe benefits may be included in the valuation.
    (2) Employees of other organizations. When an employer other than a 
grantee, subgrantee, or cost-type contractor furnishes free of charge 
the services of an employee in the employee's normal line of work, the 
services will be valued at the employee's regular rate of pay exclusive 
of the employee's fringe benefits and overhead costs. If the services 
are in a different line of work, paragraph (c)(1) of this section 
applies.
    (d) Valuation of third party donated supplies and loaned equipment 
or space. (1) If a third party donates supplies, the contribution will 
be valued at the market value of the supplies at the time of donation.
    (2) If a third party donates the use of equipment or space in a 
building but retains title, the contribution will be valued at the fair 
rental rate of the equipment or space.
    (e) Valuation of third party donated equipment, buildings, and land. 
If a third party donates equipment, buildings, or land, and title passes 
to a grantee or subgrantee, the treatment of the donated property will 
depend upon the purpose of the grant or subgrant, as follows:
    (1) Awards for capital expenditures. If the purpose of the grant or 
subgrant is to assist the grantee or subgrantee in the acquisition of 
property, the market value of that property at the time of donation may 
be counted as cost sharing or matching,
    (2) Other awards. If assisting in the acquisition of property is not 
the purpose of the grant or subgrant, paragraphs (e)(2) (i) and (ii) of 
this section apply:
    (i) If approval is obtained from the awarding agency, the market 
value at the time of donation of the donated equipment or buildings and 
the fair rental rate of the donated land may be

[[Page 213]]

counted as cost sharing or matching. In the case of a subgrant, the 
terms of the grant agreement may require that the approval be obtained 
from the Federal agency as well as the grantee. In all cases, the 
approval may be given only if a purchase of the equipment or rental of 
the land would be approved as an allowable direct cost. If any part of 
the donated property was acquired with Federal funds, only the non-
federal share of the property may be counted as cost-sharing or 
matching.
    (ii) If approval is not obtained under paragraph (e)(2)(i) of this 
section, no amount may be counted for donated land, and only 
depreciation or use allowances may be counted for donated equipment and 
buildings. The depreciation or use allowances for this property are not 
treated as third party in-kind contributions. Instead, they are treated 
as costs incurred by the grantee or subgrantee. They are computed and 
allocated (usually as indirect costs) in accordance with the cost 
principles specified in Sec. 24.22, in the same way as depreciation or 
use allowances for purchased equipment and buildings. The amount of 
depreciation or use allowances for donated equipment and buildings is 
based on the property's market value at the time it was donated.
    (f) Valuation of grantee or subgrantee donated real property for 
construction/acquisition. If a grantee or subgrantee donates real 
property for a construction or facilities acquisition project, the 
current market value of that property may be counted as cost sharing or 
matching. If any part of the donated property was acquired with Federal 
funds, only the non-federal share of the property may be counted as cost 
sharing or matching.
    (g) Appraisal of real property. In some cases under paragraphs (d), 
(e) and (f) of this section, it will be necessary to establish the 
market value of land or a building or the fair rental rate of land or of 
space in a building. In these cases, the Federal agency may require the 
market value or fair rental value be set by an independent appraiser, 
and that the value or rate be certified by the grantee. This requirement 
will also be imposed by the grantee on subgrantees.



Sec. 24.25  Program income.

    (a) General. Grantees are encouraged to earn income to defray 
program costs. Program income includes income from fees for services 
performed, from the use or rental of real or personal property acquired 
with grant funds, from the sale of commodities or items fabricated under 
a grant agreement, and from payments of principal and interest on loans 
made with grant funds. Except as otherwise provided in regulations of 
the Federal agency, program income does not include interest on grant 
funds, rebates, credits, discounts, refunds, etc. and interest earned on 
any of them.
    (b) Definition of program income. Program income means gross income 
received by the grantee or subgrantee directly generated by a grant 
supported activity, or earned only as a result of the grant agreement 
during the grant period. ``During the grant period'' is the time between 
the effective date of the award and the ending date of the award 
reflected in the final financial report.
    (c) Cost of generating program income. If authorized by Federal 
regulations or the grant agreement, costs incident to the generation of 
program income may be deducted from gross income to determine program 
income.
    (d) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a grantee or subgrantee are not 
program income unless the revenues are specifically identified in the 
grant agreement or Federal agency regulations as program income.
    (e) Royalties. Income from royalties and license fees for 
copyrighted material, patents, and inventions developed by a grantee or 
subgrantee is program income only if the revenues are specifically 
identified in the grant agreement or Federal agency regulations as 
program income. (See Sec. 24.34.)
    (f) Property. Proceeds from the sale of real property or equipment 
will be handled in accordance with the requirements of Secs. 24.31 and 
24.32.
    (g) Use of program income. Program income shall be deducted from 
outlays which may be both Federal and non-Federal as described below, 
unless the Federal agency regulations or the

[[Page 214]]

grant agreement specify another alternative (or a combination of the 
alternatives). In specifying alternatives, the Federal agency may 
distinguish between income earned by the grantee and income earned by 
subgrantees and between the sources, kinds, or amounts of income. When 
Federal agencies authorize the alternatives in paragraphs (g) (2) and 
(3) of this section, program income in excess of any limits stipulated 
shall also be deducted from outlays.
    (1) Deduction. Ordinarily program income shall be deducted from 
total allowable costs to determine the net allowable costs. Program 
income shall be used for current costs unless the Federal agency 
authorizes otherwise. Program income which the grantee did not 
anticipate at the time of the award shall be used to reduce the Federal 
agency and grantee contributions rather than to increase the funds 
committed to the project.
    (2) Addition. When authorized, program income may be added to the 
funds committed to the grant agreement by the Federal agency and the 
grantee. The program income shall be used for the purposes and under the 
conditions of the grant agreement.
    (3) Cost sharing or matching. When authorized, program income may be 
used to meet the cost sharing or matching requirement of the grant 
agreement. The amount of the Federal grant award remains the same.
    (h) Income after the award period. There are no Federal requirements 
governing the disposition of program income earned after the end of the 
award period (i.e., until the ending date of the final financial report, 
see paragraph (a) of this section), unless the terms of the agreement or 
the Federal agency regulations provide otherwise.



Sec. 24.26  Non-Federal audit.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
States, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by an independent auditor in accordance with generally 
accepted government auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee, which expends $300,000 or more 
(or other amount as specified by OMB) in Federal awards in a fiscal 
year, shall:
    (1) Determine whether State or local subgrantees have met the audit 
requirements of the Act and whether subgrantees covered by OMB Circular 
A-110, ``Uniform Administrative Requirements for Grants and Agreements 
with Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations,'' have met the audit requirements of the Act. Commercial 
contractors (private for-profit and private and governmental 
organizations) providing goods and services to State and local 
governments are not required to have a single audit performed. State and 
local governments should use their own procedures to ensure that the 
contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act, Circular A-110, or through other means (e.g., program 
reviews) if the subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instance of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.
    (c) Auditor selection. In arranging for audit services, Sec. 24.36 
shall be followed.

[53 FR 8048, 8087, Mar. 11, 1988, as amended at 62 FR 45939, 45940, Aug. 
29, 1997]

[[Page 215]]

                    Changes, Property, and Subawards



Sec. 24.30  Changes.

    (a) General. Grantees and subgrantees are permitted to rebudget 
within the approved direct cost budget to meet unanticipated 
requirements and may make limited program changes to the approved 
project. However, unless waived by the awarding agency, certain types of 
post-award changes in budgets and projects shall require the prior 
written approval of the awarding agency.
    (b) Relation to cost principles. The applicable cost principles (see 
Sec. 24.22) contain requirements for prior approval of certain types of 
costs. Except where waived, those requirements apply to all grants and 
subgrants even if paragraphs (c) through (f) of this section do not.
    (c) Budget changes--(1) Nonconstruction projects. Except as stated 
in other regulations or an award document, grantees or subgrantees shall 
obtain the prior approval of the awarding agency whenever any of the 
following changes is anticipated under a nonconstruction award:
    (i) Any revision which would result in the need for additional 
funding.
    (ii) Unless waived by the awarding agency, cumulative transfers 
among direct cost categories, or, if applicable, among separately 
budgeted programs, projects, functions, or activities which exceed or 
are expected to exceed ten percent of the current total approved budget, 
whenever the awarding agency's share exceeds $100,000.
    (iii) Transfer of funds allotted for training allowances (i.e., from 
direct payments to trainees to other expense categories).
    (2) Construction projects. Grantees and subgrantees shall obtain 
prior written approval for any budget revision which would result in the 
need for additional funds.
    (3) Combined construction and nonconstruction projects. When a grant 
or subgrant provides funding for both construction and nonconstruction 
activities, the grantee or subgrantee must obtain prior written approval 
from the awarding agency before making any fund or budget transfer from 
nonconstruction to construction or vice versa.
    (d) Programmatic changes. Grantees or subgrantees must obtain the 
prior approval of the awarding agency whenever any of the following 
actions is anticipated:
    (1) Any revision of the scope or objectives of the project 
(regardless of whether there is an associated budget revision requiring 
prior approval).
    (2) Need to extend the period of availability of funds.
    (3) Changes in key persons in cases where specified in an 
application or a grant award. In research projects, a change in the 
project director or principal investigator shall always require approval 
unless waived by the awarding agency.
    (4) Under nonconstruction projects, contracting out, subgranting (if 
authorized by law) or otherwise obtaining the services of a third party 
to perform activities which are central to the purposes of the award. 
This approval requirement is in addition to the approval requirements of 
Sec. 24.36 but does not apply to the procurement of equipment, supplies, 
and general support services.
    (e) Additional prior approval requirements. The awarding agency may 
not require prior approval for any budget revision which is not 
described in paragraph (c) of this section.
    (f) Requesting prior approval. (1) A request for prior approval of 
any budget revision will be in the same budget formal the grantee used 
in its application and shall be accompanied by a narrative justification 
for the proposed revision.
    (2) A request for a prior approval under the applicable Federal cost 
principles (see Sec. 24.22) may be made by letter.
    (3) A request by a subgrantee for prior approval will be addressed 
in writing to the grantee. The grantee will promptly review such request 
and shall approve or disapprove the request in writing. A grantee will 
not approve any budget or project revision which is inconsistent with 
the purpose or terms and conditions of the Federal grant to the grantee. 
If the revision, requested by the subgrantee would result in a change to 
the grantee's approved

[[Page 216]]

project which requires Federal prior approval, the grantee will obtain 
the Federal agency's approval before approving the subgrantee's request.



Sec. 24.31  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired under a grant or subgrant 
will vest upon acquisition in the grantee or subgrantee respectively.
    (b) Use. Except as otherwise provided by Federal statutes, real 
property will be used for the originally authorized purposes as long as 
needed for that purposes, and the grantee or subgrantee shall not 
dispose of or encumber its title or other interests.
    (1) The Federal awarding agency may require the placing of 
appropriate notices of record to advise that property has been acquired 
or improved with Federal financial assistance, and that use and 
disposition conditions apply to the property.
    (2) [Reserved]
    (c) Disposition. When real property is no longer needed for the 
originally authorized purpose, the grantee or subgrantee will request 
disposition instructions from the awarding agency. The instructions will 
provide for one of the following alternatives:
    (1) Retention of title. Retain title after compensating the awarding 
agency. The amount paid to the awarding agency will be computed by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the fair market value of the property. 
However, in those situations where a grantee or subgrantee is disposing 
of real property acquired with grant funds and acquiring replacement 
real property under the same program, the net proceeds from the 
disposition may be used as an offset to the cost of the replacement 
property.
    (2) Sale of property. Sell the property and compensate the awarding 
agency. The amount due to the awarding agency will be calculated by 
applying the awarding agency's percentage of participation in the cost 
of the original purchase to the proceeds of the sale after deduction of 
any actual and reasonable selling and fixing-up expenses. If the grant 
is still active, the net proceeds from sale may be offset against the 
original cost of the property. When a grantee or subgrantee is directed 
to sell property, sales procedures shall be followed that provide for 
competition to the extent practicable and result in the highest possible 
return.
    (3) Transfer of title. Transfer title to the awarding agency or to a 
third-party designated/approved by the awarding agency. The grantee or 
subgrantee shall be paid an amount calculated by applying the grantee or 
subgrantee's percentage of participation in the purchase of the real 
property to the current fair market value of the property.

[53 FR 8048, Mar. 11, 1988, as amended at 53 FR 8049, Mar. 11, 1988]



Sec. 24.32  Equipment.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a grant or subgrant will 
vest upon acquisition in the grantee or subgrantee respectively.
    (b) States. A State will use, manage, and dispose of equipment 
acquired under a grant by the State in accordance with State laws and 
procedures. Other grantees and subgrantees will follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment shall be used by the grantee or subgrantee in 
the program or project for which it was acquired as long as needed, 
whether or not the project or program continues to be supported by 
Federal funds. When no longer needed for the original program or 
project, the equipment may be used in other activities currently or 
previously supported by a Federal agency.
    (2) The grantee or subgrantee shall also make equipment available 
for use on other projects or programs currently or previously supported 
by the Federal Government, providing such use will not interfere with 
the work on the projects or program for which it was originally 
acquired. First preference for other use shall be given to other 
programs or projects supported by the awarding agency. User fees should 
be considered if appropriate.

