[Title 45 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2006 Edition]
[From the U.S. Government Printing Office]



[[Page i]]

          

          45


          Parts 1 to 199

                         Revised as of October 1, 2006


          Public Welfare
          



________________________

          Containing a codification of documents of general 
          applicability and future effect

          As of October 1, 2006
          With Ancillaries
                    Published by
                    Office of the Federal Register
                    National Archives and Records
                    Administration
                    A Special Edition of the Federal Register

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                            Table of Contents



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

  Title 45:
          Subtitle A--Department of Health and Human Services        3
  Finding Aids:
      Material Approved for Incorporation by Reference........     797
      Table of CFR Titles and Chapters........................     799
      Alphabetical List of Agencies Appearing in the CFR......     817
      List of CFR Sections Affected...........................     827

[[Page iv]]





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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 45 CFR 1.1 refers to 
                       title 45, part 1, section 
                       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, October 1, 2006), 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, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call 202-741-6010.

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.

[[Page vii]]


REPUBLICATION OF MATERIAL

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

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
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the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
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    The Office of the Federal Register also offers a free service on the 
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register. The NARA site also contains links to GPO Access.

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

October 1, 2006.

[[Page ix]]



                               THIS TITLE

    Title 45--Public Welfare is composed of four volumes. The parts in 
these volumes are arranged in the following order: Parts 1-199, 200-499, 
500-1199, and 1200 to end. Volume one (parts 1-199) contains all current 
regulations issued under subtitle A--Department of Health and Human 
Services. Volume two (parts 200-499) contains all current regulations 
issued under subtitle B--Regulations Relating to Public Welfare, chapter 
II--Office of Family Assistance (Assistance Programs), Administration 
for Children and Families, Department of Health and Human Services, 
chapter III--Office of Child Support Enforcement (Child Support 
Enforcement Program), Administration for Children and Families, 
Department of Health and Human Services, and chapter IV--Office of 
Refugee Resettlement, Administration for Children and Families, 
Department of Health and Human Services. Volume three (parts 500-1199) 
contains all current regulations issued under chapter V--Foreign Claims 
Settlement Commission of the United States, Department of Justice, 
chapter VI--National Science Foundation, chapter VII--Commission on 
Civil Rights, chapter VIII--Office of Personnel Management, chapter X--
Office of Community Services, Administration for Children and Families, 
Department of Health and Human Services, and chapter XI--National 
Foundation on the Arts and the Humanities. Volume four (part 1200 to 
end) contains all current regulations issued under chapter XII--
Corporation for National and Community Service, chapter XIII--Office of 
Human Development Services, Department of Health and Human Services, 
chapter XVI--Legal Services Corporation, chapter XVII--National 
Commission on Libraries and Information Science, chapter XVIII--Harry S 
Truman Scholarship Foundation, chapter XXI--Commission of Fine Arts, 
chapter XXIII--Artic Research Commission, chapter XXIV--James Madison 
Memorial Fellowship Foundation, and chapter XXV--Corporation for 
National and Community Service. The contents of these volumes represent 
all of the current regulations codified under this title of the CFR as 
of October 1, 2006.

    Amendments to part 801--Voting Rights Program, Appendixes A, B, and 
D, which apply to Texas also appear in Spanish following Appendix D.

    For this volume, Ruth Green was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of Frances D. 
McDonald, assisted by Kenneth R. Payne.


[[Page 1]]



                        TITLE 45--PUBLIC WELFARE




                   (This book contains parts 1 to 199)

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

SUBTITLE A--Department of Health And Human Services.........           1

[[Page 3]]



                    SUBTITLE A--DEPARTMENT OF HEALTH
                           AND HUMAN SERVICES




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


  Editorial Note: Nomenclature changes to subtitle A appear at 66 FR 
39452, July 31, 2001.

                  SUBCHAPTER A--GENERAL ADMINISTRATION
Part                                                                Page
1               HHS's regulations...........................           7
2               Testimony by employees and production of 
                    documents in proceedings where the 
                    United States is not a party............           7
3               Conduct of persons and traffic on the 
                    National Institutes of Health Federal 
                    enclave.................................          10
4               Service of process..........................          16
5               Freedom of Information Regulations..........          17
5a

[Reserved]

5b              Privacy Act regulations.....................          31
6

[Reserved]

7               Employee inventions.........................          44
8

[Reserved]

9               Use of HHS research facilities by academic 
                    scientists, engineers, and students.....          46
12              Disposal and utilization of surplus real 
                    property for public health purposes.....          47
12a             Use of Federal real property to assist the 
                    homeless................................          56
13              Implementation of the Equal Access to 
                    Justice Act in agency proceedings.......          64
15              Uniform relocation assistance and real 
                    property acquisition for Federal and 
                    federally assisted programs.............          73
16              Procedures of the Departmental Grant Appeals 
                    Board...................................          74
17              Release of adverse information to news media          81
30              Claims collection...........................          83
31              Tax refund offset...........................          98
32              Administrative wage garnishment.............         102
34              Claims Filed Under the Military Personnel 
                    and Civilian Employees Act..............         107
35              Tort Claims against the government..........         110

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36              Indemnification of HHS Employees............         114
46              Protection of human subjects................         115
50              U.S. Exchange Visitor Program--request for 
                    waiver of the two-year foreign residence 
                    requirement.............................         134
51              Criteria for evaluating comprehensive plan 
                    to reduce reliance on alien physicians..         137
57              Volunteer services..........................         139
60              National Practitioner Data Bank for adverse 
                    information on physicians and other 
                    health care practitioners...............         140
61              Healthcare integrity and protection data 
                    bank for final adverse information on 
                    health care providers, suppliers and 
                    practitioners...........................         147
63              Grant programs administered by the Office of 
                    the Assistant Secretary for Planning and 
                    Evaluation..............................         158
73              Standards of conduct........................         166
73a             Standards of conduct: Food and Drug 
                    Administration supplement...............         199
73b             Debarment or suspension of former employees.         204
74              Uniform administrative requirements for 
                    awards and subawards to institutions of 
                    higher education, hospitals, other 
                    nonprofit organizations, and commercial 
                    organizations...........................         207
76              Governmentwide debarment and suspension 
                    (nonprocurement)........................         255
77              Remedial actions applicable to letter of 
                    credit administration...................         278
78              Conditions for waiver of denial of Federal 
                    benefits................................         280
79              Program fraud civil remedies................         281
80              Nondiscrimination under programs receiving 
                    Federal assistance through the 
                    Department of Health and Human Services 
                    effectuation of Title VI of the Civil 
                    Rights Act of 1964......................         297
81              Practice and procedure for hearings under 
                    Part 80 of this title...................         322
82              Governmentwide requirements for drug-free 
                    workplace (financial assistance)........         332
83              Regulation for the administration and 
                    enforcement of sections 799A and 845 of 
                    the Public Health Service Act...........         338
84              Nondiscrimination on the basis of handicap 
                    in programs or activities receiving 
                    Federal financial assistance............         344
85              Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Department 
                    of Health and Human Services............         385

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86              Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving Federal financial assistance..         401
87              Equal treatment for faith-based 
                    organizations...........................         420
90              Nondiscrimination on the basis of age in 
                    programs or activities receiving Federal 
                    financial assistance....................         424
91              Nondiscrimination on the basis of age in 
                    programs or activities receiving Federal 
                    financial assistance from HHS...........         432
92              Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    State, local, and tribal governments....         439
93              New restrictions on lobbying................         466
94              Responsible prospective contractors.........         477
95              General administration--grant programs 
                    (public assistance, medical assistance 
                    and state children's health insurance 
                    programs)...............................         480
96              Block grants................................         499
97              Consolidation of grants to the insular areas         556
98              Child care and development fund.............         557
99              Procedure for hearings for the child care 
                    and development fund....................         587
100             Intergovernmental review of Department of 
                    Health and Human Services programs and 
                    activities..............................         592
        SUBCHAPTER B--REQUIREMENTS RELATING TO HEALTH CARE ACCESS
140-143

 [Reserved]

144             Requirements relating to health insurance 
                    coverage................................         596
145

[Reserved]

146             Requirements for the group health insurace 
                    market..................................         601
147

[Reserved]

[[Page 6]]

148             Requirements for the individual health 
                    insurance market........................         666
149

[Reserved]

150             CMS enforcement in group and individual 
                    insurance markets.......................         687
151-159

 [Reserved]

  SUBCHAPTER C--ADMINISTRATIVE DATA STANDARDS AND RELATED REQUIREMENTS
160             General administrative requirements.........         704
162             Administrative requirements.................         727
163

[Reserved]

164             Security and privacy........................         740
165-199         [Reserved]

[[Page 7]]



                   SUBCHAPTER A_GENERAL ADMINISTRATION


PART 1_HHS'S REGULATIONS--Table of Contents




Sec.
1.1 Location of HHS regulations.
1.2 Subject matter of Office of the Secretary regulations in parts 1-99.



Sec. 1.1  Location of HHS regulations.

    Regulations for HHS's programs and activities are located in several 
different titles of the Code of Federal Regulations:

     Regulations having HHS-wide application or which 
the Office of the Secretary administers are located in Parts 1-99 of 
Title 45.
     Health regulations are located at Parts 1-399 of 
Title 42.
     Health care financing regulations are located at 
Parts 400-499 of Title 42. These include regulations for Medicare and 
Medicaid.
     Human development services regulations are 
located at Parts 200-299 and 1300-1399 of Title 45. These include 
regulations for Head Start, social services, social and nutrition 
services for older persons, rehabilitative services, developmental 
disabilities services, Native American programs, and various programs 
relating to families and children.
     Social Security regulations are located at Parts 
400-499 of Title 20.
     Food and Drug regulations are located at Parts 1-
1299 of Title 21.
     Procurement (contract) regulations are located at 
Chapter 3 of Title 41.

    Each volume of the Code contains an index of its parts.

(5 U.S.C. 301)

[44 FR 61598, Oct. 26, 1979, as amended at 48 FR 35099, Aug. 3, 1983]



Sec. 1.2  Subject matter of Office of the Secretary regulations in parts 1-99.

    This subject matter of the regulations in Parts 1-99 of this title 
includes:

     Civil rights/nondiscrimination: Parts 80, 81, 83, 
84, 86, 90.
     Protection of human subjects: Part 46.
     Day care requirements: Part 71.
     Information, privacy, advisory committees: Parts 
5, 5a, 5b, 11, 17, 99.
     Personnel: Parts 50, 57, 73, 73a.
     Grants and letter of credit administration, 
property, hearing rights: Parts 10, 12, 15, 16, 74, 75, 77, 95.
     Claims: Parts 30, 35.
     Inventions and patents: Parts 6, 7, 8.
     Miscellaneous: Parts 3, 4, 9, 67.

(5 U.S.C. 301)

[50 FR 781, Jan. 7, 1985, as amended at 52 FR 28658, July 31, 1987]



PART 2_TESTIMONY BY EMPLOYEES AND PRODUCTION OF DOCUMENTS IN PROCEEDINGS 
WHERE THE UNITED STATES IS NOT A PARTY--Table of Contents




Sec.
2.1 Scope, purpose, and applicability.
2.2 Definitions.
2.3 Policy on presentation of testimony and production of documents.
2.4 Procedures when voluntary testimony is requested or when an employee 
          is subpoenaed.
2.5 Subpoenas duces tecum.
2.6 Certification and authentication of records.

    Authority: 5 U.S.C. 301, 5 U.S.C. 552.

    Source: 52 FR 37146, Oct. 5, 1987, unless otherwise noted.



Sec. 2.1  Scope, purpose, and applicability.

    (a) This part sets forth rules to be followed when an employee or 
former employee of the Department of Health and Human Services (``DHHS'' 
or ``Department''), other than an employee of the Food and Drug 
Administration, is requested or subpoenaed to provide testimony in a 
deposition, trial, or other similar proceeding concerning information 
acquired in the course of performing official duties or because of such 
person's official capacity with DHHS. This part also sets forth 
procedures for the handling of subpoenas duces tecum and other requests 
for any document in the possession of DHHS, other than the Food and Drug 
Administration, and for the processing of requests for certification of 
copies of documents. Separate regulations, 21 CFR part 20, govern the 
Food and Drug Administration, and those regulations are not affected by 
this part.
    (b) It is the policy of the DHHS to provide information, data, and 
records to non-federal litigants to the same extent and in the same 
manner that they

[[Page 8]]

are made available to the general public and, when subject to the 
jurisdiction of a court or other tribunal presiding over non-federal 
party litigation, to follow all applicable procedural and substantive 
rules relating to the production of information, data, and records by a 
non-party. The availability of Department employees to testify in 
litigation not involving federal parties is governed by the Department's 
policy to maintain strict impartiality with respect to private litigants 
and to minimize the disruption of official duties.
    (c) This part applies to state, local and tribal judicial, 
administrative, and legislative proceedings, and to federal judicial and 
administrative proceedings.
    (d) This part does not apply to:
    (1) Any civil or criminal proceedings where the United States, the 
Department of Health and Human Services, and any agency thereof, or any 
other Federal agency is a party.
    (2) Congressional requests or subpoenas for testimony or documents.
    (3) Consultative services and technical assistance provided by the 
Department of Health and Human Services, or any agency thereof, in 
carrying out its normal program activities.
    (4) Employees serving as expert witnesses in connection with 
professional and consultative services as approved outside activities in 
accordance with 5 CFR 2635.805 and 5 CFR 5501.106. (In cases where 
employees are providing such outside services, they must state for the 
record that the testimony represents their own views and does not 
necessarily represent the official position of the DHHS.)
    (5) Employees making appearances in their private capacity in legal 
or administrative proceedings that do not relate to the Department of 
Health and Human Services (such as cases arising out of traffic 
accidents, crimes, domestic relations, etc.) and not involving 
professional and consultative services.
    (6) Any matters covered in 21 CFR part 20-,involving the Food and 
Drug Administration.
    (7) Any civil or criminal proceedings in State court brought on 
behalf of the Department of Health and Human Services.

    Example (1): While on duty, an employee of the Department witnesses 
an incident in which a fellow employee trips on a loose piece of 
carpeting and sustains an injury. The injured employee brings a private 
tort action against the contractor installing the carpeting and the 
private landlord maintaining the building. The employee/witness is 
served with a subpoena to appear at a deposition to testify about the 
incident. The person seeking the testimony would not be required to 
obtain Agency head approval prior to requesting the testimony, because 
the subject of the testimony does not ``relate to'' the Department, 
within the meaning of Sec. 2.1(d)(5).
    Example (2): While on duty, an employee of the Department witnesses 
a mugging while looking out the window to check the weather, and then 
notifies the local police of what she observed. She is subsequently 
subpoenaed to testify in a criminal proceeding. The local prosecutor 
would not be required to obtain Agency head approval prior to requiring 
the employee to testify, because the subject of the testimony does not 
``relate to'' the Department, within the meaning of Sec. 2.1(d)(5).
    Example (3): A nurse on duty at an Indian Health Service hospital 
emergency room treats a child who is brought in following a report of 
domestic violence. The nurse is subsequently served with a subpoena to 
testify in a criminal proceeding against one of the child's parents 
concerning the injuries to the child which he observed. The local 
prosecutor would be required to obtain Agency head approval prior to 
requiring the nurse to testify, because the subject of the testimony 
involves ``information acquired in the course of performing official 
duties or because of the person's official capacity,'' within the 
meaning of Sec. 2.1(a).
    Example (4): A personnel specialist working for the Department is 
subpoenaed to testify concerning the meaning of entries on time and 
attendance records of an employee, which the requesting party received 
from the employee pursuant to discovery in a personal injury action 
brought by the employee. The party requesting the personnel specialist 
to appear would be required to obtain Agency head approval prior to 
compelling the personnel specialist to testify, because the testimony 
sought involves ``information acquired in the course of performing 
official duties or because of the person's official capacity,'' within 
the meaning of Sec. 2.1(a).
    Example (5): A National Institutes of Health physician is subpoenaed 
in a private medical malpractice action to provide expert testimony in 
her specialty. The party requesting her testimony would be required to 
obtain Agency head approval prior to her testifying in response to the 
subpoena, because the expert testimony sought involves

[[Page 9]]

``information acquired in the course of performing official duties or 
because of the person's official capacity,'' within the meaning of Sec. 
2.1(a).

[52 FR 37146, Oct. 5, 1987, as amended at 55 FR 4611, Feb. 9, 1990; 68 
FR 25838, May 14, 2003]



Sec. 2.2  Definitions.

    Agency head refers to the head of the relevant operating division or 
other major component of the DHHS, or his or her delegatee. Agency head 
for the purposes of this part means the following officials for the 
components indicated:
    (1) Office of the Secretary--Assistant Secretary for Administration 
and Management;
    (2) Administration on Aging--Assistant Secretary for Aging;
    (3) Administration for Children and Families--Assistant Secretary 
for Children and Families;
    (4) Agency for Healthcare Research and Quality--Administrator;
    (5) Agency for Toxic Substances and Disease Registry--Administrator;
    (6) Centers for Disease Control and Prevention--Director;
    (7) Centers for Medicare and Medicaid Services--Administrator;
    (8) Health Resources and Services Administration--Administrator;
    (9) Indian Health Service--Director;
    (10) National Institutes of Health--Director;
    (11) Substance Abuse and Mental Health Services Administration--
Administrator;
    (12) Office of Inspector General--Inspector General.
    Employee includes:
    (1) Commissioned officers in the Public Health Service Commissioned 
Corps, as well as regular and special DHHS employees (except employees 
of the Food and Drug Administration), when they are performing the 
duties of their regular positions, as well as when they are performing 
duties in a temporary assignment at DHHS or another organization.
    (2) Any employees of health insurance intermediaries and carriers 
performing functions under agreements entered into pursuant to sections 
1816 and 1842 of the Social Security Act, 42 U.S.C. 1395h, 1395u; and
    (3) Current and former employees and contractors of entities covered 
under the Federally Supported Health Centers Assistance Act of 1992, as 
amended, 42 U.S.C Sec. 233 (FSHCAA), provided that the requested 
testimony or information relates to the performance of medical, 
surgical, dental or related functions which were performed at a time 
when the DHHS deemed the entity to be covered by the FSHCAA.
    Certify means to authenticate under seal, pursuant to 42 U.S.C 3505, 
official documents of the Department.
    Testify and testimony includes both in-person, oral statements 
before a court, legislative or administrative body and statements made 
pursuant to depositions, interrogatories, declarations, affidavits, or 
other formal participation.

[68 FR 25839, May 14, 2003]



Sec. 2.3  Policy on Presentation of testimony and production of documents.

    No employee or former employee of the DHHS may provide testimony or 
produce documents in any proceedings to which this part applies 
concerning information acquired in the course of performing official 
duties or because of the person's official relationship with the 
Department unless authorized by the Agency head pursuant to this part 
based on a determination by the Agency head, after consultation with the 
Office of the General Counsel, that compliance with the request would 
promote the objectives of the Department.

[68 FR 25839, May 14, 2003]



Sec. 2.4  Procedures when voluntary testimony is requested or when an 
employee is subpoenaed.

    (a) All requests for testimony by an employee or former employee of 
the DHHS in his or her official capacity and not subject to the 
exceptions set forth in Sec. 2.1(d) of this part must be addressed to 
the Agency head in writing and must state the nature of the requested 
testimony, why the information sought is unavailable by any other means, 
and the reasons why the testimony would be in the interest of the DHHS 
or the federal government.
    (b) If the Agency head denies approval to comply with a subpoena for 
testimony, or if the Agency head has

[[Page 10]]

not acted by the return date, the employee will be directed to appear at 
the stated time and place, unless advised by the Office of the General 
Counsel that responding to the subpoena would be inappropriate (in such 
circumstances as, for example, an instance where the subpoena was not 
validly issued or served, where the subpoena has been withdrawn, or 
where discovery has been stayed), produce a copy of these regulations, 
and respectfully decline to testify or produce any documents on the 
basis of these regulations.

[68 FR 25840, May 14, 2003]



Sec. 2.5  Subpoenas duces tecum.

    (a) Whenever a subpoena duces tecum has been served upon a DHHS 
employee or former employee commanding the production of any record, 
such person shall refer the subpoena to the Office of the General 
Counsel (including regional chief counsels) for a determination of the 
legal sufficiency of the subpoena, whether the subpoena was properly 
served, and whether the issuing court or other tribunal has jurisdiction 
over the Department.) If the General Counsel or his designee determines 
that the subpoena is legally sufficient, the subpoena was properly 
served, and the tribunal has jurisdiction, the terms of the subpoena 
shall be complied with unless affirmative action is taken by the 
Department to modify or quash the subpoena in accordance with Fed. R. 
Civ. P. 45 (c).
    (b) If a subpoena duces tecum served upon a DHHS employee or former 
employee commanding the production of any record is determined by the 
Office of the General Counsel to be legally insufficient, improperly 
served, or from a tribunal not having jurisdiction, such subpoena shall 
be deemed a request for records under the Freedom of Information Act and 
shall be handled pursuant to the rules governing public disclosure 
established in 45 CFR part 5.

[68 FR 25840, May 14, 2003]



Sec. 2.6  Certification and authentication of records.

    Upon request, DHHS agencies will certify, pursuant to 42 U.S.C. 
3505, the authenticity of copies of records that are to be disclosed. 
Fees for copying and certification are set forth in 45 CFR 5.43.

[68 FR 25840, May 14, 2003]



PART 3_CONDUCT OF PERSONS AND TRAFFIC ON THE NATIONAL INSTITUTES OF HEALTH 
FEDERAL ENCLAVE--Table of Contents




                            Subpart A_General

Sec.
3.1 Definitions.
3.2 Applicability.
3.3 Compliance.
3.4 False reports and reports of injury or damage.
3.5 Lost and found, and abandoned property.
3.6 Nondiscrimination.

                      Subpart B_Traffic Regulations

3.21 Emergency vehicles.
3.22 Request for identification.
3.23 Parking.
3.24 Parking permits.
3.25 Servicing of vehicles.
3.26 Speed limit.
3.27 Bicycles.

                    Subpart C_Facilities and Grounds

3.41 Admission to facilities or grounds.
3.42 Restricted activities.
3.43 Removal of property.
3.44 Solicitation.

                           Subpart D_Penalties

3.61 Penalties.

    Authority: 40 U.S.C. 318-318d. 486; Delegation of Authority, 33 FR 
604.

    Source: 55 FR 2068, Jan. 22, 1990, unless otherwise noted.



                            Subpart A_General



Sec. 3.1  Definitions.

    Director means the Director or Acting Director of the National 
Institutes of Health (NIH), or other officer or employee of NIH to whom 
the authority involved has been delegated.
    Enclave means, unless the context requires a different meaning, the 
area, containing about 318 acres, acquired by the United States in 
several parcels in the years 1935 through 1983, and any further future 
acquisitions, comprising

[[Page 11]]

the National Institutes of Health located in Montgomery County, 
Maryland, over which the United States acquired exclusive jurisdiction 
under the Act of March 31, 1953, Chapter 158 (1953 Maryland Laws 311).
    Police officer means a uniformed or non-uniformed police officer 
appointed under a delegation of authority to the Director under Title 40 
United States Code section 318 or 318d; any other Federal law 
enforcement officer; and any other person whose law enforcement services 
are secured by contract, or upon request or deputation from a State or 
local law enforcement agency.



Sec. 3.2  Applicability.

    (a) The regulations in this part apply to all areas in the enclave 
and to all persons on or within the enclave, except as otherwise 
provided.
    (b) The regulations in this part do not apply to occupants, their 
visitors, and other authorized persons in areas used as living quarters:
    (1) When specifically made inapplicable, and
    (2) In the case of the following provisions: Sec. 3.24 Parking 
permits; Sec. 3.25 Servicing of vehicles; Sec. 3.42 Hobbies and 
sports; and Sec. 3.42(f) Smoking.
    (c) All regulations in this part are in addition to the provisions 
in the United States Code, including title 18 relating to crimes and 
criminal procedure, and title 21 relating to food and drugs, which 
apply:
    (1) Without regard to the place of the offense, or
    (2) To areas (such as the enclave) subject to the ``special maritime 
and territorial jurisdiction of the United States,'' as defined in Title 
18 United States Code section 7.
    (d) In accordance with the Assimilative Crimes Act (18 U.S.C. 13), 
whoever is found guilty of an offense which, although not made 
punishable by any act of Congress, nor any provision of these 
regulations, would be punishable if committed within the State of 
Maryland, shall be guilty of a like offense and subject to a like 
punishment. In the event of an irreconcilable conflict between a 
provision of this part and a Maryland statute governing the identical 
subject matter, this part shall control.
    (e) Federal criminal statutes which apply. The following Federal 
criminal statutes in the United States Code apply to Federal enclaves 
and elsewhere without regard to the place of the offense. This listing 
is provided solely for the information of the public and is not all-
inclusive. The omission of other Federal statutes does not mean that 
such other statutes do not apply. In any given situation, the cited 
statutory provisions and any amendments in effect when the alleged 
offense occurred shall determine the specifics of the offense, 
applicability, and penalty.

----------------------------------------------------------------------------------------------------------------
               Subject                        U.S. Code            Provides generally        Maximum penalty
----------------------------------------------------------------------------------------------------------------
1. By force or threat of force,        18 U.S.C. 245..........  Prohibits..............  Not involving death or
 willful injury, intimidation or                                                          bodily injury:
 interference with, or attempts to                                                        Imprisonment one year
 injure, intimidate or interfere                                                          and/or $1,000 fine.
 with, a person from participating in
 or enjoying any benefit, service,
 privilege, program, facility, or
 activity, provided by or
 administered by the U.S., and
 engaging in certain other Federal
 protected activities.
2. Malicious destruction or damage,    18 U.S.C. 844(f).......  Prohibits..............  First offense not
 by an explosive, to a building or                                                        involving death or
 other property owned, possessed,                                                         personal injury:
 used, or leased by the U.S., U.S.                                                        Imprisonment 10 years
 agency, or any organization                                                              and/or $10,000 fine
 receiving Federal financial                                                              and seizure and
 assistance.                                                                              forfeiture of
                                                                                          explosive materials.
3. Possession of explosive in          18 U.S.C. 844(g).......  Prohibits, except with   Imprisonment one year
 buildings owned, possessed, used, or                            written consent of the   and/or $1,000 fine and
 leased by U.S. or U.S. agency.                                  agency.                  seizure and forfeiture
                                                                                          of explosive
                                                                                          materials.

[[Page 12]]

 
4. Use of or carrying an explosive to  18 U.S.C. 844(h).......  Prohibits..............  First offense:
 commit, or during commission of, a                                                       Imprisonment 10 years
 felony prosecutable in a U.S. court.                                                     and seizure and
                                                                                          forfeiture of
                                                                                          explosive materials.
5. Use of or carrying a firearm        18 U.S.C. 924(c).......  Prohibits..............  First offense:
 during and in relation to any crime                                                      Imprisonment 5 years
 of violence prosecutable in a U.S.                                                       and $5,000 fine and
 court.                                                                                   seizure and forfeiture
                                                                                          of firearm and
                                                                                          ammunition.
6. Manufacture, distribution,          21 U.S.C. 841, 842,      Prohibits, except as     First offense:
 dispensing, or possession with         843, 845.                authorized by the        Imprisonment 20 years
 intent to do these acts, of                                     Controlled Substances    and/or $250,000 fine
 narcotics and other controlled                                  Act (generally 21        depending on the
 substances and counterfeit                                      U.S.C. 801-904).         amount and kind of
 substances.                                                                              substance (twice the
                                                                                          above penalties for
                                                                                          distribution by a
                                                                                          person at least 18
                                                                                          years of age to one
                                                                                          under age 21).
7. Simple possession of narcotics or   21 U.S.C. 844..........  Prohibits, unless        First offense:
 other controlled substances.                                    substance obtained       Imprisonment 1 year
                                                                 directly, or pursuant    and/or $5,000 fine.
                                                                 to prescription or
                                                                 order, from a
                                                                 practitioner, acting
                                                                 in the course of
                                                                 professional practice,
                                                                 or as otherwise
                                                                 authorized under the
                                                                 Controlled Substances
                                                                 Act.
----------------------------------------------------------------------------------------------------------------

    (f) Maryland criminal statutes that apply. The matters described in 
this paragraph are governed, in whole or in part, by the current version 
of the cited Maryland criminal statutory provisions, which are made 
Federal criminal offenses under the Assimilative Crimes Act (18 U.S.C. 
13). This listing sets forth areas of conduct particularly relevant to 
the enclave and is provided solely for the information of the public. 
The list is not all-inclusive and omission of other Maryland criminal 
statutes does not mean that such other statutes are not assimilated as 
Federal offenses under the Act. Generally, other Maryland criminal 
statutes will apply on the enclave, by force of the Act, unless 
superseded by Federal Law or a given provision of this part. In any 
given situation, the cited statutory provisions and any amendments in 
effect when the alleged offense occured shall determine the specifics of 
the offense, applicability, and penalty.

----------------------------------------------------------------------------------------------------------------
               Subject                 Maryland code annotated     Provides generally        Maximum penalty
----------------------------------------------------------------------------------------------------------------
1. Pedestrian right-of-way...........  Transportation, Sec. 21- Pedestrians have the     Imprisonment 2 months
                                        502.                     right-of-way in          and/or $500 fine.
                                                                 crosswalks and certain
                                                                 other areas. Subject
                                                                 to certain limitations.
                                       Sec. 21-511............  Blind, partially blind,  $500 fine.
                                                                 or hearing impaired
                                                                 pedestrians have the
                                                                 right-of-way at any
                                                                 crossing or
                                                                 intersection. Subject
                                                                 to certain limitations.
2. Drivers to exercise due care......  Transportation, Sec. 21- Drivers shall exercise   $500 fine.
                                        504.                     due care to avoid
                                                                 colliding with
                                                                 pedestrians, children
                                                                 and incapacitated
                                                                 individuals.
3. Driving while intoxicated, under    Transportation, Sec. 21- Prohibits..............  Sec. 21-902(a) (driving
 the influence of alcohol and/or a      902.                                              while intoxicated,
 drug or controlled substance.                                                            first offense):
                                                                                          Imprisonment 1 year
                                                                                          and/or $1,000 fine.
                                                                                         Sec. 21-902 (b), (c),
                                                                                          (d) (driving under the
                                                                                          influence):
                                                                                          Imprisonment 2 months
                                                                                          and/or $500 fine.
4. Unattended motor vehicles.........  Transportation, Sec. 21- Prohibits leaving motor  $500 fine.
                                        1101.                    vehicles unattended
                                                                 unless certain
                                                                 precautions are taken.
5. Carrying or wearing certain         Article 27, Sec. 36....  Prohibits, except for    Imprisonment 3 years or
 concealed weapons (other than                                   law enforcement          $1,000 fine.
 handguns) or openly with intent to                              personnel or as a
 injure.                                                         reasonable precaution
                                                                 against apprehended
                                                                 danger.