[[Page 217]]

    (3) Notwithstanding the encouragement in Sec. 24.25(a) to earn 
program income, the grantee or subgrantee must not use equipment 
acquired with grant funds to provide services for a fee to compete 
unfairly with private companies that provide equivalent services, unless 
specifically permitted or contemplated by Federal statute.
    (4) When acquiring replacement equipment, the grantee or subgrantee 
may use the equipment to be replaced as a trade-in or sell the property 
and use the proceeds to offset the cost of the replacement property, 
subject to the approval of the awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
with grant funds, until disposition takes place will, as a minimum, meet 
the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of property, who holds title, the acquisition date, and cost of 
the property, percentage of Federal participation in the cost of the 
property, the location, use and condition of the property, and any 
ultimate disposition data including the date of disposal and sale price 
of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft shall be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the grantee or subgrantee is authorized or required to sell 
the property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a grant or subgrant is no longer needed for the original project 
or program or for other activities currently or previously supported by 
a Federal agency, disposition of the equipment will be made as follows:
    (1) Items of equipment with a current per-unit fair market value of 
less than $5,000 may be retained, sold or otherwise disposed of with no 
further obligation to the awarding agency.
    (2) Items of equipment with a current per unit fair market value in 
excess of $5,000 may be retained or sold and the awarding agency shall 
have a right to an amount calculated by multiplying the current market 
value or proceeds from sale by the awarding agency's share of the 
equipment.
    (3) In cases where a grantee or subgrantee fails to take appropriate 
disposition actions, the awarding agency may direct the grantee or 
subgrantee to take excess and disposition actions.
    (f) Federal equipment. In the event a grantee or subgrantee is 
provided federally-owned equipment:
    (1) Title will remain vested in the Federal Government.
    (2) Grantees or subgrantees will manage the equipment in accordance 
with Federal agency rules and procedures, and submit an annual inventory 
listing.
    (3) When the equipment is no longer needed, the grantee or 
subgrantee will request disposition instructions from the Federal 
agency.
    (g) Right to transfer title. The Federal awarding agency may reserve 
the right to transfer title to the Federal Government or a third part 
named by the awarding agency when such a third party is otherwise 
eligible under existing statutes. Such transfers shall be subject to the 
following standards:
    (1) The property shall be identified in the grant or otherwise made 
known to the grantee in writing.
    (2) The Federal awarding agency shall issue disposition instruction 
within 120 calendar days after the end of the Federal support of the 
project for which it was acquired. If the Federal awarding agency fails 
to issue disposition instructions within the 120 calendar-day period the 
grantee shall follow Sec. 24.32(e).
    (3) When title to equipment is transferred, the grantee shall be 
paid an

[[Page 218]]

amount calculated by applying the percentage of participation in the 
purchase to the current fair market value of the property.



Sec. 24.33  Supplies.

    (a) Title. Title to supplies acquired under a grant or subgrant will 
vest, upon acquisition, in the grantee or subgrantee respectively.
    (b) Disposition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate fair market value upon termination 
or completion of the award, and if the supplies are not needed for any 
other federally sponsored programs or projects, the grantee or 
subgrantee shall compensate the awarding agency for its share.



Sec. 24.34  Other property.

    (a) Copyrights. The Federal awarding agency reserves a royalty-free, 
nonexclusive, and irrevocable license to reproduce, publish or otherwise 
use, and to authorize others to use, for Federal Government purposes:
    (1) The copyright in any work developed under a grant, subgrant, or 
contract under a grant or subgrant; and
    (2) Any rights of copyright to which a grantee, subgrantee, or a 
contractor purchases ownership with grant support.
    (b) Intangible property. Title to such property as loans, notes, and 
other debt instruments (whether considered tangible or intangible) 
acquired under a grant or subgrant will vest upon acquisition in the 
grantee or subgrantee respectively. Such property will be used for the 
originally authorized purpose as long as needed for that purpose, and 
the grantee or subgrantee shall not dispose of or encumber its title or 
other interests. When no longer needed for the originally authorized 
purpose, disposition of such property will be made as provided in 
Sec. 24.32(e).

[53 FR 8049, Mar. 11, 1988]



Sec. 24.35  Subawards to debarred and suspended parties.

    Grantees and subgrantees must not make any award or permit any award 
(subgrant or contract) at any tier to any party which is debarred or 
suspended or is otherwise excluded from or ineligible for participation 
in Federal assistance programs under Executive Order 12549, ``Debarment 
and Suspension.''



Sec. 24.36  Procurement.

    (a) States. When procuring property and services under a grant, a 
State will follow the same policies and procedures it uses for 
procurements from its non-Federal funds. The State will ensure that 
every purchase order or other contract includes any clauses required by 
Federal statutes and executive orders and their implementing 
regulations. Other grantees and subgrantees will follow paragraphs (b) 
through (i) in this section.
    (b) Procurement standards. (1) Grantees and subgrantees will use 
their own procurement procedures which reflect applicable State and 
local laws and regulations, provided that the procurements conform to 
applicable Federal law and the standards identified in this section.
    (2) Grantees and subgrantees will maintain a contract administration 
system which ensures that contractors perform in accordance with the 
terms, conditions, and specifications of their contracts or purchase 
orders.
    (3) Grantees and subgrantees will maintain a written code of 
standards of conduct governing the performance of their employees 
engaged in the award and administration of contracts. No employee, 
officer or agent of the grantee or subgrantee shall participate in 
selection, or in the award or administration of a contract supported by 
Federal funds if a conflict of interest, real or apparent, would be 
involved. Such a conflict would arise when:
    (i) The employee, officer or agent,
    (ii) Any member of his immediate family,
    (iii) His or her partner, or
    (iv) An organization which employs, or is about to employ, any of 
the above, has a financial or other interest in the firm selected for 
award. The grantee's or subgrantee's officers, employees or agents will 
neither solicit nor accept gratuities, favors or anything of monetary 
value from contractors, potential contractors, or parties to 
subagreements. Grantee and subgrantees may set minimum rules where

[[Page 219]]

the financial interest is not substantial or the gift is an unsolicited 
item of nominal intrinsic value. To the extent permitted by State or 
local law or regulations, such standards or conduct will provide for 
penalties, sanctions, or other disciplinary actions for violations of 
such standards by the grantee's and subgrantee's officers, employees, or 
agents, or by contractors or their agents. The awarding agency may in 
regulation provide additional prohibitions relative to real, apparent, 
or potential conflicts of interest.
    (4) Grantee and subgrantee procedures will provide for a review of 
proposed procurements to avoid purchase of unnecessary or duplicative 
items. Consideration should be given to consolidating or breaking out 
procurements to obtain a more economical purchase. Where appropriate, an 
analysis will be made of lease versus purchase alternatives, and any 
other appropriate analysis to determine the most economical approach.
    (5) To foster greater economy and efficiency, grantees and 
subgrantees are encouraged to enter into State and local 
intergovernmental agreements for procurement or use of common goods and 
services.
    (6) Grantees and subgrantees are encouraged to use Federal excess 
and surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (7) Grantees and subgrantees are encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative anaylsis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (8) Grantees and subgrantees will make awards only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources.
    (9) Grantees and subgrantees will maintain records sufficient to 
detail the significant history of a procurement. These records will 
include, but are not necessarily limited to the following: rationale for 
the method of procurement, selection of contract type, contractor 
selection or rejection, and the basis for the contract price.
    (10) Grantees and subgrantees will use time and material type 
contracts only--
    (i) After a determination that no other contract is suitable, and
    (ii) If the contract includes a ceiling price that the contractor 
exceeds at its own risk.
    (11) Grantees and subgrantees alone will be responsible, in 
accordance with good administrative practice and sound business 
judgment, for the settlement of all contractual and administrative 
issues arising out of procurements. These issues include, but are not 
limited to source evaluation, protests, disputes, and claims. These 
standards do not relieve the grantee or subgrantee of any contractual 
responsibilities under its contracts. Federal agencies will not 
substitute their judgment for that of the grantee or subgrantee unless 
the matter is primarily a Federal concern. Violations of law will be 
referred to the local, State, or Federal authority having proper 
jurisdiction.
    (12) Grantees and subgrantees will have protest procedures to handle 
and resolve disputes relating to their procurements and shall in all 
instances disclose information regarding the protest to the awarding 
agency. A protestor must exhaust all administrative remedies with the 
grantee and subgrantee before pursuing a protest with the Federal 
agency. Reviews of protests by the Federal agency will be limited to:
    (i) Violations of Federal law or regulations and the standards of 
this section (violations of State or local law will be under the 
jurisdiction of State or local authorities) and
    (ii) Violations of the grantee's or subgrantee's protest procedures 
for failure to review a complaint or protest. Protests received by the 
Federal agency other than those specified above will be referred to the 
grantee or subgrantee.

[[Page 220]]

    (c) Competition. (1) All procurement transactions will be conducted 
in a manner providing full and open competition consistent with the 
standards of Sec. 24.36. Some of the situations considered to be 
restrictive of competition include but are not limited to:
    (i) Placing unreasonable requirements on firms in order for them to 
qualify to do business,
    (ii) Requiring unnecessary experience and excessive bonding,
    (iii) Noncompetitive pricing practices between firms or between 
affiliated companies,
    (iv) Noncompetitive awards to consultants that are on retainer 
contracts,
    (v) Organizational conflicts of interest,
    (vi) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance of 
other relevant requirements of the procurement, and
    (vii) Any arbitrary action in the procurement process.
    (2) Grantees and subgrantees will conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed in-
State or local geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts State licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criteria provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.
    (3) Grantees will have written selection procedures for procurement 
transactions. These procedures will ensure that all solicitations:
    (i) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description shall not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured, and when necessary, shall set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equal'' description may be used as a means to define the 
performance or other salient requirements of a procurement. The specific 
features of the named brand which must be met by offerors shall be 
clearly stated; and
    (ii) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (4) Grantees and subgrantees will ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, grantees and subgrantees will 
not preclude potential bidders from qualifying during the solicitation 
period.
    (d) Methods of procurement to be followed. (1) Procurement by small 
purchase procedures. Small purchase procedures are those relatively 
simple and informal procurement methods for securing services, supplies, 
or other property that do not cost more than the simplified acquisition 
threshold fixed at 41 U.S.C. 403(11) (currently set at $100,000). If 
small purchase procedures are used, price or rate quotations shall be 
obtained from an adequate number of qualified sources.
    (2) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm-fixed-price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in Sec. 24.36(d)(2)(i) apply.
    (i) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (A) A complete, adequate, and realistic specification or purchase 
description is available;

[[Page 221]]

    (B) Two or more responsible bidders are willing and able to compete 
effectively and for the business; and
    (C) The procurement lends itself to a firm fixed price contract and 
the selection of the successful bidder can be made principally on the 
basis of price.
    (ii) If sealed bids are used, the following requirements apply:
    (A) The invitation for bids will be publicly advertised and bids 
shall be solicited from an adequate number of known suppliers, providing 
them sufficient time prior to the date set for opening the bids;
    (B) The invitation for bids, which will include any specifications 
and pertinent attachments, shall define the items or services in order 
for the bidder to properly respond;
    (C) All bids will be publicly opened at the time and place 
prescribed in the invitation for bids;
    (D) A firm fixed-price contract award will be made in writing to the 
lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs shall be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (E) Any or all bids may be rejected if there is a sound documented 
reason.
    (3) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed-price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of sealed bids. If this method is used, the 
following requirements apply:
    (i) Requests for proposals will be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals shall be honored to the maximum extent 
practical;
    (ii) Proposals will be solicited from an adequate number of 
qualified sources;
    (iii) Grantees and subgrantees will have a method for conducting 
technical evaluations of the proposals received and for selecting 
awardees;
    (iv) Awards will be made to the responsible firm whose proposal is 
most advantageous to the program, with price and other factors 
considered; and
    (v) Grantees and subgrantees may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection factor, can only be used in procurement of A/E professional 
services. It cannot be used to purchase other types of services though 
A/E firms are a potential source to perform the proposed effort.
    (4) Procurement by noncompetitive proposals is procurement through 
solicitation of a proposal from only one source, or after solicitation 
of a number of sources, competition is determined inadequate.
    (i) Procurement by noncompetitive proposals may be used only when 
the award of a contract is infeasible under small purchase procedures, 
sealed bids or competitive proposals and one of the following 
circumstances applies:
    (A) The item is available only from a single source;
    (B) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;
    (C) The awarding agency authorizes noncompetitive proposals; or
    (D) After solicitation of a number of sources, competition is 
determined inadequate.
    (ii) Cost analysis, i.e., verifying the proposed cost data, the 
projections of the data, and the evaluation of the specific elements of 
costs and profits, is required.
    (iii) Grantees and subgrantees may be required to submit the 
proposed procurement to the awarding agency for pre-award review in 
accordance with paragraph (g) of this section.
    (e) Contracting with small and minority firms, women's business 
enterprise and labor surplus area firms. (1) The grantee and subgrantee 
will take all necessary

[[Page 222]]

affirmative steps to assure that minority firms, women's business 
enterprises, and labor surplus area firms are used when possible.
    (2) Affirmative steps shall include:
    (i) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (ii) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (iii) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority business, and women's business enterprises;
    (iv) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority business, and 
women's business enterprises;
    (v) Using the services and assistance of the Small Business 
Administration, and the Minority Business Development Agency of the 
Department of Commerce; and
    (vi) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (e)(2) (i) through 
(v) of this section.
    (f) Contract cost and price. (1) Grantees and subgrantees must 
perform a cost or price analysis in connection with every procurement 
action including contract modifications. The method and degree of 
analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, grantees must make 
independent estimates before receiving bids or proposals. A cost 
analysis must be performed when the offeror is required to submit the 
elements of his estimated cost, e.g., under professional, consulting, 
and architectural engineering services contracts. A cost analysis will 
be necessary when adequate price competition is lacking, and for sole 
source procurements, including contract modifications or change orders, 
unless price resonableness can be established on the basis of a catalog 
or market price of a commercial product sold in substantial quantities 
to the general public or based on prices set by law or regulation. A 
price analysis will be used in all other instances to determine the 
reasonableness of the proposed contract price.
    (2) Grantees and subgrantees will negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration will be given to 
the complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (3) Costs or prices based on estimated costs for contracts under 
grants will be allowable only to the extent that costs incurred or cost 
estimates included in negotiated prices are consistent with Federal cost 
principles (see Sec. 24.22). Grantees may reference their own cost 
principles that comply with the applicable Federal cost principles.
    (4) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting shall not be used.
    (g) Awarding agency review. (1) Grantees and subgrantees must make 
available, upon request of the awarding agency, technical specifications 
on proposed procurements where the awarding agency believes such review 
is needed to ensure that the item and/or service specified is the one 
being proposed for purchase. This review generally will take place prior 
to the time the specification is incorporated into a solicitation 
document. However, if the grantee or subgrantee desires to have the 
review accomplished after a solicitation has been developed, the 
awarding agency may still review the specifications, with such review 
usually limited to the technical aspects of the proposed purchase.
    (2) Grantees and subgrantees must on request make available for 
awarding agency pre-award review procurement documents, such as requests 
for proposals or invitations for bids, independent cost estimates, etc. 
when:
    (i) A grantee's or subgrantee's procurement procedures or operation 
fails

[[Page 223]]

to comply with the procurement standards in this section; or
    (ii) The procurement is expected to exceed the simplified 
acquisition threshold and is to be awarded without competition or only 
one bid or offer is received in response to a solicitation; or
    (iii) The procurement, which is expected to exceed the simplified 
acquisition threshold, specifies a ``brand name'' product; or
    (iv) The proposed award is more than the simplified acquisition 
threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (v) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the simplified acquisition 
threshold.
    (3) A grantee or subgrantee will be exempt from the pre-award review 
in paragraph (g)(2) of this section if the awarding agency determines 
that its procurement systems comply with the standards of this section.
    (i) A grantee or subgrantee may request that its procurement system 
be reviewed by the awarding agency to determine whether its system meets 
these standards in order for its system to be certified. Generally, 
these reviews shall occur where there is a continuous high-dollar 
funding, and third-party contracts are awarded on a regular basis.
    (ii) A grantee or subgrantee may self-certify its procurement 
system. Such self-certification shall not limit the awarding agency's 
right to survey the system. Under a self-certification procedure, 
awarding agencies may wish to rely on written assurances from the 
grantee or subgrantee that it is complying with these standards. A 
grantee or subgrantee will cite specific procedures, regulations, 
standards, etc., as being in compliance with these requirements and have 
its system available for review.
    (h) Bonding requirements. For construction or facility improvement 
contracts or subcontracts exceeding the simplified acquisition 
threshold, the awarding agency may accept the bonding policy and 
requirements of the grantee or subgrantee provided the awarding agency 
has made a determination that the awarding agency's interest is 
adequately protected. If such a determination has not been made, the 
minimum requirements shall be as follows:
    (1) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' shall consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
his bid, execute such contractual documents as may be required within 
the time specified.
    (2) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (3) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (i) Contract provisions. A grantee's and subgrantee's contracts must 
contain provisions in paragraph (i) of this section. Federal agencies 
are permitted to require changes, remedies, changed conditions, access 
and records retention, suspension of work, and other clauses approved by 
the Office of Federal Procurement Policy.
    (1) Administrative, contractual, or legal remedies in instances 
where contractors violate or breach contract terms, and provide for such 
sanctions and penalties as may be appropriate. (Contracts more than the 
simplified acquisition threshold)
    (2) Termination for cause and for convenience by the grantee or 
subgrantee including the manner by which it will be effected and the 
basis for settlement. (All contracts in excess of $10,000)
    (3) Compliance with Executive Order 11246 of September 24, 1965, 
entitled ``Equal Employment Opportunity,'' as amended by Executive Order 
11375 of October 13, 1967, and as supplemented in Department of Labor 
regulations (41

[[Page 224]]

CFR chapter 60). (All construction contracts awarded in excess of 
$10,000 by grantees and their contractors or subgrantees)
    (4) Compliance with the Copeland ``Anti-Kickback'' Act (18 U.S.C. 
874) as supplemented in Department of Labor regulations (29 CFR Part 3). 
(All contracts and subgrants for construction or repair)
    (5) Compliance with the Davis-Bacon Act (40 U.S.C. 276a to 276a-7) 
as supplemented by Department of Labor regulations (29 CFR Part 5). 
(Construction contracts in excess of $2000 awarded by grantees and 
subgrantees when required by Federal grant program legislation)
    (6) Compliance with Sections 103 and 107 of the Contract Work Hours 
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by 
Department of Labor regulations (29 CFR Part 5). (Construction contracts 
awarded by grantees and subgrantees in excess of $2000, and in excess of 
$2500 for other contracts which involve the employment of mechanics or 
laborers)
    (7) Notice of awarding agency requirements and regulations 
pertaining to reporting.
    (8) Notice of awarding agency requirements and regulations 
pertaining to patent rights with respect to any discovery or invention 
which arises or is developed in the course of or under such contract.
    (9) Awarding agency requirements and regulations pertaining to 
copyrights and rights in data.
    (10) Access by the grantee, the subgrantee, the Federal grantor 
agency, the Comptroller General of the United States, or any of their 
duly authorized representatives to any books, documents, papers, and 
records of the contractor which are directly pertinent to that specific 
contract for the purpose of making audit, examination, excerpts, and 
transcriptions.
    (11) Retention of all required records for three years after 
grantees or subgrantees make final payments and all other pending 
matters are closed.
    (12) Compliance with all applicable standards, orders, or 
requirements issued under section 306 of the Clean Air Act (42 U.S.C. 
1857(h)), section 508 of the Clean Water Act (33 U.S.C. 1368), Executive 
Order 11738, and Environmental Protection Agency regulations (40 CFR 
part 15). (Contracts, subcontracts, and subgrants of amounts in excess 
of $100,000).
    (13) Mandatory standards and policies relating to energy efficiency 
which are contained in the state energy conservation plan issued in 
compliance with the Energy Policy and Conservation Act (Pub. L. 94-163, 
89 Stat. 871).

[53 FR 8048, 8087, Mar. 11, 1988, as amended at 60 FR 19639, 19642, Apr. 
19, 1995]



Sec. 24.37  Subgrants.

    (a) States. States shall follow state law and procedures when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. States shall:
    (1) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations;
    (2) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statute and regulation;
    (3) Ensure that a provision for compliance with Sec. 24.42 is placed 
in every cost reimbursement subgrant; and
    (4) Conform any advances of grant funds to subgrantees substantially 
to the same standards of timing and amount that apply to cash advances 
by Federal agencies.
    (b) All other grantees. All other grantees shall follow the 
provisions of this part which are applicable to awarding agencies when 
awarding and administering subgrants (whether on a cost reimbursement or 
fixed amount basis) of financial assistance to local and Indian tribal 
governments. Grantees shall:
    (1) Ensure that every subgrant includes a provision for compliance 
with this part;
    (2) Ensure that every subgrant includes any clauses required by 
Federal statute and executive orders and their implementing regulations; 
and
    (3) Ensure that subgrantees are aware of requirements imposed upon 
them by Federal statutes and regulations.

[[Page 225]]

    (c) Exceptions. By their own terms, certain provisions of this part 
do not apply to the award and administration of subgrants:
    (1) Section 24.10;
    (2) Section 24.11;
    (3) The letter-of-credit procedures specified in Treasury 
Regulations at 31 CFR Part 205, cited in Sec. 24.21; and
    (4) Section 24.50.

              Reports, Records, Retention, and Enforcement



Sec. 24.40  Monitoring and reporting program performance.

    (a) Monitoring by grantees. Grantees are responsible for managing 
the day-to-day operations of grant and subgrant supported activities. 
Grantees must monitor grant and subgrant supported activities to assure 
compliance with applicable Federal requirements and that performance 
goals are being achieved. Grantee monitoring must cover each program, 
function or activity.
    (b) Nonconstruction performance reports. The Federal agency may, if 
it decides that performance information available from subsequent 
applications contains sufficient information to meet its programmatic 
needs, require the grantee to submit a performance report only upon 
expiration or termination of grant support. Unless waived by the Federal 
agency this report will be due on the same date as the final Financial 
Status Report.
    (1) Grantees shall submit annual performance reports unless the 
awarding agency requires quarterly or semi-annual reports. However, 
performance reports will not be required more frequently than quarterly. 
Annual reports shall be due 90 days after the grant year, quarterly or 
semi-annual reports shall be due 30 days after the reporting period. The 
final performance report will be due 90 days after the expiration or 
termination of grant support. If a justified request is submitted by a 
grantee, the Federal agency may extend the due date for any performance 
report. Additionally, requirements for unnecessary performance reports 
may be waived by the Federal agency.
    (2) Performance reports will contain, for each grant, brief 
information on the following:
    (i) A comparison of actual accomplishments to the objectives 
established for the period. Where the output of the project can be 
quantified, a computation of the cost per unit of output may be required 
if that information will be useful.
    (ii) The reasons for slippage if established objectives were not 
met.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (3) Grantees will not be required to submit more than the original 
and two copies of performance reports.
    (4) Grantees will adhere to the standards in this section in 
prescribing performance reporting requirements for subgrantees.
    (c) Construction performance reports. For the most part, on-site 
technical inspections and certified percentage-of-completion data are 
relied on heavily by Federal agencies to monitor progress under 
construction grants and subgrants. The Federal agency will require 
additional formal performance reports only when considered necessary, 
and never more frequently than quarterly.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates which have significant impact upon the grant 
or subgrant supported activity. In such cases, the grantee must inform 
the Federal agency as soon as the following types of conditions become 
known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the award. This disclosure 
must include a statement of the action taken, or contemplated, and any 
assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more 
beneficial results than originally planned.
    (e) Federal agencies may make site visits as warranted by program 
needs.
    (f) Waivers, extensions. (1) Federal agencies may waive any 
performance

[[Page 226]]

report required by this part if not needed.
    (2) The grantee may waive any performance report from a subgrantee 
when not needed. The grantee may extend the due date for any performance 
report from a subgrantee if the grantee will still be able to meet its 
performance reporting obligations to the Federal agency.



Sec. 24.41  Financial reporting.

    (a) General. (1) Except as provided in paragraphs (a) (2) and (5) of 
this section, grantees will use only the forms specified in paragraphs 
(a) through (e) of this section, and such supplementary or other forms 
as may from time to time be authorized by OMB, for:
    (i) Submitting financial reports to Federal agencies, or
    (ii) Requesting advances or reimbursements when letters of credit 
are not used.
    (2) Grantees need not apply the forms prescribed in this section in 
dealing with their subgrantees. However, grantees shall not impose more 
burdensome requirements on subgrantees.
    (3) Grantees shall follow all applicable standard and supplemental 
Federal agency instructions approved by OMB to the extend required under 
the Paperwork Reduction Act of 1980 for use in connection with forms 
specified in paragraphs (b) through (e) of this section. Federal 
agencies may issue substantive supplementary instructions only with the 
approval of OMB. Federal agencies may shade out or instruct the grantee 
to disregard any line item that the Federal agency finds unnecessary for 
its decisionmaking purposes.
    (4) Grantees will not be required to submit more than the original 
and two copies of forms required under this part.
    (5) Federal agencies may provide computer outputs to grantees to 
expedite or contribute to the accuracy of reporting. Federal agencies 
may accept the required information from grantees in machine usable 
format or computer printouts instead of prescribed forms.
    (6) Federal agencies may waive any report required by this section 
if not needed.
    (7) Federal agencies may extend the due date of any financial report 
upon receiving a justified request from a grantee.
    (b) Financial Status Report--(1) Form. Grantees will use Standard 
Form 269 or 269A, Financial Status Report, to report the status of funds 
for all nonconstruction grants and for construction grants when required 
in accordance with Sec. 24.41(e)(2)(iii) of this section.
    (2) Accounting basis. Each grantee will report program outlays and 
program income on a cash or accrual basis as prescribed by the awarding 
agency. If the Federal agency requires accrual information and the 
grantee's accounting records are not normally kept on the accural basis, 
the grantee shall not be required to convert its accounting system but 
shall develop such accrual information through and analysis of the 
documentation on hand.
    (3) Frequency. The Federal agency may prescribe the frequency of the 
report for each project or program. However, the report will not be 
required more frequently than quarterly. If the Federal agency does not 
specify the frequency of the report, it will be submitted annually. A 
final report will be required upon expiration or termination of grant 
support.
    (4) Due date. When reports are required on a quarterly or semiannual 
basis, they will be due 30 days after the reporting period. When 
required on an annual basis, they will be due 90 days after the grant 
year. Final reports will be due 90 days after the expiration or 
termination of grant support.
    (c) Federal Cash Transactions Report--(1) Form. (i) For grants paid 
by letter or credit, Treasury check advances or electronic transfer of 
funds, the grantee will submit the Standard Form 272, Federal Cash 
Transactions Report, and when necessary, its continuation sheet, 
Standard Form 272a, unless the terms of the award exempt the grantee 
from this requirement.
    (ii) These reports will be used by the Federal agency to monitor 
cash advanced to grantees and to obtain disbursement or outlay 
information for each grant from grantees. The format

[[Page 227]]

of the report may be adapted as appropriate when reporting is to be 
accomplished with the assistance of automatic data processing equipment 
provided that the information to be submitted is not changed in 
substance.
    (2) Forecasts of Federal cash requirements. Forecasts of Federal 
cash requirements may be required in the ``Remarks'' section of the 
report.
    (3) Cash in hands of subgrantees. When considered necessary and 
feasible by the Federal agency, grantees may be required to report the 
amount of cash advances in excess of three days' needs in the hands of 
their subgrantees or contractors and to provide short narrative 
explanations of actions taken by the grantee to reduce the excess 
balances.
    (4) Frequency and due date. Grantees must submit the report no later 
than 15 working days following the end of each quarter. However, where 
an advance either by letter of credit or electronic transfer of funds is 
authorized at an annualized rate of one million dollars or more, the 
Federal agency may require the report to be submitted within 15 working 
days following the end of each month.
    (d) Request for advance or reimbursement--(1) Advance payments. 
Requests for Treasury check advance payments will be submitted on 
Standard Form 270, Request for Advance or Reimbursement. (This form will 
not be used for drawdowns under a letter of credit, electronic funds 
transfer or when Treasury check advance payments are made to the grantee 
automatically on a predetermined basis.)
    (2) Reimbursements. Requests for reimbursement under nonconstruction 
grants will also be submitted on Standard Form 270. (For reimbursement 
requests under construction grants, see paragraph (e)(1) of this 
section.)
    (3) The frequency for submitting payment requests is treated in 
Sec. 24.41(b)(3).
    (e) Outlay report and request for reimbursement for construction 
programs. (1) Grants that support construction activities paid by 
reimbursement method.
    (i) Requests for reimbursement under construction grants will be 
submitted on Standard Form 271, Outlay Report and Request for 
Reimbursement for Construction Programs. Federal agencies may, however, 
prescribe the Request for Advance or Reimbursement form, specified in 
Sec. 24.41(d), instead of this form.
    (ii) The frequency for submitting reimbursement requests is treated 
in Sec. 24.41(b)(3).
    (2) Grants that support construction activities paid by letter of 
credit, electronic funds transfer or Treasury check advance.
    (i) When a construction grant is paid by letter of credit, 
electronic funds transfer or Treasury check advances, the grantee will 
report its outlays to the Federal agency using Standard Form 271, Outlay 
Report and Request for Reimbursement for Construction Programs. The 
Federal agency will provide any necessary special instruction. However, 
frequency and due date shall be governed by Sec. 24.41(b) (3) and (4).
    (ii) When a construction grant is paid by Treasury check advances 
based on periodic requests from the grantee, the advances will be 
requested on the form specified in Sec. 24.41(d).
    (iii) The Federal agency may substitute the Financial Status Report 
specified in Sec. 24.41(b) for the Outlay Report and Request for 
Reimbursement for Construction Programs.
    (3) Accounting basis. The accounting basis for the Outlay Report and 
Request for Reimbursement for Construction Programs shall be governed by 
Sec. 24.41(b)(2).