[[Page 13]]

 
6. Unlawful wearing, carrying, or      Article 27, Sec. 36B...  Prohibits except by law  First offense and no
 transporting a handgun, whether                                 enforcement personnel    prior related offense:
 concealed or openly.                                            or with permit.          Imprisonment 3 years
                                                                                          and/or $2,500 fine.
7. Use of handgun or concealable       Article 27, Sec. 36B...  Prohibits..............  Imprisonment 20 years.
 antique firearm in commission of
 felony or crime of violence.
8. Disturbance of the peace..........  Article 27, Sec. 122...  Prohibits acting in a    Imprisonment 30 days
                                                                 disorderly manner in     and/or $500 fine.
                                                                 public places.
9. Gambling..........................  Article 27, Secs. 240,   Prohibits betting,       Sec. 240: Imprisonment
                                        245.                     wagering and gambling,   one year and/or $1,000
                                                                 and certain games of     fine. Sec. 245:
                                                                 chance (does not apply   Imprisonment 2 years
                                                                 to vending or            and/or $100 fine.
                                                                 purchasing lottery
                                                                 tickets authorized
                                                                 under State law in
                                                                 accordance with
                                                                 approved procedures).
----------------------------------------------------------------------------------------------------------------



Sec. 3.3  Compliance.

    A person must comply with the regulations in this part; with all 
official signs; and with the lawful directions or orders of a police 
officer or other authorized person, including traffic and parking 
directions.



Sec. 3.4  False reports and reports of injury or damage.

    A person may not knowingly give any false or fictitious report 
concerning an accident or violation of the regulations of this part or 
any applicable Federal or Maryland statute to any person properly 
investigating an accident or alleged violation. All incidents resulting 
in injury to persons or willful damage to property in excess of $100.00 
(one hundred dollars) in value must be reported by the persons involved 
to the Police Office as soon as possible. The Police Office's main 
location and telephone number is: Building 31, Room B3BN10; (301) 496-
5685.



Sec. 3.5  Lost and found, and abandoned property.

    Lost articles which are found on the enclave, including money and 
other personal property, together with any identifying information, must 
be deposited at the Police Office or with an office (such as the place 
where found) which may likely have some knowledge of ownership. If the 
article is deposited with an office other than the Police Office and the 
owner does not claim it within 30 days, it shall be deposited at the 
Police Office for further disposition in accordance with General 
Services Administration regulations (41 CFR part 101-48). Abandoned, or 
other unclaimed property and, in the absence of specific direction by a 
court, forfeited property, may be so identified by the Police Office and 
sold and the proceeds deposited in accordance with 41 CFR 101-45.304 and 
101-48.305.

[57 FR 1874, Jan. 16, 1992]



Sec. 3.6  Nondiscrimination.

    A person may not discriminate by segregation or otherwise against 
another person because of age, color, creed, handicap, national origin, 
race or sex, in furnishing or by refusing to furnish to that person the 
use of any facility of a public nature, including all services, 
privileges, accommodations, and activities provided within the enclave. 
(Title 18 United States Code section 245 prohibits, by use of force or 
threat of force, willful injury, intimidation, or interference with, a 
person from participating in or enjoying any benefit, service, 
privilege, program, facility, or activity provided by or administered by 
the United States, attempts to do these acts, and engaging in certain 
other activities.)



                      Subpart B_Traffic Regulations



Sec. 3.21  Emergency vehicles.

    A person must yield the right of way to an emergency vehicle 
operating its siren or flashing lights.



Sec. 3.22  Request for identification.

    Upon request by a police officer, a person involved in any of the 
following situations must provide identification, for example, by 
exhibiting satisfactory

[[Page 14]]

credentials (such as an employment identification card or driver's 
license):
    (a) A traffic accident within the enclave;
    (b) The police officer reasonably believes that the individual is 
engaged in, or has engaged in, criminal conduct or a violation of the 
regulations of this part; or
    (c) The enclave or a portion of the enclave is not open to the 
public (see Sec. 3.41).
    A driver of a motor vehicle involved in an accident within the 
enclave shall also exhibit, upon the request of a police officer, the 
owner's registration card or other satisfactory proof of ownership.



Sec. 3.23  Parking.

    (a) A person may not stand (vehicle stopped, with or without, an 
occupant), or park a motor vehicle or other vehicle:
    (1) In a lane, space, or area not designated by a sign for parking, 
and/or standing;
    (2) On a sidewalk;
    (3) Within an intersection or crosswalk;
    (4) Within 10 feet of a fire hydrant, 5 feet of a driveway, or 20 
feet of a stop sign, crosswalk, or traffic control signal;
    (5) In a double-parked position;
    (6) At a curb painted yellow;
    (7) On the side of a street facing oncoming traffic;
    (8) In a position that would obstruct traffic;
    (9) For a period in excess of 24 hours, except at living quarters, 
or with the approval of the Police Office.
    (b) A person must park bicycles, motorbikes, and similar vehicles 
only in designated areas, and may not bring these vehicles inside 
buildings.
    (c) A visitor must park in an area identified for that purpose by 
posted signs or similar instructions, such as ``visitor parking'' and 
``reserved for visitors''.
    (d) A person may not drive or park an unauthorized motor vehicle on 
a grassy, or any other unpaved, area without the approval of the Police 
Office.



Sec. 3.24  Parking permits.

    Except for visitor parking, a person may not park a motor vehicle 
without displaying a parking permit, currently valid for that location. 
The Director may revoke or refuse to issue or renew any parking permit 
for violation of this section, or any provision of this part.



Sec. 3.25  Servicing of vehicles.

    A person may not wash, polish, change oil, lubricate, or make 
nonemergency repairs on a privately owned vehicle.



Sec. 3.26  Speed limit.

    The speed limit is 25 miles per hour, unless otherwise posted. A 
driver of a vehicle may not exceed the speed limit.



Sec. 3.27  Bicycles.

    A person may not operate a bicycle, motorbike, or similar vehicle 
without a horn or other warning device, and, if the vehicle is operated 
between dusk and dawn, it must be equipped with an operating headlight, 
and taillight or reflector.



                    Subpart C_Facilities and Grounds



Sec. 3.41  Admission to facilities or grounds.

    The enclave is officially open to the public during normal working 
and visiting hours and for approved public events. The enclave is closed 
to the public at all other times, and the Director may also officially 
close all or part of the enclave, or any building, in emergency 
situations and at other times the Director deems necessary to ensure the 
orderly conduct of Government business. When all or part of the enclave 
is closed to the public, admission is restricted to employees and other 
authorized persons who may be required to display Government credentials 
or other identification when requested by a police officer and may be 
required to sign a register. The living quarters and adjacent areas are 
not open to the public but are open at all times to occupants and their 
visitors and business invitees, unless otherwise closed by the Director.

[[Page 15]]



Sec. 3.42  Restricted activities.

    (a) Hobbies and sports. A person may undertake hobbies and sports 
only in designated areas or as approved by the Director.
    (b) Pets and other animals. A person may not bring on the enclave 
any cat, dog, or other animal except for authorized purposes. This 
prohibition does not apply to domestic pets at living quarters or to the 
exercise of these pets under leash or other appropriate restraints. The 
use of a dog by a handicapped person to assist that person is 
authorized.
    (c) Photography. A person may take photographs, films or 
audiovisuals, for personal or news purposes on the grounds of the 
enclave or in entrances, lobbies, foyers, corridors, and auditoriums in 
use for public meetings, except when contrary to security regulations or 
Department of Health and Human Services policies, or where prohibited by 
appropriate signs. Photographs and similar activities for advertising or 
commercial purposes may be taken only with the advance written approval 
of the Director. A person may take photographs of a patient only with 
the informed consent of the patient (or the natural or legal guardian) 
and of the Director of the Warren Grant Magnuson Clinical Center or 
delegate.
    (d) Intoxicating beverages, narcotics, and other controlled 
substances. A person may not possess, sell, consume, or use alcohol or 
other intoxicating beverages, except in connection with official duties, 
as part of authorized research, or as otherwise authorized by the 
Director, or, in the case of possession, consumption or use only, in 
living quarters. (The sale, consumption, use, or possession of narcotics 
and other controlled substances is prohibited and shall be governed by 
the Controlled Substances Act (21 U.S.C. 841-845); driving under the 
influence of an alcoholic beverage, drug or controlled substance is 
prohibited and shall be governed by the Maryland Transportation Code 
Annotated section 21-902.)
    (e) Nuisances and disturbances. The following acts by a person are 
prohibited: Unwarranted loitering, disorderly conduct (acting in a 
disorderly manner to the disturbance of the public peace is prohibited 
and shall be governed by Maryland Code Annotated, Article 27, section 
122); littering or disposal of rubbish in an unauthorized manner, the 
creation of any hazard to persons or property; the throwing of articles 
of any kind from or at a building; the climbing upon any part of a 
building for other than an authorized purpose; the loud playing of 
radios or other similar devices; and rollerskating, skateboarding, 
sledding or similar activities, except in officially designated areas.
    (f) Smoking. Except as part of an approved medical research 
protocol, a person may not smoke in any building on the enclave.
    (g) Firearms, explosive, and other weapons. No person other than a 
specifically authorized police officer shall possess firearms, 
explosives, or other dangerous or deadly weapons or dangerous materials 
intended to be used as weapons either openly or concealed. Upon written 
request, the Director may permit possession in living quarters of 
antique firearms held for collection purposes, if the Director finds 
that the collection does not present any risk of harm.

[55 FR 2068, Jan. 22, 1990, as amended at 57 FR 1874, Jan. 16, 1992]



Sec. 3.43  Removal of property.

    A person may not remove Federal property from the enclave or any 
building on the enclave without a property pass, signed by an authorized 
property custodian, which specifically describes the items to be 
removed. In an emergency, or when the property custodian is not 
available, a police officer may approve removal of Federal property if, 
after consulting with the administrative officer or other appropriate 
official, the police officer is authorized by the official to do so. 
Privately-owned property, other than that ordinarily carried on one's 
person, may be removed only under this property pass procedure, or upon 
properly establishing ownership of the property to a police officer.
    Packages, briefcases, or other containers brought within the enclave 
are subject to inspection while on, or being removed from, the enclave.

[[Page 16]]



Sec. 3.44  Solicitation.

    It shall be unlawful for a person (other than an employee using 
authorized bulletin boards), without prior written approval of the 
Director, to offer or display any article or service for sale within the 
enclave buildings or grounds; or to display any sign, placard, or other 
form of advertisement; or to collect private debts; or to solicit 
business, alms, subscriptions or contributions, except in connection 
with approved national or local campaigns for funds for welfare, health 
and other public interest purposes, or solicitation of labor 
organization membership or dues as authorized under the Civil Service 
Reform Act of 1978 (Pub. L. 95-454).
    This provision shall not apply to authorized lessees and their 
agents and employees with regard to space leased for commercial, 
cultural, educational, or recreational purposes, under the Public 
Buildings Cooperative Use Act of 1976 (40 U.S.C. 490(A)(16)).



                           Subpart D_Penalties



Sec. 3.61  Penalties.

    (a) A person found guilty of violating any provision of the 
regulations in this part is subject to a fine of not more than $50 or 
imprisonment of not more than thirty days or both, for each violation 
(40 U.S.C. 318c).
    (b) Penalties for violation of offenses proscribed by Federal 
statutes (generally codified in title 18 of the United States Code) and 
Maryland criminal statutes which are made Federal offenses under the 
Assimilative Crimes Act and are prescribed in the applicable provisions 
of those statutes.



PART 4_SERVICE OF PROCESS--Table of Contents




Sec.
4.1 Suits against the Department and its employees in their official 
          capacities.
4.2 Other process directed to the Department or Secretary.
4.3 Process against Department officials in their individual capacities.
4.4 Acknowledgment of mailed process.
4.5 Effect of regulations.
4.6 Materials related to petitions under the National Vaccine Injury 
          Compensation Program.

    Authority: 5 U.S.C. 301, 42 U.S.C. 300aa-11.

    Source: 48 FR 24079, May 31, 1983, unless otherwise noted.



Sec. 4.1  Suits against the Department and its employees in their official 
capacities.

    Summonses and complaints to be served by mail on the Department of 
Health and Human Services, the Secretary of Health and Human Services, 
or other employees of the Department in their official capacities should 
be sent to the General Counsel, Department of Health and Human Services, 
200 Independence Avenue, S.W., Washington, DC 20201.



Sec. 4.2  Other process directed to the Department or Secretary.

    Subpoenas and other process (other than summonses and complaints) 
that are required to be served on the Department of Health and Human 
Services or the Secretary of Health and Human Services in his official 
capacity should be served as follows:
    (a) If authorized by law to be served by mail, any mailed process 
should be sent to the General Counsel, Department of Health and Human 
Services, 200 Independence, S.W., Washington, DC 20201.
    (b) If served by an individual, the process should be delivered to 
the staff of the correspondence control unit in the Office of the 
General Counsel, Room 711-E, 200 Independence Avenue, S.W., Washington, 
DC, or, in the absence of that staff, to any Deputy General Counsel or 
secretary to any Deputy General Counsel of the Department.



Sec. 4.3  Process against Department officials in their individual 
capacities.

    Process to be served on Department officials in their individual 
capacities must be served in compliance with the requirements for 
service of process on individuals who are not governmental officials. 
The Office of the General Counsel is authorized but not required to 
accept process to be served on Departmental officials in their 
individual capacities if the suit relates to an employee's official 
duties.

[[Page 17]]



Sec. 4.4  Acknowledgement of mailed process.

    The Department will not provide a receipt or other acknowledgement 
of process received, except for a return receipt associated with 
certified mail and, where required, the acknowledgement specified by 
Rule 4(c)(2)(C) of the Federal Rules of Civil Procedure.



Sec. 4.5  Effect of regulations.

    The regulations in this part are intended solely to identify 
Department officials who are authorized to accept service of process. 
Litigants must comply with all requirements pertaining to service of 
process that are established by statute and court rule even though they 
are not repeated in these regulations.



Sec. 4.6  Materials related to petitions under the National Vaccine Injury 
Compensation Program.

    Notwithstanding the provisions of Sec. Sec. 4.1, 4.2, and 4.3, 
service of the Secretary's copies of petitions for compensation under 
the VICP and of related filings, by mail, shall be served upon the 
Director, Division of Vaccine Injury Compensation, Office of Special 
Programs, Health Resources and Services Administration 5600 Fishers 
Lane, Parklawn Building, Room 16C-17, Rockville, Maryland 20857, or in 
person, shall be served upon the Director, Division of Vaccine Injury 
Compensation, Office of Special Programs, Health Resources and Services 
Administration, 4350 East West Highway, 10th Floor, Bethesda, Maryland 
20814.

[67 FR 78990, Dec. 27, 2002]



PART 5_FREEDOM OF INFORMATION REGULATIONS--Table of Contents




                         Subpart A_Basic Policy

Sec.
5.1 Purpose.
5.2 Policy.
5.3 Scope.
5.4 Relationship between the FOIA and the Privacy Act of 1974.
5.5 Definitions.

                      Subpart B_Obtaining a Record

5.21 How to request records.
5.22 Requests not handled under the FOIA.
5.23 Referral of requests outside the Department.
5.24 Responding to your request.

                 Subpart C_Release and Denial of Records

5.31 Designation of authorized officials.
5.32 Release of records.
5.33 Denial of requests.
5.34 Appeal of denials.
5.35 Time limits.

                             Subpart D_Fees

5.41 Fees to be charged--categories of requests.
5.42 Fees to be charged--general provisions.
5.43 Fee schedule.
5.44 Procedures for assessing and collecting fees.
5.45 Waiver or reduction of fees.

            Subpart E_Records Available for Public Inspection

5.51 Records available.
5.52 Indexes of records.

             Subpart F_Reasons for Withholding Some Records

5.61 General.
5.62 Exemption one: National defense and foreign policy.
5.63 Exemption two: Internal personnel rules and practices.
5.64 Exemption three: Records exempted by other statutes.
5.65 Exemption four: Trade secrets and confidential commercial or 
          financial information.
5.66 Exemption five: Internal memoranda.
5.67 Exemption six: Clearly unwarranted invasion of personal privacy.
5.68 Exemption seven: Law enforcement.
5.69 Exemptions 8 and 9: Records on financial institutions; records on 
          wells.

    Authority: 5 U.S.C. 552, 18 U.S.C. 1905, 31 U.S.C. 9701, 42 U.S.C. 
1306(c), E.O. 12600.

    Source: 53 FR 47700, Nov. 25, 1988, unless otherwise noted.



                         Subpart A_Basic Policy



Sec. 5.1  Purpose.

    This part contains the rules that the Department of Health and Human 
Services (HHS) follows in handling requests for records under the 
Freedom of Information Act (FOIA). It describes how to make a FOIA 
request; who can release records and who can decide not to release; how 
much time it should take to make a determination regarding release; what 
fees may be charged;

[[Page 18]]

what records are available for public inspection; why some records are 
not released; and your right to appeal and then go to court if we refuse 
to release records.



Sec. 5.2  Policy.

    As a general policy, HHS follows a balanced approach in 
administering FOIA. We not only recognize the right of public access to 
information in the possession of the Department, but also protect the 
integrity of internal processes. In addition, we recognize the 
legitimate interests of organizations or persons who have submitted 
records to the Department or who would otherwise be affected by release 
of records. For example, we have no discretion to release certain 
records, such as trade secrets and confidential commercial information, 
prohibited from release by law. This policy calls for the fullest 
responsible disclosure consistent with those requirements of 
administrative necessity and confidentiality which are recognized in the 
Freedom of Information Act.



Sec. 5.3  Scope.

    These rules apply to all components of the Department. Some units 
may establish additional rules because of unique program requirements, 
but such rules must be consistent with these rules and must have the 
concurrence of the Assistant Secretary for Public Affairs. Existing 
implementing rules remain in effect to the extent that they are 
consistent with the new Departmental regulation. If additional rules are 
issued, they will be published in the Federal Register, and you may get 
copies from our Freedom of information Officers.



Sec. 5.4  Relationship between the FOIA and the Privacy Act of 1974.

    (a) Coverage. The FOIA and this rule apply to all HHS records. The 
Privacy Act, 5 U.S.C. 552a, applies to records that are about 
individuals, but only if the records are in a system of records. 
``Individuals'' and ``system of records'' are defined in the Privacy Act 
and in our Privacy Act regulation, part 5b of this title.
    (b) Requesting your own records. If you are an individual and 
request records, then to the extent you are requesting your own records 
in a system of records, we will handle your request under the Privacy 
Act and part 5b. If there is any record that we need not release to you 
under those provisions, we will also consider your request under the 
FOIA and this rule, and we will release the record to you if the FOIA 
requires it.
    (c) Requesting another individual's record. Whether or not you are 
an individual, if you request records that are about an individual 
(other than yourself) and that are in a system of records, we will 
handle your request under the FOIA and this rule. (However, if our 
disclosure in response to your request would be permitted by the Privacy 
Act's disclosure provision, 5 U.S.C. 552a(b), for reasons other than the 
requirements of the FOIA, and if we decide to make the disclosure, then 
we will not handle your request under the FOIA and this rule. For 
example, when we make routine use disclosures pursuant to requests, we 
do not handle them under the FOIA and this rule. ``Routine use'' is 
defined in the Privacy Act and in Part 5b). If we handle your request 
under the FOIA and this rule and the FOIA does not require releasing the 
record to you, then the Privacy Act may prohibit the release and remove 
our discretion to release.



Sec. 5.5  Definitions.

    As used in this part,
    Agency means any executive department, military department, 
government corporation, government controlled corporation, or other 
establishment in the executive branch of the Federal Government, or any 
independent regulatory agency. Thus, HHS is an agency. A private 
organization is not an agency even if it is performing work under 
contract with the Government or is receiving Federal financial 
assistance. Grantee and contractor records are not subject to the FOIA 
unless they are in the possession or under the control of HHS or its 
agents, such as Medicare health insurance carriers and intermediaries.
    Commercial use means, when referring to a request, that the request 
is from or on behalf of one who seeks information for a use or purpose 
that furthers

[[Page 19]]

the commercial, trade, or profit interests of the requester or of a 
person on whose behalf the request is made. Whether a request is for a 
commercial use depends on the purpose of the request and the use to 
which the records will be put; the identity of the requester 
(individual, non-profit corporation, for-profit corporation), on the 
nature of the records, while in some cases indicative of that purpose or 
use, is not necessarily determinative. When a request is from a 
representative of the news media, a purpose or use supporting the 
requester's news dissemination function is not a commercial use.
    Department or HHS means the Department of Health and Human Services. 
It includes Medicare health insurance carriers and intermediaries to the 
extent they are performing functions under agreements entered into under 
sections 1816 and 1842 of the Social Security Act, 42 U.S.C. 1395h, 
1395u.
    Duplication means the process of making a copy of a record and 
sending it to the requester, to the extent necessary to respond to the 
request. Such copies include paper copy, microform, audio-visual 
materials, and magnetic tapes, cards, and discs.
    Educational institution means a preschool, elementary or secondary 
school, institution of undergraduate or graduate higher education, or 
institution of professional or vocational education, which operates a 
program of scholarly research.
    Freedom of Information Act or FOIA means section 552 of Title 5, 
United States Code, as amended.
    Freedom of Information Officer means an HHS official who has been 
delegated the authority to release or withhold records and assess, 
waive, or reduce fees in response to FOIA requests.
    Non-commercial scientific institution means an institution that is 
not operated substantially for purposes of furthering its own or someone 
else's business, trade, or profit interests, and that is operated for 
purposes of conducting scientific research whose results are not 
intended to promote any particular product or industry.
    Records means any handwritten, typed, or printed documents (such as 
memoranda, books, brochures, studies, writings, drafts, letters, 
transcripts, and minutes) and documentary material in other forms (such 
as punchcards; magnetic tapes, cards, or discs; paper tapes; audio or 
video recordings; maps; photographs; slides; microfilm; and motion 
pictures). It does not include objects or articles such as exhibits, 
models, equipment, and duplication machines or audiovisual processing 
materials. Nor does it include books, magazines, pamphlets, or other 
reference material in formally organized and officially designated HHS 
libraries, where such materials are available under the rules of the 
particular library.
    Representative of the news media means a person actively gathering 
information for an entity organized and operated to publish or broadcast 
news to the public. News media entities include television and radio 
broadcasters, publishers of periodicals who distribute their products to 
the general public or who make their products available for purchase or 
subscription by the general public, and entities that may disseminate 
news through other media (e.g., electronic dissemination of text). We 
will treat freelance journalists as representatives of a new media 
entity if they can show a likelihood of publication through such an 
entity. A publication contract is such a basis, and the requester's past 
publication record may show such a basis.
    Request means asking for records, whether or not you refer 
specifically to the Freedom of Information Act. Requests from Federal 
agencies and court orders for documents are not included within this 
definition. Subpoenas are requests only to the extent provided by Part 2 
of this title.
    Review means, when used in connection with processing records for a 
commercial use request, examining the records to determine what 
portions, if any, may be withheld, and any other processing that is 
necessary to prepare the records for release. It includes only the 
examining and processing that are done the first time we analyze whether 
a specific exemption applies to a particular record or portion of a 
record. It does not include examination done in the appeal stage with 
respect to an exemption that was applied at the initial request stage. 
However, if we initially

[[Page 20]]

withhold a record under one exemption, and on appeal we determine that 
that exemption does not apply, then examining the record in the appeal 
stage for the purpose of determining whether a different exemption 
applies is included in review. It does not include the process of 
researching or resolving general legal or policy issues regarding 
exemptions.
    Search means looking for records or portions of records responsive 
to a request. It includes reading and interpreting a request, and also 
page-by-page and line-by-line examination to identify responsive 
portions of a document. However, it does not include line-by-line 
examination where merely duplicating the entire page would be a less 
expensive and quicker way to comply with the request.



                      Subpart B_Obtaining a Record



Sec. 5.21  How to request records.

    (a) General. Our policy is to answer all requests, both oral and 
written, for records. However, in order to have the rights given you by 
the FOIA and by this regulation (for example, the right to appeal if we 
deny your request and the right to have our decisions reviewed in 
court), you must either make your request in writing or make it orally 
to a Freedom of Information Officer. Freedom of Information Officers and 
their staffs may put in writing any oral requests they receive directly.
    (b) Addressing requests. It will help us to handle your request 
sooner if you address it to the Freedom of Information Officer in the 
HHS unit that is most likely to have the records you want. (See Sec. 
5.31 of this Part for a list of Freedom of Information Officers.) If you 
cannot determine this, send the request to: HHS Freedom of Information 
Officer, 645-F, Hubert H. Humphrey Building, Department of Health and 
Human Services, 200 Independence Avenue SW., Washington, DC 20201. Write 
the words ``Freedom of Information Act Request'' on the envelope and 
letter.
    (c) Details in the letter. You should provide details that will help 
us identify and find the records you are requesting. If there is 
insufficient information, we will ask you for more. Include your 
telephone number(s) to help us reach you if we have questions. If you 
are not sure how to write your request or what details to include, 
communicate with a Freedom of Information Officer.



Sec. 5.22  Requests not handled under the FOIA.

    (a) We will not handle your request under the FOIA and this 
regulation to the extent it asks for records that are currently 
available, either from HHS or from another part of the Federal 
Government, under a statute that provides for charging fees for those 
records. For example, we will not handle your request under the FOIA and 
this regulation to the extent it asks for detailed earnings statements 
under the Social Security program, or records currently available from 
the Government Printing Office of the National Technical Information 
Service.
    (b) We will not handle your request under the FOIA and this 
regulation to the extent it asks for records that are distributed by an 
HHS program office as part of its regular program activity, for example, 
health education brochures distributed by the Public Health Service or 
public information leaflets distributed by the Social Security 
Administration.



Sec. 5.23  Referral of requests outside the Department.

    If you request records that were created by, or provided to us by, 
another Federal agency, and if that agency asserts control over the 
records, we may refer the records and your request to that agency. We 
may likewise refer requests for classified records to the agency that 
classified them. In these cases, the other agency will process and 
respond to your request, to the extent it concerns those records, under 
that agency's regulation, and you need not make a separate request to 
that agency. We will notify you when we refer your request to another 
agency.



Sec. 5.24  Responding to your request.

    (a) Retrieving records. The Department is required to furnish copies 
of records only when they are in our possession or we can retrieve them 
from storage. If we have stored the records

[[Page 21]]

you want in the National Archives or another storage center, we will 
retrieve and review them for possible disclosure. However, the Federal 
Government destroys many old records, so sometimes it is impossible to 
fill requests. Various laws, regulations, and manuals give the time 
periods for keeping records before they may be destroyed. For example, 
there is information about retention of records in the Records Disposal 
Act of 1944, 44 U.S.C. 3301 through 3314; the Federal Property 
Management Regulations, 41 CFR 101-11.4; the General Records Schedules 
of the National Archives and Records Administration; and in the HHS 
Handbook: Files Maintenance and Records Disposition.
    (b) Furnishing records. The requirement is that we furnish copies 
only of records that we have or can retrieve. We are not compelled to 
create new records. For example, we are not required to write a new 
program so that a computer will print information in the format you 
prefer. However, if the requested information is maintained in 
computerized form, but we can, with minimal computer instructions, 
produce the information on paper, we will do this if it is the only way 
to respond to a request. Nor are we required to perform research for 
you. On the other hand, we may decide to conserve government resources 
and at the same time supply the records you need by consolidating 
information from various records rather than copying them all. Moreover, 
we are required to furnish only one copy of a record and usually impose 
that limit. If information exists in different forms, we will provide 
the record in the form that best conserves government resources. For 
example, if it requires less time and expense to provide a computer 
record as a paper printout rather than in an electronic medium, we will 
provide the printout.



                 Subpart C_Release and Denial of Records



Sec. 5.31  Designation of authorized officials.

    (a) Freedom of Information Officers. To provide coordination and 
consistency in responding to FOIA requests, only Freedom of Information 
Officers have the authority to release or deny records. These same 
officials determine fees.
    (1) HHS Freedom of Information Officer. Only the HHS Freedom of 
Information Officer may determine whether to release or deny records in 
any of the following situations:
    (i) The records you seek include records addressed to or sent from 
an official or office of the Office of the Secretary, including its 
staff offices, or of any Regional Director's Office;
    (ii) The records you seek include any records of the Office of Human 
Development Services, the Family Support Administration, or any 
organizational unit of HHS not specifically indentified below; or
    (iii) The records include records of more than one of the major 
units identified below (PHS, CMS, and SSA) either at headquarters or in 
a Regional Office.
    (2) PHS Freedom of Information Officer. If the records you seek are 
exclusively records of the Public Health Service or if the records you 
seek involve more than one health agency of the Public Health Service, 
including its records in the regions, only the Deputy Assistant 
Secretary for Health (Communications), who also is the PHS Freedom of 
Information Officer, may determine whether to release or deny the 
records, except as follows:
    (i) CDC and ATSDR Freedom of Information Officer. If the records you 
seek are exclusively records of the Centers for Disease Control and/or 
the Agency for Toxic Substances and Disease Registry, only the Director, 
Office of Public Affairs, CDC, who also is the CDC and ATSDR Freedom of 
Information Officer, may determine whether to release or deny the 
records.
    (ii) FDA Freedom of Information Officer. If the records you seek are 
exclusively records of the Food and Drug Administration, only the 
Associate Commissioner for Public Affairs, FDA, who also is the FDA 
Freedom of Information Officer, may determine whether to release or deny 
the records.
    (iii) NIH Freedom of Information Officer. If the records you seek 
are exclusively records of the National Institutes of Health, only the 
Associate Director of Communications, HIH, who

[[Page 22]]

also is the NIH Freedom of Information Officer, may determine whether to 
release or deny the records.
    (iv) HRSA Freedom of Information Officer. If the records you seek 
are exclusively records of the Health Resources and Services 
Administration, only the Associate Administrator for Communications, 
HRSA, who also is the HRSA Freedom of Information Officer, may determine 
whether to release or deny the records.
    (v) ADAMHA Freedom of Information Officer. If the records you seek 
are exclusively records of the Alcohol, Drug Abuse and Mental Health 
Administration, only the Associate Administrator for Communications and 
Public Affairs, ADAMHA, who is also the ADAMHA Freedom of Information 
Officer, may determine whether to release or deny the records.
    (vi) IHS Freedom of Information Officer. If the records you seek are 
exclusively records of the Indian Health Service, only the Director of 
Communications, IHS, who also is the IHS Freedom of Information Officer, 
may determine whether to release or deny the records.
    (3) SSA Freedom of Information Officer. If the records you seek are 
exclusively records of the Social Security Administration, including its 
records in the regions, only the Director, Office of Public Inquiries, 
SSA, who also is the SSA Freedom of Information Officer, may determine 
whether to release or deny the records.
    (4) CMS Freedom of Information Officer. If the records you seek are 
exclusively records of theCenters for Medicare & Medicaid Services, 
including its records in the regions, only the Director, Office of 
Public Affairs, CMS, who also is the CMS Freedom of Information Officer, 
may determine whether to release or deny the records.
    (b) Delegations. Any of the above Freedom of Information Officers 
may delegate his or her authority to release or deny records and to 
determine fees. Any such delegation requires the concurrence of the 
Assistant Secretary for Public Affairs.
    (c) Addresses and telephone numbers. The addresses and telephone 
numbers of the Freedom of Information Officers are listed below.