Sec. 24.42  Retention and access requirements for records.

    (a) Applicability. (1) This section applies to all financial and 
programmatic records, supporting documents, statistical records, and 
other records of grantees or subgrantees which are:
    (i) Required to be maintained by the terms of this part, program 
regulations or the grant agreement, or
    (ii) Otherwise reasonably considered as pertinent to program 
regulations or the grant agreement.
    (2) This section does not apply to records maintained by contractors 
or subcontractors. For a requirement to place a provision concerning 
records in certain kinds of contracts, see Sec. 24.36(i)(10).

[[Page 228]]

    (b) Length of retention period. (1) Except as otherwise provided, 
records must be retained for three years from the starting date 
specified in paragraph (c) of this section.
    (2) If any litigation, claim, negotiation, audit or other action 
involving the records has been started before the expiration of the 3-
year period, the records must be retained until completion of the action 
and resolution of all issues which arise from it, or until the end of 
the regular 3-year period, whichever is later.
    (3) To avoid duplicate recordkeeping, awarding agencies may make 
special arrangements with grantees and subgrantees to retain any records 
which are continuously needed for joint use. The awarding agency will 
request transfer of records to its custody when it determines that the 
records possess long-term retention value. When the records are 
transferred to or maintained by the Federal agency, the 3-year retention 
requirement is not applicable to the grantee or subgrantee.
    (c) Starting date of retention period--(1) General. When grant 
support is continued or renewed at annual or other intervals, the 
retention period for the records of each funding period starts on the 
day the grantee or subgrantee submits to the awarding agency its single 
or last expenditure report for that period. However, if grant support is 
continued or renewed quarterly, the retention period for each year's 
records starts on the day the grantee submits its expenditure report for 
the last quarter of the Federal fiscal year. In all other cases, the 
retention period starts on the day the grantee submits its final 
expenditure report. If an expenditure report has been waived, the 
retention period starts on the day the report would have been due.
    (2) Real property and equipment records. The retention period for 
real property and equipment records starts from the date of the 
disposition or replacement or transfer at the direction of the awarding 
agency.
    (3) Records for income transactions after grant or subgrant support. 
In some cases grantees must report income after the period of grant 
support. Where there is such a requirement, the retention period for the 
records pertaining to the earning of the income starts from the end of 
the grantee's fiscal year in which the income is earned.
    (4) Indirect cost rate proposals, cost allocations plans, etc. This 
paragraph applies to the following types of documents, and their 
supporting records: indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (i) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the grantee) to form the basis for negotiation of the rate, then the 3-
year retention period for its supporting records starts from the date of 
such submission.
    (ii) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the grantee) for negotiation purposes, then the 3-year 
retention period for the proposal plan, or computation and its 
supporting records starts from end of the fiscal year (or other 
accounting period) covered by the proposal, plan, or other computation.
    (d) Substitution of microfilm. Copies made by microfilming, 
photocopying, or similar methods may be substituted for the original 
records.
    (e) Access to records--(1) Records of grantees and subgrantees. The 
awarding agency and the Comptroller General of the United States, or any 
of their authorized representatives, shall have the right of access to 
any pertinent books, documents, papers, or other records of grantees and 
subgrantees which are pertinent to the grant, in order to make audits, 
examinations, excerpts, and transcripts.
    (2) Expiration of right of access. The rights of access in this 
section must not be limited to the required retention period but shall 
last as long as the records are retained.
    (f) Restrictions on public access. The Federal Freedom of 
Information Act (5 U.S.C. 552) does not apply to records unless required 
by Federal, State, or local law, grantees and subgrantees are

[[Page 229]]

not required to permit public access to their records.



Sec. 24.43  Enforcement.

    (a) Remedies for noncompliance. If a grantee or subgrantee 
materially fails to comply with any term of an award, whether stated in 
a Federal statute or regulation, an assurance, in a State plan or 
application, a notice of award, or elsewhere, the awarding agency may 
take one or more of the following actions, as appropriate in the 
circumstances:
    (1) Temporarily withhold cash payments pending correction of the 
deficiency by the grantee or subgrantee or more severe enforcement 
action by the awarding agency,
    (2) Disallow (that is, deny both use of funds and matching credit 
for) all or part of the cost of the activity or action not in 
compliance,
    (3) Wholly or partly suspend or terminate the current award for the 
grantee's or subgrantee's program,
    (4) Withhold further awards for the program, or
    (5) Take other remedies that may be legally available.
    (b) Hearings, appeals. In taking an enforcement action, the awarding 
agency will provide the grantee or subgrantee an opportunity for such 
hearing, appeal, or other administrative proceeding to which the grantee 
or subgrantee is entitled under any statute or regulation applicable to 
the action involved.
    (c) Effects of suspension and termination. Costs of grantee or 
subgrantee resulting from obligations incurred by the grantee or 
subgrantee during a suspension or after termination of an award are not 
allowable unless the awarding agency expressly authorizes them in the 
notice of suspension or termination or subsequently. Other grantee or 
subgrantee costs during suspension or after termination which are 
necessary and not reasonably avoidable are allowable if:
    (1) The costs result from obligations which were properly incurred 
by the grantee or subgrantee before the effective date of suspension or 
termination, are not in anticipation of it, and, in the case of a 
termination, are noncancellable, and,
    (2) The costs would be allowable if the award were not suspended or 
expired normally at the end of the funding period in which the 
termination takes effect.
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude grantee or subgrantee from being subject to 
``Debarment and Suspension'' under E.O. 12549 (see Sec. 24.35).



Sec. 24.44  Termination for convenience.

    Except as provided in Sec. 24.43 awards may be terminated in whole 
or in part only as follows:
    (a) By the awarding agency with the consent of the grantee or 
subgrantee in which case the two parties shall agree upon the 
termination conditions, including the effective date and in the case of 
partial termination, the portion to be terminated, or
    (b) By the grantee or subgrantee upon written notification to the 
awarding agency, setting forth the reasons for such termination, the 
effective date, and in the case of partial termination, the portion to 
be terminated. However, if, in the case of a partial termination, the 
awarding agency determines that the remaining portion of the award will 
not accomplish the purposes for which the award was made, the awarding 
agency may terminate the award in its entirety under either Sec. 24.43 
or paragraph (a) of this section.



                 Subpart D--After-the-Grant Requirements



Sec. 24.50  Closeout.

    (a) General. The Federal agency will close out the award when it 
determines that all applicable administrative actions and all required 
work of the grant has been completed.
    (b) Reports. Within 90 days after the expiration or termination of 
the grant, the grantee must submit all financial, performance, and other 
reports required as a condition of the grant. Upon request by the 
grantee, Federal agencies may extend this timeframe. These may include 
but are not limited to:
    (1) Final performance or progress report.

[[Page 230]]

    (2) Financial Status Report (SF 269) or Outlay Report and Request 
for Reimbursement for Construction Programs (SF-271) (as applicable).
    (3) Final request for payment (SF-270) (if applicable).
    (4) Invention disclosure (if applicable).
    (5) Federally-owned property report:

In accordance with Sec. 24.32(f), a grantee must submit an inventory of 
all federally owned property (as distinct from property acquired with 
grant funds) for which it is accountable and request disposition 
instructions from the Federal agency of property no longer needed.
    (c) Cost adjustment. The Federal agency will, within 90 days after 
receipt of reports in paragraph (b) of this section, make upward or 
downward adjustments to the allowable costs.
    (d) Cash adjustments. (1) The Federal agency will make prompt 
payment to the grantee for allowable reimbursable costs.
    (2) The grantee must immediately refund to the Federal agency any 
balance of unobligated (unencumbered) cash advanced that is not 
authorized to be retained for use on other grants.



Sec. 24.51  Later disallowances and adjustments.

    The closeout of a grant does not affect:
    (a) The Federal agency's right to disallow costs and recover funds 
on the basis of a later audit or other review;
    (b) The grantee's obligation to return any funds due as a result of 
later refunds, corrections, or other transactions;
    (c) Records retention as required in Sec. 24.42;
    (d) Property management requirements in Secs. 24.31 and 24.32; and
    (e) Audit requirements in Sec. 24.26.



Sec. 24.52  Collection of amounts due.

    (a) Any funds paid to a grantee in excess of the amount to which the 
grantee is finally determined to be entitled under the terms of the 
award constitute a debt to the Federal Government. If not paid within a 
reasonable period after demand, the Federal agency may reduce the debt 
by:
    (1) Making an adminstrative offset against other requests for 
reimbursements,
    (2) Withholding advance payments otherwise due to the grantee, or
    (3) Other action permitted by law.
    (b) Except where otherwise provided by statutes or regulations, the 
Federal agency will charge interest on an overdue debt in accordance 
with the Federal Claims Collection Standards (4 CFR Chapter II). The 
date from which interest is computed is not extended by litigation or 
the filing of any form of appeal.

Subpart E--Entitlements [Reserved]



PART 25--PROGRAM--Table of Contents




                          Fraud Civil Remedies

Sec.
25.1  Basis and purpose.
25.2  Definitions.
25.3  Basis for civil penalties and assessments.
25.4  Investigation.
25.5  Review by the reviewing official.
25.6  Prerequisites for issuing a complaint.
25.7  Complaint.
25.8  Service of complaint.
25.9  Answer.
25.10  Default upon failure to file an answer.
25.11  Referral of complaint and answer to the ALJ.
25.12  Notice of hearing.
25.13  Parties to the hearing.
25.14  Separation of functions.
25.15  Ex parte contacts.
25.16  Disqualification of reviewing official or ALJ.
25.17  Rights of parties.
25.18  Authority of the ALJ.
25.19  Prehearing conferences.
25.20  Disclosure of documents.
25.21  Discovery.
25.22  Exchange of witness lists, statements, and exhibits.
25.23  Subpoena for attendance at hearing.
25.24  Protective order.
25.25  Fees.
25.26  Form, filing and service of papers.
25.27  Computation of time.
25.28  Motions.
25.29  Sanctions.
25.30  The hearing and burden of proof.
25.31  Determining the amount of penalties and assessments.
25.32  Location of hearing.
25.33  Witnesses.
25.34  Evidence.
25.35  The record.
25.36  Post-hearing briefs.
25.37  Initial decision.
25.38  Reconsideration of initial decision.

[[Page 231]]

25.39  Appeal to authority head.
25.40  Stays ordered by the Department of Justice.
25.41  Stay pending appeal.
25.42  Judicial review.
25.43  Collection of civil penalties and assessments.
25.44  Right to administrative offset.
25.45  Deposit in Treasury of United States.
25.46  Compromise or settlement.
25.47  Limitations.

    Authority: Secs. 6101-6104, Pub. L. 99-509, 100 Stat. 1874 (31 
U.S.C. 3801-3812); Sec. 4, as amended, and sec. 5, Pub. L. 101-410, 104 
Stat. 890 (28 U.S.C. 2461 note); Pub. L. 104-134, 110 Stat. 1321, 28 
U.S.C. 2461 note.

    Source: 55 FR 47854, Nov. 16, 1990, unless otherwise noted.

                          Fraud Civil Remedies



Sec. 25.1  Basis and purpose.

    (a) Basis. This part implements the Program Fraud Civil Remedies Act 
of 1986, Public Law 99-509, section 6101-6104, 100 Stat. 1874 (October 
21, 1986), to be codified at 31 U.S.C. 3801-3812. 31 U.S.C. 3809 of the 
statute requires each authority head to promulgate regulations necessary 
to implement the provisions of the statute.
    (b) Purpose. This part (1) establishes administrative procedures for 
imposing civil penalties and assessments against persons who make, 
submit, or present, or cause to be made, submitted, or presented, false, 
fictitious, or fraudulent claims or written statements to authorities or 
to their agents, and (2) specifies the hearing and appeal rights of 
persons subject to allegations of liability for such penalties and 
assessments.



Sec. 25.2  Definitions.