                     Freedom of Information Officers

HHS Freedom of Information Officer, Room 645-F, Hubert H. Humphrey 
Building, 200 Independence Avenue SW., Washington, DC 20201, Tel: (202) 
472-7453
SSA Freedom of Information Officer, Room 4-H-8, Annex Building, 6401 
Security Boulevard, Baltimore, Maryland 21235, Tel: (301) 965-3962
CMS Freedom of Information Officer, Room 100, Professional Building, 
Office of Public Affairs, 6660 Security Boulevard, Baltimore, Maryland 
21207, Tel: (301) 966-5352
PHS Freedom of Information Officer, Room 13-C-24, Parklawn Building, 
5600 Fishers Lane, Rockville, Maryland 20857, Tel: (301) 443-5252
FDA Freedom of Information Officer, HFW-35, Room 12A16, Parklawn 
Building, 5600 Fishers Land, Rockville, Maryland 20857, Tel: (301) 443-
1813
NIH Freedom of Information Officer, National Institutes of Health, 
Building 31, Room 2B39, 9000 Rockville Pike, Bethesda, Maryland 20892, 
Tel: (301) 496-5633
CDC Freedom of Information Officer, Centers for Disease Control, 1600 
Clifton Road, NE., Atlanta, Georgia 30333, Tel: (404) 329-3286
HRSA Freedom of Information Officer, Room 14-43, Parklawn Building, 5600 
Fishers Lane, Rockville, Maryland 20857, Tel: (301) 443-2086
ADAMHA Freedom of Information Officer, Room 12-C-15, Parklawn Building, 
5600 Fishers Lane, Rockville, Maryland 20857, Tel: (301) 443-3783
IHS Freedom of Information Officer, Room 5-A-39, Parklawn Building, 5600 
Fishers Land, Rockville, Maryland 20857, Tel: (301) 443-1397.



Sec. 5.32  Release of records.

    (a) Records previously released. If we have released a record, or a 
part of a record, to others in the past, we will ordinarily release it 
to you also. However, we will not release it to you if a statute forbids 
this disclosure, and we will not necessarily release it to you if an 
exemption applies in your situation and did not apply, or applied 
differently, in the previous situations.
    (b) Unauthorized disclosure. The principle stated in paragraph (a) 
of this section, does not apply if the previous release was 
unauthorized.
    (c) Poor copy. If we cannot make a legible copy of a record to be 
released, we do not attempt to reconstruct it. Instead, we furnish the 
best copy possible and note its poor quality in our reply.

[[Page 23]]



Sec. 5.33  Denial of requests.

    (a) Information furnished. All denials are in writing and describe 
in general terms the material withheld; state the reasons for the 
denial, including, as applicable, a reference to the specific exemption 
of the FOIA authorizing the withholding or deletion; explain your right 
to appeal the decision and identify the official to whom you should send 
the appeal; and are signed by the person who made the decision to deny 
all or part of the request.
    (b) Unproductive searches. We make a diligent search for records to 
satisfy your request. Nevertheless, we may not be able always to find 
the records you want using the information you provided, or they may not 
exist. If we advise you that we have been unable to find the records 
despite a diligent search, this does not constitute a denial of your 
request.



Sec. 5.34  Appeal of denials.

    (a) Right of appeal. You have the right to appeal a partial or full 
denial of your FOIA request. To do so, you must put your appeal in 
writing and send it to the review official identified in the denial 
letter. You must send your appeal within 30 days from the date you 
receive that letter or from the date you receive the records released as 
a partial grant of your request, whichever is later.
    (b) Letter of appeal. The appeal letter should state reasons why you 
believe that the FOIA exemption(s) we cited do not apply to the records 
that you requested, or give reasons why they should be released 
regardless of whether the exemption(s) apply. Because we have some 
discretionary authority in deciding whether to release or withhold 
records, you may strengthen your request by explaining your reasons for 
wanting the records. However, you are not required to give any 
explanation.
    (c) Review process. Before making a decision on an appeal of a 
denial, the designated review official will consult with the General 
Counsel to ensure that the rights and interests of all parties affected 
by the request are protected. Also, the concurrence of the Assistant 
Secretary for Public Affairs is required in all appeal decisions, 
including those on fees. When the review official responds to an appeal, 
that constitutes the Department's final action on the request. If the 
review official grants your appeal, we will send the records to you 
promptly or let you inspect them, or else we will explain the reason for 
any delay and the approximate date you will receive copies or be allowed 
to inspect the records. If the decision is to deny your appeal, the 
official will state the reasons for the decision in writing and inform 
you of the FOIA provision for judicial review.



Sec. 5.35  Time limits.

    (a) General. FOIA sets certain time limits for us to decide whether 
to disclose the records you requested, and to decide appeals. If we fail 
to meet the deadlines, you may proceed as if we had denied your request 
or your appeal. We will try diligently to comply with the time limits, 
but if it appears that processing your request may take longer than we 
would wish, we will acknowledge your request and tell you its status. 
Since requests may be misaddressed or misrouted, you should call or 
write to confirm that we have the request and to learn its status if you 
have not heard from us in a reasonable time.
    (b) Time allowed. (1) We will decide whether to release records 
within 10 working days after your request reaches the appropriate FOI 
office, as identified in Sec. 5.31 of this part. When we decide to 
release records, we will actually provide the records, or let you 
inspect them, as soon as possible after that decision.
    (2) We will decide an appeal within 20 working days after the appeal 
reaches the appropriate review official
    (c) Extension of time limits. FOI Officers of review officials may 
extend the time limits in unusual circumstances. Extension at the 
request stage and at the appeal stage may total up to 10 working days. 
We will notify you in writing of any extension. ``Unusual 
circumstances'' include situations when we:
    (1) Search for and collect records from field facilites, archives, 
or locations other than the office processing the request.

[[Page 24]]

    (2) Search for, collect, or examine a great many records in response 
to a single request.
    (3) Consult with another office or agency that has substantial 
interest in the determination of the request.
    (4) Conduct negotiations with submitters and requesters of 
information to determine the nature and extent of non-disclosable 
proprietary materials.



                             Subpart D_Fees



Sec. 5.41  Fees to be charged--categories of requests.

    The paragraphs below state, for each category of request, the type 
of fees that we will generally charge. However, for each of these 
categories, the fees may be limited, waived, or reduced for the reasons 
given in Sec. Sec. 5.42 through 5.45 or for other reasons.
    (a) Commercial use request. If your request is for a commercial use, 
HHS will charge you the costs of search, review, and duplication.
    (b) Educational and scientific institutions and news media. If you 
are an educational institution or a non-commercial scientific 
institution, operated primarily for scholarly or scientific research, or 
a representative of the news media, and your request is not for a 
commercial use, HHS will charge you only for the duplication of 
documents. Also, HHS will not charge you the copying costs for the first 
100 pages of duplication.
    (c) Other requesters. If your request is not the kind described by 
paragraph (a) or (b) of this section, then HHS will charge you only for 
the search and the duplication. Also, we will not charge you for the 
first two hours of search time or for the copying costs of the first 100 
pages of duplication.



Sec. 5.42  Fees to be charged--general provisions.

    (a) We may charge search fees even if the records we find are exempt 
from disclosure, or even if we do not find any records at all.
    (b) If we are not charging you for the first two hours of search 
time, under Sec. 5.41(c), and those two hours are spent on a computer 
search, then the two free hours are the first two hours of the 
operator's own operation. If the operator spends less than two hours on 
the search, we well reduce the total search fees by the average hourly 
rate for the operator's time, multipled by two.
    (c) If we are not charging you for the first 100 pages of 
duplication, under Sec. 5.41 (b) or (c), then those 100 pages are the 
first 100 pages of photocopies of standard size pages, or the first 100 
pages of computer printout. If we cannot use this method to calculate 
the fee reduction, then we will reduce your total duplication fee by the 
normal charge for photocopying a standard size page, multiplied by 100.
    (d) We will not charge you any fee at all if the costs of routine 
collection and processing of the fee are likely to equal or exceed the 
amount of the fee. As of May 1987, such costs among the units HHS ranged 
between $6.00 and $12.50.
    (e) If we determine that you (acting either alone or together with 
others) are breaking down a single request into a series of requests in 
order to avoid (or reduce) the fees charged, we may aggregate all these 
requests for purposes of calculating the fees charged.
    (f) We will charge interest on unpaid bills beginning on the 31st 
day following the day the bill was sent. We will use the provisions of 
Part 30 of this Title in assessing interest, administrative costs, and 
penalties and in taking actions to encourage payment.
    (g) This subpart does not apply to requests for Social Security 
program records on Social Security number holders, wage earners, 
employers, and claimants, where the requests are governed by section 
1106 of the Social Security Act, 42 U.S.C. 1306(c), and by 20 CFR 
442.441.



Sec. 5.43  Fee schedule.

    HHS charges the following fees:
    (a) Manual searching for or reviewing of records--when the search or 
review is performed by employees at grade GS-1 through GS-8, an hourly 
rate based on the salary of a GS-5, step 7, employee; when done by a GS-
9 through GS-14, an hourly rate based on the salary of a GS-12, step 4, 
employee; and when done by a GS-15 or above, an hourly rate based on the 
salary of a GS-15, step 7, employee. In each case, the hourly rate will 
be computed by taking the current hourly rate for the

[[Page 25]]

specified grade and step, adding 16% of that rate to cover benefits, and 
rounding to the nearest whole dollar. As of November 25, 1988, these 
rates were $10, $20, and $37 respectively. When a search involves 
employees at more than one of these levels, we will charge the rate 
appropriate for each.
    (b) Computer searching and printing--the actual cost of operating 
the computer plus charges for the time spent by the operator, at the 
rates given in paragraph (a) of this section.
    (c) Photocopying standard size pages--$0.10 per page. FOI Officers 
may charge lower fees for particular documents where--
    (1) The document has already been printed in large numbers,
    (2) The program office determines that using existing stock to 
answer this request, and any other anticipated FOI requests, will not 
interfere with program requirements, and
    (3) The FOI Officer determines that the lower fee is adequate to 
recover the prorated share of the original printing costs.
    (d) Photocopying odd-size documents (such as punchcards or 
blueprints), or reproducing other records (such as tapes)--the actual 
costs of operating the machine, plus the actual cost of the materials 
used, plus charges for the time spent by the operator, at the rates 
given in paragraph (a) of this section.
    (e) Certifying that records are true copies. This service is not 
required by the FOIA. If we agree to provide it, we will charge $10 per 
certification.
    (f) Sending records by express mail, certified mail, or other 
special methods. This service is not required by the FOIA. If we agree 
to provide it, we will charge our actual costs.
    (g) Performing any other special service that you request and we 
agree to--actual costs of operating any machinery, plus actual cost of 
any materials used, plus charges for the time of our employees, at the 
rates given in paragraph (a) of this section.



Sec. 5.44  Procedures for assessing and collecting fees.

    (a) Agreement to pay. We generally assume that when you request 
records you are willing to pay the fees we charge for services 
associated with your request. You may specify a limit on the amount you 
are willing to spend. We will notify you if it appears that the fees 
will exceed the limit and ask whether you nevertheless want us to 
proceed with the search.
    (b) Advance payment. If you have failed to pay previous bills in a 
timely fashion, or if our initial review of your request indicates that 
we will charge you fees exceeding $250, we will require you to pay your 
past due fees and/or the estimated fees, or a deposit, before we start 
searching for the records you want. If so, we will let you know promptly 
upon receiving your request. In such cases, the administrative time 
limits prescribed in Sec. 5.35 of the part (i.e., ten working days from 
receipt of initial requests and 20 working days from receipt of appeals 
from initial denials, plus permissible extensions of these time limits) 
will begin only after we come to an agreement with you over payment of 
fees, or decide that fee waiver or reduction is appropriate.
    (c) Billing and payment. We will normally require you to pay all 
fees before we furnish the records to you. We may, at our discretion, 
send you a bill along with or following the furnishing of the records. 
For example, we may do this if you have a history of prompt payment. We 
may also, at our discretion, aggregate the charges for certain time 
periods in order to avoid sending numerous small bills to frequent 
requesters, or to businesses or agents representing requesters. For 
example, we might send a bill to such a requester once a month. Fees 
should be paid in accordance with the instructions furnished by the 
person who responds to your requests.



Sec. 5.45  Waiver or reduction of fees.

    (a) Standard. We will waive or reduce the fees we would otherwise 
charge if disclosure of the information meets both of the following 
tests:
    (1) It is in the public interest because it is likely to contribute 
significantly to public understanding of the operations or activities of 
the government, and
    (2) It is not primarily in the commercial interest of the requester.
    These two tests are explained in paragraphs (b) and (c) of this 
section.

[[Page 26]]

    (b) Public interest. The disclosure passes the first test only if it 
furthers the specific public interest of being likely to contribute 
significantly to public understanding of government operations or 
activities, regardless of any other public interest it may further. In 
analyzing this question, we will consider the following factors.
    (1) How, if at all, do the records to be disclosed pertain to the 
operations or activities of the Federal Government?
    (2) Would disclosure of the records reveal any meaningful 
information about government operations or activities? Can one learn 
from these records anything about such operations that is not already 
public knowledge?
    (3) Will the disclosure advance the understanding of the general 
public as distinguished from a narrow segment of interested persons? 
Under this factor we may consider whether the requester is in a position 
to contribute to public understanding. For example, we may consider 
whether the requester has such knowledge or expertise as may be 
necessary to understand the information, and whether the requester's 
intended use of the information would be likely to disseminate the 
information among the public. An unsupported claim to be doing research 
for a book or article does not demonstrate that likelihood, while such a 
claim by a representative of the news media is better evidence.
    (4) Will the contribution to public understanding be a significant 
one? Will the public's understanding of the government's operations be 
substantially greater as a result of the disclosure?
    (c) Not primarily in the requester's commercial interest. If the 
disclosure passes the test of furthering the specific public interest 
described in paragraph (b) of this section, we will determine whether it 
also furthers the requester's commercial interest and, if so, whether 
this effect outweighs the advancement of that public interest. In 
applying this second test, we will consider the following factors:
    (1) Would the disclosure further a commercial interest of the 
requester, or of someone on whose behalf the requester is acting? 
``Commercial interests'' include interests relating to business, trade, 
and profit. Not only profit-making corporations have commercial 
interests--so do nonprofit corporations, individuals, unions, and other 
associations. The interest of a representative of the news media in 
using the information for news dissemination purposes will not be 
considered a commercial interest.
    (2) If disclosure would further a commercial interest of the 
requester, would that effect outweigh the advancement of the public 
interest defined in paragraph (b) of this section? Which effect is 
primary?
    (d) Deciding between waiver and reduction. If the disclosure passes 
both tests, we will normally waive fees. However, in some cases we may 
decide only to reduce the fees. For example, we may do this when 
disclosure of some but not all of the requested records passes the 
tests.
    (e) Procedure for requesting a waiver or reduction. You must make 
your request for a waiver or reduction at the same time you make your 
request for records. You should explain why you believe a waiver or 
reduction is proper under the analysis in paragraphs (a) through (d) of 
this section. Only FOI Officers may make the decision whether to waive, 
or reduce, the fees. If we do not completely grant your request for a 
waiver or reduction, the denial letter will designate a review official. 
You may appeal the denial to that official. In your appeal letter, you 
should discuss whatever reasons are given in our denial letter. The 
process prescribed in Sec. 5.34(c) of this part will also apply to 
these appeals.



            Subpart E_Records Available for Public Inspection



Sec. 5.51  Records available.

    (a) Records of general interest. We will make the following records 
of general interest available for your inspection and copying. Before 
releasing them, however, we may delete the names of people, or 
information that would identify them, if release would invade their 
personal privacy to a clearly unwarranted degree. (See Sec. 5.67 of 
this part.)
    (1) Orders and final opinions, including concurring and dissenting 
opinions in adjudications, such as Letters of Finding issued by the 
Office for Civil

[[Page 27]]

Rights in civil rights complaints, and Social Security Rulings. (See 
Sec. 5.66 of this part for availability of internal memoranda, 
including attorney opinions and advice.)
    (2) Statements of policy and interpretations that we have adopted 
but have not published in the Federal Register.
    (3) Administrative staff manuals and instructions to staff that 
affect the public. (We will not make available, however, manuals or 
instructions that reveal investigative or audit procedures as described 
in Sec. Sec. 5.63 and 5.68 of this part.)
    (b) Other records. In addition to such records as those described in 
paragraph (a) of this section, we will make available to any person a 
copy of all other agency records, unless we determine that such records 
should be withheld from disclosure under subsection (b) of the Act and 
Subpart F of this regulation.



Sec. 5.52  Indexes of records.

    (a) Inspection and copying. We will maintain and provide for your 
inspection and copying current indexes of the records described in Sec. 
5.51(a). We will also publish and distribute copies of the indexes 
unless we announce in the Federal Register that it is unnecessary or 
impracticable to do so. For assistance in locating indexes maintained in 
the Department, you may contact the HHS Freedom of Information Officer 
at the address and telephone number in Sec. 5.31(c).
    (b) Record citation as precedent. We will not use or cite any record 
described in Sec. 5.51(a) as a precedent for an action against a person 
unless we have indexed the record and published it or made it available, 
or unless the person has timely notice of the record.



             Subpart F_Reasons for Withholding Some Records



Sec. 5.61  General.

    Section 552(b) of the Freedom of Information Act contains nine 
exemptions to the mandatory disclosure of records. We describe these 
exemptions below and explain how this Department applies them to 
disclosure determinations. (In some cases more than one exemption may 
apply to the same document.) Information obtained by the Department from 
any individual or organization, furnished in reliance on a provision for 
confidentiality authorized by applicable statute or regulation, will not 
be disclosed, to the extent it can be withheld under one of these 
exemptions. This section does not itself authorize the giving of any 
pledge of confidentiality by any officer or employee of the Department.



Sec. 5.62  Exemption one: National defense and foreign policy.

    We are not required to release records that, as provided by FOIA, 
are ``(a) specifically authorized under criteria established by an 
Executive Order to be kept secret in the interest of national defense or 
foreign policy and (b) are in fact properly classified pursuant to such 
Executive Order.'' Executive Order No. 12356 (1982) provides for such 
classification. When the release of certain records may adversely affect 
U.S. relations with foreign countries, we usually consult with officials 
of those countries or officials of the Department of State. Also, we may 
on occasion have in our possession records classified by some other 
agency. We may refer your request for such records to the agency that 
classified them and notify you that we have done so, as explained in 
Sec. 5.23.



Sec. 5.63  Exemption two: Internal personnel rules and practices.

    We are not required to release records that are ``related solely to 
the internal personnel rules and practices of an agency.'' Under this 
exemption, we may withhold routine internal agency practices and 
procedures. For example, we may withhold guard schedules and rules 
governing parking facilities or lunch periods. Also under this 
exemption, we may withhold internal records whose release would help 
some persons circumvent the law or agency regulations. For example, we 
ordinarily do not disclose manuals that instruct our investigators or 
auditors how to investigate possible violations of law, to the extent 
that this release would help some persons circumvent the law.

[[Page 28]]



Sec. 5.64  Exemption three: Records exempted by other statutes.

    We are not required to release records if another statute 
specifically allows us to withhold them. We may use another statute to 
justify withholding only if it absolutely prohibits disclosure or if it 
sets forth criteria to guide our decision on releasing or identifies 
particular types of material to be withheld.



Sec. 5.65  Exemption four: Trade secrets and confidential commercial or financial information.

    We will withhold trade secrets and commercial or financial 
information that is obtained from a person and is privileged or 
confidential.
    (a) Trade secrets. A trade secret is a secret, commercially valuable 
plan, formula, process, or device that is used for the making, 
preparing, compounding, or processing of trade commodities and that can 
be said to be the end product of either innovation or substantial 
effort. There must be a direct relationship between the trade secret and 
the productive process.
    (b) Commercial or financial information. We will not disclose 
records whose information is ``commercial or financial,'' is obtained 
from a person, and is ``privileged or confidential.''
    (1) Information is ``commercial or financial'' if it relates to 
businesses, commerce, trade, employment, profits, or finances (including 
personal finances). We interpret this category broadly.
    (2) Information is ``obtained from a person'' if HHS or another 
agency has obtained it from someone outside the Federal Government or 
from someone within the Government who has a commercial or financial 
interest in the information. ``Person'' includes an individual, 
partnership, corporation, association, state or foreign government, or 
other organization. Information is not ``obtained from a person'' if it 
is generated by HHS or another federal agency. However, information is 
``obtained from a person'' if it is provided by someone, including but 
not limited to an agency employee, who retains a commercial or financial 
interest in the information.
    (3) Information is ``privileged'' if it would ordinarily be 
protected from disclosure in civil discovery by a recognized evidentiary 
privilege, such as the attorney-client privilege or the work product 
privilege. Information may be privileged for this purpose under a 
privilege belonging to a person outside the government, unless the 
providing of the information to the government rendered the information 
no longer protectable in civil discovery.
    (4) Information is ``confidential'' if it meets one of the following 
tests:
    (i) Disclosure may impair the government's ability to obtain 
necessary information in the future;
    (ii) Disclosure would substantially harm the competitive position of 
the person who submitted the information;
    (iii) Disclosure would impair other government interests, such as 
program effectiveness and compliance; or
    (iv) Disclosure would impair other private interests, such as an 
interest in controlling availability of intrinsically valuable records, 
which are sold in the market by their owner.

The following questions may be relevant in analyzing whether a record 
meets one or more of the above tests: Is the information of a type 
customarily held in strict confidence and not disclosed to the public by 
the person to whom it belongs? What is the general custom or usage with 
respect to such information in the relevant occupation or business? How 
many, and what types of, individuals have access to the information? 
What kind and degree of financial injury can be expected if the 
information is disclosed?
    (c) Designation of certain confidential information. A person who 
submits records to the government may designate part or all of the 
information in such records as exempt from disclosure under Exemption 4 
of the FOIA. The person may make this designation either at the time the 
records are submitted to the government or within a reasonable time 
thereafter. The designation must be in writing. Where a legend is 
required by a request for proposals or request for quotations, pursuant 
to 48 CFR 352.215-12, then that legend is necessary for this purpose. 
Any such designation will expire ten years

[[Page 29]]

after the records were submitted to the government.
    (d) Predisclosure notification. The procedures in this paragraph 
apply to records on which the submitter has designated information as 
provided in paragraph (c) of this section. They also apply to records 
that were submitted to the government where we have substantial reason 
to believe that information in the records could reasonably be 
considered exempt under Exemption 4. Certain exceptions to these 
procedures are stated in paragraph (e) of this section.
    (1) When we receive a request for such records, and we determine 
that we may be required to disclose them, we will make reasonable 
efforts to notify the submitter about these facts. The notice will 
include a copy of the request, and it will inform the submitter about 
the procedures and time limits for submission and consideration of 
objections to disclosure. If we must notify a large number of 
submitters, we may do this by posting or publishing a notice in a place 
where the submitters are reasonably likely to become aware of it.
    (2) The submitter has five working days from receipt of the notice 
to object to disclosure of any part of the records and to state all 
bases for its objections.
    (3) We will give consideration to all bases that have been timely 
stated by the submitter. If we decide to disclose the records, we will 
notify the submitter in writing. This notice will briefly explain why we 
did not sustain its objections. We will include with the notice a copy 
of the records about which the submitter objected, as we propose to 
disclose them. The notice will state that we intend to disclose the 
records five working days after the submitter receives the notice unless 
we are ordered by a United States District Court not to release them.
    (4) When a requester files suit under the FOIA to obtain records 
covered by this paragraph, we will promptly notify the submitter.
    (5) Whenever we send a notice to a submitter under paragraph (d)(1) 
of this section, we will notify the requester that we are giving the 
submitter a notice and an opportunity to object. Whenever we send a 
notice to a submitter under paragraph (d)(3) of this section, we will 
notify the requester of this fact.
    (e) Exceptions to predisclosure notification. The notice 
requirements in paragraph (d) of this section do not apply in the 
following situations:
    (1) We decided not to disclose the records;
    (2) The information has previously been published or made generally 
available;
    (3) Disclosure is required by a regulation, issued after notice and 
opportunity for public comment, that specifies narrow categories of 
records that are to be disclosed under the FOIA, but in this case a 
submitter may still designate records as described in paragraph (c) of 
this section, and in exceptional cases, we may, at our discretion, 
follow the notice procedures in paragraph (d) of this section; or
    (4) The designation appears to be obviously frivolous, but in this 
case we will still give the submitter the written notice required by 
paragraph (d)(3) of this section (although this notice need not explain 
our decision or include a copy of the records), and we will notify the 
requester as described in paragraph (d)(5) of this section.



Sec. 5.66  Exemption five: Internal memoranda.

    This exemption covers internal government communications and notes 
that fall within a generally recognized evidentiary privilege. Internal 
government communications include an agency's communications with an 
outside consultant or other outside person, with a court, or with 
Congress, when those communications are for a purpose similar to the 
purpose of privileged intra-agency communications. Some of the most-
commonly applicable privileges are described in the following 
paragraphs.
    (a) Deliberative process privilege. This privilege protects 
predecisional deliberative communications. A communication is protected 
under this privilege if it was made before a final decision was reached 
on some question of policy and if it expressed recommendations or 
opinions on that question. The purpose of the privilege is to prevent

[[Page 30]]

injury to the quality of the agency decisionmaking process by 
encouraging open and frank internal policy discussions, by avoiding 
premature disclosure of policies not yet adopted, and by avoiding the 
public confusion that might result from disclosing reasons that were not 
in fact the ultimate grounds for an agency's decision. Purely factual 
material in a deliberative document is within this privilege only if it 
is inextricably intertwined with the deliberative portions so that it 
cannot reasonably be segregated, if it would reveal the nature of the 
deliberative portions, or if its disclosure would in some other way make 
possible an intrusion into the decisionmaking process. We will release 
purely factual material in a deliberative document unless that material 
is otherwise exempt. The privilege continues to protect predecisional 
documents even after a decision is made.
    (b) Attorney work product privilege. This privilege protects 
documents prepared by or for an agency, or by or for its representative 
(typically, HHS attorneys) in anticipation of litigation or for trial. 
It includes documents prepared for purposes of administrative 
adjudications as well as court litigation. It includes documents 
prepared by program offices as well as by attorneys. It includes factual 
material in such documents as well as material revealing opinions and 
tactics. Finally, the privilege continues to protect the documents even 
after the litigation is closed.
    (c) Attorney-client communication privilege. This privilege protects 
confidential communications between a lawyer and an employee or agent of 
the government where there is an attorney-client relationship between 
them (typically, where the lawyer is acting as attorney for the agency 
and the employee is communicating on behalf of the agency) and where the 
employee has communicated information to the attorney in confidence in 
order to obtain legal advice or assistance.



Sec. 5.67  Exemption six: Clearly unwarranted invasion of personal privacy.

    (a) Documents affected. We may withhold records about individuals if 
disclosure would constitute a clearly unwarranted invasion of their 
personal privacy.
    (b) Balancing test. In deciding whether to release records to you 
that contain personal or private information about someone else, we 
weigh the foreseeable harm of invading that person's privacy against the 
public benefit that would result from the release. If you were seeking 
information for a purely commercial venture, for example, we might not 
think that disclosure would primarily benefit the public and we would 
deny your request. On the other hand, we would be more inclined to 
release information if you were working on a research project that gave 
promise of providing valuable information to a wide audience. However, 
in our evaluation of requests for records we attempt to guard against 
the release of information that might involve a violation of personal 
privacy because of a requester being able to ``read between the lines'' 
or piece together items that would constitute information that normally 
would be exempt from mandatory disclosure under Exemption Six.
    (c) Examples. Some of the information that we frequently withhold 
under Exemption Six is: Home addresses, ages, and minority group status 
of our employees or former employees; social security numbers; medical 
information about individuals participating in clinical research 
studies; names and addresses of individual beneficiaries of our 
programs, or benefits such individuals receive; earning records, claim 
files, and other personal information maintained by the Social Security 
Administration, the Public Health Service, and theCenters for Medicare & 
Medicaid Services.



Sec. 5.68  Exemption seven: Law enforcement.