    ALJ means an Administrative Law Judge in the authority appointed 
pursuant to 5 U.S.C. 3105 or detailed to the authority pursuant to 5 
U.S.C. 3344.
    Authority means the Department of Commerce.
    Authority head means the Secretary of the Department of Commerce, or 
designee.
    Benefit means, except as the context otherwise requires, anything of 
value, including but not limited to any advantage, preference, 
privilege, license, permit, favorable decision, ruling, status, or loan 
guarantee.
    Claim means any request, demand, or submission--
    (a) Made to the authority for property, services, or money 
(including money representing grants, loans, insurance, or benefits);
    (b) Made to a recipient of property, services, or money from the 
authority or to a party to a contract with the authority--
    (1) For property or services if the United States--
    (i) Provided such property or services;
    (ii) Provided any portion of the funds for the purchase of such 
property or services; or
    (iii) Will reimburse such recipient or party for the purchase of 
such property or services; or
    (2) For the payment of money (including money representing grants, 
loans, insurance, or benefits) if the United States--
    (i) Provided any portion of the money requested or demanded; or
    (ii) Will reimburse such recipient or party for any portion of the 
money paid on such request or demand; or
    (c) Made to the authority which has the effect of decreasing an 
obligation to pay or account for property, services, or money.
    Complaint means the administrative complaint served by the reviewing 
official on the respondent under Sec. 25.7.
    Department means the Department of Commerce.
    Government means the United States Government.
    Individual means a natural person.
    Initial decision means the written decision of the ALJ required by 
Secs. 25.10 or 25.37, and includes a revised initial decision issued 
following a remand or a motion for reconsideration.
    Investigating official means the Inspector General of the Department 
of Commerce or an officer or employee of the Office of the Inspector 
General designated by the Inspector General and serving in a position 
for which the rate of basic pay is not less than the minimum rate of 
basic pay for grade GS-16 under the General Schedule.
    Knows or has reason to know, means that a person, with respect to a 
claim or statement--

[[Page 232]]

    (a) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (b) Acts in deliberative ignorance of the truth or falsity of the 
claim or statement; or
    (c) Acts in reckless disregard of the truth or falsity of the claim 
or statement.
    Makes, wherever it appears, shall include the terms presents, 
submits, and causes to be made, presented, or submitted. As the context 
requires, making or made, shall likewise include the corresponding forms 
of such terms.
    Person means any individual, partnership, corporation, association, 
or private organization and includes the plural of that term.
    Representative means any attorney who is a member in good standing 
of the bar of any State, Territory, or possession of the United States 
or of the District of Columbia or the Commonwealth of Puerto Rico.
    Respondent means any person alleged in a complaint under Sec. 25.7 
to be liable for a civil penalty or assessment under Sec. 25.3.
    Reviewing official means the General Counsel of the Department or 
his or her designee who is serving in a position for which the rate of 
basic pay is not less than the minimum rate of basic pay for grade GS-16 
under the General Schedule.
    Statement means any representation, certification, affirmation, 
document, record, or accounting or bookkeeping entry made--
    (a) With respect to a claim or to obtain the approval or payment of 
a claim (including relating to eligibility to make a claim); or
    (b) With respect to (including relating to eligibility for)--
    (1) A contract with, or a bid or proposal for a contract with; or
    (2) A grant, loan, or benefit from,

the authority, or any State, political subdivision of a State, or other 
party, if the United States Government provides any portion of the money 
or property under such contract or for such grant, loan, or benefit, or 
if the Government will reimburse such State, political subdivision, or 
party for any portion of the money or property under such contract or 
for such grant, loan, or benefit.



Sec. 25.3  Basis for civil penalties and assessments.

    (a) Claims. (1) Any person who makes a claim that the person knows 
or has reason to know--
    (i) Is false, fictitious, or fraudulent;
    (ii) Includes, or is supported by, any written statement which 
asserts a material fact which is false, fictitious, or fraudulent;
    (iii) Includes, or is supported by, any written statement that--
    (A) Omits a material fact;
    (B) Is false, fictitious, or fraudulent as a result of such 
omission; and
    (C) Is a statement in which the person making such statement has a 
duty to include such material fact; or
    (iv) Is for payment for the provision of property or services which 
the person has not provided as claimed, shall be subject, in addition to 
any other remedy that may be prescribed by law, to a civil penalty of 
not more than $5,000 for each such claim made on or before October 23, 
1996, and of not more than $5,500 for each such claim made after October 
23, 1996.
    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim.
    (3) A claim shall be considered made to the authority, recipient, or 
party when such claim is actually made to an agent, fiscal intermediary, 
or other entity, including any State or political subdivision thereof, 
acting for or on behalf of the authority, recipient, or party.
    (4) Each claim for property, services, or money is subject to a 
civil penalty regardless of whether such property, services, or money is 
actually delivered or paid.
    (5) If the Government has made payment (including transferred 
property or provided services) or a claim, a person subject to a civil 
penalty under paragraph (a)(1) of this section shall also be subject to 
an assessment of not more than twice the amount of such claim or that 
portion thereof that is

[[Page 233]]

determined to be in violation of paragraph (a)(1) of the section. Such 
assessment shall be in lieu of damages sustained by the Government 
because of such claim.
    (b) Statements. (1) Any person who makes a written statement that--
    (i) The person knows or has reason to know--
    (A) Asserts a material fact which is false, fictitious, or 
fraudulent; or
    (B) Is false, fictitious, or fraudulent because it omits a material 
fact that the person making the statement has a duty to include in such 
statement; and
    (ii) Contains, or is accompanied by, an express certification or 
affirmation of the truthfulness and accuracy of the contents of the 
statement, shall be subject, in addition to any other remedy that may be 
prescribed by law, to a civil penalty of not more than $5,000 for each 
such statement made on or before October 23, 1996, and of not more than 
$5,500 for each such statement made after October 23, 1996.
    (2) Each written representation, certification, or affirmation 
constitutes a separate statement.
    (3) A statement shall be considered made to the authority when such 
statement is actually made to an agent, fiscal intermediary, or other 
entity, including any State or political subdivision thereof, acting for 
or on behalf of the authority.
    (c) No proof of specific intent to defraud is required to establish 
liability under this section.
    (d) In any case in which it is determined that more than one person 
is liable for making a claim or statement under this section, each such 
person may be held liable for a civil penalty.
    (e) In any case in which it is determined that more than one person 
is liable for making a claim under this section on which the Government 
has made payment (including transferred property or provide services), 
an assessment may be imposed against any such person or jointly and 
severally against any combination of such persons.

[55 FR 47854, Nov. 16, 1990, as amended at 61 FR 55094, Oct. 24, 1996]



Sec. 25.4  Investigation.

    (a) If an investigating official concludes that a subpoena pursuant 
to the authority conferred by 31 U.S.C. 3804(a) is warranted--
    (1) The subpoena so issued shall notify the person to whom it is 
addressed of the authority under which the subpoena is issued and shall 
identify the records or documents sought;
    (2) The investigating official may designate a person to act on his 
or her behalf to receive the documents sought; and
    (3) The person receiving such subpoena shall be required to tender 
to the investigating official, or the person designated to receive the 
documents, a certification that--
    (i) The documents sought have been produced;
    (ii) Such documents are not available and the reasons therefore; or
    (iii) Such documents, suitably identified, have been withheld based 
upon the assertion of an identified privilege.
    (b) If the investigating official concludes that an action under the 
Program Fraud Civil Remedies Act may be warranted, the investigating 
official shall submit a report containing the findings and conclusions 
of such investigation to the reviewing official.
    (c) Nothing in this section shall preclude or limit an investigating 
official's discretion to refer allegations directly to the Department of 
Justice for suit under the False Claims Act or other civil relief, or to 
defer or postpone a report or referral to avoid interference with a 
criminal investigation or prosecution.
    (d) Nothing in this section modifies any responsibility of an 
investigating official to report violations of criminal law to the 
Attorney General.



Sec. 25.5  Review by the reviewing official.

    (a) If, based on the report of the investigating official under 
Sec. 25.4(b), the reviewing official determines that there is adequate 
evidence to believe that a person is liable under Sec. 25.3, the 
reviewing official shall transmit to the Attorney General a written 
notice of the reviewing official's intention to issue a complaint under 
Sec. 25.7.
    (b) Such notice shall include--

[[Page 234]]

    (1) A statement of the reviewing official's reasons for issuing a 
complaint;
    (2) A statement specifying the evidence that supports the 
allegations of liability;
    (3) A description of the claims or statements upon which the 
allegations of liability are based;
    (4) An estimate of the amount of money, or the value of property, 
services, or other benefits, requested or demanded in violation of 
Sec. 25.3 of this part;
    (5) A statement of any exculpatory or mitigating circumstances that 
may relate to the claims or statements known by the reviewing official 
or the investigating official; and
    (6) A statement that there is a reasonable prospect of collecting an 
appropriate amount of penalties and assessments. Such a statement may be 
based upon information then known or an absence of any information 
indicating that the person may be unable to pay such an amount.



Sec. 25.6  Prerequisites for issuing a complaint.

    (a) The reviewing official may issue a complaint under Sec. 25.7 
only if--
    (1) The Department of Justice approved the issuance of a complaint 
in a written statement described in 31 U.S.C. 3803(b)(1), and
    (2) In the case of allegations of liability under Sec. 25.3(a) with 
respect to a claim, the reviewing official determines that, with respect 
to such claim or a group of related claims submitted at the same time 
such claim is submitted (as defined in paragraph (b) of this section), 
the amount of money, or the value of property or services, demanded or 
requested in violation of Sec. 25.3(a) does not exceed $150,000.
    (b) For the purposes of this section, a related group of claims 
submitted at the same time shall include only those claims arising from 
the same transaction (e.g., grant, loan, application, or contract) that 
are submitted simultaneously as part of a single request, demand, or 
submission.
    (c) Nothing in this section shall be construed to limit the 
reviewing official's authority to join in a single complaint against a 
person claims that are unrelated or were not submitted simultaneously, 
regardless of the amount of money, or the value of property or services, 
demanded or requested.



Sec. 25.7  Complaint.

    (a) On or after the date the Department of Justice approves the 
issuance of a complaint in accordance with 31 U.S.C. 3803(b)(1), the 
reviewing official may serve a complaint on the respondent, as provided 
in Sec. 25.8.
    (b) The complaint shall state--
    (1) The allegations of liability against the respondent, including 
the statutory basis for liability, an identification of the claims or 
statements that are the basis for the alleged liability, and the reasons 
why liability allegedly arises from such claims or statements;
    (2) The maximum amount of penalties and assessments for which the 
respondent may be held liable;
    (3) Instructions for filing an answer to request a hearing, 
including a specific statement of the respondent's right to request a 
hearing by filing an answer and to be represented by a representative; 
and
    (4) That failure to file an answer within 30 days of service of the 
complaint will result in the imposition of the maximum amount of 
penalties and assessments without right to appeal.
    (c) At the same time the reviewing official serves the complaint, he 
or she shall serve the respondent with a copy of these regulations.



Sec. 25.8  Service of complaint.

    (a) Service of a complaint must be made by certified or registered 
mail or by delivery in any manner authorized by Rule 4(d) of the Federal 
Rules of Civil Procedure.
    (b) Proof of service, stating the name and address of the person on 
whom the complaint was served, and the manner and date of service, may 
be made by--
    (1) Affidavit of the individual making service;
    (2) An acknowledged United States Postal Service return receipt 
card; or
    (3) Written acknowledgment of the respondent or his or her 
representative.



Sec. 25.9  Answer.

    (a) The respondent may request a hearing by filing an answer with 
the

[[Page 235]]

reviewing official within 30 days of service of the complaint. An answer 
shall be deemed to be a request for hearing.
    (b) In the answer, the respondent--
    (1) Shall admit or deny each of the allegations of liability made in 
the complaint;
    (2) Shall state any defense on which the respondent intends to rely;
    (3) May state any reasons why the respondent contends that the 
penalties and assessments should be less than the statutory maximum; and
    (4) Shall state the name, address, and telephone number of the 
person authorized by the respondent to act as respondent's 
representative, if any.



Sec. 25.10  Default upon failure to file an answer.

    (a) If the respondent does not file an answer within the time 
prescribed in Sec. 25.9(a), the reviewing official may refer the 
complaint to the ALJ along with the proof of service, as provided in 
Sec. 25.8(b).
    (b) Upon the referral of the complaint, the ALJ shall promptly serve 
on the respondent in the manner prescribed in Sec. 25.8, a notice that 
an initial decision will be issued under this section.
    (c) The ALJ shall assume the facts alleged in the complaint to be 
true and, if such facts establish liability under Sec. 25.3, the ALJ 
shall issue an initial decision imposing the maximum amount of penalties 
and assessments allowed under the statute.
    (d) Except as otherwise provided in this section, by failing to file 
a timely answer, the respondent waives any right to further review of 
the penalties and assessments imposed under paragraph (c) of this 
section, and the initial decision shall become final binding upon the 
parties 30 days after it is issued.
    (e) If, before such an initial decision becomes final, the 
respondent files motion with the ALJ seeking to reopen on the grounds 
that extraordinary circumstances prevented the respondent from filing an 
answer, the initial decision shall be stayed pending the ALJ's decision 
on the motion.
    (f) If, on such motion, the respondent can demonstrate extraordinary 
circumstances excusing the failure to file a timely answer, the ALJ 
shall withdraw the initial decision in paragraph (c) of this section, if 
such a decision has been issued, and shall grant the respondent an 
opportunity to answer the complaint.
    (g) A decision of the ALJ denying a respondent's motion under 
paragraph (e) of this section is not subject to reconsideration under 
Sec. 25.38.
    (h) The respondent may appeal to the authority head the decision 
denying a motion to reopen by filing a notice of appeal with the 
authority head within 15 days after the ALJ denies the motion. The 
timely filing of a notice of appeal shall stay the initial decision 
until the authority head decides the issue.
    (i) If the respondent files a timely notice of appeal with the 
authority head, the ALJ shall forward the record of the proceeding to 
the authority head.
    (j) The authority head shall decide expeditiously whether 
extraordinary circumstances excuse the respondent's failure to file a 
timely answer based solely on the record before the ALJ.
    (k) If the authority head decides that extraordinary circumstances 
excused the respondent's failure to file a timely answer, the authority 
head shall remand the case of the ALJ with instructions to grant the 
respondent an opportunity to answer.
    (l) If the authority head decides that the respondent's failure to 
file a timely answer is not excused, the authority head shall reinstate 
the initial decision of the ALJ, which shall become final and binding 
upon the parties 30 days after the authority head issues such decision.



Sec. 25.11  Referral of complaint and answer to the ALJ.

    Upon receipt of an answer, the reviewing official shall file the 
complaint and answer with the ALJ.



Sec. 25.12  Notice of hearing.

    (a) When the ALJ receives the complaint and answer, the ALJ shall 
promptly serve a notice of hearing upon the respondent in the manner 
prescribed by Sec. 25.8. At the same time, the ALJ shall send a copy of 
such notice to the representative for the Government.

[[Page 236]]

    (b) Such notice shall include--
    (1) The tentative time and place, and the nature of the hearing;
    (2) The legal authority and jurisdiction under which the hearing is 
to be held;
    (3) The matters of fact and law to be asserted;
    (4) A description of the procedures for the conduct of the hearing;
    (5) The name, address, and telephone number of the representative of 
the Government and of the respondent, if any; and
    (6) Such other matters as the ALJ deems appropriate.



Sec. 25.13  Parties to the hearing.

    (a) The parties to the hearing shall be the respondent and the 
authority.
    (b) Pursuant to 31 U.S.C. 3730(c)(5), a private plaintiff under the 
False Claims Act may participate in these proceedings to the extent 
authorized by the provisions of that Act.