    We are not required to disclose information or records that the 
government has compiled for law enforcement purposes. The records may 
apply to actual or potential violations of either criminal or civil laws 
or regulations. We can withhold these records only to the extent that 
releasing them would cause harm in at least one of the following 
situations:
    (a) Enforcement proceedings. We may withhold information whose 
release

[[Page 31]]

could reasonably be expected to interfere with prospective or ongoing 
law enforcement proceedings. Investigations of fraud and mismanagement, 
employee misconduct, and civil rights violations may fall into this 
category. In certain cases--such as when a fraud investigation is 
likely--we may refuse to confirm or deny the existence of records that 
relate to the violations in order not to disclose that an investigation 
is in progress, or may be conducted.
    (b) Fair trial or impartial adjudication. We may withhold records 
whose release would deprive a person of a fair trial or an impartial 
adjudication because of prejudicial publicity.
    (c) Personal privacy. We are careful not to disclose information 
that could reasonably be expected to constitute an unwarranted invasion 
of personal privacy. When a name surfaces in an investigation, that 
person is likely to be vulnerable to innuendo, rumor, harassment, and 
retaliation.
    (d) Confidential sources and information. We may withhold records 
whose release could reasonably be expected to disclose the identity of a 
confidential source of information. A confidential source may be an 
individual; a state, local, or foreign government agency; or any private 
organization. The exemption applies whether the source provides 
information under an express promise of confidentiality or under 
circumstances from which such an assurance could be reasonably inferred. 
Also, where the record, or information in it, has been compiled by a 
criminal law enforcement authority conducting a criminal investigation, 
or by an agency conducting a lawful national security investigation, the 
exemption also protects all information supplied by a confidential 
source. Also protected from mandatory disclosure is any information 
which, if disclosed, could reasonably be expected to jeopardize the 
system of confidentiality that assures a flow of information from 
sources to investigatory agencies.
    (e) Techniques and procedures. We may withhold records reflecting 
special techniques or procedures of investigation or prosecution, not 
otherwise generally known to the public. In some cases, it is not 
possible to describe even in general terms those techniques without 
disclosing the very material to be withheld. We may also withhold 
records whose release would disclose guidelines for law enforcement 
investigations or prosecutions if this disclosure could reasonably be 
expected to create a risk that someone could circumvent requirements of 
law or of regulation.
    (f) Life and physical safety. We may withhold records whose 
disclosure could reasonably be expected to endanger the life or physical 
safety of any individual. This protection extends to threats and 
harassment as well as to physical violence.



Sec. 5.69  Exemptions 8 and 9: Records on financial institutions; records 
on wells.

    Exemption eight permits us to withhold records about regulation or 
supervision of financial institutions. Exemption nine permits the 
withholding of geological and geophysical information and data, 
including maps, concerning wells.

                           PART 5a [RESERVED]



PART 5b_PRIVACY ACT REGULATIONS--Table of Contents




Sec.
5b.1 Definitions.
5b.2 Purpose and scope.
5b.3 Policy.
5b.4 Maintenance of records.
5b.5 Notification of or access to records.
5b.6 Special procedures for notification of or access to medical 
          records.
5b.7 Procedures for correction or amendment of records.
5b.8 Appeals of refusals to correct or amend records.
5b.9 Disclosure of records.
5b.10 Parents and guardians.
5b.11 Exempt systems.
5b.12 Contractors.
5b.13 Fees.

Appendix A to Part 5b--Employee Standards of Conduct
Appendix B to Part 5b--Routine Uses Applicable to More Than One System 
          of Records Maintained by HHS
Appendix C to Part 5b--Delegations of Authority [Reserved]

    Authority: 5 U.S.C. 301, 5 U.S.C. 552a.

    Source: 40 FR 47409, Oct. 8, 1975, unless otherwise noted.

[[Page 32]]



Sec. 5b.1  Definitions.

    As used in this part:
    (a) Access means availability of a record to a subject individual.
    (b) Agency means the Department of Health and Human Services.
    (c) Department means the Department of Health and Human Services.
    (d) Disclosure means the availability or release of a record to 
anyone other than the subject individual.
    (e) Individual means a living person who is a citizen of the United 
States or an alien lawfully admitted for permanent residence. It does 
not include persons such as sole proprietorships, partnerships, or 
corporations. A business firm which is identified by the name of one or 
more persons is not an individual within the meaning of this part.
    (f) Maintain means to maintain, collect, use, or disseminate when 
used in connection with the term ``record''; and, to have control over 
or responsibility for a system of records when used in connection with 
the term ``system of records.''
    (g) Notification means communication to an individual whether he is 
a subject individual.
    (h) Record means any item, collection, or grouping of information 
about an individual that is maintained by the Department, including but 
not limited to the individual's education, financial transactions, 
medical history, and criminal or employment history and that contains 
his name, or an identifying number, symbol, or other identifying 
particular assigned to the individual, such as a finger or voice print 
or a photograph. When used in this part, record means only a record 
which is in a system of records.
    (i) Responsible Department official means that officer who is listed 
in a notice of a system of records as the system manager for a given 
system of records or another individual listed in the notice of a system 
of records to whom requests may be made, or the designee of either such 
officer or individual.
    (j) Routine use means the disclosure of a record outside the 
Department, without the consent of the subject individual, for a purpose 
which is compatible with the purpose for which the record was collected. 
It includes disclosures required to be made by statute other than the 
Freedom of Information Act, 5 U.S.C. 552. It does not include 
disclosures which are permitted to be made without the consent of the 
subject individual which are not compatible with the purpose for which 
it was collected such as disclosures to the Bureau of the Census, the 
General Accounting Office, or to Congress.
    (k) Secretary means the Secretary of Health and Human Services, or 
his designee.
    (l) Statistical record means a record maintained for statistical 
research or reporting purposes only and not maintained to make 
determinations about a particular subject individual.
    (m) Subject individual means that individual to whom a record 
pertains.
    (n) System of records means any group of records under the control 
of the Department from which a record is retrieved by personal 
identifier such as the name of the individual, number, symbol or other 
unique retriever assigned to the individual. Single records or groups of 
records which are not retrieved by a personal identifier are not part of 
a system of records. Papers maintained by individual employees of the 
Department which are prepared, maintained, or discarded at the 
discretion of the employee and which are not subject to the Federal 
Records Act, 44 U.S.C. 2901, are not part of a system of records; 
Provided, That such personal papers are not used by the employee or the 
Department to determine any rights, benefits, or privileges of 
individuals.



Sec. 5b.2  Purpose and scope.

    (a) This part implements section 3 of the Privacy Act of 1974, 5 
U.S.C. 552a (hereinafter referred to as the Act), by establishing agency 
policies and procedures for the maintenance of records. This part also 
establishes agency policies and procedures under which a subject 
individual may be given notification of or access to a record pertaining 
to him and policies and procedures under which a subject individual may 
have his record corrected or amended if he believes that his record is 
not accurate, timely, complete, or relevant or necessary to accomplish a 
Department function.

[[Page 33]]

    (b) All components of the Department are governed by the provisions 
of this part. Also governed by the provisions of this part are:
    (1) Certain non-Federal entities which operate as agents of the 
Department for purposes of carrying out Federal functions, such as 
intermediaries and carriers performing functions under contracts and 
agreements entered into pursuant to sections 1816 and 1842 of the Social 
Security Act, 42 U.S.C. 1395h and 1395u.
    (2) Advisory committees and councils within the meaning of the 
Federal Advisory Committee Act which provide advice to (i) any official 
or component of the Department or (ii) the President and for which the 
Department has been delegated responsibility for providing services.
    (c) Employees of the Department governed by this part include all 
regular and special government employees of the Department; members of 
the Public Health Service Commissioned Corps; experts and consultants 
whose temporary (not in excess of 1 year) or intermittent services have 
been procured by the Department by contract pursuant to 3109 of Title 5, 
United States Code; volunteers where acceptance of their services are 
authorized by law; those individuals performing gratuitous services as 
permitted under conditions prescribed by the Civil Service Commission; 
and, participants in work-study or training programs.
    (d) Where other statutes mandate procedures which are inconsistent 
with the procedures set forth in this part, components of the Department 
may issue supplementary regulations containing procedures necessary to 
comply with such statutes. In addition, components of the Department may 
supplement by regulation the policies and procedures set forth in this 
part to meet particular needs of the programs administered by such 
components.
    (e) This part does not:
    (1) Make available to a subject individual records which are not 
retrieved by that individual's name or other personal identifier.
    (2) Make available to the general public records which are retrieved 
by a subject individual's name or other personal identifier or make 
available to the general public records which would otherwise not be 
available to the general public under the Freedom of Information Act, 5 
U.S.C. 552, and Part 5 of this title.
    (3) Govern the maintenance or disclosure of, notification of or 
access to, records in the possession of the Department which are subject 
to regulations of another agency, such as personnel records subject to 
the regulations of the Civil Service Commission.
    (4) Apply to grantees, including State and local governments or 
subdivisions thereof, administering federally funded programs.
    (5) Make available records compiled by the Department in reasonable 
anticipation of court litigation or formal administrative proceedings. 
The availability of such records to the general public or to any subject 
individual or party to such litigation or proceedings shall be governed 
by applicable constitutional principles, rules of discovery, and 
applicable regulations of the Department and any of its components.



Sec. 5b.3  Policy.

    It is the policy of the Department to protect the privacy of 
individuals to the fullest extent possible while nonetheless permitting 
the exchange of records required to fulfill the administrative and 
program responsibilities of the Department, and responsibilities of the 
Department for disclosing records which the general public is entitled 
to have under the Freedom of Information Act, 5 U.S.C. 552, and Part 5 
of this title.



Sec. 5b.4  Maintenance of records.

    (a) No record will be maintained by the Department unless:
    (1) It is relevant and necessary to accomplish a Department function 
required to be accomplished by statute or Executive Order;
    (2) It is acquired to the greatest extent practicable from the 
subject individual when maintenance of the record may result in a 
determination about the subject individual's rights, benefits or 
privileges under Federal programs;
    (3) The individual providing the record is informed of the authority 
for

[[Page 34]]

providing the record (including whether the providing of the record is 
mandatory or voluntary, the principal purpose for maintaining the 
record, the routine uses for the record, what effect his refusal to 
provide the record may have on him), and if the record is not required 
by statute or Executive Order to be provided by the individual, he 
agrees to provide the record.
    (b) No record will be maintained by the Department which describes 
how an individual exercises rights guaranteed by the First Amendment 
unless expressly authorized (1) by statute, or (2) by the subject 
individual, or (3) unless pertinent to and within the scope of an 
authorized law enforcement activity.



Sec. 5b.5  Notification of or access to records.

    (a) Times, places, and manner of requesting notification of or 
access to a record. (1) Subject to the provisions governing medical 
records in Sec. 5b.6 of this part, any individual may request 
notification of a record. He may at the same time request access to any 
record pertaining to him. An individual may be accompanied by another 
individual of his choice when he requests access to a record in person; 
Provided, That he affirmatively authorizes the presence of such other 
individual during any discussion of a record to which access is 
requested.
    (2) An individual making a request for notification of or access to 
a record shall address his request to the responsible Department 
official and shall verify his identity when required in accordance with 
paragraph (b)(2) of this section. At the time the request is made, the 
individual shall specify which systems of records he wishes to have 
searched and the records to which he wishes to have access. He may also 
request that copies be made of all or any such records. An individual 
shall also provide the responsible Department official with sufficient 
particulars to enable such official to distinguish between records on 
subject individuals with the same name. The necessary particulars are 
set forth in the notices of systems of records.
    (3) An individual who makes a request in person may leave with any 
responsible Department official a request for notification of or access 
to a record under the control of another responsible Department 
official; Provided, That the request is addressed in writing to the 
appropriate responsible Department official.
    (b) Verification of identity--(1) When required. Unless an 
individual, who is making a request for notification of or access to a 
record in person, is personally known to the responsible Department 
official, he shall be required to verify his identity in accordance with 
paragraph (b)(2) of this section if:
    (i) He makes a request for notification of a record and the 
responsible Department official determines that the mere disclosure of 
the existence of the record would be a clearly unwarranted invasion of 
privacy if disclosed to someone other than the subject individual; or,
    (ii) He makes a request for access to a record which is not required 
to be disclosed to the general public under the Freedom of Information 
Act, 5 U.S.C. 552, and Part 5 of this title.
    (2) Manner of verifying identity. (i) An individual who makes a 
request in person shall provide to the responsible Department official 
at least one piece of tangible identification such as a driver's 
license, passport, alien or voter registration card, or union card to 
verify his identity. If an individual does not have identification 
papers to verify his identity, he shall certify in writing that he is 
the individual who he claims to be and that he understands that the 
knowing and willful request for or acquisition of a record pertaining to 
an individual under false pretenses is a criminal offense under the Act 
subject to a $5,000 fine.
    (ii) Except as provided in paragraph (b)(2)(v) of this section, an 
individual who does not make a request in person shall submit a 
notarized request to the responsible Department official to verify his 
identity or shall certify in his request that he is the individual who 
he claims to be and that he understands that the knowing and willful 
request for or acquisition of a record pertaining to an individual under 
false pretenses is a criminal offense under the Act subject to a $5,000 
fine.

[[Page 35]]

    (iii) An individual who makes a request on behalf of a minor or 
legal incompetent as authorized under Sec. 5b.10 of this part shall 
verify his relationship to the minor or legal incompetent, in addition 
to verifying his own identity, by providing a copy of the minor's birth 
certificate, a court order, or other competent evidence of guardianship 
to the responsible Department official; except that, an individual is 
not required to verify his relationship to the minor or legal 
incompetent when he is not required to verify his own identity or when 
evidence of his relationship to the minor or legal incompetent has been 
previously given to the responsible Department official.
    (iv) An individual shall further verify his identity if he is 
requesting notification of or access to sensitive records such as 
medical records. Any further verification shall parallel the record to 
which notification or access is being sought. Such further verification 
may include such particulars as the individual's years of attendance at 
a particular educational institution, rank attained in the uniformed 
services, date or place of birth, names of parents, an occupation or the 
specific times the individual received medical treatment.
    (v) An individual who makes a request by telephone shall verify his 
identity by providing to the responsible Department official identifying 
particulars which parallel the record to which notification or access is 
being sought. If the responsible Department official determines that the 
particulars provided by telephone are insufficient, the requester will 
be required to submit the request in writing or in person. Telephone 
requests will not be accepted where an individual is requesting 
notification of or access to sensitive records such as medical records.
    (c) Granting notification of or access to a record. (1) Subject to 
the provisions governing medical records in Sec. 5b.6 of this part and 
the provisions governing exempt systems in Sec. 5b.11 of this part, a 
responsible Department official, who receives a request for notification 
of or access to a record and, if required, verification of an 
individual's identity, will review the request and grant notification or 
access to a record, if the individual requesting access to the record is 
the subject individual.
    (2) If the responsible Department official determines that there 
will be a delay in responding to a request because of the number of 
requests being processed, a breakdown of equipment, shortage of 
personnel, storage of records in other locations, etc., he will so 
inform the individual and indicate when notification or access will be 
granted.
    (3) Prior to granting notification of or access to a record, the 
responsible Department official may at his discretion require an 
individual making a request in person to reduce his request to writing 
if the individual has not already done so at the time the request is 
made.



Sec. 5b.6  Special procedures for notification of or access to medical 
records.

    (a) General. An individual in general has a right to notification of 
or access to his medical records, including psychological records, as 
well as to other records pertaining to him maintained by the Department. 
This section sets forth special procedures as permitted by the Act for 
notification of or access to medical records, including a special 
procedure for notification of or access to medical records of minors. 
The special procedures set forth in paragraph (b) of this section may 
not be suitable for use by every component of the Department. Therefore, 
components may follow the paragraph (b) procedure for notification of or 
access to medical records, or may issue regulations establishing special 
procedures for such purposes. The special procedure set forth in 
paragraph (c) of this section relating to medical records of minors is 
mandatory.
    (b) Medical records procedures--(1) Notification of or access to 
medical records. (i) Any individual may request notification of or 
access to a medical record pertaining to him. Unless the individual is a 
parent or guardian requesting notification of or access to a minor's 
medical record, an individual shall make a request for a medical record 
in accordance with this section and the procedures in Sec. 5b.5 of this 
part.
    (ii) An individual who requests notification of or access to a 
medical record

[[Page 36]]

shall, at the time the request is made, designate a representative in 
writing. The representative may be a physician, other health 
professional, or other responsible individual, who would be willing to 
review the record and inform the subject individual of its contents at 
the representative's discretion.
    (2) Utilization of the designated representative. A subject 
individual will be granted direct access to a medical record if the 
responsible official determines that direct access is not likely to have 
an adverse effect on the subject individual. If the responsible 
Department official believes that he is not qualified to determine, or 
if he does determine, that direct access to the subject individual is 
likely to have an adverse effect on the subject individual, the record 
will be sent to the designated representative. The subject individual 
will be informed in writing that the record has been sent.
    (c) Medical records of minors--(1) Requests by minors; notification 
of or access to medical records to minors. A minor may request 
notification of or access to a medical record pertaining to him in 
accordance with paragraph (b) of this section.
    (2) Requests on a minor's behalf; notification of or access to 
medical records to an individual on a minor's behalf. (i) In order to 
protect the privacy of a minor, a parent or guardian, authorized to act 
on a minor's behalf as provided in Sec. 5b.10 of this part, who makes a 
request for notification of or access to a minor's medical record will 
not be given direct notification of or access to such record.
    (ii) A parent or guardian shall make all requests for notification 
of or access to a minor's medical record in accordance with this 
paragraph and the procedures in Sec. 5b.5 of this part. A parent or 
guardian shall at the time he makes a request designate a family 
physician or other health professional (other than a family member) to 
whom the record, if any, will be sent.
    (iii) Where a medical record on the minor exists, it will be sent to 
the physician or health professional designated by the parent or 
guardian in all cases. If disclosure of the record would constitute an 
invasion of the minor's privacy, that fact will be brought to the 
attention of the physician or health professional to whom the record is 
sent. The physician or health professional will be asked to consider the 
effect that disclosure of the record to the parent or guardian would 
have on the minor in determining whether the minor's medical record 
should be made available to the parent or guardian. Response to the 
parent or guardian making the request will be made in substantially the 
following form:

We have completed processing your request for notification of or access 
to______________________________________________________________________

----------------------------------------'s

 (Name of minor)

medical records. Please be informed that if any medical record were 
found pertaining to that individual, they have not been sent to your 
designated physician or health professional.


In each case where a minor's medical record is sent to a physician or 
health professional, reasonable efforts will be made to so inform the 
minor.



Sec. 5b.7  Procedures for correction or amendment of records.

    (a) Any subject individual may request that his record be corrected 
or amended if he believes that the record is not accurate, timely, 
complete, or relevant or necessary to accomplish a Department function. 
A subject individual making a request to amend or correct his record 
shall address his request to the responsible Department official in 
writing; except that, the request need not be in writing if the subject 
individual makes his request in person and the responsible Department 
official corrects or amends the record at that time. The subject 
individual shall specify in each request:
    (1) The system of records from which the record is retrieved;
    (2) The particular record which he is seeking to correct or amend;
    (3) Whether he is seeking an addition to or a deletion or 
substitution of the record; and,
    (4) His reasons for requesting correction or amendment of the 
record.
    (b) A request for correction or amendment of a record will be 
acknowledged within 10 working days of its receipt unless the request 
can be

[[Page 37]]

processed and the subject individual informed of the responsible 
Department official's decision on the request within that 10 day period.
    (c) If the responsible Department official agrees that the record is 
not accurate, timely, or complete based on a preponderance of the 
evidence, the record will be corrected or amended. The record will be 
deleted without regard to its accuracy, if the record is not relevant or 
necessary to accomplish the Department function for which the record was 
provided or is maintained. In either case, the subject individual will 
be informed in writing of the correction, amendment, or deletion and, if 
accounting was made of prior disclosures of the record, all previous 
recipients of the record will be informed of the corrective action 
taken.
    (d) If the responsible Department official does not agree that the 
record should be corrected or amended, the subject individual will be 
informed in writing of the refusal to correct or amend the record. He 
will also be informed that he may appeal the refusal to correct or amend 
his record to the appropriate appeal authority listed in Sec. 5b.8 of 
this part. The appropriate appeal authority will be identified to the 
subject individual by name, title, and business address.
    (e) Requests to correct or amend a record governed by the regulation 
of another government agency, e.g., Civil Service Commission, Federal 
Bureau of Investigation, will be forwarded to such government agency for 
processing and the subject individual will be informed in writing of the 
referral.



Sec. 5b.8  Appeals of refusals to correct or amend records.

    (a) Processing the appeal. (1) A subject individual who disagrees 
with a refusal to correct or amend his record may appeal the refusal in 
writing. All appeals shall be made to the following appeal authorities, 
or their designees, or successors in function:
    (i) Assistant Secretary for Administration and Management for 
records of the Office of the Secretary, or where the initial refusal to 
correct or amend was made by another appeal authority. The appeal 
authority for an initial refusal by the Assistant Secretary for 
Administration and Management is the Under Secretary.
    (ii) Assistant Secretary for Health for records of the Public Health 
Service including Office of Assistant Secretary for Health; Health 
Resources Administration; Health Services Administration; Alcohol, Drug 
Abuse, and Mental Health Administration; Center for Disease Control; 
National Institutes of Health; and Food and Drug Administration.
    (iii) Assistant Secretary for Education for records of the Office of 
the Assistant Secretary for Education, National Center for Education 
Statistics, National Institute of Education, and Office of Education.
    (iv) Assistant Secretary for Human Development for records of the 
Office of Human Development.
    (v) Commissioner of Social Security for records of the Social 
Security Administration.
    (vi) Administrator, Social and Rehabilitation Service for the 
records of the Social and Rehabilitation Service.
    (2) An appeal will be completed within 30 working days from its 
receipt by the appeal authority; except that, the appeal authority may 
for good cause extend this period for an additional 30 days. Should the 
appeal period be extended, the subject individual appealing the refusal 
to correct or amend the record will be informed in writing of the 
extension and the circumstances of the delay. The subject individual's 
request to amend or correct the record, the responsible Department 
official's refusal to correct or amend, and any other pertinent material 
relating to the appeal will be reviewed. No hearing will be held.
    (3) If the appeal authority agrees that the record subject to the 
appeal should be corrected or amended, the record will be amended and 
the subject individual will be informed in writing of the correction or 
amendment. Where an accounting was made of prior disclosures of the 
record, all previous recipients of the record will be informed of the 
corrective action taken.
    (4) If the appeal is denied, the subject individual will be informed 
in writing:
    (i) Of the denial and the reasons for the denial;

[[Page 38]]

    (ii) That he has a right to seek judicial review of the denial; and,
    (iii) That he may submit to the responsible Department official a 
concise statement of disagreement to be associated with the disputed 
record and disclosed whenever the record is disclosed.
    (b) Notation and disclosure of disputed records. Whenever a subject 
individual submits a statement of disagreement to the responsible 
Department official in accordance with paragraph (a)(4)(iii) of this 
section, the record will be noted to indicate that it is disputed. In 
any subsequent disclosure, a copy of the subject individual's statement 
of disagreement will be disclosed with the record. If the responsible 
Department official deems it appropriate, a concise statement of the 
appeal authority's reasons for denying the subject individual's appeal 
may also be disclosed with the record. While the subject individual will 
have access to this statement of reasons, such statement will not be 
subject to correction or amendment. Where an accounting was made of 
prior disclosures of the record, all previous recipients of the record 
will be provided a copy of the subject individual's statement of 
disagreement, as well as the statement, if any, of the appeal 
authority's reasons for denying the subject individual's appeal.



Sec. 5b.9  Disclosure of records.

    (a) Consent to disclosure by a subject individual. (1) Except as 
provided in paragraph (b) of this section authorizing disclosures of 
records without consent, no disclosure of a record will be made without 
the consent of the subject individual. In each case the consent, whether 
obtained from the subject individual at the request of the Department or 
whether provided to the Department by the subject individual on his own 
initiative, shall be in writing. The consent shall specify the 
individual, organizational unit or class of individuals or 
organizational units to whom the record may be disclosed, which record 
may be disclosed and, where applicable, during which time frame the 
record may be disclosed (e.g., during the school year, while the subject 
individual is out of the country, whenever the subject individual is 
receiving specific services). A blanket consent to disclose all of a 
subject individual's records to unspecified individuals or 
organizational units will not be honored. The subject individual's 
identity and, where applicable (e.g., where a subject individual gives 
consent to disclosure of a record to a specific individual), the 
identity of the individual to whom the record is to be disclosed shall 
be verified.
    (2) A parent or guardian of any minor is not authorized to give 
consent to a disclosure of the minor's medical record.
    (b) Disclosures without the consent of the subject individual. The 
disclosures listed in this paragraph may be made without the consent of 
the subject individual. Such disclosures are:
    (1) To those officers and employees of the Department who have a 
need for the record in the performance of their duties. The responsible 
Department official may upon request of any officer or employee, or on 
his own initiative, determine what constitutes legitimate need.
    (2) Required to be disclosed under the Freedom of Information Act, 5 
U.S.C. 552, and Part 5 of this title.
    (3) For a routine use as defined in paragraph (j) of Sec. 5b.1 of 
this part. Routine uses will be listed in any notice of a system of 
records. Routine uses published in Appendix B are applicable to more 
than one system of records. Where applicable, notices of systems of 
records may contain references to the routine uses listed in Appendix B. 
Appendix B will be published with any compendium of notices of systems 
of records.
    (4) 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 U.S.C.
    (5) To a recipient who has provided the agency with advance written 
assurance that the record will be used solely as a statistical research 
or reporting record; Provided, That, the record is transferred in a form 
that does not identify the subject individual.
    (6) 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

[[Page 39]]

evaluation by the Administrator of General Services or his designee to 
determine whether the record has such value.
    (7) To another government 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 the activity 
is authorized by law, and if the head of such government agency or 
instrumentality has submitted a written request to the Department 
specifying the record desired and the law enforcement activity for which 
the record is sought.
    (8) To an individual pursuant to a showing of compelling 
circumstances affecting the health or safety of any individual if a 
notice of the disclosure is transmitted to the last known address of the 
subject individual.
    (9) 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.
    (10) To the Comptroller General, or any of his authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office.
    (11) Pursuant to the order of a court of competent jurisdiction.
    (c) Accounting of disclosures. (1) An accounting of all disclosures 
of a record will be made and maintained by the Department for 5 years or 
for the life of the record, whichever is longer; except that, such an 
accounting will not be made:
    (i) For disclosures under paragraphs (b) (1) and (2) of this 
section; and,
    (ii) For disclosures made with the written consent of the subject 
individual.
    (2) The accounting will include:
    (i) The date, nature, and purpose of each disclosure; and
    (ii) The name and address of the person or entity to whom the 
disclosure is made.
    (3) Any subject individual may request access to an accounting of 
disclosures of a record. The subject individual shall make a request for 
access to an accounting in accordance with the procedures in Sec. 5b.5 
of this part. A subject individual will be granted access to an 
accounting of the disclosures of a record in accordance with the 
procedures of this part which govern access to the related record. 
Access to an accounting of a disclosure of a record made under paragraph 
(b)(7) of this section may be granted at the discretion of the 
responsible Department official.



Sec. 5b.10  Parents and guardians.

    For the purpose of this part, a parent or guardian of any minor or 
the legal guardian or any individual who has been declared incompetent 
due to physical or mental incapacity or age by a court of competent 
jurisdiction is authorized to act on behalf of an individual or a 
subject individual. Except as provided in paragraph (b)(2) of Sec. 
5b.5, of this part governing procedures for verifying an individual's 
identity, and paragraph (c) (2) of Sec. 5b.6 of this part governing 
special procedures for notification of or access to a minor's medical 
records, an individual authorized to act on behalf of a minor or legal 
incompetent will be viewed as if he were the individual or subject 
individual.



Sec. 5b.11  Exempt systems.

    (a) General policy. The Act permits certain types of specific 
systems of records to be exempt from some of its requirements. It is the 
policy of the Department to exercise authority to exempt systems of 
records only in compelling cases.
    (b) Specific systems of records exempted. (1) Those systems of 
records listed in paragraph (b)(2) of this section are exempt from the 
following provisions of the Act and this part:
    (i) 5 U.S.C. 552a(c)(3) and paragraph (c)(2) of Sec. 5b.9 of this 
part which require a subject individual to be granted access to an 
accounting of disclosures of a record.
    (ii) 5 U.S.C. 552a(d) (1) through (4) and (f) and Sec. Sec. 5b.6, 
5b.7, and 5b.8 of this part relating to notification of or access to 
records and correction or amendment of records.
    (iii) 5 U.S.C. 552a(e)(4) (G) and (H) which require inclusion of 
information about Department procedures for notification, access, and 
correction or amendment of records in the notice for the systems of 
records.