Sec. 25.14  Separation of functions.

    (a) The investigating official, the reviewing official, and any 
employee or agent of the authority who takes part in investigating, 
preparing, or presenting a particular case may not, in such case or a 
factually related case--
    (1) Participate in the hearing as the ALJ;
    (2) Participate or advise in the initial decision or the review of 
the initial decision by the authority head, except as a witness or a 
representative in public proceedings; or
    (3) Make the collection of penalties and assessments under 31 U.S.C. 
3806.
    (b) The ALJ shall not be responsible to, or subject to the 
supervision or direction of, the investigating official or the reviewing 
official.
    (c) The reviewing official shall, after consulting with the 
Inspector General, designate the representative for the Government, who 
shall be an attorney with either the Office of General Counsel or the 
Office of the Inspector General. The reviewing official's decision is 
final.



Sec. 25.15  Ex parte contacts.

    No party or person (except employees of the ALJ's office) shall 
communicate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec. 25.16  Disqualification of reviewing official or ALJ.

    (a) A reviewing official or ALJ in a particular case may disqualify 
himself or herself at any time.
    (b) A party may file with the ALJ a motion for disqualification of a 
reviewing official or an ALJ. Such motion shall be accompanied by an 
affidavit alleging personal bias or other reason for disqualification.
    (c) Such motion and affidavit shall be filed promptly upon the 
party's discovery of reasons requiring disqualification, or such 
objections shall be deemed waived.
    (d) Such affidavit shall state specific facts that support the 
party's belief that personal bias or other reason for disqualification 
exists and the time and circumstances of the party's discovery of such 
facts. It shall be accompanied by a certificate of the representative of 
record that it is made in good faith.
    (e) Upon the filing of such a motion and affidavit, the ALJ shall 
proceed no further in the case until he or she resolves the matter of 
disqualification in accordance with paragraph (f) of this section.
    (f)(1) If the ALJ determines that a reviewing official is 
disqualified, the ALJ shall dismiss the complaint without prejudice.
    (2) If the ALJ disqualifies himself or herself, the case shall be 
reassigned promptly to another ALJ.
    (3) If the ALJ denies a motion to disqualify, the authority head may 
determine the matter only as part of his or her review of the initial 
decision upon appeal, if any.



Sec. 25.17  Rights of parties.

    Except as otherwise limited by this part, all parties may--
    (a) Be accompanied, represented, and advised by a representative;
    (b) Participate in any conference held by the ALJ;

[[Page 237]]

    (c) Conduct discovery;
    (d) Agree to stipulations of fact or law, which shall be made part 
of the record;
    (e) Present evidence relevant to the issues at the hearing;
    (f) Present and cross-examine witnesses;
    (g) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (h) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing.



Sec. 25.18  Authority of the ALJ.

    (a) The ALJ shall conduct a fair and impartial hearing, avoid delay, 
maintain order, and assure that a record of the proceeding is made.
    (b) The ALJ has the authority to--
    (1) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of discovery;
    (8) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (9) Examine witnesses;
    (10) Receive, rule on, exclude, or limit evidence;
    (11) Upon motion of a party, take official notice of facts;
    (12) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact;
    (13) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (14) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under this part.
    (c) The ALJ does not have the authority to find Federal statutes or 
regulations invalid.



Sec. 25.19  Prehearing conferences.

    (a) The ALJ may schedule prehearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ shall schedule at least 
one prehearing conference at a reasonable time in advance of the 
hearing.
    (c) The ALJ may use prehearing conferences to discuss the following:
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement;
    (3) Stipulations and admissions of fact or as to the contents and 
authenticity of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;
    (5) Whether a party chooses to waive appearance at an oral hearing 
and to submit only documentary evidence (subject to the objection of 
other parties) and written argument;
    (6) Limitation of the number of witnesses;
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits;
    (8) Discovery;
    (9) The time and place for the hearing; and
    (10) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.
    (d) The ALJ may issue an order containing all matters agreed upon by 
the parties or ordered by the ALJ at a prehearing conference.



Sec. 25.20  Disclosure of documents.

    (a) Upon written request to the reviewing official, the respondent 
may review any relevant and material documents, transcripts, records, 
and other materials that related to the allegations set out in the 
complaint and upon which the findings and conclusions of the 
investigating official under Sec. 25.4(b) are based, unless such 
documents are subject to a privilege under Federal law. Upon payment of 
fees for duplication, the respondent may obtain copies of such 
documents.

[[Page 238]]

    (b) Upon written request to the reviewing official, the respondent 
also may obtain a copy of all exculpatory information in the possession 
of the reviewing official or investigating official relating to the 
allegations in the complaint, even if it is contained in a document that 
would otherwise be privileged. If the document would otherwise be 
privileged, only that portion containing exculpatory information must be 
disclosed.
    (c) The notice sent to the Attorney General from the reviewing 
official as described in Sec. 25.5 is not discoverable under any 
circumstances.
    (d) The respondents may file a motion to compel dosclosure of the 
documents subject to the provisions of this section. Such a motion may 
only be filed with the ALJ following the filing of an answer pursuant to 
Sec. 25.9.



Sec. 25.21  Discovery.

    (a) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying;
    (2) Requests for admissions of the authenticity of any relevant 
document or of the truth of any relevant fact;
    (3) Written interrogatories; and
    (4) Depositions.
    (b) For the purpose of this section and Secs. 25.22 and 25.23, the 
term ``documents'' includes information, documents, reports, answers, 
records, accounts, papers, and other data and documentary evidence. 
Nothing contained herein shall be interpreted to require the creation of 
a document.
    (c) Unless mutually agreed to by the parties, discovery is available 
only as ordered by the ALJ. The ALJ shall regulate the timing of 
discovery.
    (d) Motions for discovery. (1) A party seeking discovery may file a 
motion with the ALJ. Such a motion shall be accompanied by a copy of the 
requested discovery, or in the case of depositions, a summary of the 
scope of the proposed deposition.
    (2) Within two days of service, a party may file an opposition to 
the motion and/or a motion for protective order as provided in 
Sec. 25.34.
    (3) The ALJ may grant a motion for discovery only if he or she finds 
that the discovery sought--
    (i) Is necessary for the expeditious, fair, and reasonable 
consideration of the issues;
    (ii) Is not unduly costly or burdensome;
    (iii) Will not unduly delay the proceeding; and
    (iv) Does not seek privileged information.
    (4) The burden of showing that discovery should be allowed is on the 
party seeking discovery.
    (5) The ALJ may grant discovery subject to a protective order under 
Sec. 25.24.
    (e) Depositions. (1) If a motion for deposition is granted, the ALJ 
shall issue a subpoena for the deponent, which may require the deponent 
to produce documents. The subpoena shall specify the time and place at 
which the deposition will be held.
    (2) The party seeking to depose shall serve the subpoena in the 
manner prescribed in Sec. 25.8.
    (3) The deponent may file with the ALJ a motion to quash the 
subpoena or a motion for a protective order within ten days of service.
    (4) The party seeking to depose shall provide for the taking of a 
verbatim transcript of the deposition, which it shall make available to 
all other parties for inspection and copying.
    (f) Each party shall bear its own costs of discovery.



Sec. 25.22  Exchange of witness lists, statements, and exhibits.

    (a) At least 15 days before the hearing or at such other time as may 
be ordered by the ALJ, the parties shall exchange witness lists, copies 
of prior statements of proposed witnesses, and copies of proposed 
hearing exhibits, including copies of any written statements that the 
party intends to offer in lieu of live testimony in accordance with 
Sec. 25.33(b). At the time the above documents are exchanged, any party 
that intends to rely on the transcript of deposition testimony in lieu 
of live testimony at the hearing, if permitted by the ALJ, shall provide 
each party with a copy of the specific pages of the transcript it 
intends to introduce into evidence.
    (b) If a party objects, the ALJ shall not admit into evidence the 
testimony

[[Page 239]]

of any witness whose name does not appear on the witness list or any 
exhibit not provided to the opposing party as provided above unless the 
ALJ finds good cause for the failure or that there is no prejudice to 
the objecting party.
    (c) Unless another party objects within the time set by the ALJ, 
documents exchanged in accordance with paragraph (a) of this section 
shall be deemed to be authentic for the purpose of admissibility at the 
hearing.



Sec. 25.23  Subpoena for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
individual at the hearing may request that the ALJ issue a subpoena.
    (b) A subpoena requiring the attendance and testimony of an 
individual may also require the individual to produce documents at the 
hearing.
    (c) A party seeking a subpoena shall file a written request 
therefore not less than 15 days before the date fixed for the hearing 
unless otherwise allowed by the ALJ for good cause shown: Such request 
shall specify any documents to be produced and shall designate the 
witnesses and describe the address and location thereof with sufficient 
particularity to permit such witnesses to be found.
    (d) The subpoena shall specify the time and place at which the 
witness is to appear and any documents the witness is to produce.
    (e) The party seeking the subpoena shall serve it in the manner 
prescribed in Sec. 25.8. A subpoena on a party or upon an individual 
under the control of a party may be served by first class mail.
    (f) A party or the individual to whom the subpoena is directed may 
file with the ALJ a motion to quash the subpoena within ten days after 
service or on or before the time specified in the subpoena for 
compliance if it is less than ten days after service.



Sec. 25.24  Protective order.

    (a) A party of a prospective witness or deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may make any order which 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, including one or 
more of the following:
    (1) That the discovery not be had;
    (2) That the discovery may be had only on specified terms and 
conditions, including a designation of the time or place;
    (3) That the discovery may be had only through a method of discovery 
other than that requested;
    (4) That certain matters not be inquired into, or that the scope of 
discovery be limited to certain matters;
    (5) That discovery be conducted with no one present except persons 
designated by the ALJ;
    (6) That the contents of discovery or evidence be sealed;
    (7) That a deposition after being sealed be opened only by order of 
the ALJ;
    (8) That a trade secret or other confidential research, development, 
commercial information, or facts pertaining to any criminal 
investigation, proceeding, or other administrative investigation not be 
disclosed or be disclosed only in a designated way; or
    (9) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as direct by the 
ALJ.



Sec. 25.25  Fees.

    The party requesting a subpoena shall pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage shall accompany the subpoena when served, 
except that when a subpoena is issued on behalf of the Department of 
Commerce, a check for witness fees and mileage need not accompany the 
subpoena.



Sec. 25.26  Form, filing and service of papers.

    (a) Form. (1) Documents filed with the ALJ shall include an original 
and one copy.
    (2) Every pleading and paper filed in the proceeding shall contain a 
caption setting forth the title of the action, the

[[Page 240]]

case number assigned by the ALJ, and a designation of the paper (e.g., 
motion to quash subpoena).
    (3) Every pleading and paper shall be signed by, and shall contain 
the address and telephone number of, the party of the person on whose 
behalf the paper was filed, or his or her representative.
    (4) Papers are considered filed when they are mailed. Date of 
mailing may be established by a certificate from the party or its 
representative or by proof that the document was sent by certified or 
registered mail.
    (b) Service. A party filing a document with the ALJ shall, at the 
time of filing, serve a copy of such document on every other party. 
Service upon any party of any document other than the complaint or 
notice of hearing shall be made by deliverying or mailing a copy to the 
party's last known address. When a party is represented by a 
representative, service shall be made upon such representative in lieu 
of the actual party.
    (c) Proof of service. A certificate of the individual serving the 
document by personal delivery or by mail, setting forth the manner of 
service, shall be proof of service.



Sec. 25.27  Computation of time.

    (a) In computing any period of time under this part or in an order 
issued thereunder, the time begins with the day following the act, 
event, or default, and includes the last day of the period, unless it is 
a Saturday, Sunday, or legal holiday observed by the Federal government, 
in which event it includes the next business day.
    (b) When the period of time allowed is less than seven days, 
intermediate Saturdays, Sundays, and legal holidays observed by the 
Federal government shall be excluded from the computation.
    (c) Where a document has been served or issued by mail, an 
additional five days will be added to the time permitted for any 
response.



Sec. 25.28  Motions.

    (a) Any application to the ALJ for an order or ruling shall be by 
motion. Motions shall state the relief sought, the authority relied 
upon, and the facts alleged, and shall be filed with the ALJ and served 
on all other parties.
    (b) Except for motions made during a prehearing conference or at the 
hearing, all motions shall be in writing. The ALJ may require that oral 
motions be reduced to writing.
    (c) Within 15 days after a written motion is served, or such other 
time as may be fixed by the ALJ, any party may file a response to such 
motion.
    (d) The ALJ may not grant a written motion before the time for 
filing responses thereto has expired, except upon consent of the parties 
or following a hearing on the motion, but may overrule or deny such 
motion without awaiting a response.
    (e) The ALJ shall make a reasonable effort to dispose of all 
outstanding motions prior to the beginning of the hearing.



Sec. 25.29  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative, for--
    (1) Failing to comply with an order, rule, or procedure governing 
the proceeding;
    (2) Failing to prosecute or defend an action; or
    (3) Engaging in other misconduct that interferes with the speedy, 
orderly, or fair conduct of the hearing.
    (b) Any such sanction, including but not limited to those listed in 
paragraphs (c), (d), and (e) of this section, shall reasonably relate to 
the severity and nature of the failure or misconduct.
    (c) When a party fails to comply with an order, including an order 
for taking a deposition, the production of evidence within the party's 
control, or a request for admission, the ALJ may--
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, deem each matter of which 
an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with such order from 
introducing evidence concerning, or otherwise relying upon, testimony 
relating to the information sought; and

[[Page 241]]

    (4) Strike any part of the pleadings or other submissions of the 
party failing to comply with such request.
    (d) If a party fails to prosecute or defend an action under this 
part commenced by service of a notice of hearing, the ALJ may dismiss 
the action or may issue an initial decision imposing penalties and 
assessments.
    (e) The ALJ may refuse to consider any motion, request, response, 
brief or other document which is not filed in a timely fashion.



Sec. 25.30  The hearing and burden of proof.