[[Page 40]]

    (iv) 5 U.S.C. 552(e)(3) and paragraph (a)(3) of Sec. 5b.4 of this 
part which require that an individual asked to provide a record to the 
Department be informed of the authority for providing the record 
(including whether the providing of the record is mandatory or 
voluntary, the principal purposes for maintaining the record, the 
routine uses for the record, and what effect his refusal to provide the 
record may have on him), and if the record is not required by statute or 
Executive Order to be provided by the individual, he agrees to provide 
the record. This exemption applies only to an investigatory record 
compiled by the Department for criminal law enforcement purposes in a 
system of records exempt under subsection (j)(2) of the Act to the 
extent that these requirements would prejudice the conduct of the 
investigation.
    (2) The following systems of records are exempt from those 
provisions of the Act and this part listed in paragraph (b) (1) of this 
section.
    (i) Pursuant to subsection (j)(2) of the Act:
    (A) The Saint Elizabeths Hospital's Court-Ordered Forensic 
Investigatory Materials Files; and
    (B) The Investigatory Material Compiled for Law Enforcement Purposes 
System, HHS.
    (ii) Pursuant to subsection (k)(2) of the Act:
    (A) The General Criminal Investigation Files, HHS/SSA;
    (B) The Criminal Investigations File, HHS/SSA; and,
    (C) The Program Integrity Case Files, HHS/SSA.
    (D) Civil and Administrative Investigative Files of the Inspector 
General, HHS/OS/OIG.
    (E) Complaint Files and Log. HHS/OS/OCR.
    (F) Investigative materials compiled for law enforcement purposes 
for the Healthcare Integrity and Protection Data Bank (HIPDB), of the 
Office of Inspector General. (See Sec. 61.15 of this title for access 
and correction rights under the HIPDB by subjects of the Data Bank.)
    (G) Investigative materials compiled for law enforcement purposes 
for the Program Information Management System, HHS/OS/OCR.
    (iii) Pursuant to subsection (k)(4) of the Act:
    (A) The Health and Demographic Surveys Conduct in Random Samples of 
the U.S. Population;
    (B) The Health Manpower Inventories and Surveys;
    (C) The Vital Statistics for Births, Deaths, Fetal Deaths, Marriages 
and Divorces Occurring in the U.S. during Each Year; and,
    (D) The Maryland Psychiatric Case Register.
    (E) The Health Resources Utilization Statistics, DHHS/OASH/NCHS.
    (F) National Medical Expenditure Survey Records. HHS/OASH/NCHSR.
    (iv) Pursuant to subsection (k)(5) of the Act:
    (A) The Investigatory Material Compiled for Security and Suitability 
Purposes System, HHS; and,
    (B) The Suitability for Employment Records, HHS.
    (v) Pursuant to subsections (j)(2), (k)(2), and (k)(5) of the Act:
    (A) The Clinical Investigatory Records, HHS/FDA;
    (B) The Regulated Industry Employee Enforcement Records, HHS/FDA;
    (C) The Employee Conduct Investigative Records, HHS/FDA; and,
    (D) The Service Contractor Employee Investigative Records, HHS/FDA.
    (vi) Pursuant to subsection (k)(6) of the Act:
    (A) The Personnel Research and Merit Promotion Test Records, HHS/
SSA/OMA.
    (vii) Pursuant to subsections (k)(2) and (k)(5) of the Act:
    (A) Public Health Service Records Related to Investigations of 
Scientific Misconduct, HHS/OASH/ORI.
    (B) Administration: Investigative Records, HHS/NIH/OM/OA/OMA.
    (c) Notification of or access to records in exempt systems of 
records. (1) Where a system of records is exempt as provided in 
paragraph (b) of this section, any individual may nonetheless request 
notification of or access to a record in that system. An individual 
shall make requests for notification of or access to a record in an 
exempt system of records in accordance with the procedures of Sec. Sec. 
5b.5 and 5b.6 of this part.

[[Page 41]]

    (2) An individual will be granted notification of or access to a 
record in an exempt system but only to the extent such notification or 
access would not reveal the identity of a source who furnished the 
record to the Department under an express promise, and prior to 
September 27, 1975 an implied promise, that his identity would be held 
in confidence, if:
    (i) The record is in a system of records which is exempt under 
subsection (k)(2) of the Act and the individual has been, as a result of 
the maintenance of the record, denied a right, privilege, or benefit to 
which he would otherwise be eligible; or,
    (ii) The record is in a system of records which is exempt under 
subsection (k)(5) of the Act.
    (3) If an individual is not granted notification of or access to a 
record in a system of records exempt under subsections (k) (2) and (5) 
of the Act in accordance with this paragraph, he will be informed that 
the identity of a confidential source would be revealed if notification 
of or access to the record were granted to him.
    (d) Discretionary actions by the responsible Department official. 
Unless disclosure of a record to the general public is otherwise 
prohibited by law, the responsible Department official may in his 
discretion grant notification of or access to a record in a system of 
records which is exempt under paragraph (b) of this section. 
Discretionary notification of or access to a record in accordance with 
this paragraph will not be a precedent for discretionary notification of 
or access to a similar or related record and will not obligate the 
responsible Department official to exercise his discretion to grant 
notification of or access to any other record in a system of records 
which is exempt under paragraph (b) of this section.

[40 FR 47409, Oct. 8, 1975, as amended at 43 FR 40229, Sept. 11, 1978; 
47 FR 57040, Dec. 22, 1982; 49 FR 14108, Apr. 10, 1984; 51 FR 41352, 
Nov. 14, 1986; 59 FR 36717, July 19, 1994; 65 FR 34988, June 1, 2000; 65 
FR 37289, June 14, 2000; 68 FR 62751, Nov. 6, 2003]



Sec. 5b.12  Contractors.

    (a) All contracts entered into on or after September 27, 1975 which 
require a contractor to maintain or on behalf of the Department to 
maintain, a system of records to accomplish a Department function must 
contain a provision requiring the contractor to comply with the Act and 
this part.
    (b) All unexpired contracts entered into prior to September 27, 1975 
which require the contractor to maintain or on behalf of the Department 
to maintain, a system of records to accomplish a Department function 
will be amended as soon as practicable to include a provision requiring 
the contractor to comply with the Act and this part. All such contracts 
must be so amended by July 1, 1976 unless for good cause the appeal 
authority identified in Sec. 5b.8 of this part authorizes the 
continuation of the contract without amendment beyond that date.
    (c) A contractor and any employee of such contractor shall be 
considered employees of the Department only for the purposes of the 
criminal penalties of the Act, 5 U.S.C. 552a(i), and the employee 
standards of conduct listed in Appendix A of this part where the 
contract contains a provision requiring the contractor to comply with 
the Act and this part.
    (d) This section does not apply to systems of records maintained by 
a contractor as a result of his management discretion, e.g., the 
contractor's personnel records.



Sec. 5b.13  Fees.

    (a) Policy. Where applicable, fees for copying records will be 
charged in accordance with the schedule set forth in this section. Fees 
may only be charged where an individual requests that a copy be made of 
the record to which he is granted access. No fee may be charged for 
making a search of the system of records whether the search is manual, 
mechanical, or electronic. Where a copy of the record must be made in 
order to provide access to the record (e.g., computer printout where no 
screen reading is available), the copy will be made available to the 
individual without cost. Where a medical record is made available to a 
representative designated by the individual or to a physician or health 
professional designated by a parent or guardian under Sec. 5b.6 of this 
part, no fee will be charged.

[[Page 42]]

    (b) Fee schedule. The fee schedule for the Department is as follows:
    (1) Copying of records susceptible to photocopying--$.10 per page.
    (2) Copying records not susceptible to photocopying (e.g., punch 
cards or magnetic tapes)--at actual cost to be determined on a case-by-
case basis.
    (3) No charge will be made if the total amount of copying does not 
exceed $25.

          Appendix A to Part 5b--Employee Standards of Conduct

    (a) General. All employees are required to be aware of their 
responsibilities under the Privacy Act of 1974, 5 U.S.C. 552a. 
Regulations implementing the Act are set forth in 45 CFR 5b. Instruction 
on the requirements of the Act and regulation shall be provided to all 
new employees of the Department. In addition, supervisors shall be 
responsible for assuring that employees who are working with systems of 
records or who undertake new duties which require the use of systems of 
records are informed of their responsibilities. Supervisors shall also 
be responsible for assuring that all employees who work with such 
systems of records are periodically reminded of the requirements of the 
Act and are advised of any new provisions or interpretations of the Act.
    (b) Penalties. (1) All employees must guard against improper 
disclosure f records which are governed by the Act. Because of the 
serious consequences of improper invasions of personal privacy, 
employees may be subject to disciplinary action and criminal prosecution 
for knowing and willful violations of the Act and regulation. In 
addition, employees may also be subject to disciplinary action for 
unknowing or unwillful violations, where the employee had notice of the 
provisions of the Act and regulations and failed to inform himself 
sufficiently or to conduct himself in accordance with the requirements 
to avoid violations.
    (2) The Department may be subjected to civil liability for the 
following actions undertaken by its employees:
    (a) Making a determination under the Act and Sec. Sec. 5b.7 and 
5b.8 of the regulation not to amend an individual's record in accordance 
with his request, or failing to make such review in conformity with 
those provisions;
    (b) Refusing to comply with an individual's request for notification 
of or access to a record pertaining to hiem;
    (c) Failing to maintain any record pertaining to any individual with 
such accuracy, relevance, timeliness, and completeness as is necessary 
to assure fairness in any determination relating to the qualifications, 
character, rights, or opportunities of, or benefits to the individual 
that may be made on the basis of such a record, and consequently a 
determination is made which is adverse to the individual; or
    (d) Failing to comply with any other provision of the Act or any 
rule promulgated thereunder, in such a way as to have an adverse effect 
on an individual.
    (3) An employee may be personally subject to criminal liability as 
set forth below and in 5 U.S.C. 552a (i):
    (a) Any officer or employee of an agency, who by virtue of his 
employment or official position, has possession of, or access to, agency 
records which contain individually identifiable information the 
disclosure of which is prohibited by the Act or by rules or regulations 
established thereunder, and who, knowing that disclosure of the specific 
material is so prohibited, willfully discloses the material in any 
manner to any person or agency not entitled to receive it, shall be 
guilty of a misdemeanor and fined not more than $5,000.
    (b) Any officer or employee of any agency who willfully maintains a 
system of records without meeting the notice requirements [of the Act] 
shall be guilty of a misdemeanor and fined not more than $5,000.
    (c) Rules Governing Employees Not Working With Systems of Records. 
Employees whose duties do not involve working with systems of records 
will not generally disclose to any one, without specific authorization 
from their supervisors, records pertaining to employees or other 
individuals which by reason of their official duties are available to 
them. Notwithstanding the above, the following records concerning 
Federal employees are a matter of public record and no further 
authorization is necessary for disclosure:
    (1) Name and title of individual.
    (2) Grade classification or equivalent and annual rate of salary.
    (3) Position description.
    (4) Location of duty station, including room number and telephone 
number.
    In addition, employees shall disclose records which are listed in 
the Department's Freedom of Information Regulation as being available to 
the public. Requests for other records will be referred to the 
responsible Department official. This does not preclude employees from 
discussing matters which are known to them personally, and without 
resort to a record, to official investigators of Federal agencies for 
official purposes such as suitability checks, Equal Employment 
Opportunity investigations, adverse action proceedings, grievance 
proceedings, etc.
    (d) Rules governing employees whose duties require use or reference 
to systems of records. Employees whose official duties require that they 
refer to, maintain, service, or otherwise deal with systems of records 
(hereinafter referred to as ``Systems Employees'') are governed by the 
general provisions. In addition, extra precautions are required and 
systems

[[Page 43]]

employees are held to higher standards of conduct.
    (1) Systems Employees shall:
    (a) Be informed with respect to their responsibilities under the 
Act;
    (b) Be alert to possible misuses of the system and report to their 
supervisors any potential or actual use of the system which they believe 
is not in compliance with the Act and regulation;
    (c) Make a disclosure of records within the Department only to an 
employee who has a legitimate need to know the record in the course of 
his official duties;
    (d) Maintain records as accurately as practicable.
    (e) Consult with a supervisor prior to taking any action where they 
are in doubt whether such action is in conformance with the Act and 
regulation.
    (2) Systems Employees shall not:
    (a) Disclose in any form records from a system of records except (1) 
with the consent or at the request of the subject individual; or (2) 
where its disclosure is permitted under Sec. 5b.9 of the regulation.
    (b) Permit unauthorized individuals to be present in controlled 
areas. Any unauthorized individuals observed in controlled areas shall 
be reported to a supervisor or to the guard force.
    (c) Knowingly or willfully take action which might subject the 
Department to civil liability.
    (d) Make any arrangements for the design development, or operation 
of any system of records without making reasonable effort to provide 
that the system can be maintained in accordance with the Act and 
regulation.
    (e) Contracting officers. In addition to any applicable provisions 
set forth above, those employees whose official duties involve entering 
into contracts on behalf of the Department shall also be governed by the 
following provisions:
    (1) Contracts for design, or development of systems and equipment. 
No contract for the design or development of a system of records, or for 
equipment to store, service or maintain a system of records shall be 
entered into unless the contracting officer has made reasonable effort 
to ensure that the product to be purchased is capable of being used 
without violation of the Act or regulation. Special attention shall be 
given to provision of physical safeguards.
    (2) Contracts for the operation of systems of records. A review by 
the Contracting Officer, in conjunction with other officials whom he 
feels appropriate, of all proposed contracts providing for the operation 
of systems of records shall be made prior to execution of the contracts 
to determine whether operation of the system of records is for the 
purpose of accomplishing a Department function. If a determination is 
made that the operation of the system is to accomplish a Department 
function, the contracting officer shall be responsible for including in 
the contract appropriate provisions to apply the provisions of the Act 
and regulation to the system, including prohibitions against improper 
release by the contractor, his employees, agents, or subcontractors.
    (3) Other service contracts. Contracting officers entering into 
general service contracts shall be responsible for determining the 
appropriateness of including provisions in the contract to prevent 
potential misuse (inadvertent or otherwise) by employees, agents, or 
subcontractors of the contractor.
    (f) Rules Governing Responsible Department Officials. In addition to 
the requirements for Systems Employees, responsible Department officials 
shall:
    (1) Respond to all requests for notification of or access, 
disclosure, or amendment of records in a timely fashion in accordance 
with the Act and regulation;
    (2) Make any amendment of records accurately and in a timely 
fashion;
    (3) Inform all persons whom the accounting records show have 
received copies of the record prior to the amendments of the correction; 
and
    (4) Associate any statement of disagreement with the disputed 
record, and
    (a) Transmit a copy of the statement to all persons whom the 
accounting records show have received a copy of the disputed record, and
    (b) Transmit that statement with any future disclosure.

 Appendix B to Part 5b--Routine Uses Applicable to More Than One System 
                      of Records Maintained by HHS

    (1) In the event that a system of records maintained by this agency 
or carry out its functions indicates a violation or potential violation 
of law, whether civil, criminal or regulatory in nature, and whether 
arising by general statute or particular program statute, or by 
regulation, rule or order issued pursuant thereto, the relevant records 
in the system of records may be referred, as a routine use, to the 
appropriate agency, whether federal, or foreign, charged with the 
responsibility of investigating or prosecuting such violation or charged 
with enforcing or implementing the statute, or rule, regulation or order 
issued pursuant thereto.
    (2) Referrals may be made of assignments of research investigators 
and project monitors to specific research projects to the Smithsonian 
Institution to contribute to the Smithsonian Science Information 
Exchange, Inc.
    (3) In the event the Department deems it desirable or necessary, in 
determining whether particular records are required to be disclosed 
under the Freedom of Information

[[Page 44]]

Act, disclosure may be made to the Department of Justice for the purpose 
of obtaining its advice.
    (4) A record from this system of records may be disclosed as a 
``routine use'' to a federal, state or local agency maintaining civil, 
criminal or other relevant enforcement records or other pertinent 
records, such as current licenses, if necessary to obtain a record 
relevant to an agency decision concerning the hiring or retention of an 
employee, the issuance of a security clearance, the letting of a 
contract, or the issuance of a license, grant or other benefit.
    A record from this system of records may be disclosed to a Federal 
agency, in response to its request, in connection with the hiring or 
retention of an employee, the issuance of a security clearance, the 
reporting of an investigation of an employee, the letting of a contract, 
or the issuance of a license, grant, or other benefit by the requesting 
agency, to the extent that the record is relevant and necessary to the 
requesting agency's decision on the matter.
    (5) In the event that a system of records maintained by this agency 
to carry out its function indicates a violation or potential violation 
of law, whether civil, criminal or regulatory in nature, and whether 
arising by general statute or particular program statute, or by 
regulation, rule or order issued pursuant thereto, the relevant records 
in the system of records may be referred, as a routine use, to the 
appropriate agency, whether state or local charged with the 
responsibility of investigating or prosecuting such violation or charged 
with enforcing or implementing the statute, or rule, regulation or order 
issued pursuant thereto.
    (6) Where Federal agencies having the power to subpoena other 
Federal agencies' records, such as the Internal Revenue Service or the 
Civil Rights Commission, issue a subpoena to the Department for records 
in this system of records, the Department will make such records 
available.
    (7) Where a contract between a component of the Department and a 
labor organization recognized under E.O. 11491 provides that the agency 
will disclose personal records relevant to the organization's mission, 
records in this system of records may be disclosed to such organization.
    (8) Where the appropriate official of the Department, pursuant to 
the Department's Freedom of Information Regulation determines that it is 
in the public interest to disclose a record which is otherwise exempt 
from mandatory disclosure, disclosure may be made from this system of 
records.
    (9) The Department contemplates that it will contract with a private 
firm for the purpose of collating, analyzing, aggregating or otherwise 
refining records in this system. Relevant records will be disclosed to 
such a contractor. The contractor shall be required to maintain Privacy 
Act safeguards with respect to such records.
    (10)-(99) [Reserved]
    (100) To the Department of Justice or other appropriate Federal 
agencies in defending claims against the United States when the claim is 
based upon an individual's mental or physical condition and is alleged 
to have arisen because of activities of the Public Health Service in 
connection with such individual.
    (101) To individuals and organizations, deemed qualified by the 
Secretary to carry out specific research solely for the purpose of 
carrying out such research.
    (102) To organizations deemed qualified by the Secretary to carry 
out quality assessment, medical audits or utilization review.
    (103) Disclosures in the course of employee discipline or competence 
determination proceedings.

       Appendix C to Part 5b--Delegations of Authority [Reserved]

                            PART 6 [RESERVED]



PART 7_EMPLOYEE INVENTIONS--Table of Contents




Sec.
7.0 Who are employees.
7.1 Duty of employee to report inventions.
7.3 Determination as to domestic rights.
7.4 Option to acquire foreign rights.
7.7 Notice to employee of determination.
7.8 Employee's right of appeal.

    Authority: Reorg. Plan No. 1 of 1953, 18 FR 2053; 3 CFR 1953 Supp. 
E.O. 10096, 15 FR 391; 3 CFR. 1950 Supp. and E.O. 10930, 26 FR 2583; 3 
CFR 1961 Supp.



Sec. 7.0  Who are employees.

    As used in this part, the term Government employee means any officer 
or employee, civilian or military, except such part-time employees or 
part-time consultants as may be excluded therefrom by a determination 
made in writing by the head of the employee's office or constituent 
organization, pursuant to an exemption approved by the Commissioner of 
Patents that to include him or them would be impracticable or 
inequitable, given the reasons therefor. A person shall not be 
considered to be a part-time employee or part-time consultant for this 
purpose unless the terms of his employment contemplate that he shall 
work for less than the minimum number of hours per day, or less than a 
minimum number of days per week, or less than the minimum

[[Page 45]]

number of weeks per year, regularly required of full-time employees of 
his class.

[27 FR 7986, Aug. 10, 1962]



Sec. 7.1  Duty of employee to report inventions.

    Every Department employee is required to report to the Assistant 
Secretary (Health and Scientific Affairs) in accordance with the 
procedures established therefor, every invention made by him (whether or 
not jointly with others) which bears any relation to his official duties 
or which was made in whole or in any part during working hours, or with 
any contribution of Government facilities, equipment, material, funds, 
or information, or of time or services of other Government employees on 
official duty.

[31 FR 12842, Oct. 1, 1966]



Sec. 7.3  Determination as to domestic rights.

    The determination of the ownership of the domestic right, title, and 
interest in and to an invention which is or may be patentable, made by a 
Government employee while under the administrative jurisdiction of the 
Department, shall be made in writing by the Assistant Secretary (Health 
and Scientific Affairs), in accordance with the provisions of Executive 
Order 10096 and Government-wide regulations issued thereunder by the 
Commissioner of Patents as follows:
    (a) The Government as represented by the Assistant Secretary (Health 
and Scientific Affairs) shall obtain the entire domestic right, title 
and interest in and to all inventions made by any Government employee 
(1) during working hours, or (2) with a contribution by the Government 
of facilities, equipment, materials, funds, or information, or of time 
or services of other Government employees on official duty, or (3) which 
bear a direct relation to or are made in consequence of the official 
duties of the inventor.
    (b) In any case where the contribution of the Government, as 
measured by any one or more of the criteria set forth in paragraph (a) 
of this section, to the invention is insufficient equitably to justify a 
requirement of assignment to the Government of the entire domestic 
right, title and interest in and to such invention, or in any case where 
the Government has insufficient interest in an invention to obtain the 
entire domestic right, title, and interest therein (although the 
Government could obtain same under paragraph (a) of this section), the 
Department, subject to the approval of the Commissioner, shall leave 
title to such invention in the employee, subject, however, to the 
reservation to the Government of a nonexclusive, irrevocable, royalty-
free license in the invention with power to grant licenses for all 
governmental purposes, such reservation to appear, where practicable, in 
any patent, domestic or foreign, which may issue on such invention.
    (c) In applying the provisions of paragraphs (a) and (b) of this 
section, to the facts and circumstances relating to the making of any 
particular invention, it shall be presumed that an invention made by an 
employee who is employed or assigned (1) to invent or improve or perfect 
any art, machine, manufacture, or composition of matter, (2) to conduct 
or perform research, development work, or both, (3) to supervise, 
direct, coordinate, or review Government financed or conducted research, 
development work, or both, or (4) to act in a liaison capacity among 
governmental or nongovernmental agencies or individuals engaged in such 
work, falls within the provisions of paragraph (a) of this section, and 
it shall be presumed that any invention made by any other employee falls 
within the provisions of paragraph (b) of this section. Either 
presumption may be rebutted by a showing of the facts and circumstances 
and shall not preclude a determination that these facts and 
circumstances justify leaving the entire right, title and interest in 
and to the invention in the Government employee, subject to law.
    (d) In any case wherein the Government neither (1) obtains the 
entire domestic right, title and interest in and to an invention 
pursuant to the provisions of paragraph (a) of this section, nor (2) 
reserves a nonexclusive, irrevocable, royalty-free license in the 
invention, with power to grant licenses for all governmental purposes, 
pursuant to the provisions of paragraph (b)

[[Page 46]]

of this section, the Government shall leave the entire right, title and 
interest in and to the invention in the Government employee, subject to 
law.

[27 FR 7986, Aug. 10, 1962, as amended at 31 FR 12842, Nov. 1, 1966]



Sec. 7.4  Option to acquire foreign rights.

    In any case where it is determined that all domestic rights should 
be assigned to the Government, it shall further be determined, pursuant 
to Executive Order 9865 and Government-wide regulations issued 
thereunder, that the Government shall reserve an option to require the 
assignment of such rights in all or in any specified foreign countries. 
In case where the inventor is not required to assign the patent rights 
in any foreign country or countries to the Government or the Government 
fails to exercise its option within such period of time as may be 
provided by regulations issued by the Commissioner of Patents, any 
application for a patent which may be filed in such country or countries 
by the inventor or his assignee shall nevertheless be subject to a 
nonexclusive, irrevocable, royalty-free license to the Government for 
all governmental purposes, including the power to issue sublicenses for 
use in behalf of the Government and/or in furtherance of the foreign 
policies of the Government.

[27 FR 7987, Aug. 10, 1962]



Sec. 7.7  Notice to employee of determination.

    The employee-inventor shall be notified in writing of the 
Department's determination of the rights to his invention and of his 
right of appeal, if any. Notice need not be given if the employee stated 
in writing that he would agree to the determination of ownership which 
was in fact made.

[31 FR 12842, Oct. 1, 1966]



Sec. 7.8  Employee's right of appeal.

    An employee who is aggrieved by a determination of the Department 
may appeal to the Commissioner of Patents, pursuant to section 4(d) of 
Executive Order 10096, as amended by Executive Order 10930, and 
regulations issued thereunder, by filing a written appeal with the 
Commissioner, in duplicate, and a copy of the appeal with the Assistant 
Secretary (Health and Scientific Affairs), within 30 days (or such 
longer period as the Commissioner may, for good cause, fix in any case) 
after receiving written notice of such determination.

[27 FR 7986, Aug. 10, 1962, as amended at 31 FR 12842, Oct. 1, 1966]

                            PART 8 [RESERVED]



PART 9_USE OF HHS RESEARCH FACILITIES BY ACADEMIC SCIENTISTS, ENGINEERS, 
AND STUDENTS--Table of Contents




Sec.
9.1 Purpose.
9.2 Policy.
9.3 Delegations of authority.
9.4 Criteria.
9.5 Restrictions.

    Authority: 27 Stat. 395, as amended; 20 U.S.C. 91.

    Source: 34 FR 18938, Nov. 27, 1969, unless otherwise noted.



Sec. 9.1  Purpose.

    To enhance the availability of DHHS scientific research and study 
facilities to academic scientists, engineers, and qualified students.



Sec. 9.2  Policy.

    It is the policy of the Department of Health and Human Services in 
accordance with the policy of the President announced on February 21, 
1969, to make research and study facilities of the Department readily 
available to the scientific community, especially qualified academic 
scientists and engineers. Unique, unusual, and expensive-to-duplicate 
facilities at laboratories and other study and research facilities of 
the Department will be made available to the national scientific 
community, to the maximum extent practical without serious detriment to 
the missions of those facilities. It is also the policy of the 
Department to permit qualified students and graduates of institutions of 
learning in the several States, and territories, as well as the District 
of Columbia, to use study and research facilities of the Department.

[[Page 47]]

When such facilities are used by academic scientists, engineers, and 
students, the costs incurred for the operation of the unique or unusual 
research facilities, as well as of the other facilities, should be 
funded by the operating agency responsible for the operation of that 
facility, except for any significant incremental costs incurred in 
support of research not directly related to an HHS mission.



Sec. 9.3  Delegations of authority.

    (a) The heads of operating agencies are delegated authority for 
negotiations and decisions as to the use of Department facilities by 
qualified academic scientists, engineers, and students.
    (b) The heads of operating agencies may (and are encouraged to) 
redelegate to the heads of their respective component organizations, 
with the power to further redelegate to laboratory directors, the 
authority for negotiations and decisions as to the use of departmental 
facilities. Appropriate use shall be made of advisory groups in 
formulating their decisions.



Sec. 9.4  Criteria.

    (a) The official permitting use of Department facilities must 
determine that it would be consistent with the programs of his activity 
to participate. Facilities may be made available provided the use of 
such facilities will be of direct benefit to the objectives of the 
academic scientist, or engineer, or student, with the prospect of 
fruitful interchange of ideas and information between Department 
personnel and the academic scientist, or engineer, or student, and such 
use will not interfere with the Department program.
    (b) The official permitting use of Department facilities will 
furnish the non-Government user with safety requirements or operating 
procedures to be followed. Such requirements or procedures are to 
include the requirement to report to the permitting official any 
accident involving the non-Government user.
    (c) The official delegated authority for approving the use of 
Department facilities will not permit the use of laboratory facilities 
unless he determines:
    (1) That facilities are available for the period desired; and
    (2) That the proposed research will not interfere with regular 
Department functions or needs, nor require the subsequent acquisition of 
additional equipment by the Department.



Sec. 9.5  Restrictions.

    (a) Each individual authorized to use Department facilities will be 
expected to use the facilities and equipment with customary care and 
otherwise conduct himself in such manner as to complete his research or 
study within any time limits prescribed.
    (b) Each individual authorized to use HHS facilities may not be 
authorized to sign requisitions for supplies and equipment.
    (c) Any official approving the use of HHS facilities should seek an 
agreement, executed by non-Government users, absolving the Federal 
agency of liability in case of personal injury, death, and failure or 
damage to the non-Government user's experiments or equipment. The 
agreement must also contain a statement that the non-Government user 
will comply with all safety regulations and procedures while using such 
facilities.



PART 12_DISPOSAL AND UTILIZATION OF SURPLUS REAL PROPERTY FOR PUBLIC 
HEALTH PURPOSES--Table of Contents




Sec.
12.1 Definitions.
12.2 Scope.
12.3 General policies.
12.4 Limitations.
12.5 Awards.
12.6 Notice of available property.
12.7 Applications for surplus real property.
12.8 Assignment of surplus real property.
12.9 General disposal terms and conditions.
12.10 Compliance with the National Environmental Policy Act of 1969 and 
          other related Acts (environmental impact).
12.11 Special terms and conditions.
12.12 Utilization.
12.13 Form of conveyance.
12.14 Compliance inspections and reports.
12.15 Reports to Congress.

Exhibit A to Part 12--Public Benefit Allowance for Transfer of Real 
          Property for Health Purposes

    Authority: Sec. 203, 63 Stat. 385, as amended; 40 U.S.C. 484; sec. 
501 of Pub. L. 100-77, 101 Stat. 509-10, 42 U.S.C. 11411.

[[Page 48]]


    Source: 45 FR 72173, Oct. 31, 1980, unless otherwise noted.



Sec. 12.1  Definitions.

    (a) Act means the Federal Property and Administrative Services Act 
of 1949, 63 Stat. 377 (40 U.S.C. 471 et seq.). Terms defined in the Act 
and not defined in this section have the meanings given to them in the 
Act.
    (b) Accredited means having the approval of a recognized 
accreditation board or association on a regional, State, or national 
level, such as a State Board of Health. Approval as used above describes 
the formal process carried out by State Agencies and institutions in 
determining that health organizations or programs meet minimum 
acceptance standards.
    (c) Administrator means the Administrator of General Services.
    (d) Assigned property means real and related personal property 
which, in the discretion of the Administrator or his designee, has been 
made available to the Department for transfer for public health 
purposes.
    (e) Department means the U.S. Department of Health and Human 
Services.
    (f) Disposal agency means the executive agency of the Government 
which has authority to assign property to the Department for transfer 
for public health purposes.
    (g) Excess means any property under the control of any Federal 
agency which is not required for its needs and the discharge of its 
responsibilities, as determined by the head thereof.
    (h) Fair market value means the highest price which the property 
will bring by sale in the open market by a willing seller to a willing 
buyer.
    (i) Holding agency means the Federal agency which has control over 
and accountability for the property involved.
    (j) Nonprofit institution means any institution, organization, or 
association, whether incorporated or unincorporated, no part of the net 
earnings of which inures or may lawfully inure to the benefit of any 
private shareholder or individual, and (except for institutions which 
lease property to assist the homeless under Title V of Pub. L. 100-77) 
which has been held to be tax-exempt under section 501(c)(3) of the 
Internal Revenue Code of 1954.
    (k) Off-site property means surplus buildings, utilities and all 
other removable improvements, including related personal property, to be 
transferred by the Department for removal and use away from the site for 
public health purposes.
    (l) On-site means surplus real property, including related personal 
property, to be transferred by the Department for use in place for 
public health purposes.
    (m) Public benefit allowance means a discount on the sale or lease 
price of real property transferred for public health purposes, 
representing any benefit determined by the Secretary which has accrued 
or may accrue to the United States thereby.
    (n) Related personal property means any personal property: (1) Which 
is located on and is (i) an integral part of, or (ii) useful in the 
operation of real property; or (2) which is determined by the 
Administrator to be otherwise related to the real property.
    (o) Secretary means the Secretary of Health and Human Services.
    (p) State means a State of the United States, and includes the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
Territories and possessions of the United States.
    (q) Surplus when used with respect to real property means any excess 
real property not required for the needs and the discharge of the 
responsibilities of all Federal agencies as determined by the 
Administrator.

[45 FR 72173, Oct. 31, 1980, as amended at 53 FR 7745, Mar. 10, 1988]



Sec. 12.2  Scope.

    This part is applicable to surplus real property located within any 
State which is appropriate for assignment to, or which has been assigned 
to, the Department for transfer for public health purposes, as provided 
for in section 203(k) of the Act.



Sec. 12.3  General policies.

    (a) It is the policy of the Department to foster and assure maximum 
utilization of surplus real property for public health purposes, 
including research.

[[Page 49]]

    (b) Transfers may be made only to States, their political 
subdivisions and instrumentalities, tax-supported public health 
institutions, and nonprofit public health institutions which (except for 
institutions which lease property to assist the homeless under Title V 
of Pub. L. 100-77) have been held tax-exempt under section 501(c)(3) of 
the Internal Revenue Code of 1954.
    (c) Real property will be requested for assignment only when the 
Department has determined that the property is suitable and needed for 
public health purposes. The amount of real and related personal property 
to be transferred shall not exceed normal operating requirements of the 
applicant. Such property will not be requested for assignment unless it 
is needed at the time of application for public health purposes or will 
be so needed within the immediate or foreseeable future. Where 
construction or major renovation is not required or proposed, the 
property must be placed into use within twelve (12) months from the date 
of transfer. When construction or major renovation is contemplated at 
the time of transfer, the property must be placed in use within 36 
months from the date of transfer. If the applicable time limitation is 
not met, the transferee shall either commence payments in cash to the 
Department for each month thereafter during which the proposed use has 
not been implemented or take such other action as set forth in Sec. 
12.12 as is deemed appropriate by the Department. Such monthly payments 
shall be computed on the basis of the current fair market value of the 
property at the time of the first payment by subtracting therefrom any 
portion of the purchase price paid in cash at the time of transfer, and 
by dividing the balance by the total number of months in the period of 
restriction. If the facility has not been placed into use within eight 
(8) years of the date of the deed, title to the property will be 
revested in the United States, or, at the discretion of the Department, 
the restrictions and conditions may be abrogated in accordance with 
Sec. 12.9.
    (d) Transfers will be made only after the applicant has certified 
that the proposed program is not in conflict with State or local zoning 
restrictions, building codes, or similar limitations.
    (e) Organizations which may be eligible include those which provide 
care and training for the physically and mentally ill, including medical 
care of the aged and infirm; clinical services; services (including 
shelter) to homeless individuals; other public health services 
(including water and sewer); or similar services devoted primarily to 
the promotion and protection of public health. In addition, 
organizations which provide assistance to homeless individuals may be 
eligible for leases under title V of Public Law 100-77. Except for the 
provision of services (including shelter) to homeless individuals, 
organizations which have as their principal purpose the providing of 
custodial or domiciliary care are not eligible. The eligible 
organization must be authorized to carry out the activity for which it 
requests the property.
    (f) An applicant's plan of operation will not be approved unless it 
provides that the applicant will not discriminate because of race, 
color, sex, handicap, or national origin in the use of the property.

[45 FR 72173, Oct. 31, 1980, as amended at 53 FR 7745, Mar. 10, 1988; 55 
FR 32252, Aug. 8, 1990]



Sec. 12.4  Limitations.

    (a) Surplus property transferred pursuant to this part will be 
disposed of on an ``as is, where is,'' basis without warranty of any 
kind.
    (b) Unless excepted by the General Services Administrator in his 
assignment, mineral rights will be conveyed together with the surface 
rights.



Sec. 12.5  Awards.

    Where there is more than one applicant for the same property, it 
will be awarded to the applicant having a program of utilization which 
provides, in the opinion of the Department, the greatest public benefit. 
Where the property will serve more than one program, it will be 
apportioned to fit the needs of as many programs as is practicable.

[[Page 50]]



Sec. 12.6  Notice of available property.

    Reasonable publicity will be given to the availability of surplus 
real property which is suitable for assignment to the Department for 
transfer for public health uses. The Department will establish 
procedures reasonably calculated to afford all eligible users having a 
legitimate interest in acquiring the property for such uses an 
opportunity to make an application therefor. However, publicity need not 
be given to the availability of surplus real property which is occupied 
and being used for eligible public health purposes at the time the 
property is declared surplus, the occupant expresses interest in the 
property, and the Department determines that it has a continuing need 
therefor.



Sec. 12.7  Applications for surplus real property.

    Applications for surplus real property for public health purposes 
shall be made to the Department through the office specified in the 
notice of availability.

[55 FR 32252, Aug. 8, 1990]



Sec. 12.8  Assignment of surplus real property.

    (a) Notice of interest in a specific property for public health 
purposes will be furnished the General Services Administrator by the 
Department at the earliest possible date.
    (b) Requests to the Administrator for assignment of surplus real 
property to the Department for transfer for public health purposes will 
be based on the following conditions:
    (1) The Department has an acceptable application for the property.
    (2) The applicant is willing, authorized, and in a position to 
assume immediate care, custody, and maintenance of the property.
    (3) The applicant is able, willing and authorized to pay the 
administrative expenses incident to the transfer.
    (4) The applicant has the necessary funds, or the ability to obtain 
such funds, to carry out the approved program of use of the property.



Sec. 12.9  General disposal terms and conditions.

    (a) Surplus real property transfers under this part will be limited 
to public health purposes. Transferees shall be entitled to a public 
benefit allowance in terms of a percentage which will be applied against 
the value of the property to be conveyed. Such an allowance will be 
computed on the basis of benefits to the United States from the use of 
such property for public health purposes. The computation of such public 
benefit allowances will be in accordance with Exhibit A attached hereto 
and made a part hereof.
    (b) A transfer of surplus real property for public health purposes 
is subject to the disapproval of the Administrator within 30 days after 
notice is given to him of the proposed transfer.
    (c) Transfers will be on the following terms and conditions:
    (1) The transferee will be obligated to utilize the property 
continuously in accordance with an approved plan of operation.
    (2) The transferee will not be permitted to sell, lease or sublease, 
rent, mortgage, encumber, or otherwise dispose of the property, or any 
part thereof, without the prior written authorization of the Department.
    (3) The transferee will file with the Department such reports 
covering the utilization of the property as may be required.
    (4) In the event the property is sold, leased or subleased, 
encumbered, disposed of, or is used for purposes other than those set 
forth in the approved plan without the consent of the Department, all 
revenues or the reasonable value of other benefits received by the 
transferee directly or indirectly from such use, as determined by the 
Department, will be considered to have been received and held in trust 
by the transferee for the account of the United States and will be 
subject to the direction and control of the Department. The provisions 
of this paragraph shall not impair or affect the rights reserved to the 
United States in paragraph (c)(6) of this section, or the right of the 
Department to impose conditions to its consent.
    (5) Lessees will be required to carry all perils and liability 
insurance to

[[Page 51]]

protect the Government and the Government's residual interest in the 
property. Transferees will be required to carry such flood insurance as 
may be required by the Department pursuant to Pub. L. 93-234. Where the 
transferee elects to carry insurance against damages to or loss of on-
site property due to fire or other hazards, and where loss or damage to 
transferred Federal surplus real property occurs, all proceeds from 
insurance shall be promptly used by the transferee for the purpose of 
repairing and restoring the property to its former condition, or 
replacing it with equivalent or more suitable facilities. If not so 
used, there shall be paid to the United States that part of the 
insurance proceeds that is attributable to the Government's residual 
interest in the property lost, damaged, or destroyed in the case of 
leases, attributable to the fair market value of the leased facilities.
    (6) With respect to on-site property, in the event of noncompliance 
with any of the conditions of the transfer as determined by the 
Department, title to the property transferred and the right to immediate 
possession shall, at the option of the Department, revert to the 
Government. In the event title is reverted to the United States for 
noncompliance or voluntarily reconveyed, the transferee shall, at the 
option of the Department, be required to reimburse the Government for 
the decrease in value of the property not due to reasonable wear and 
tear or acts of God or attributable to alterations completed by the 
transferee to adapt the property to the public health use for which the 
property was transferred. With respect to leased property, in the event 
of noncompliance with any of the conditions of the lease, as determined 
by the Department, the right of occupancy and possession shall, at the 
option of the Department, be terminated. In the event a leasehold is 
terminated by the United States for noncompliance or is voluntarily 
surrendered, the lessee shall be required at the option of the 
Department to reimburse the Government for the decrease in value of the 
property not due to reasonable wear and tear or acts of God or 
attributable to alterations completed by the lessee to adapt the 
property to the public health use for which the property was leased.

With respect to any reverter of title or termination of leasehold 
resulting from noncompliance, the Government shall, in addition thereto, 
be reimbursed for such costs as may be incurred in recovering title to 
or possession of the property.


Any payments of cash made by the transferee against the purchase price 
of property transferred shall, upon a forfeiture of title to the 
property for breach of condition, be forfeited.
    (7) With respect to off-site property, in the event of noncompliance 
with any of the terms and conditions of the transfer, the unearned 
public benefit allowance shall, at the option of the Department, become 
immediately due and payable or, if the property or any portion thereof 
is sold, leased, or otherwise disposed of without authorization from the 
Department, such sale, lease or sublease, or other disposal shall be for 
the benefit and account of the United States and the United States shall 
be entitled to the proceeds. In the event the transferee fails to remove 
the property or any portion thereof within the time specified, then in 
addition to the rights reserved above, at the option of the Department, 
all right, title, and interest in and to such unremoved property shall 
be retransferred to other eligible applicants or shall be forfeited to 
the United States.
    (8) With respect only to on-site property which has been declared 
excess by the Department of Defense, such declaration having included a 
statement indicating the property has a known potential for use during a 
national emergency, the Department shall reserve the right during any 
period of emergency declared by the President of the United States or by 
the Congress of the United States to the full and unrestricted use by 
the Government of the surplus real property, or of any portion thereof, 
disposed of in accordance with the provisions of this part. Such use may 
be either exclusive or nonexclusive. Prior to the expiration or 
termination of the period of restricted use by the transferee, the 
Government will not be obligated to pay rent or any other fees or 
charges during the period

[[Page 52]]

of emergency, except that the Government will:
    (i) Bear the entire cost of maintenance of such portion of the 
property used by it exclusively or over which it may have exclusive 
possession or control;
    (ii) Pay the fair share, commensurate with the use of the cost of 
maintenance of such surplus real property as it may use nonexclusively 
or over which it may have nonexclusive possession or control;
    (iii) Pay a fair rental for the use of improvements or additions to 
the surplus real property made by the purchaser or lessee without 
Government aid; and
    (iv) Be responsible for any damage to the surplus real property 
caused by its use, reasonable wear and tear, the common enemy and acts 
of God excepted. Subsequent to the expiration or termination of the 
period of restricted use, the obligations of the Government will be as 
set forth in the preceding sentence and, in addition, the Government 
shall be obligated to pay a fair rental for all or any portion of the 
conveyed premises which it uses.
    (9) The restrictions set forth in paragraphs (c) (1) through (7) of 
this section will extend for thirty (30) years for land with or without 
improvements; and for facilities being acquired separately from land 
whether they are for use on-site or off-site, the period of limitations 
on the use of the structures will be equal to their estimated economic 
life. The restrictions set forth in paragraphs (c) (1) through (7) of 
this section will extend for the entire initial lease period and for any 
renewal periods for property leased from the Department.
    (d) Transferees, by obtaining the consent of the Department, may 
abrogate the restrictions set forth in paragraph (c) of this section for 
all or any portion of the property upon payment in cash to the 
Department of an amount equal to the then current fair market value of 
the property to be released, multiplied by the public benefit allowance 
granted at the time of conveyance, divided by the total number of months 
of the period of restriction set forth in the conveyance document and 
multiplied by the number of months that remain in the period of 
restriction as determined by the Department. For purposes of abrogation 
payment computation, the current fair market value shall not include the 
value of any improvements placed on the property by the transferee.
    (e) Related personal property will be transferred or leased as a 
part of the realty and in accordance with real property procedures. It 
will be subject to the same public benefit allowance granted for the 
real property. Where related personal property is involved in an on-site 
transfer, the related personal property may be transferred by a bill of 
sale imposing restrictions for a period not to exceed five years from 
the date of transfer, other terms and conditions to be the same as, and 
made a part of, the real property transaction.



Sec. 12.10  Compliance with the National Environmental Policy Act of 1969 
and other related Acts (environmental impact).

    (a) The Department will, prior to making a final decision to convey 
or lease, or to amend, reform, or grant an approval or release with 
respect to a previous conveyance or lease of, surplus real property for 
public health purposes, complete an environmental assessment of the 
proposed transaction in keeping with applicable provisions of the 
National Environmental Policy Act of 1969, the National Historic 
Preservation Act of 1966, the National Archeological Data Preservation 
Act, and other related acts. No permit to use surplus real property 
shall allow the permittee to make, or cause to be made, any irreversible 
change in the condition of said property, and no use permit shall be 
employed for the purpose of delaying or avoiding compliance with the 
requirements of these Acts.
    (b) Applicants shall be required to provide such information as the 
Department deems necessary to make an assessment of the impact of the 
proposed Federal action on the human environment. Materials contained in 
the applicant's official request, responses to a standard questionnaire 
prescribed by the Public Health Service, as well as other relevant 
information, will be

[[Page 53]]

used by the Department in making said assessment.
    (c) If the assessment reveals (1) That the proposed Federal action 
involves properties of historical significance which are listed, or 
eligible for listing, in the National Register of Historic Places, or 
(2) that a more than insignificant impact on the human environment is 
reasonably foreseeable as a result of the proposed action, or (3) that 
the proposed Federal action could result in irreparable loss or 
destruction of archeologically significant items or data, the Department 
will, except as provided for in paragraph (d) of this section, prepare 
and distribute, or cause to be prepared or distributed, such notices and 
statements and obtain such approvals as are required by the above cited 
Acts.
    (d) If a proposed action involves other Federal agencies in a 
sequence of actions, or a group of actions, directly related to each 
other because of their functional interdependence, the Department may 
enter into and support a lead agency agreement to designate a single 
lead agency which will assume primary responsibility for coordinating 
the assessment of environmental effects of proposed Federal actions, 
preparing and distributing such notices and statements, or obtaining 
such approvals, as are required by the above cited Acts. The procedures 
of the designated lead agency will be utilized in conducting the 
environmental assessment. In the event of disagreement between the 
Department and another Federal agency, the Department will reserve the 
right to abrogate its lead agency agreement with the other Federal 
Agency.

[45 FR 72173, Oct. 31, 1980, as amended at 55 FR 32252, Aug. 8, 1990]



Sec. 12.11  Special terms and conditions.

    (a) Applicants will be required to pay all external administrative 
costs which will include, but not be limited to, taxes, surveys, 
appraisals, inventory costs, legal fees, title search, certificate or 
abstract expenses, decontamination costs, moving costs, closing fees in 
connection with the transaction and service charges, if any, made by 
State Agencies for Federal Property Assistance under the terms of a 
cooperative agreement with the Department.
    (b) In the case of off-site property, applicants will be required to 
post performance bonds, make performance guarantee deposits, or give 
such other assurances as may be required by the Department or the 
holding agency to insure adequate site clearance and to pay service 
charges, if any, made by State Agencies for Federal Property Assistance 
under the terms of a cooperative agreement with the Department.
    (c) Whenever negotiations are undertaken for disposal to private 
nonprofit public health organizations of any surplus real property which 
cost the Government $1 million or more, the Department will give notice 
to the Attorney General of the United States of the proposed disposal 
and the terms and conditions thereof. The applicant shall furnish to the 
Department such information and documents as the Attorney General may 
determine to be appropriate or necessary to enable him to give the 
advice as provided for by section 207 of the Act.
    (d) Where an applicant proposes to acquire or lease and use in place 
improvements located on land which the Government does not own, he shall 
be required, before the transfer is consummated, to obtain a right to 
use the land commensurate with the duration of the restrictions 
applicable to the improvements, or the term of the lease. The applicant 
will be required to assume, or obtain release of, the Government's 
obligations respecting the land including but not limited to obligations 
relating to restoration, waste, and rent. At the option of the 
Department, the applicant may be required to post a bond to indemnify 
the Government against such obligations.
    (e) The Department may require the inclusion in the transfer or 
lease document of any other provision deemed desirable or necessary.
    (f) Where an eligible applicant for an on-site transfer proposes to 
construct new, or rehabilitate old, facilities, the financing of which 
must be accomplished through issuance of revenue bonds having terms 
inconsistent with the terms and conditions of transfer prescribed in 
Sec. 12.9 (c), (d), and (e) of this chapter, the Department may, in

[[Page 54]]

its discretion, impose such alternate terms and conditions of transfer 
in lieu thereof as may be appropriate to assure utilization of the 
property for public health purposes.



Sec. 12.12  Utilization.

    (a) Where property or any portion thereof is not being used for the 
purposes for which transferred, the transferee will be required at the 
direction of the Department:
    (1) To place the property into immediate use for an approved 
purpose;
    (2) To retransfer such property to such other public health user as 
the Department may direct;
    (3) To sell such property for the benefit and account of the United 
States;
    (4) To return title to such property to the United States or to 
relinquish any leasehold interest therein;
    (5) To abrogate the conditions and restrictions of the transfer, as 
set forth in Sec. 12.9(d) of this chapter, except that, where property 
has never been placed in use for the purposes for which transferred, 
abrogation will not be permitted except under extenuating circumstances; 
or
    (6) To make payments as provided for in Sec. 12.3(c) of this 
chapter.
    (b) Where the transferee or lessee desires to place the property in 
temporary use for a purpose other than that for which the property was 
transferred or leased, approval from the Department must be obtained, 
and will be conditioned upon such terms as the Department may impose.



Sec. 12.13  Form of conveyance.

    (a) Transfers or leases of surplus real property will be on forms 
approved by the Office of General Counsel of the Department and will 
include such of the disposal or lease terms and conditions set forth in 
this part and such other terms and conditions as the Office of General 
Counsel may deem appropriate or necessary.
    (b) Transfers of on-site property will normally be by quitclaim deed 
without warranty of title.



Sec. 12.14  Compliance inspections and reports.

    The Department will make or have made such compliance inspections as 
are necessary and will require of the transferee or lessee such 
compliance reports and actions as are deemed necessary.



Sec. 12.15  Reports to Congress.

    The Secretary will make such reports of real property disposal 
activities as are required by section 203 of the Act and such other 
reports as may be required by law.

[[Page 55]]

  Exhibit A to Part 12--Public Benefit Allowance for Transfer of Real 
                    Property for Health Purposes \1\

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                Percent allowed
                                              --------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Organization allowances                                             Utilization allowances
                                              ---------------------------------------------------------------------------------------------------------------------------------------   Maximum
                Classification                    Basic                                                       Unmet needs                                                               public
                                                 public        Tax                               ------------------------------------ Integrated  Outpatient    Public     Training     benefit
                                                 benefit     support   Accreditation   Hardship                                        research    services    services     program    allowance
                                                allowance                                          10 to 25%   26 to 50%  51 to 100%    program
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Hospitals....................................          50          20            20           10          10          20          30          10          10          10          10         100
Clinics......................................          50          20            20           10          10          20          30  ..........  ..........  ..........  ..........         100
Nursing Homes................................          50          20            20           10          10          20          30  ..........  ..........  ..........          10         100
Public Health Administration.................     \2\ 100  ..........  .............  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........     \2\ 100
Public Refuse Disposal and Water Systems.....     \2\ 100  ..........  .............  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........     \2\ 100
Research.....................................     \2\ 100  ..........  .............  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........     \2\ 100
Rehabilitation Facility......................          50          20            20           10          10          20          30          10          10          10          10         100
Special Services.............................          50          20            20           10          10          20          30  ..........  ..........          10  ..........         100
Assistance to the Homeless...................     \2\ 100  ..........  .............  ..........  ..........  ..........  ..........  ..........  ..........  ..........  ..........     \2\ 100
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ This public benefit allowance applies only to surplus real property being sold for on-site use. When surplus real property is to be moved from the site, a basic public benefit allowance of
  100% will be granted.
\2\ Applicable when this is the primary use to be made of the property. The public benefit allowance for the overall health program is applicable when such facilities are conveyed as a minor
  component of other facilities.


[45 FR 72173, Oct. 31, 1980, as amended at 53 FR 7745, Mar. 10, 1988]

[[Page 56]]



PART 12a_USE OF FEDERAL REAL PROPERTY TO ASSIST THE HOMELESS--Table of 
Contents




Sec.
12a.1 Definitions.
12a.2 Applicability.
12a.3 Collecting the information.
12a.4 Suitability determination.
12a.5 Real property reported excess to GSA.
12a.6 Suitability criteria.
12a.7 Determination of availability.
12a.8 Public notice of determination.
12a.9 Application process.
12a.10 Action on approved applications.
12a.11 Unsuitable properties.
12a.12 No applications approved.

    Authority: 42 U.S.C. 11411; 40 U.S.C. 484(k); 42 U.S.C. 3535(d).

    Source: 56 FR 23794, 23795, May 24, 1991, unless otherwise noted.

    Effective Date Note: At 56 FR 23794, 23795, May 24, 1991, part 12a 
was added, effective May 24, 1991, except for Sec. 12a.3, which will 
not become effective until approved by the District Court for the 
District of Columbia, pending further proceedings.



Sec. 12a.1  Definitions.

    Applicant means any representative of the homeless which has 
submitted an application to the Department of Health and Human Services 
to obtain use of a particular suitable property to assist the homeless.
    Checklist or property checklist means the form developed by HUD for 
use by landholding agencies to report the information to be used by HUD 
in making determinations of suitability.
    Classification means a property's designation as unutilized, 
underutilized, excess, or surplus.
    Day means one calendar day including weekends and holidays.
    Eligible organization means a State, unit of local government or a 
private non-profit organization which provides assistance to the 
homeless, and which is authorized by its charter or by State law to 
enter into an agreement with the Federal government for use of real 
property for the purposes of this subpart. Representatives of the 
homeless interested in receiving a deed for a particular piece of 
surplus Federal property must be section 501(c)(3) tax exempt.
    Excess property means any property under the control of any Federal 
executive agency that is not required for the agency's needs or the 
discharge of its responsibilities, as determined by the head of the 
agency pursuant to 40 U.S.C. 483.
    GSA means the General Services Administration.
    HHS means the Department of Health and Human Services.
    Homeless means:
    (1) An individual or family that lacks a fixed, regular, and 
adequate nighttime residence; and
    (2) An individual or family that has a primary nighttime residence 
that is:
    (i) A supervised publicly or privately operated shelter designed to 
provide temporary living accommodations (including welfare hotels, 
congregate shelters, and transitional housing for the mentally ill);
    (ii) An institution that provides a temporary residence for 
individuals intended to be institutionalized; or
    (iii) A public or private place not designed for, or ordinarily used 
as, a regular sleeping accommodation for human beings. This term does 
not include any individual imprisoned or otherwise detained under an Act 
of the Congress or a State law.
    HUD means the Department of Housing and Urban Development.
    ICH means the Interagency Council on the Homeless.
    Landholding agency means a Federal department or agency with 
statutory authority to control real property.
    Lease means an agreement between either the Department of Health and 
Human Services for surplus property, or landholding agencies in the case 
of non-excess properties or properties subject to the Base Closure and 
Realignment Act (Public Law 100-526; 10 U.S.C. 2687), and the applicant, 
giving rise to the relationship of lessor and lessee for the use of 
Federal real property for a term of at least one year under the 
conditions set forth in the lease document.
    Non-profit organization means an organization no part of the net 
earnings of which inures to the benefit of any member, founder, 
contributor, or individual; that has a voluntary board; that has an 
accounting system or has designated an entity that will maintain a 
functioning accounting system

[[Page 57]]

for the organization in accordance with generally accepted accounting 
procedures; and that practices nondiscrimination in the provision of 
assistance.
    Permit means a license granted by a landholding agency to use 
unutilized or underutilized property for a specific amount of time under 
terms and conditions determined by the landholding agency.
    Property means real property consisting of vacant land or buildings, 
or a portion thereof, that is excess, surplus, or designated as 
unutilized or underutilized in surveys by the heads of landholding 
agencies conducted pursuant to section 202(b)(2) of the Federal Property 
and Administrative Services Act of 1949 (40 U.S.C. 483(b)(2).)
    Regional Homeless Coordinator means a regional coordinator of the 
Interagency Council on the Homeless.
    Representative of the Homeless means a State or local government 
agency, or private nonprofit organization which provides, or proposes to 
provide, services to the homeless.
    Screen means the process by which GSA surveys Federal agencies, or 
State, local and non-profit entities, to determine if any such entity 
has an interest in using excess Federal property to carry out a 
particular agency mission or a specific public use.
    State Homeless Coordinator means a state contact person designated 
by a state to receive and disseminate information and communications 
received from the Interagency Council on the Homeless in accordance with 
section 210(a) of the Stewart B. McKinney Act of 1987, as amended.
    Suitable property means that HUD has determined that a particular 
property satisfies the criteria listed in Sec. 12a.6.
    Surplus property means any excess real property not required by any 
Federal landholding agency for its needs or the discharge of its 
responsibilities, as determined by the Administrator of GSA.
    Underutilized means an entire property or portion thereof, with or 
without improvements which is used only at irregular periods or 
intermittently by the accountable landholding agency for current program 
purposes of that agency, or which is used for current program purposes 
that can be satisfied with only a portion of the property.
    Unsuitable property means that HUD has determined that a particular 
property does not satisfy the criteria in Sec. 12a.6.
    Unutilized property means an entire property or portion thereof, 
with or without improvements, not occupied for current program purposes 
for the accountable executive agency or occupied in caretaker status 
only.



Sec. 12a.2  Applicability.

    (a) This part applies to Federal real property which has been 
designated by Federal landholding agencies as unutilized, underutilized, 
excess or surplus and is therefore subject to the provisions of title V 
of the McKinney Act (42 U.S.C. 11411).
    (b) The following categories of properties are not subject to this 
subpart (regardless of whether they may be unutilized or underutilized).
    (1) Machinery and equipment.
    (2) Government-owned, contractor-operated machinery, equipment, 
land, and other facilities reported excess for sale only to the using 
contractor and subject to a continuing military requirement.
    (3) Properties subject to special legislation directing a particular 
action.
    (4) Properties subject to a Court Order.
    (5) Property not subject to survey requirements of Executive Order 
12512 (April 29, 1985).
    (6) Mineral rights interests.
    (7) Air Space interests.
    (8) Indian Reservation land subject to section 202(a)(2) of the 
Federal Property and Administrative Service Act of 1949, as amended.
    (9) Property interests subject to reversion.
    (10) Easements.
    (11) Property purchased in whole or in part with Federal funds if 
title to the property is not held by a Federal landholding agency as 
defined in this Part.



Sec. 12a.3  Collecting the information.

    (a) Canvass of landholding agencies. On a quarterly basis, HUD will 
canvass

[[Page 58]]

landholding agencies to collect information about property described as 
unutilized, underutilized, excess, or surplus, in surveys conducted by 
the agencies under section 202 of the Federal Property and 
Administrative Services Act (40 U.S.C. 483), Executive Order 12512, and 
41 CFR part 101-47.800. Each canvass will collect information on 
properties not previously reported and about property reported 
previously the status or classification of which has changed or for 
which any of the information reported on the property checklist has 
changed.
    (1) HUD will request descriptive information on properties 
sufficient to make a reasonable determination, under the criteria 
described below, of the suitability of a property for use as a facility 
to assist the homeless.
    (2) HUD will direct landholding agencies to respond to requests for 
information within 25 days of receipt of such requests.
    (b) Agency Annual Report. By December 31 of each year, each 
landholding agency must notify HUD regarding the current availability 
status and classification of each property controlled by the agency 
that:
    (1) Was included in a list of suitable properties published that 
year by HUD, and
    (2) Remains available for application for use to assist the 
homeless, or has become available for application during that year.
    (c) GSA Inventory. HUD will collect information, in the same manner 
as described in paragraph (a) of this section, from GSA regarding 
property that is in GSA's current inventory of excess or surplus 
property.
    (d) Change in Status. If the information provided on the property 
checklist changes subsequent to HUD's determination of suitability, and 
the property remains unutilized, underutilized, excess or surplus, the 
landholding agency shall submit a revised property checklist in response 
to the next quarterly canvass. HUD will make a new determination of 
suitability and, if it differs from the previous determination, 
republish the property information in the Federal Register. For example, 
property determined unsuitable for national security concerns may no 
longer be subject to security restrictions, or property determined 
suitable may subsequently be found to be contaminated.



Sec. 12a.4  Suitability determination.

    (a) Suitability determination. Within 30 days after the receipt of 
information from landholding agencies regarding properties which were 
reported pursuant to the canvass described in Sec. 12a.3(a), HUD will 
determine, under criteria set forth in Sec. 12a.6, which properties are 
suitable for use as facilities to assist the homeless and report its 
determination to the landholding agency. Properties that are under 
lease, contract, license, or agreement by which a Federal agency retains 
a real property interest or which are scheduled to become unutilized or 
underutilized will be reviewed for suitability no earlier than six 
months prior to the expected date when the property will become 
unutilized or underutilized, except that properties subject to the Base 
Closure and Realignment Act may be reviewed up to eighteen months prior 
to the expected date when the property will become unutilized or 
underutilized.
    (b) Scope of suitability. HUD will determine the suitability of a 
property for use as a facility to assist the homeless without regard to 
any particular use.
    (c) Environmental information. HUD will evaluate the environmental 
information contained in property checklists forwarded to HUD by the 
landholding agencies solely for the purpose of determining suitability 
of properties under the criteria in Sec. 12a.6.
    (d) Written record of suitability determination. HUD will assign an 
identification number to each property reviewed for suitability. HUD 
will maintain a written public record of the following:
    (1) The suitability determination for a particular piece of 
property, and the reasons for that determination; and
    (2) The landholding agency's response to the determination pursuant 
to the requirements of Sec. 12a.7(a).
    (e) Property determined unsuitable. Property that is reviewed by HUD 
under this section and that is determined unsuitable for use to assist 
the homeless may not be made available

[[Page 59]]

for any other purpose for 20 days after publication in the Federal 
Register of a Notice of unsuitability to allow for review of the 
determination at the request of a representative of the homeless.
    (f) Procedures for appealing unsuitability determinations. (1) To 
request review of a determination of unsuitability, a representative of 
the homeless must contact HUD within 20 days of publication of notice in 
the Federal Register that a property is unsuitable. Requests may be 
submitted to HUD in writing or by calling 1-800-927-7588 (Toll Free). 
Written requests must be received no later than 20 days after notice of 
unsuitability is published in the Federal Register.
    (2) Requests for review of a determination of unsuitability may be 
made only by representatives of the homeless, as defined in Sec. 12a.1.
    (3) The request for review must specify the grounds on which it is 
based, i.e., that HUD has improperly applied the criteria or that HUD 
has relied on incorrect or incomplete information in making the 
determination (e.g., that property is in a floodplain but not in a 
floodway).
    (4) Upon receipt of a request to review a determination of 
unsuitability, HUD will notify the landholding agency that such a 
request has been made, request that the agency respond with any 
information pertinent to the review, and advise the agency that it 
should refrain from initiating disposal procedures until HUD has 
completed its reconsideration regarding unsuitability.
    (i) HUD will act on all requests for review within 30 days of 
receipt of the landholding agency's response and will notify the 
representative of the homeless and the landholding agency in writing of 
its decision.
    (ii) If a property is determined suitable as a result of the review, 
HUD will request the landholding agency's determination of availability 
pursuant to Sec. 12a.7(a), upon receipt of which HUD will promptly 
publish the determination in the Federal Register. If the determination 
of unsuitability stands, HUD will inform the representative of the 
homeless of its decision.