    (a) The ALJ shall conduct a hearing on the record in order to 
determine whether the respondent is liable for a civil penalty or 
assessment under Sec. 25.3 and, if so, the appropriate amount of any 
such civil penalty or assessment considering any aggravating or 
mitigating factors.
    (b) The authority shall prove respondent's liability and any 
aggravating factors by a preponderance of the evidence.
    (c) The respondent shall prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (d) The hearing shall be open to the public unless otherwise ordered 
by the ALJ for good cause shown.



Sec. 25.31  Determining the amount of penalties and assessments.

    (a) In determining an appropriate amount of civil penalties and 
assessments, the ALJ and the authority head, upon appeal, should 
evaluate any circumstances that mitigate or aggravate the violation and 
should articulate in their opinions the reasons that support the 
penalties and assessments they impose. Because of the intangible costs 
of fraud, the expense of investigating such conduct, and the need to 
deter others who might be similarly tempted ordinarily double 
assessment, in lieu of damages, and a significant civil penalty should 
be imposed.
    (b) Although not exhaustive, the following factors are among those 
that may influence the ALJ and the authority head in determining the 
amount of penalties and assessments to impose with respect to the 
misconduct (i.e., the false, fictitious, or fraudulent claims or 
statements) charged in the complaint:
    (1) The number of false, fictitious, or fraudulent claims or 
statements;
    (2) The time period over which such claims or statements were made;
    (3) The degree of the respondent's culpability with respect to the 
misconduct;
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed;
    (5) The value of the Government's actual loss as a result of the 
misconduct, including foreseeable consequential damages and the costs of 
investigation;
    (6) The relationship of the amount imposed as civil penalties to the 
amount of the Government's loss;
    (7) The potential or actual impact of the misconduct upon national 
defense, public health or safety, or public confidence in the management 
of Government programs and operations, including particularly the impact 
on the intended beneficiaries of such program;
    (8) Whether the respondent has engaged in a pattern of the same or 
similar misconduct;
    (9) Whether the respondent attempted to conceal the misconduct;
    (10) The degree to which the respondent has involved others in the 
misconduct or in concealing it;
    (11) Where the misconduct of employees or agents is imputed to the 
respondent, the extent to which the respondent's practices fostered or 
attempted to preclude such misconduct;
    (12) Whether the respondent cooperated in or obstructed an 
investigation of the misconduct;
    (13) Whether the respondent assisted in identifying and prosecuting 
other wrongdoers;
    (14) The complexity of the program or transaction, and the degree of 
the respondent's sophistication with respect to it, including the extent 
of the respondent's prior participation in the program or in similar 
transactions;
    (15) Whether the respondent has been found, in any criminal, civil, 
or administrative proceeding to have engaged in similar misconduct or to 
have dealt dishonestly with the Government of the United States or of a 
State directly or indirectly; and

[[Page 242]]

    (16) The need to deter the respondent and others from engaging in 
the same or similar misconduct.
    (c) Nothing in this section shall be construed to limit the ALJ or 
the authority head from considering any other factors that in any given 
case may mitigate or aggravate the offense for which penalties and 
assessments are imposed.



Sec. 25.32  Location of hearing.

    (a) The hearing may be held--
    (1) In any judicial district of the United States in which the 
respondent resides or transacts business;
    (2) In any judicial district of the United States in which the claim 
or statement in issue was made; or
    (3) In such other place as may be agreed upon by the respondent and 
the ALJ.
    (b) Each party shall have the opportunity to present arguments with 
respect to the location of the hearing.
    (c) The hearing shall be held at the place and at the time ordered 
by the ALJ.



Sec. 25.33  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing shall be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. Any such written statements 
must be provided to all other parties along with the last known address 
of such witness, in a manner which allows sufficient time for other 
parties to subpoena such witness for cross-examination at the hearing. 
Prior written statements of witnesses proposed to testify at the hearing 
and deposition transcripts shall be exchanged as provided in 
Sec. 25.22(a).
    (c) The ALJ shall exercise reasonable control over the mode and 
order of interrogating witnesses and presenting evidence so as to--
    (1) Make the interrogation and presentation effective for the 
ascertainment of the truth;
    (2) Avoid needless consumption of time; and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The ALJ shall permit the parties to conduct such cross-
examination as may be required for a full and true disclosure of the 
facts.
    (e) At the discretion of the ALJ, a witness may be cross-examined on 
matters relevant to the proceeding without regard to the scope of his or 
her direct examination. To the extent permitted by the ALJ, cross-
examination on matters outside the scope of direct examination shall be 
conducted in the manner of direct examination and may proceed by leading 
questions only if the witness is a hostile witness, an adverse party or 
a witness identified with an adverse party.
    (f) Upon motion of any party, the ALJ shall order witnesses excluded 
so that they cannot hear the testimony of other witnesses. This rule 
does not authorize exclusion of--
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of the party designated by the party's representative; or
    (3) An individual whose presence is shown by a party to be essential 
to the presentation of its case, including an individual employed by the 
Government engaged in assisting the representative for the Government.



Sec. 25.34  Evidence.

    (a) The ALJ shall determine the admissibility of evidence.
    (b) Except as provided in this part, the ALJ shall not be bound by 
the Federal Rules of Evidence. However, the ALJ may apply the Federal 
Rules of Evidence where appropriate, e.g., to exclude unreliable 
evidence.
    (c) The ALJ shall exclude irrelevant and inmaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence may be excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement shall be 
inadmissible to the extent provided in Rule 408 of the Federal Rules of 
Evidence.

[[Page 243]]

    (g) The ALJ shall permit the parties to introduce rebuttal witnesses 
and evidence.
    (h) All documents and other evidence offered or taken for the record 
shall be open to examination by all parties, unless otherwise ordered by 
the ALJ pursuant to Sec. 25.24.



Sec. 25.35  The record.

    (a) The hearing will be recorded and transcribed. Transcripts may be 
obtained following the hearing from the ALJ at a cost not to exceed the 
actual cost of duplication.
    (b) The transcript of testimony, exhibits and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for the decision by the ALJ and the 
authority head.
    (c) The record may be inspected and copied (upon payment of a 
reasonable fee) by anyone, unless otherwise ordered by the ALJ pursuant 
to Sec. 25.24.



Sec. 25.36  Post-hearing briefs.

    The ALJ may require the parties to file post-hearing briefs. In any 
event, any party may file a post-hearing brief. The ALJ shall fix the 
time for filing such briefs, not to exceed 60 days from the date the 
parties receive the transcript of the hearing or, if applicable, the 
stipulated record. Such briefs may be accompanied by proposed findings 
of fact and conclusions of law. The ALJ may permit the parties to file 
reply briefs.



Sec. 25.37  Initial decision.

    (a) The ALJ shall issue an initial decision based only on the 
record, which shall contain findings of fact, conclusions of law, and 
the amount of any penalties and assessments imposed.
    (b) The findings of fact shall include a finding on each of the 
following issues:
    (1) Whether the claims or statements identified in the complaint, or 
any portions thereof, violate Sec. 25.3.
    (2) If the person is liable for penalties or assessments, the 
appropriate amount of any such penalties or assessments considering any 
mitigating or aggravating factors that he or she finds in the case, such 
as those described in Sec. 25.31.
    (c) The ALJ shall promptly serve the initial decision on all parties 
within 90 days after the time for submission of post-hearing briefs and 
reply briefs (if permittted) has expired. The ALJ shall as the same time 
serve all respondents with a statement describing the right of any 
respondent determined to be liable for a civil penalty or assessment to 
file a motion for reconsideration with the ALJ or a notice of appeal 
with the authority head. If the ALJ fails to meet the deadline contained 
in this paragraph, he or she shall notify the parties of the reason for 
the delay and shall set a new deadline.
    (d) Unless the initial decision of the ALJ is timely appealed to the 
authority head, or a motion for reconsideration of the initial decision 
is timely filed, the initial decision shall constitute the final 
decision of the authority head and shall be final and binding on the 
parties 30 days after it is issued by the ALJ.



Sec. 25.38  Reconsideration of initial decision.

    (a) Except as provided in paragraph (d) of this section, any party 
may file a motion for reconsideration of the initial decision within 20 
days of receipt of the initial decision. If service was made by mail, 
receipt will be presumed to be five days from the date of mailing in the 
absence of contrary proof.
    (b) Every such motion must set forth the matters claimed to have 
been erroneously decided and the nature of the alleged errors. Such 
motion shall be accompanied by a supporting brief.
    (c) Responses to such motions shall be allowed only upon request of 
the ALJ.
    (d) No party may file a motion for reconsideration of an initial 
decision that has been revised in response to a previous motion for 
reconsideration.
    (e) The ALJ may dispose of a motion for reconsideration by denying 
it or by issuing a revised initial decision.
    (f) If the ALJ denies a motion for reconsideration, the initial 
decision shall constitute the final decision of the authority head and 
shall be final and binding on the parties 30 days after the ALJ denies 
the motion, unless the initial decision is timely appealed to the

[[Page 244]]

authority head in accordance with Sec. 25.39.
    (g) If the ALJ issues a revised initial decision, that decision 
shall constitute the final decision of the authority head and shall be 
final and binding on the parties 30 days after it is issued, unless it 
is timely appealed to the authority head in accordance with Sec. 25.39.



Sec. 25.39  Appeal to authority head.

    (a) Any respondent who has filed a timely answer and who is 
determined in an initial decision to be liable for a civil penalty or 
assessment may appeal such decision to the authority head by filing a 
notice of appeal with the authority head in accordance with this 
section.
    (b)(1) No notice of appeal may be filed until the time period for 
filing a motion for reconsideration under Sec. 25.38 has expired.
    (2) If a motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ denies the motion or 
issues a revised initial decision, whichever applies.
    (3) If no motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ issues the initial 
decision.
    (4) The authority head may extend the initial 30 day period for an 
additional 30 days if the respondent files with the authority head a 
request for an extension within the initial 30 day period and shows good 
cause.
    (c) If the respondent files a timely notice of appeal with the 
authority head, the ALJ shall forward the record of the proceeding to 
the authority head.
    (d) A notice of appeal shall be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions.
    (e) The representative for the Government may file a brief in 
opposition to exceptions within 30 days of receiving the notice of 
appeal and accompanying brief.
    (f) There is no right to appear personally before the authority 
head.
    (g) There is no right to appeal any interlocutory ruling by the ALJ.
    (h) In reviewing the initial decision, the authority head shall not 
consider any objection that was not raised before the ALJ unless a 
demonstration is made of extraordinary circumstances causing the failure 
to raise the objection.
    (i) If any party demonstrates to the satisfaction of the authority 
head that additional evidence not presented at such hearing is material 
and that there was reasonable grounds for the failure to present such 
evidence at such hearing, the authority head shall remand the matter to 
the ALJ for consideration of such additional evidence.
    (j) The authority head may affirm, reduce, reverse, compromise, 
remand, or settle any penalty or assessment determined by the ALJ in any 
initial decision.
    (k) The authority head shall promptly serve each party to the appeal 
with a copy of the decision of the authority head and a statement 
describing the right of any person determined to be liable for a penalty 
or assessment to seek judicial review.
    (l) Unless a petition for review is filed as provided in 31 U.S.C. 
3805 after a respondent has exhausted all administrative remedies under 
this part and within 60 days after the date on which the authority head 
serves the respondent with a copy of the authority head's decision, a 
determination that a respondent is liable under Sec. 25.3 is final and 
is not subject to judicial review.



Sec. 25.40  Stays ordered by the Department of Justice.

    If at any time the Attorney General or an Assistant Attorney General 
designated by the Attorney General transmits to the authority head a 
written finding that continuation of the administrative process 
described in this part with respect to a claim or statement may 
adversely affect any pending or potential criminal or civil action 
related to such claim or statement, the authority head shall stay the 
process and it shall be resumed only upon receipt of the written 
authorization of the Attorney General.



Sec. 25.41  Stay pending appeal.

    (a) An initial decision is stayed automatically pending disposition 
of a motion for reconsideration or of an appeal to the authority head.

[[Page 245]]

    (b) No administrative stay is available following a final decision 
of the authority head.



Sec. 25.42  Judicial review.

    Section 3805 of title 31, United States Code, authorized judicial 
review by an appropriate United States District Court of a final 
decision of the authority head imposing penalties or assessments under 
this part and specifies the procedures for such review.



Sec. 25.43  Collection of civil penalties and assessments.

    Sections 3806 and 3808(b) of title 31, United States Code, authorize 
actions for collection of civil penalties and assessments imposed under 
this part and specify the procedures for such actions.



Sec. 25.44  Right to administrative offset.

    The amount of any penalty or assessment which has become final, or 
for which a judgment has been entered under Secs. 25.42 and 25.43, or 
any amount agreed upon in a compromise or settlement under Sec. 25.46, 
may be collected by administrative offset under 31 U.S.C. 3716, except 
that an administrative offset may not be made under this subsection 
against a refund of an overpayment of Federal taxes, then or later owing 
by the United States to the respondent.



Sec. 25.45  Deposit in Treasury of United States.

    All amounts collected pursuant to this part shall be deposited as 
miscellaneous receipts in the Treasury of the United States, except as 
provided in 31 U.S.C. 3806(g).



Sec. 25.46  Compromise or settlement.

    (a) Parties may make offers of compromise or settlement at any time.
    (b) The reviewing official has the exclusive authority to compromise 
or settle a case under this part at any time after the date on which the 
reviewing official is permitted to issue a complaint and before the date 
on which the ALJ issues an initial decision. If the designated 
representative of the Government is not with the Office of General 
Counsel, the representative shall forward all settlement offers to the 
reviewing official and cannot negotiate a compromise or settlement with 
the respondent except as directed by the reviewing official.
    (c) The authority head has exclusive authority to compromise or 
settle a case under this part at any time after the date on which the 
ALJ issues an initial decision, except during the pendency of any review 
under Sec. 25.42 or during the pendency of any action to collect 
penalties and assessments under Sec. 25.43.
    (d) The Attorney General has exclusive authority to compromise or 
settle a case under this part during the pendency of any review under 
Sec. 25.42 or of any action to recover penalties and assessments under 
31 U.S.C. 3806.
    (e) The investigating official may recommend settlement terms to the 
reviewing official, the authority head, or the Attorney General, as 
appropriate. The reviewing official may recommend settlement terms to 
the authority head, or the Attorney General, as appropriate.
    (f) Any compromise or settlement must be in writing.