Sec. 12a.5  Real property reported excess to GSA.

    (a) Each landholding agency must submit a report to GSA of 
properties it determines excess. Each landholding agency must also 
provide a copy of HUD's suitability determination, if any, including 
HUD's identification number for the property.
    (b) If a landholding agency reports a property to GSA which has been 
reviewed by HUD for homeless assistance suitability and HUD determined 
the property suitable, GSA will screen the property pursuant to Sec. 
12a.5(g) and will advise HUD of the availability of the property for use 
by the homeless as provided in Sec. 12a.5(e). In lieu of the above, GSA 
may submit a new checklist to HUD and follow the procedures in Sec. 
12a.5(c) through Sec. 12a.5(g).
    (c) If a landholding agency reports a property to GSA which has not 
been reviewed by HUD for homeless assistance suitability, GSA will 
complete a property checklist, based on information provided by the 
landholding agency, and will forward this checklist to HUD for a 
suitability determination. This checklist will reflect any change in 
classification, i.e., from unutilized or underutilized to excess.
    (d) Within 30 days after GSA's submission, HUD will advise GSA of 
the suitability determination.
    (e) When GSA receives a letter from HUD listing suitable excess 
properties in GSA's inventory, GSA will transmit to HUD within 45 days a 
response which includes the following for each identified property:
    (1) A statement that there is no other compelling Federal need for 
the property, and therefore, the property will be determined surplus; or
    (2) A statement that there is further and compelling Federal need 
for the property (including a full explanation of such need) and that, 
therefore, the property is not presently available for use to assist the 
homeless.
    (f) When an excess property is determined suitable and available and 
notice is published in the Federal Register, GSA will concurrently 
notify HHS, HUD, State and local government units, known homeless 
assistance providers that have expressed interest in

[[Page 60]]

the particular property, and other organizations, as appropriate, 
concerning suitable properties.
    (g) Upon submission of a Report of Excess to GSA, GSA may screen the 
property for Federal use. In addition, GSA may screen State and local 
governmental units and eligible nonprofit organizations to determine 
interest in the property in accordance with current regulations. (See 41 
CFR 101-47.203-5, 101-47.204-1 and 101-47.303-2.)
    (h) The landholding agency will retain custody and accountability 
and will protect and maintain any property which is reported excess to 
GSA as provided in 41 CFR 101-47.402.



Sec. 12a.6  Suitability criteria.

    (a) All properties, buildings and land will be determined suitable 
unless a property's characteristics include one or more of the following 
conditions:
    (1) National security concerns. A property located in an area to 
which the general public is denied access in the interest of national 
security (e.g., where a special pass or security clearance is a 
condition of entry to the property) will be determined unsuitable. Where 
alternative access can be provided for the public without compromising 
national security, the property will not be determined unsuitable on 
this basis.
    (2) Property containing flammable or explosive materials. A property 
located within 2000 feet of an industrial, commercial or Federal 
facility handling flammable or explosive material (excluding underground 
storage) will be determined unsuitable. Above ground containers with a 
capacity of 100 gallons or less, or larger containers which provide the 
heating or power source for the property, and which meet local safety, 
operation, and permitting standards, will not affect whether a 
particular property is determined suitable or unsuitable. Underground 
storage, gasoline stations and tank trucks are not included in this 
category and their presence will not be the basis of an unsuitability 
determination unless there is evidence of a threat to personal safety as 
provided in paragraph (a)(5) of this section.
    (3) Runway clear zone and military airfield clear zone. A property 
located within an airport runway clear zone or military airfield clear 
zone will be determined unsuitable.
    (4) Floodway. A property located in the floodway of a 100 year 
floodplain will be determined unsuitable. If the floodway has been 
contained or corrected, or if only an incidental portion of the property 
not affecting the use of the remainder of the property is in the 
floodway, the property will not be determined unsuitable.
    (5) Documented deficiencies. A property with a documented and 
extensive condition(s) that represents a clear threat to personal 
physical safety will be determined unsuitable. Such conditions may 
include, but are not limited to, contamination, structural damage or 
extensive deterioration, friable asbestos, PCB's, or natural hazardous 
substances such as radon, periodic flooding, sinkholes or earth slides.
    (6) Inaccessible. A property that is inaccessible will be determined 
unsuitable. An inaccessible property is one that is not accessible by 
road (including property on small off-shore islands) or is land locked 
(e.g., can be reached only by crossing private property and there is no 
established right or means of entry).



Sec. 12a.7  Determination of availability.

    (a) Within 45 days after receipt of a letter from HUD pursuant to 
Sec. 12a.4(a), each landholding agency must transmit to HUD a statement 
of one of the following:
    (1) In the case of unutilized or underutilized property:
    (i) An intention to declare the property excess,
    (ii) An intention to make the property available for use to assist 
the homeless, or
    (iii) The reasons why the property cannot be declared excess or made 
available for use to assist the homeless. The reasons given must be 
different than those listed as suitability criteria in Sec. 12a.6.
    (2) In the case of excess property which had previously been 
reported to GSA:
    (i) A statement that there is no compelling Federal need for the 
property, and that, therefore, the property will be determined surplus; 
or

[[Page 61]]

    (ii) A statement that there is a further and compelling Federal need 
for the property (including a full explanation of such need) and that, 
therefore, the property is not presently available for use to assist the 
homeless.



Sec. 12a.8  Public notice of determination.

    (a) No later than 15 days after the last 45 day period has elapsed 
for receiving responses from the landholding agencies regarding 
availability, HUD will publish in the Federal Register a list of all 
properties reviewed, including a description of the property, its 
address, and classification. The following designations will be made:
    (1) Properties that are suitable and available.
    (2) Properties that are suitable and unavailable.
    (3) Properties that are suitable and to be declared excess.
    (4) Properties that are unsuitable.
    (b) Information about specific properties can be obtained by 
contacting HUD at the following toll free number, 1-800-927-7588.
    (c) HUD will transmit to the ICH a copy of the list of all 
properties published in the Federal Register. The ICH will immediately 
distribute to all state and regional homeless coordinators area-relevant 
portions of the list. The ICH will encourage the state and regional 
homeless coordinators to disseminate this information widely.
    (d) No later than February 15 of each year, HUD shall publish in the 
Federal Register a list of all properties reported pursuant to Sec. 
12a.3(b).
    (e) HUD shall publish an annual list of properties determined 
suitable but which agencies reported unavailable including the reasons 
such properties are not available.
    (f) Copies of the lists published in the Federal Register will be 
available for review by the public in the HUD headquarters building 
library (room 8141); area-relevant portions of the lists will be 
available in the HUD regional offices and in major field offices.



Sec. 12a.9  Application process.

    (a) Holding period. (1) Properties published as available for 
application for use to assist the homeless shall not be available for 
any other purpose for a period of 60 days beginning on the date of 
publication. Any representative of the homeless interested in any 
underutilized, unutilized, excess or surplus Federal property for use as 
a facility to assist the homeless must send to HHS a written expression 
of interest in that property within 60 days after the property has been 
published in the Federal Register.
    (2) If a written expression of interest to apply for suitable 
property for use to assist the homeless is received by HHS within the 60 
day holding period, such property may not be made available for any 
other purpose until the date HHS or the appropriate landholding agency 
has completed action on the application submitted pursuant to that 
expression of interest.
    (3) The expression of interest should identify the specific 
property, briefly describe the proposed use, include the name of the 
organization, and indicate whether it is a public body or a private non-
profit organization. The expression of interest must be sent to the 
Division of Health Facilities Planning (DHFP) of the Department of 
Health and Human Services at the following address:

Director, Division of Health Facilities Planning, Public Health Service, 
Room 17A-10, Parklawn Building, 5600 Fishers Lane, Rockville, Maryland 
20857.


HHS will notify the landholding agency (for unutilized and underutilized 
properties) or GSA (for excess and surplus properties) when an 
expression of interest has been received for a particular property.
    (4) An expression of interest may be sent to HHS any time after the 
60 day holding period has expired. In such a case, an application 
submitted pursuant to this expression of interest may be approved for 
use by the homeless if:
    (i) No application or written expression of interest has been made 
under any law for use of the property for any purpose; and
    (ii) In the case of excess or surplus property, GSA has not received 
a bona fide offer to purchase that property or advertised for the sale 
of the property by public auction.

[[Page 62]]

    (b) Application Requirements. Upon receipt of an expression of 
interest, DHFP will send an application packet to the interested entity. 
The application packet requires the applicant to provide certain 
information, including the following--
    (1) Description of the applicant organization. The applicant must 
document that it satisfies the definition of a ``representative of the 
homeless,'' as specified in Sec. 12a.1 of this subpart. The applicant 
must document its authority to hold real property. Private non-profit 
organizations applying for deeds must document that they are section 
501(c)(3) tax-exempt.
    (2) Description of the property desired. The applicant must describe 
the property desired and indicate that any modifications made to the 
property will conform to local use restrictions except for local zoning 
regulations.
    (3) Description of the proposed program. The applicant must fully 
describe the proposed program and demonstrate how the program will 
address the needs of the homeless population to be assisted. The 
applicant must fully describe what modifications will be made to the 
property before the program becomes operational.
    (4) Ability to finance and operate the proposed program. The 
applicant must specifically describe all anticipated costs and sources 
of funding for the proposed program. The applicant must indicate that it 
can assume care, custody, and maintenance of the property and that it 
has the necessary funds or the ability to obtain such funds to carry out 
the approved program of use for the property.
    (5) Compliance with non-discrimination requirements. Each applicant 
and lessee under this part must certify in writing that it will comply 
with the requirements of the Fair Housing Act (42 U.S.C. 3601-3619) and 
implementing regulations; and as applicable, Executive Order 11063 
(Equal Opportunity in Housing) and implementing regulations; title VI of 
the Civil Rights Act of 1964 (42 U.S.C. 2000d to d-4) (Nondiscrimination 
in Federally Assisted Programs) and implementing regulations; the 
prohibitions against discrimination on the basis of age under the Age 
Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing 
regulations; and the prohibitions against otherwise qualified 
individuals with handicaps under section 504 of the Rehabilitation Act 
of 1973 (29 U.S.C. 794) and implementing regulations. The applicant must 
state that it will not discriminate on the basis of race, color, 
national origin, religion, sex, age, familial status, or handicap in the 
use of the property, and will maintain the required records to 
demonstrate compliance with Federal laws.
    (6) Insurance. The applicant must certify that it will insure the 
property against loss, damage, or destruction in accordance with the 
requirements of 45 CFR 12.9.
    (7) Historic preservation. Where applicable, the applicant must 
provide information that will enable HHS to comply with Federal historic 
preservation requirements.
    (8) Environmental information. The applicant must provide sufficient 
information to allow HHS to analyze the potential impact of the 
applicant's proposal on the environment, in accordance with the 
instructions provided with the application packet. HHS will assist 
applicants in obtaining any pertinent environmental information in the 
possession of HUD, GSA, or the landholding agency.
    (9) Local government notification. The applicant must indicate that 
it has informed the applicable unit of general local government 
responsible for providing sewer, water, police, and fire services, in 
writing of its proposed program.
    (10) Zoning and Local Use Restrictions. The applicant must indicate 
that it will comply with all local use restrictions, including local 
building code requirements. Any applicant which applies for a lease or 
permit for a particular property is not required to comply with local 
zoning requirements. Any applicant applying for a deed of a particular 
property, pursuant to Sec. 12a. 9(b)(3), must comply with local zoning 
requirements, as specified in 45 CFR part 12.
    (c) Scope of evaluations. Due to the short time frame imposed for 
evaluating applications, HHS' evaluation will, generally, be limited to 
the information contained in the application.

[[Page 63]]

    (d) Deadline. Completed applications must be received by DHFP, at 
the above address, within 90 days after an expression of interest is 
received from a particular applicant for that property. Upon written 
request from the applicant, HHS may grant extensions, provided that the 
appropriate landholding agency concurs with the extension. Because each 
applicant will have a different deadline based on the date the applicant 
submitted an expression of interest, applicants should contact the 
individual landholding agency to confirm that a particular property 
remains available prior to submitting an application.
    (e) Evaluations. (1) Upon receipt of an application, HHS will review 
it for completeness, and, if incomplete, may return it or ask the 
applicant to furnish any missing or additional required information 
prior to final evaluation of the application.
    (2) HHS will evaluate each completed application within 25 days of 
receipt and will promptly advise the applicant of its decision. 
Applications are evaluated on a first-come, first-serve basis. HHS will 
notify all organizations which have submitted expressions of interest 
for a particular property regarding whether the first application 
received for that property has been approved or disapproved. All 
applications will be reviewed on the basis of the following elements, 
which are listed in descending order of priority, except that paragraphs 
(e)(2)(iv) and (e)(2)(v) of this section are of equal importance.
    (i) Services offered. The extent and range of proposed services, 
such as meals, shelter, job training, and counseling.
    (ii) Need. The demand for the program and the degree to which the 
available property will be fully utilized.
    (iii) Implementation Time. The amount of time necessary for the 
proposed program to become operational.
    (iv) Experience. Demonstrated prior success in operating similar 
programs and recommendations attesting to that fact by Federal, State, 
and local authorities.
    (v) Financial Ability. The adequacy of funding that will likely be 
available to run the program fully and properly and to operate the 
facility.
    (3) Additional evaluation factors may be added as deemed necessary 
by HHS. If additional factors are added, the application packet will be 
revised to include a description of these additional factors.
    (4) If HHS receives one or more competing applications for a 
property within 5 days of the first application HHS will evaluate all 
completed applications simultaneously. HHS will rank approved 
applications based on the elements listed in Sec. 12a.8(e)(2), and 
notify the landholding agency, or GSA, as appropriate, of the relative 
ranks.

(Approved by the Office of Management and Budget under control number 
0937-0191)



Sec. 12a.10  Action on approved applications.

    (a) Unutilized and underutilized properties. (1) When HHS approves 
an application, it will so notify the applicant and forward a copy of 
the application to the landholding agency. The landholding agency will 
execute the lease, or permit document, as appropriate, in consultation 
with the applicant.
    (2) The landholding agency maintains the discretion to decide the 
following:
    (i) The length of time the property will be available. (Leases and 
permits will be for a period of at least one year unless the applicant 
requests a shorter term.)
    (ii) Whether to grant use of the property via a lease or permit;
    (iii) The terms and conditions of the lease or permit document.
    (b) Excess and surplus properties. (1) When HHS approves an 
application, it will so notify the applicant and request that GSA assign 
the property to HHS for leasing. Upon receipt of the assignment, HHS 
will execute a lease in accordance with the procedures and requirements 
set out in 45 CFR part 12. In accordance with 41 CFR 101-47.402, custody 
and accountability of the property will remain throughout the lease term 
with the agency which initially reported the property as excess.
    (2) Prior to assignment to HHS, GSA may consider other Federal uses 
and other important national needs; however, in deciding the disposition 
of surplus real property, GSA will generally

[[Page 64]]

give priority of consideration to uses to assist the homeless. GSA may 
consider any competing request for the property made under section 
203(k) of the Federal Property and Administrative Services Act of 1949 
(40 U.S.C. 484(k)) that is so meritorious and compelling that it 
outweighs the needs of the homeless, and HHS may likewise consider any 
competing request made under subsection 203(k)(1) of that law.
    (3) Whenever GSA or HHS decides in favor of a competing request over 
a request for property for homeless assistance use as provided in 
paragraph (b)(2) of this section, the agency making the decision will 
transmit to the appropriate committees of the Congress an explanatory 
statement which details the need satisfied by conveyance of the surplus 
property, and the reasons for determining that such need was so 
meritorious and compelling as to outweigh the needs of the homeless.
    (4) Deeds. Surplus property may be conveyed to representatives of 
the homeless pursuant to section 203(k) of the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 484(k)(1), and section 
501(f) of the McKinney Act as amended, 42 U.S.C. 11411. Representatives 
of the homeless must complete the application packet pursuant to the 
requirements of Sec. 12a.9 of this part and in accordance with the 
requirements of 45 CFR part 12.
    (c) Completion of Lease Term and Reversion of Title. Lessees and 
grantees will be responsible for the protection and maintenance of the 
property during the time that they possess the property. Upon 
termination of the lease term or reversion of title to the Federal 
government, the lessee or grantee will be responsible for removing any 
improvements made to the property and will be responsible for 
restoration of the property. If such improvements are not removed, they 
will become the property of the Federal government. GSA or the 
landholding agency, as appropriate, will assume responsibility for 
protection and maintenance of a property when the lease terminates or 
title reverts.



Sec. 12a.11  Unsuitable properties.

    The landholding agency will defer, for 20 days after the date that 
notice of a property is published in the Federal Register, action to 
dispose of properties determined unsuitable for homeless assistance. HUD 
will inform landholding agencies or GSA if appeal of an unsuitability 
determination is filed by a representative of the homeless pursuant to 
Sec. 12a.4(f)(4). HUD will advise the agency that it should refrain 
from initiating disposal procedures until HUD has completed its 
reconsideration process regarding unsuitability. Thereafter, or if no 
appeal has been filed after 20 days, GSA or the appropriate landholding 
agency may proceed with disposal action in accordance with applicable 
law.



Sec. 12a.12  No applications approved.

    (a) At the end of the 60 day holding period described in Sec. 
12a.9(a), HHS will notify GSA, or the landholding agency, as 
appropriate, if an expression of interest has been received for a 
particular property. Where there is no expression of interest, GSA or 
the landholding agency, as appropriate, will proceed with disposal in 
accordance with applicable law.
    (b) Upon advice from HHS that all applications have been 
disapproved, or if no completed applications or requests for extensions 
have been received by HHS within 90 days from the date of the last 
expression of interest, disposal may proceed in accordance with 
applicable law.



PART 13_IMPLEMENTATION OF THE EQUAL ACCESS TO JUSTICE ACT IN AGENCY 
PROCEEDINGS--Table of Contents




                      Subpart A_General Provisions

Sec.
13.1 Purpose of these rules.
13.2 When these rules apply.
13.3 Proceedings covered.
13.4 Eligibility of applicants.
13.5 Standards for awards.
13.6 Allowable fees and expenses.
13.7 Studies, exhibits, analyses, engineering reports, tests and 
          projects.

             Subpart B_Information Required from Applicants

13.10 Contents of application.
13.11 Net worth exhibits.
13.12 Documentation of fees and expenses.

[[Page 65]]

            Subpart C_Procedures for Considering Applications

13.21 Filing and service of pleadings.
13.22 When an application may be filed.
13.23 Responsive pleadings.
13.24 Settlements.
13.25 Further proceedings.
13.26 Decisions.
13.27 Agency review.
13.28 Judicial review.
13.29 Payment of award.
13.30 Designation of adjudicative officer.

Appendix A to Part 13

    Authority: 5 U.S.C. 504(c)(1).

    Source: 48 FR 45252, Oct. 4, 1983, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 13.1  Purpose of these rules.

    These rules implement section 203 of the Equal Access to Justice 
Act, 5 U.S.C. 504 and 504 note, for the Department of Health and Human 
Services. They describe the circumstances under which the Department may 
award attorney fees and certain other expenses to eligible individuals 
and entities who prevail over the Department in certain administrative 
proceedings (called ``adversary adjudications''). The Department may 
reimburse parties for expenses incurred in adversary adjudications if 
the party prevails in the proceeding and if the Department's position in 
the proceeding was not substantially justified or if the action is one 
to enforce compliance with a statutory or regulatory requirement and the 
Department's demand is substantially in excess of the ultimate decision 
and is unreasonable when compared with that decision. They also describe 
what proceedings constitute adversary adjudications covered by the Act, 
what types of persons and entities may be eligible for an award, and 
what procedures and standards the Department will use to make a 
determination as to whether a party may receive an award.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2845, Jan. 21, 2004]



Sec. 13.2  When these rules apply.

    These rules apply to adversary adjudications before the Department.

[69 FR 2845, Jan. 21, 2004]



Sec. 13.3  Proceedings covered.

    (a) These rules apply only to adversary adjudications. For the 
purpose of these rules, only an adjudication required to be under 5 
U.S.C. 554, in which the position of the Department or one of its 
components is represented by an attorney or other representative (``the 
agency's litigating party'') who enters an appearance and participates 
in the proceeding, constitutes an adversary adjudication. These rules do 
not apply to proceedings for the purpose of establishing or fixing a 
rate or for the purpose of granting, denying, or renewing a license.
    (b) If the agency's litigating party enters an appearance, 
Department proceedings listed in Appendix A to this part are covered by 
these rules. Also covered are any other proceedings under statutes that 
incorporate by reference the procedures of sections 1128(f), 
1128A(c)(2), or 1842(j)(2) of the Social Security Act, 42 U.S.C. 1320a-
7(f), 1320a-7a(c)(2), or 1395u(j)(2). If a proceeding is not covered 
under either of the two previous sentences, a party may file a fee 
application as otherwise required by this part and may argue that the 
Act covers the proceeding. Any coverage issue shall be determined by the 
adjudicative officer and, if necessary, by the appellate authority on 
review.
    (c) If a proceeding is covered by these rules, but also involves 
issues excluded under paragraph (a) of this section from the coverage of 
these rules, reimbursement is available only for fees and expenses 
resulting from covered issues.

[45 FR 45252, Oct. 4, 1983, as amended at 69 FR 2845, Jan. 21, 2004]



Sec. 13.4  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under these regulations, the applicant must be a party, as defined in 5 
U.S.C. 551(3), to the adversary adjudication for which it seeks an 
award. An applicant must show that it meets all conditions of 
eligibility set out in this subpart and in Subpart B.
    (b) The categories of eligible applicants are as follows:

[[Page 66]]

    (1) Charitable or other tax-exempt organizations described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (2) Cooperative associations as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (3) Individuals with a net worth of not more than $2 million;
    (4) Sole owners of unincorporated businesses if the owner has a net 
worth of not more than $7 million, including both personal and business 
interests, and if the business has not more than 500 employees;
    (5) All other partnerships, corporations, associations, local 
governmental units, and public and private organizations with a net 
worth of not more than $7 million and with not more than 500 employees; 
and
    (6) Where an award is sought on the basis stated in Sec. 13.5(c) of 
this part, small entities as defined in 5 U.S.C. 601.
    (c) For the purpose of determining eligibility, the net worth and 
number of employees of an applicant is calculated as of the date the 
proceeding was initiated. The net worth of an applicant is determined by 
generally accepted accounting principles.
    (d) Whether an applicant who owns an unincorporated business will be 
considered as an ``individual'' or a ``sole owner of an unincorporated 
business'' will be determined by whether the applicant's participation 
in the proceeding is related primarily to individual interests or to 
business interests.
    (e) The employees of an applicant include all those persons 
regularly providing 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 is not eligible if it appears from the facts and 
circumstances that it has participated in the proceedings only or 
primarily on behalf of other persons or entities that are ineligible.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004]



Sec. 13.5  Standards for awards.

    (a) An award of fees and expenses may be made either on the basis 
that the Department's position in the proceeding was not substantially 
justified or on the basis that, in a proceeding to enforce compliance 
with a statutory or regulatory requirement, the Department's demand 
substantially exceeded the ultimate decision and was unreasonable when 
compared with that decision. These two bases are explained in greater 
detail in paragraphs (b) and (c) of this section.
    (b) Awards where the Department's position was not substantially 
justified. (1) Awards will be made on this basis only where the 
Department's position in the proceeding was not substantially justified. 
The Department's position includes, in addition to the position taken by 
the agency in the proceeding, the agency action or failure to act that 
was the basis for the proceeding. Whether the Department's position was 
substantially justified is to be determined on the basis of the 
administrative record as a whole. The fact that a party has prevailed in 
a proceeding does not create a presumption that the Department's 
position was not substantially justified. The burden of proof as to 
substantial justification is on the agency's litigating party, which may 
avoid an award by showing that

[[Page 67]]

its position was reasonable in law and fact.
    (2) When two or more matters are joined together for one hearing, 
each of which could have been heard separately (without regard to laws 
or rules fixing a jurisdictional minimum amount for claims), and an 
applicant has prevailed with respect to one or several of the matters, 
an eligible applicant may receive an award for expenses associated only 
with the matters on which it prevailed if the Department's position on 
those matters was not substantially justified.
    (3) Awards for fees and expenses incurred before the date on which a 
proceeding was initiated will be made only if the applicant can 
demonstrate that they were reasonably incurred in preparation for the 
proceeding.
    (4) Awards will be reduced or denied if the applicant has unduly or 
unreasonably protracted the proceeding or if other special circumstances 
make an award unjust.
    (c) Awards where the Department's demand was substantially excessive 
and unreasonable. (1) Awards will be made on this basis only where the 
adversary adjudication arises from the Department's action to enforce a 
party's compliance with a statutory or regulatory requirement. An award 
may be made on this basis only if the Department's demand that led to 
the proceeding was substantially in excess of the ultimate decision in 
the proceeding, and that demand is unreasonable when compared with that 
decision, given all the facts and circumstances of the case.
    (2) Any award made on this basis shall be limited to the fees and 
expenses that are primarily related to defending against the excessive 
nature of the demand. An award shall not include fees and expenses that 
are primarily related to defending against the merits of charges, or 
fees and expenses that are primarily related to defending against the 
portion of the demand that was not excessive, to the extent that these 
fees and expenses are distinguishable from the fees and expenses 
primarily related to defending against the excessive nature of the 
demand.
    (3) Awards will be denied if the party has committed a willful 
violation of law or otherwise acted in bad faith, or if special 
circumstances make an award unjust.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004]



Sec. 13.6  Allowable fees and expenses.

    (a) Awards will be limited to the rates customarily charged by 
persons engaged in the business of acting as attorneys, agents and 
expert witnesses. If a party has already received, or is eligible to 
receive, reimbursement for any expenses under another statutory 
provision or another program allowing reimbursement, its award under 
these rules must be reduced by the amount the prevailing party has 
already received, or is eligible to receive, from the Federal 
government.
    (b) An award for the fees of an attorney or agent may not exceed 
$125.00 per hour, regardless of the actual rate charged by the attorney 
or agent. An award for the fees of an expert witness may not exceed the 
highest rate at which the Department pays expert witnesses, which is 
$24.09 per hour, regardless of the actual rates charged by the witness. 
These limits apply only to fees; an award may include the reasonable 
expenses of the attorney, agent, or witness as a separate item, if the 
attorney, agent or witness ordinarily charges separately for such 
expenses.
    (c) In determining the reasonableness of the fees sought for 
attorneys, agents or expert witnesses, the adjudicative officer must 
consider factors bearing on the request, which include, but are not 
limited to:
    (1) If the attorney, agent or witness is in private practice, his or 
her customary fee for like services; if the attorney, agent or witness 
is an employee of the applicant, the fully allocated cost of service;
    (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 proceeding; and

[[Page 68]]

    (5) Such other factors as may bear on the value of the services 
provided.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004]



Sec. 13.7  Studies, exhibits, analyses, engineering reports, tests and 
projects.

    The reasonable cost (or the reasonable portion of the cost) for any 
study, exhibit, analysis, engineering report, test, project or similar 
matter prepared on behalf of a party may be awarded to the extent that:
    (a) The charge for the service does not exceed the prevailing rate 
payable for similar services,
    (b) The study or other matter was necessary to the preparation for 
the administrative proceeding, and
    (c) The study or other matter was prepared for use in connection 
with the administrative proceeding. No award will be made for a study or 
other matter which was necessary to satisfy statutory or regulatory 
requirements, or which would ordinarily be conducted as part of the 
party's business irrespective of the administrative proceeding.



             Subpart B_Information Required from Applicants



Sec. 13.10  Contents of application.

    (a) Applications for an award of fees and expenses must include:
    (1) The name of the applicant and the identification of the 
proceeding;
    (2) Where an award is sought on the basis stated in Sec. 13.5(b) of 
this part, a declaration that the applicant believes it has prevailed, 
and an identification of the position of the Department that the 
applicant alleges was not substantially justified. Where an award is 
sought on the basis stated in Sec. 13.5(c) of this part, an 
identification of the statutory or regulatory requirement that the 
applicant alleges the Department was seeking to enforce, and an 
identification of the Department's demand and of the document or 
documents containing that demand;
    (3) Unless the applicant is an individual, a statement of the number 
of its employees on the date on which the proceeding was initiated, and 
a brief description of the type and purpose of its organization or 
business. However, where an award is sought solely on the basis stated 
in Sec. 13.5(c) of this part, the applicant need not state the number 
of its employees;
    (4) A description of any affiliated individuals or entities, as the 
term ``affiliate'' is defined in Sec. 13.4(f), or a statement that none 
exist;
    (5) A statement that the applicant's net worth as of the date on 
which the proceeding was initiated did not exceed the appropriate limits 
as stated in Sec. 13.4(b) of this part. However, an applicant may omit 
this statement if:
    (i) 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 qualified under 
such section;
    (ii) 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)); or
    (iii) It states that it is applying for an award solely on the basis 
stated in Sec. 13.5(c) of this part, and that it is a small entity as 
defined in 5 U.S.C. 601, and it describes the basis for its belief that 
it qualifies as a small entity under that section.
    (6) A statement of the amount of fees and expenses for which an 
award is sought;
    (7) A declaration that the applicant has not received, has not 
applied for, and does not intend to apply for reimbursement of the cost 
of items listed in the Statement of Fees and Expenses under any other 
program or statute; or if the applicant has received or applied for or 
will receive or apply for reimbursement of those expenses under another 
program or statute, a statement of the amount of reimbursement received 
or applied for or intended to be applied for; and
    (8) Any other matters the applicant wishes the Department to 
consider in determining whether and in what amount an award should be 
made.
    (b) All applications must be signed by the applicant or by an 
authorized officer or attorney of the applicant. It

[[Page 69]]

shall also contain or be accompanied by a written verification under 
oath or under penalty of perjury that the information provided in the 
application is true and correct.