Sec. 25.47  Limitations.

    (a) The notice of hearing with respect to a claim or statement must 
be served in the manner specified in Sec. 25.8 within 6 years after the 
date on which such claim or statement is made.
    (b) If the respondent fails to file a timely answer, service of a 
notice under Sec. 25.10(b) shall be deemed a notice of hearing for 
purposes of this section.
    (c) The statute of limitations may be extended by agreement of the 
parties.



PART 26--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT) AND GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE (GRANTS)--Table of Contents




                           Subpart A--General

Sec.
26.100  Purpose.
26.105  Definitions.
26.110  Coverage.
26.115  Policy.

                      Subpart B--Effect of Actions

26.200  Debarment or suspension.

[[Page 246]]

26.205  Ineligible persons.
26.210  Voluntary exclusion.
26.215  Exception provision.
26.220  Continuation of covered transactions.
26.225  Failure to adhere to restrictions.

                          Subpart C--Debarment

26.300  General.
26.305  Causes for debarment.
26.310  Procedures.
26.311  Investigation and referral.
26.312  Notice of proposed debarment.
26.313  Opportunity to contest proposed debarment.
26.314  Debarring official's decision.
26.315  Settlement and voluntary exclusion.
26.320  Period of debarment.
26.325  Scope of debarment.

                          Subpart D--Suspension

26.400  General.
26.405  Causes for suspension.
26.410  Procedures.
26.411  Notice of suspension.
26.412  Opportunity to contest suspension.
26.413  Suspending official's decision.
26.415  Period of suspension.
26.420  Scope of suspension.

       Subpart E--Responsibilities of GSA, Agency and Participants

26.500  GSA responsibilities.
26.505  Department of Commerce responsibilities
26.510  Participants' responsibilities.

          Subpart F--Drug-Free Workplace Requirements (Grants)

26.600  Purpose.
26.605  Definitions.
26.610  Coverage.
26.615  Grounds for suspension of payments, suspension or termination of 
          grants, or suspension or debarment.
26.620  Effect of violation.
26.625  Exception provision.
26.630  Certification requirements and procedures.
26.635  Reporting of and employee sanctions for convictions of criminal 
          drug offenses.

Appendix A to Part 26--Certification Regarding Debarment, Suspension, 
          and Other Responsibility Matters--Primary Covered Transactions
Appendix B to Part 26--Certification Regarding Debarment, Suspension, 
          Ineligibility and Voluntary Exclusion--Lower Tier Covered 
          Transactions
Appendix C to Part 26--Certification Regarding Drug-Free Workplace 
          Requirements

    Authority: 5 U.S.C. 301; 41 U.S.C. 701 et seq.; Sec. 2455, Pub. L. 
103-355, 108 Stat. 3327 (31 U.S.C. 6101 note); E.O. 12549, 3 CFR, 1986 
comp., p. 189; E.O. 12689, 3 CFR, 1989 comp., p. 235.

    Source: 53 FR 19177, 19204, May 26, 1988, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 55 FR 21679, May 25, 1990, and 60 FR 33036, June 26, 1995.

    Editorial Note: For additional information, see related documents 
published at 52 FR 20360, May 29, 1987, 53 FR 19160, May 26, 1988, and 
53 FR 34474, September 6, 1988.



                           Subpart A--General



Sec. 26.100  Purpose.

    (a) Executive Order (E.O.) 12549 provides that, to the extent 
permitted by law, Executive departments and agencies shall participate 
in a governmentwide system for nonprocurement debarment and suspension. 
A person who is debarred or suspended shall be excluded from Federal 
financial and nonfinancial assistance and benefits under Federal 
programs and activities. Debarment or suspension of a participant in a 
program by one agency shall have governmentwide effect.
    (b) These regulations implement section 3 of E.O. 12549 and the 
guidelines promulgated by the Office of Management and Budget under 
section 6 of the E.O. by:
    (1) Prescribing the programs and activities that are covered by the 
governmentwide system;
    (2) Prescribing the governmentwide criteria and governmentwide 
minimum due process procedures that each agency shall use;
    (3) Providing for the listing of debarred and suspended 
participants, participants declared ineligible (see definition of 
``ineligible'' in Sec. 26.105), and participants who have voluntarily 
excluded themselves from participation in covered transactions;
    (4) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion; and
    (5) Offering such other guidance as necessary for the effective 
implementation and administration of the governmentwide system.
    (c) These regulations also implement Executive Order 12689 (3 CFR, 
1989

[[Page 247]]

Comp., p. 235) and 31 U.S.C. 6101 note (Public Law 103-355, sec. 2455, 
108 Stat. 3327) by--
    (1) Providing for the inclusion in the List of Parties Excluded from 
Federal Procurement and Nonprocurement Programs all persons proposed for 
debarment, debarred or suspended under the Federal Acquisition 
Regulation, 48 CFR Part 9, subpart 9.4; persons against which 
governmentwide exclusions have been entered under this part; and persons 
determined to be ineligible; and
    (2) Setting forth the consequences of a debarment, suspension, 
determination of ineligibility, or voluntary exclusion.
    (d) Although these regulations cover the listing of ineligible 
participants and the effect of such listing, they do not prescribe 
policies and procedures governing declarations of ineligibility.

[60 FR 33040, 33044, June 26, 1995]



Sec. 26.105  Definitions.

    The following definitions apply to this part:
    Adequate evidence. Information sufficient to support the reasonable 
belief that a particular act or omission has occurred.
    Affiliate. Persons are affiliates of each other if, directly or 
indirectly, either one controls or has the power to control the other, 
or, a third person controls or has the power to control both. Indicia of 
control include, but are not limited to: interlocking management or 
ownership, identity of interests among family members, shared facilities 
and equipment, common use of employees, or a business entity organized 
following the suspension or debarment of a person which has the same or 
similar management, ownership, or principal employees as the suspended, 
debarred, ineligible, or voluntarily excluded person.
    Agency. Any executive department, military department or defense 
agency or other agency of the executive branch, excluding the 
independent regulatory agencies.
    Civil judgment. The disposition of a civil action by any court of 
competent jurisdiction, whether entered by verdict, decision, 
settlement, stipulation, or otherwise creating a civil liability for the 
wrongful acts complained of; or a final determination of liability under 
the Program Fraud Civil Remedies Act of 1988 (31 U.S.C. 3801-12).
    Conviction. A judgment or conviction of a criminal offense by any 
court of competent jurisdiction, whether entered upon a verdict or a 
plea, including a plea of nolo contendere.
    Debarment. An action taken by a debarring official in accordance 
with these regulations to exclude a person from participating in covered 
transactions. A person so excluded is ``debarred.''
    Debarring official. An official authorized to impose debarment. The 
debarring official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    Indictment. Indictment for a criminal offense. An information or 
other filing by competent authority charging a criminal offense shall be 
given the same effect as an indictment.
    Ineligible. Excluded from participation in Federal nonprocurement 
programs pursuant to a determination of ineligibility under statutory, 
executive order, or regulatory authority, other than Executive Order 
12549 and its agency implementing regulations; for example, excluded 
pursuant to the Davis-Bacon Act and its implementing regulations, the 
equal employment opportunity acts and executive orders, or the 
environmental protection acts and executive orders. A person is 
ineligible where the determination of ineligibility affects such 
person's eligibility to participate in more than one covered 
transaction.
    Legal proceedings. Any criminal proceeding or any civil judicial 
proceeding to which the Federal Government or a State or local 
government or quasi-governmental authority is a party. The term includes 
appeals from such proceedings.
    List of parties excluded from Federal procurement and nonprocurement 
programs. A list compiled, maintained and distributed by the General 
Services Administration (GSA) containing the names and other information 
about persons who have been debarred, suspended, or voluntarily excluded 
under Executive Orders 12549 and 12689 and

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these regulations or 48 CFR part 9, subpart 9.4, persons who have been 
proposed for debarment under 48 CFR part 9, subpart 9.4, and those 
persons who have been determined to be ineligible.
    Notice. A written communication served in person or sent by 
certified mail, return receipt requested, or its equivalent, to the last 
known address of a party, its identified counsel, its agent for service 
of process, or any partner, officer, director, owner, or joint venturer 
of the party. Notice, if undeliverable, shall be considered to have been 
received by the addressee five days after being properly sent to the 
last address known by the agency.
    Participant. Any person who submits a proposal for, enters into, or 
reasonably may be expected to enter into a covered transaction. This 
term also includes any person who acts on behalf of or is authorized to 
commit a participant in a covered transaction as an agent or 
representative of another participant.
    Person. Any individual, corporation, partnership, association, unit 
of government or legal entity, however organized, except: foreign 
governments or foreign governmental entities, public international 
organizations, foreign government owned (in whole or in part) or 
controlled entities, and entities consisting wholly or partially of 
foreign governments or foreign governmental entities.
    Preponderance of the evidence. Proof by information that, compared 
with that opposing it, leads to the conclusion that the fact at issue is 
more probably true than not.
    Principal. Officer, director, owner, partner, key employee, or other 
person within a participant with primary management or supervisory 
responsibilities; or a person who has a critical influence on or 
substantive control over a covered transaction, whether or not employed 
by the participant. Persons who have a critical influence on or 
substantive control over a covered transaction are:
    (1) Principal investigators.
    (2) [Reserved]
    Proposal. A solicited or unsolicited bid, application, request, 
invitation to consider or similar communication by or on behalf of a 
person seeking to participate or to receive a benefit, directly or 
indirectly, in or under a covered transaction.
    Respondent. A person against whom a debarment or suspension action 
has been initiated.
    State. Any of the States of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, any territory or possession 
of the United States, or any agency of a State, exclusive of 
institutions of higher education, hospitals, and units of local 
government. A State instrumentality will be considered part of the State 
government if it has a written determination from a State government 
that such State considers that instrumentality to be an agency of the 
State government.
    Suspending official. An official authorized to impose suspension. 
The suspending official is either:
    (1) The agency head, or
    (2) An official designated by the agency head.
    Suspension. An action taken by a suspending official in accordance 
with these regulations that immediately excludes a person from 
participating in covered transactions for a temporary period, pending 
completion of an investigation and such legal, debarment, or Program 
Fraud Civil Remedies Act proceedings as may ensue. A person so excluded 
is ``suspended.''
    Voluntary exclusion or voluntarily excluded. A status of 
nonparticipation or limited participation in covered transactions 
assumed by a person pursuant to the terms of a settlement.

[53 FR 19177, 19204, May 26, 1988, as amended at 60 FR 33041, 33044, 
June 26, 1995.



Sec. 26.110  Coverage.

    (a) These regulations apply to all persons who have participated, 
are currently participating or may reasonably be expected to participate 
in transactions under Federal nonprocurement programs. For purposes of 
these regulations such transactions will be referred to as ``covered 
transactions.''
    (1) Covered transaction. For purposes of these regulations, a 
covered transaction is a primary covered transaction or a lower tier 
covered transaction. Covered transactions at any tier need

[[Page 249]]

not involve the transfer of Federal funds.
    (i) Primary covered transaction. Except as noted in paragraph (a)(2) 
of this section, a primary covered transaction is any nonprocurement 
transaction between an agency and a person, regardless of type, 
including: grants, cooperative agreements, scholarships, fellowships, 
contracts of assistance, loans, loan guarantees, subsidies, insurance, 
payments for specified use, donation agreements and any other 
nonprocurement transactions between a Federal agency and a person. 
Primary covered transactions also include those transactions specially 
designated by the U.S. Department of Housing and Urban Development in 
such agency's regulations governing debarment and suspension.
    (ii) Lower tier covered transaction. A lower tier covered 
transaction is:
    (A) Any transaction between a participant and a person other than a 
procurement contract for goods or services, regardless of type, under a 
primary covered transaction.
    (B) Any procurement contract for goods or services between a 
participant and a person, regardless of type, expected to equal or 
exceed the Federal procurement small purchase threshold fixed at 10 
U.S.C. 2304(g) and 41 U.S.C. 253(g) (currently $25,000) under a primary 
covered transaction.
    (C) Any procurement contract for goods or services between a 
participant and a person under a covered transaction, regardless of 
amount, under which that person will have a critical influence on or 
substantive control over that covered transaction. Such persons are:
    (1) Principal investigators.
    (2) Providers of federally-required audit services.
    (2) Exceptions. The following transactions are not covered:
    (i) Statutory entitlements or mandatory awards (but not subtier 
awards thereunder which are not themselves mandatory), including 
deposited funds insured by the Federal Government;
    (ii) Direct awards to foreign governments or public international 
organizations, or transactions with foreign governments or foreign 
governmental entities, public international organizations, foreign 
government owned (in whole or in part) or controlled entities, entities 
consisting wholly or partially of foreign governments or foreign 
governmental entities;
    (iii) Benefits to an individual as a personal entitlement without 
regard to the individual's present responsibility (but benefits received 
in an individual's business capacity are not excepted);
    (iv) Federal employment;
    (v) Transactions pursuant to national or agency-recognized 
emergencies or disasters;
    (vi) Incidental benefits derived from ordinary governmental 
operations; and
    (vii) Other transactions where the application of these regulations 
would be prohibited by law.
    (3) Department of Commerce covered transactions. These Department of 
Commerce regulations apply to the Department's domestic assistance 
covered transactions (whether by a Federal agency, recipient, 
subrecipient, or intermediary) including, except as noted in paragraph 
(a)(2) of this section: grants, cooperative agreements, scholarships, 
fellowships, loans, loan guarantees, subsidies, insurance, payments for 
specified use, and donation agreement subawards, subcontracts and 
transactions at any tier that are charges as direct or indirect costs, 
regardless of type (including subtier awards under awards which are 
statutory entitlement or mandatory awards).
    (b) Relationship to other sections. This section describes the types 
of transactions to which a debarment or suspension under the regulations 
will apply. Subpart B, ``Effect of Action,'' Sec. 26.200, ``Debarment or 
suspension,'' sets forth the consequences of a debarment or suspension. 
Those consequences would obtain only with respect to participants and 
principals in the covered transactions and activities described in 
Sec. 26.110(a). Sections 26.325, ``Scope of debarment,'' and 26.420, 
``Scope of suspension,'' govern the extent to which a specific 
p