(Approved by the Office of Management and Budget under control number 
0990-0118)

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004]



Sec. 13.11  Net worth exhibits.

    (a) Each applicant must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
defined in Sec. 13.4(f) of this part) when the proceeding was 
initiated. This requirement does not apply to a qualified tax-exempt 
organization or cooperative association. Nor does it apply to a party 
that states that it is applying for an award solely on the basis stated 
in Sec. 13.5(c) of this part. If any individual, corporation, or other 
entity directly or indirectly controls or owns a majority of the voting 
shares or other interest of the applicant, or if the applicant directly 
or indirectly owns or controls a majority of the voting shares or other 
interest of any corporation or other entity, the exhibit must include a 
showing of the net worth of all such affiliates or of the applicant 
including the affiliates. 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) The net worth exhibit shall describe any transfers of assets 
from, or obligations incurred by, the applicant or any affiliate, 
occurring in the one year period prior to the date on which the 
proceeding was initiated, that reduced the net worth of the applicant 
and its affiliates below the applicable net worth ceiling. If there were 
no such transactions, the applicant shall so state.
    (c) 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 adversely 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, the officer will omit the material 
from the public record. In that case, any decision regarding disclosure 
of the material (whether in response to a request from an agency or 
person outside the Department or on the Department's own initiative) 
will be made in accordance with applicable statutes and Department rules 
and procedures for commercial and financial records which the submitter 
claims are confidential or privileged. In particular, this regulation is 
not a basis for a promise or obligation of confidentiality.

(Approved by the Office of Management and Budget under control number 
0990-0118)

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2846, Jan. 21, 2004]



Sec. 13.12  Documentation of fees and expenses.

    (a) All applicants must be accompanied by full documentation of the 
fees and expenses, including the cost of any study, exhibit, analysis, 
report, test or other similar item, for which the applicant seeks 
reimbursement.
    (b) The documentation shall include an affidavit from each attorney, 
agent, or expert witness representing or appearing in behalf of the 
party, stating

[[Page 70]]

the actual time expended, the rate at which fees and other expenses were 
computed, a description of the specific services performed, 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. Where the 
adversary adjudication includes covered proceedings (as described in 
Sec. 13.3) as well as excluded proceedings, or two or more matters, 
each of which could have been heard separately, the fees and expenses 
shall be shown separately for each proceeding or matter, and the basis 
for allocating expenses among the proceedings or matters shall be 
indicated.
    (1) The affidavit shall itemize in detail the services performed by 
the date, number of hours per date and the services performed during 
those hours. In order to establish the hourly rate, the affidavit shall 
state the hourly rate which is billed and paid by the majority of 
clients during the relevant time periods.
    (2) If no hourly rate is paid by the majority of clients because, 
for instance, the attorney or agent represents most clients on a 
contingency basis, the attorney or agent shall provide affidavits from 
two attorneys or agents with similar experience, who perform similar 
work, stating the hourly rate which they bill and are paid by the 
majority of their clients during a comparable time period.
    (c) If the applicant seeks reimbursement of any expenses not covered 
by the affidavit described in paragraph (b), the documentation must also 
include an affidavit describing all such expenses and stating the 
amounts paid or payable by the applicant or by any other person or 
entity for the services provided.
    (d) The adjudicative officer may require the applicant to provide 
vouchers, receipts, or other substantiation for any fees or expenses 
claimed, pursuant to Sec. 13.25 of this part.

(Approved by the Office of Management and Budget under control number 
0990-0118)

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2847, Jan. 21, 2004]



            Subpart C_Procedures for Considering Applications



Sec. 13.21  Filing and service of pleadings.

    All pleadings, including applications for an award of fees, answers, 
comments, and other pleadings related to the applications, shall be 
filed in the same manner as other pleadings in the proceeding and served 
on all other parties and participants, except as provided in Sec. 
13.11(b) of this part concerning confidential financial information.



Sec. 13.22  When an application may be filed.

    (a) The applicant must file and serve its application no later than 
30 calendar days after the Department's final disposition of the 
proceeding which makes the applicant a prevailing party.
    (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) For purposes of this rule, an applicant has prevailed when the 
agency has made a final disposition favorable to the applicant with 
respect to any matter which could have been heard as a separate 
proceeding, regardless of whether it was joined with other matters for 
hearing.
    (d) If review or reconsideration is sought or taken, whether within 
the agency or to the courts, of a decision as to which an applicant 
believes it has prevailed, proceedings on the application shall be 
stayed pending final disposition of the underlying controversy.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2847, Jan. 21, 2004]



Sec. 13.23  Responsive pleadings.

    (a) The agency's litigating party shall file an answer within 30 
calendar days after service of the application or, where the proceeding 
is stayed as provided in Sec. 13.22(d) of this part, within 30 calendar 
days after the final disposition of the underlying controversy. The 
answer shall either consent to the

[[Page 71]]

award or explain in detail any objections to the award requested and 
identify the facts relied on in support of the agency's position. The 
adjudicative officer may for good cause grant an extension of time for 
filing an answer.
    (b) 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. 13.25.
    (c) Any party to or participant in a proceeding may file comments on 
an application within 30 calendar days, or on an answer within 15 
calendar days after service of the application or answer.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2847, Jan. 21, 2004]



Sec. 13.24  Settlements.

    The applicant and the agency's litigating party may agree on a 
proposed settlement of the award at any time prior to final action on 
the application. If the parties agree on a proposed settlement of an 
award before an application has been filed, the application shall be 
filed with the proposed settlement. All settlements must be approved by 
the adjudicative officer and the head of the agency or office or his or 
her designee before becoming final.



Sec. 13.25  Further proceedings.

    (a) Ordinarily, a decision on an application will be made on the 
basis of the hearing record and pleadings related to the application. 
However, at the request of either the applicant or the agency's 
litigating party, or on his or her own initiative, the adjudicative 
officer may order further proceedings, including an informal conference, 
oral argument, additional written submissions, 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. In no such further 
proceeding shall evidence be introduced from outside the administrative 
record in order to prove that the Department's position was, or was not, 
substantially justified.
    (b) A request that the adjudicative officer order additional written 
submissions or oral testimony shall identify the information sought and 
shall explain why the information is necessary to decide the issues.
    (c) The adjudicative officer may impose sanctions on any party for 
failure to comply with his or her order to file pleadings, produce 
documents, or present witnesses for oral examination. These sanctions 
may include but are not limited to granting the application partly or 
completely, dismissing the application, and diminishing the award 
granted.

[48 FR 45252, Oct. 4, 1983, as amended at 69 FR 2847, Jan. 21, 2004]



Sec. 13.26  Decisions.

    The adjudicative officer shall issue an initial decision on the 
application as promptly as possible after the filing of the last 
document or conclusion of the hearing. The decision must include written 
findings and conclusions on the applicant's eligibility and status as a 
prevailing party, including a finding on the net worth of the applicant. 
Where the adjudicative officer has determined under Sec. 13.11(b) that 
the applicant's net worth information is exempted from disclosure under 
the Freedom of Information Act, the finding on net worth shall be kept 
confidential. The decision shall also include, if at issue, findings on 
whether the agency's position was substantially justified, whether the 
applicant unduly protracted the proceedings, an explanation of any 
difference between the amount requested and the amount awarded, and 
whether any special circumstances make the award unjust.



Sec. 13.27  Agency review.

    (a) The appellate authority for any proceedings shall be the 
official or component that would have jurisdiction over an appeal of the 
merits.
    (b) If either the applicant or the agency's litigating party seeks 
review of the adjudicative officer's decision on the fee application, it 
shall file and serve exceptions within 30 days after issuance of the 
initial decision. Within another 30 days after receipt of such 
exceptions, the opposing party, if it has not done so previously, may 
file its

[[Page 72]]

own exceptions to the adjudicative officer's decision. The appellate 
authority shall issue a final decision on the application as soon as 
possible or remand the application to the adjudicative officer for 
further proceedings. Any party that does not file and serve exceptions 
within the stated time limit loses the opportunity to do so.

[69 FR 2847, Jan. 21, 2004]



Sec. 13.28  Judicial review.

    Judicial review of final agency decisions on awards may be obtained 
as provided in 5 U.S.C. 504(c)(2).



Sec. 13.29  Payment of award.

    The notification to an applicant of a final decision that an award 
will be made shall contain the name and address of the appropriate 
Departmental finance office that will pay the award. An applicant 
seeking payment of an award shall submit to that finance officer a copy 
of the final decision granting the award, accompanied by a statement 
that the applicant will not seek review of the decision in the United 
States courts. The Department will pay the amount awarded to the 
applicant within 60 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 proceedings.



Sec. 13.30  Designation of adjudicative officer.

    Upon the filing of an application pursuant to Sec. 13.11(a), the 
officer who presided over the taking of evidence in the proceeding which 
gave rise to the application will, if available, be automatically 
designated as the adjudicative officer for the handling of the 
application.

                          Appendix A to Part 13

------------------------------------------------------------------------
                                                          Applicable
     Proceedings covered        Statutory authority       regulations
------------------------------------------------------------------------
                       Office of Inspector General
------------------------------------------------------------------------
 
1. Proceedings to impose       42 U.S.C. 1320a-       42 CFR Part 1003;
 civil monetary penalties,      7a(c)(2); 1320b-       42 CFR Part 1005.
 assessments, or exclusions     10(c); 1395i-
 from Medicare and State        3(b)(3)(B)(ii),
 health care programs.          (g)(2)(A)(i); 1395l
                                (h)(5)(D), (i)(6);
                                1395m(a)(11)(A),
                                (a)(18), (b)(5)(C),
                                (j)(2)(A)(iii);
                                1395u(j)(2), (k), (l
                                )(3), (m)(3),
                                (n)(3), (p)(3)(A);
                                1395y(b)(3)(C),
                                (b)(6)(B);
                                1395cc(g);
                                1395dd(d)(1)(A),
                                (B);
                                1395mm(i)(6)(B);
                                1395nn(g)(3), (4);
                                1395ss(d);
                                1395bbb(c)(1);
                                1396b(m)(5)(B);
                                1396r(b)(3)(B)(ii),
                                (g)(2)(A)(i);
                                1396t(i)(3);
                                11131(c);
                                11137(b)(2).
2. Appeals of exclusions from  42 U.S.C. 1320a-7(f);  42 CFR Part 1001;
 Medicare and State health      1395l (h)(5)(D);       42 CFR Part 1005.
 care programs and/or other     1395m(a)(11)(A),
 programs under the Social      (b)(5)(C);
 Security Act.                  1395u(j)(2), (k), (l
                                )(3), (m)(3),
                                (n)(3), (p)(3)(B).
3. Appeal of exclusions from   42 U.S.C. 1320c-       42 CFR Part 1004;
 programs under the Social      5(b)(4), (5).          42 CFR Part 1005.
 Security Act, for which
 services may be provided on
 the recommendation of a Peer
 Review Organization.
4. Proceedings to impose       31 U.S.C. 3803.......  45 CFR Part 79.
 civil penalties and
 assessments for false claims
 and statements.
------------------------------
                Centers for Medicare & Medicaid Services
------------------------------------------------------------------------
1. Proceedings to suspend or   42 U.S.C. 263a(i);     42 CFR Part 493,
 revoke licenses of clinical    1395w-2.               Subpart R.
 laboratories.
2. Proceedings provided to a   42 U.S.C. 1395h(e)(1)- 42 CFR 421.114,
 fiscal intermediary before     (3).                   421.128.
 assigning or reassigning
 Medicare providers to a
 different fiscal
 intermediary.
3. Appeals of determinations   42 U.S.C. 1395cc(h);   42 CFR 489.53(d);
 that an institution or         1395dd(d)(1)(A).       42 CFR Part 498.
 agency is not a Medicare
 provider of services, and
 appeals of terminations or
 nonrenewals of Medicare
 provider agreements.

[[Page 73]]

 
4. Proceedings before the      42 U.S.C. 1395oo.....  42 CFR Part 405,
 Provider Reimbursement                                Subpart R.
 Review Board when Department
 employees appear as counsel
 for the intermediary.
5. Appeals of CMS              42 U.S.C. 1396i......  42 CFR Part 498.
 determinations that an
 intermediate care facility
 for the mentally retarded
 (ICFMR) no longer qualifies
 as an ICFMR for Medicaid
 purposes.
6. Proceedings to impose       42 U.S.C. 1395i-       42 CFR Part 1003.
 civil monetary penalties,      3(h)(2)(B)(ii);
 assessments, or exclusions     1395l(q)(2)(B)(i);
 from Medicare and State        1395m(a)(11)(A),
 health care programs.          (c)(4)(C); 1395w-
                                2(b)(2)(A); 1395w-
                                4(g)(1), (g)(3)(B),
                                (g)(4)(B)(ii);
                                1395nn(g)(5);
                                1395ss(a)(2),
                                (p)(8), (p)(9)(C),
                                (q)(5)(C),
                                (r)(6)(A), (s)(3),
                                (t)(2);
                                1395bbb(f)(2)(A);
                                1396r(h)(3)(C)(ii);
                                1396r-8(b)(3)(B),
                                (C)(ii);
                                1396t(j)(2)(C);
                                1396u(h)(2).
7. Appeals of exclusions from  42 U.S.C.              42 CFR Part 498;
 Medicare and State health      1395l(q)(2)(B)(ii);    42 CFR 1001.107.
 care programs and/or other     1395m(a)(11)(A),
 programs under the Social      (c)(5)(C); 1395w-
 Security Act.                  4(g)(1), (g)(3)(B),
                                (g)(4)(B)(ii).
------------------------------
                      Food and Drug Administration
------------------------------------------------------------------------
1. Proceedings to withdraw     21 U.S.C. 355(e).....  21 CFR Part 12; 21
 approval of new drug                                  CFR 314.200.
 applications.
2. Proceedings to withdraw     21 U.S.C. 360b(e),     21 CFR Part 12; 21
 approval of new animal drug    (m).                   CFR Part 514,
 applications and medicated                            Subpart B.
 feed applications.
3. Proceedings to withdraw     21 U.S.C. 306e(e),     21 CFR Part 12.
 approval of medical device     (g).
 premarket approval
 applications.
------------------------------
 
                         Office for Civil Rights
------------------------------------------------------------------------
1. Proceedings to enforce      42 U.S.C. 2000d-1....  45 CFR 80.9.
 Title VI of the Civil Rights
 Act of 1964, which prohibits
 discrimination on the basis
 of race, color or national
 origin by recipients of
 Federal financial assistance.
2. Proceedings to enforce      29 U.S.C. 794a; 42     45 CFR 84.61.
 section 504 of the             U.S.C. 2000d-1.
 Rehabilitation Act of 1973,
 which prohibits
 discrimination on the basis
 of handicap by recipients of
 Federal financial assistance.
3. Proceedings to enforce the  42 U.S.C. 6104(a)....  45 CFR 91.47.
 Age Discrimination Act of
 1975, which prohibits
 discrimination on the basis
 of age by recipients of
 Federal financial assistance.
4. Proceedings to enforce      20 U.S.C. 1682.......  45 CFR 86.71.
 Title IX of the Education
 Amendments of 1972, which
 prohibits discrimination on
 the basis of sex in certain
 education programs by
 recipients of Federal
 financial assistance.
------------------------------------------------------------------------


[69 FR 2847, Jan. 21, 2004]



PART 15_UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION FOR 
FEDERAL AND FEDERALLY ASSISTED PROGRAMS--Table of Contents




    Authority: Sec. 213, Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, Pub. L. 91-646, 84 Stat. 1894 (42 
U.S.C. 4633) 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).



Sec. 15.1  Uniform relocation assistance 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 et seq.), 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) are 
set forth in 49 CFR Part 24.

[52 FR 48026, Dec. 17, 1987 and 54 FR 8912, Mar. 2, 1989]

[[Page 74]]



PART 16_PROCEDURES OF THE DEPARTMENTAL GRANT APPEALS BOARD--Table of 
Contents




Sec.
16.1 What this part does.
16.2 Definitions.
16.3 When these procedures become available.
16.4 Summary of procedures below.
16.5 How the Board operates.
16.6 Who represents the parties.
16.7 The first steps in the appeal process: The notice of appeal and the 
          Board's response.
16.8 The next step in the appeal process: Preparation of an appeal file 
          and written argument.
16.9 How the Board will promote development of the record.
16.10 Using a conference.
16.11 Hearing.
16.12 The expedited process.
16.13 Powers and responsibilities.
16.14 How Board review is limited.
16.15 Failure to meet deadlines and other requirements.
16.16 Parties to the appeal.
16.17 Ex parte communications (communications outside the record).
16.18 Mediation.
16.19 How to calculate deadlines.
16.20 How to submit material to the Board.
16.21 Record and decisions.
16.22 The effect of an appeal.
16.23 How long an appeal takes.

Appendix A to Part 16--What Disputes the Board Reviews

    Authority: 5 U.S.C. 301 and secs. 1, 5, 6, and 7 of Reorganization 
Plan No. 1 of 1953, 18 FR 2053, 67 Stat. 631 and authorities cited in 
the Appendix.

    Source: 46 FR 43817, Aug. 31, 1981, unless otherwise noted.



Sec. 16.1  What this part does.

    This part contains requirements and procedures applicable to certain 
disputes arising under the HHS programs described in Appendix A. This 
part is designed to provide a fair, impartial, quick and flexible 
process for appeal from written final decisions. This part supplements 
the provisions in Part 74 of this title.



Sec. 16.2  Definitions.

    (a) Board means the Departmental Grant Appeals Board of the 
Department of Health and Human Services. Reference below to an action of 
the Board means an action of the Chair, another Board member, or Board 
staff acting at the direction of a Board member. In certain instances, 
the provisions restrict action to particular Board personnel, such as 
the Chair or a Board member assigned to a case.
    (b) Other terms shall have the meaning set forth in Part 74 of this 
title, unless the context below otherwise requires.



Sec. 16.3  When these procedures become available.

    Before the Board will take an appeal, three circumstances must be 
present:
    (a) The dispute must arise under a program which uses the Board for 
dispute resolution, and must meet any special conditions established for 
that program. An explanation is contained in Appendix A.
    (b) The appellant must have received a final written decision, and 
must appeal that decision within 30 days after receiving it. Details of 
how final decisions are developed and issued, and what must be in them, 
are contained in 45 CFR 74.304.
    (c) The appellant must have exhausted any preliminary appeal process 
required by regulation. For example, see 42 CFR part 50 (subpart D) for 
Public Health Service programs. In such cases, the final written 
decision required for the Board's review is the decision resulting from 
the preliminary review or appeal process. Appendix A contains further 
details.

[46 FR 43817, Aug. 31, 1981, as amended at 62 FR 38218, July 17, 1997]



Sec. 16.4  Summary of procedures below.

    The Board's basic process is review of a written record (which both 
parties are given ample opportunity to develop), consisting of relevant 
documents and statements submitted by both parties (see Sec. 16.8). In 
addition, the Board may hold an informal conference (see Sec. 16.10). 
The informal conference primarily involves questioning of the 
participants by a presiding Board member. Conferences may be conducted 
by telephone conference call. The written record review also may be 
supplemented by a hearing involving an opportunity for examining 
evidence and witnesses, cross-examination, and oral argument (see Sec. 
16.11). A hearing is

[[Page 75]]

more expensive and time-consuming than a determination on the written 
record alone or with an informal conference. Generally, therefore, the 
Board will schedule a hearing only if the Board determines that there 
are complex issues or material facts in dispute, or that the Board's 
review would otherwise be significantly enhanced by a hearing. Where the 
amount in dispute is $25,000 or less, there are special expedited 
procedures (see Sec. 16.12 of this part). In all cases, the Board has 
the flexibility to modify procedures to ensure fairness, to avoid delay, 
and to accommodate the peculiar needs of a given case. The Board makes 
maximum feasible use of preliminary informal steps to refine issues and 
to encourage resolution by the parties. The Board also has the 
capability to provide mediation services (see Sec. 16.18).



Sec. 16.5  How the Board operates.

    (a) The Board's professional staff consists of a Chair (who is also 
a Board member) and full- and part-time Board members, all appointed by 
the Secretary; and a staff of employees and consultants who are 
attorneys or persons from other relevant disciplines, such as 
accounting.
    (b) The Chair will assign a Board member to have lead responsibility 
for each case (the ``presiding Board member''). The presiding Board 
member will conduct the conference or hearing, if one is held. Each 
decision of the Board is issued by the presiding Board member and two 
other Board members.
    (c) The Board staff assists the presiding Board member, and may 
request information from the parties; conduct telephone conference calls 
to request information, to clarify issues, or to schedule events; and 
assist in developing decisions and other documents in a case.
    (d) The Chair will assure that no Board or staff member will 
participate in a case where his or her impartiality could reasonably be 
questioned.
    (e) The Board's powers and responsibilities are set forth in Sec. 
16.13.



Sec. 16.6  Who represents the parties.

    The appellant's notice of appeal, or the first subsequent submission 
to the Board, should specify the name, address and telephone number of 
the appellant's representative. In its first submission to the Board and 
the appellant, the respondent (i.e., the federal party to the appeal) 
should specify the name, address and telephone number of the 
respondent's representative.



Sec. 16.7  The first steps in the appeal process: The notice of appeal 
and the Board's response.

    (a) As explained in 45 CFR 74.304, a prospective appellant must 
submit a notice of appeal to the Board within 30 days after receiving 
the final decision. The notice of appeal must include a copy of the 
final decision, a statement of the amount in dispute in the appeal, and 
a brief statement of why the decision is wrong.
    (b) Within ten days after receiving the notice of appeal, the Board 
will send an acknowledgment, enclose a copy of these procedures, and 
advise the appellant of the next steps. The Board will also send a copy 
of the notice of appeal, its attachments, and the Board's acknowledgment 
to the respondent. If the Board Chair has determined that the appeal 
does not meet the conditions of Sec. 16.3 or if further information is 
needed to make this determination, the Board will notify the parties at 
this point.



Sec. 16.8  The next step in the appeal process: Preparation of an appeal 
file and written argument.

    Except in expedited cases (generally those of $25,000 or less; see 
Sec. 16.12 for details), the appellant and the respondent each 
participate in developing an appeal file for the Board to review. Each 
also submits written argument in support of its position. The 
responsibilities of each are as follows:
    (a) The appellant's responsibility. Within 30 days after receiving 
the acknowledgment of the appeal, the appellant shall submit the 
following to the Board (with a copy to the respondent):
    (1) An appeal file containing the documents supporting the claim, 
tabbed and organized chronologically and accompanied by an indexed list 
identifying each document. The appellant should include only those 
documents which are important to the Board's decision on the issues in 
the case.

[[Page 76]]

    (2) A written statement of the appellant's argument concerning why 
the respondent's final decision is wrong (appellant's brief).
    (b) The respondent's responsibility. Within 30 days after receiving 
the appellant's submission under paragraph (a) of this section, the 
respondent shall submit the following to the Board (with a copy to the 
appellant):
    (1) A supplement to the appeal file containing any additional 
documents supporting the respondent's position, organized and indexed as 
indicated under paragraph (a) of this section. The respondent should 
avoid submitting duplicates of documents submitted by the appellant.
    (2) A written statement (respondent's brief) responding to the 
appellant's brief.
    (c) The appellant's reply. Within 15 days after receiving the 
respondent's submission, the appellant may submit a short reply. The 
appellant should avoid repeating arguments already made.
    (d) Cooperative efforts. Whenever possible, the parties should try 
to develop a joint appeal file, agree to preparation of the file by one 
of them, agree to facts to eliminate the need for some documents, or 
agree that one party will submit documents identified by the other.
    (e) Voluminous documentation. Where submission of all relevant 
documents would lead to a voluminous appeal file (for example where 
review of a disputed audit finding of inadequate documentation might 
involve thousands of receipts), the Board will consult with the parties 
about how to reduce the size of the file.



Sec. 16.9  How the Board will promote development of the record.

    The Board may, at the time it acknowledges an appeal or at any 
appropriate later point, request additional documents or information; 
request briefing on issues in the case; issue orders to show cause why a 
proposed finding or decision of the Board should not become final; hold 
preliminary conferences (generally by telephone) to establish schedules 
and refine issues; and take such other steps as the Board determines 
appropriate to develop a prompt, sound decision.



Sec. 16.10  Using a conference.

    (a) Once the Board has reviewed the appeal file, the Board may, on 
its own or in response to a party's request, schedule an informal 
conference. The conference will be conducted by the presiding Board 
member. The purposes of the conference are to give the parties an 
opportunity to make an oral presentation and the Board an opportunity to 
clarify issues and question both parties about matters which the Board 
may not yet fully understand from the record.
    (b) If the Board has decided to hold a conference, the Board will 
consult or correspond with the parties to schedule the conference, 
identify issues, and discuss procedures. The Board will identify the 
persons who will be allowed to participate, along with the parties' 
representatives, in the conference. The parties can submit with their 
briefs under Sec. 16.8 a list of persons who might participate with 
them, indicating how each person is involved in the matter. If the 
parties wish, they may also suggest questions or areas of inquiry which 
the Board may wish to pursue with each participant.
    (c) Unless the parties and the Board otherwise agree, the following 
procedures apply:
    (1) Conferences will be recorded at Department expense. On request, 
a party will be sent one copy of the transcript. The presiding Board 
member will insure an orderly transcript by controlling the sequence and 
identification of speakers.
    (2) Only in exceptional circumstances will documents be received at 
a conference. Inquiry will focus on material in the appeal file. If a 
party finds that further documents should be in the record for the 
conference, the party should supplement the appeal file, submitting a 
supplementary index and copies of the documents to the Board and the 
other party not less than ten days prior to the conference.
    (3) Each party's representative may make an oral presentation. 
Generally, the only oral communications of other participants will 
consist of statements requested by the Board or responses to

[[Page 77]]

the Board's questions. The Board will allow reply comment, and may allow 
short closing statements. On request, the Board may allow the 
participants to question each other.
    (4) There will be no post-conference submissions, unless the Board 
determines they would be helpful to resolve the case. The Board may 
require or allow the parties to submit proposed findings and 
conclusions.



Sec. 16.11  Hearing.

    (a) Electing a hearing. If the appellant believes a hearing is 
appropriate, the appellant should specifically request one at the 
earliest possible time (in the notice of appeal or with the appeal 
file). The Board will approve a request (and may schedule a hearing on 
its own or in response to a later request) if it finds there are complex 
issues or material facts in dispute the resolution of which would be 
significantly aided by a hearing, or if the Board determines that its 
decisionmaking otherwise would be enhanced by oral presentations and 
arguments in an adversary, evidentiary hearing. The Board will also 
provide a hearing if otherwise required by law or regulation.
    (b) Preliminary conference before the hearing. The Board generally 
will hold a prehearing conference (which may be conducted by telephone 
conference call) to consider any of the following: the possibility of 
settlement; simplifying and clarifying issues; stipulations and 
admissions; limitations on evidence and witnesses that will be presented 
at the hearing; scheduling the hearing; and any other matter that may 
aid in resolving the appeal. Normally, this conference will be conducted 
informally and off the record; however, the Board, after consulting with 
the parties, may reduce results of the conference to writing in a 
document which will be made part of the record, or may transcribe 
proceedings and make the transcript part of the record.
    (c) Where hearings are held. Hearings generally are held in 
Washington, DC. In exceptional circumstances, the Board may hold the 
hearing at an HHS Regional Office or other convenient facility near the 
appellant.
    (d) Conduct of the hearing. (1) The presiding Board member will 
conduct the hearing. Hearings will be as informal as reasonably 
possible, keeping in mind the need to establish an orderly record. The 
presiding Board member generally will admit evidence unless it is 
determined to be clearly irrelevant, immaterial or unduly repetitious, 
so the parties should avoid frequent objections to questions and 
documents. Both sides may make opening and closing statements, may 
present witnesses as agreed upon in the prehearing conference, and may 
cross-examine. Since the parties have ample opportunity to develop a 
complete appeal file, a party may introduce an exhibit at the hearing 
only after explaining to the satisfaction of the presiding Board member 
why the exhibit was not submitted earlier (for example, because the 
information was not available).
    (2) The Board may request the parties to submit written statements 
of witnesses to the Board and each other prior to the hearing so that 
the hearing will primarily be concerned with cross-examination and 
rebuttal.
    (3) False statements of a witness may be the basis for criminal 
prosecution under sections 287 and 1001 of Title 18 of the United States 
Code.
    (4) The hearing will be recorded at Department expense.
    (e) Procedures after the hearing. The Board will send one copy of 
the transcript to each party as soon as it is received by the Board. At 
the discretion of the Board, the parties may be required or allowed to 
submit post-hearing briefs or proposed findings and conclusions (the 
parties will be informed at the hearing). A party should note any major 
prejudicial transcript errors in an addendum to its post-hearing brief 
(or if no brief will be submitted, in a letter submitted within a time 
limit set by the Board).



Sec. 16.12  The expedited process.

    (a) Applicability. Where the amount in dispute is $25,000 or less, 
the Board will use these expedited procedures, unless the Board Chair 
determines otherwise under paragraph (b) of this section. If the Board 
and the parties agree, the Board may use these procedures in cases of 
more than $25,000.

[[Page 78]]

    (b) Exceptions. If there are unique or unusually complex issues 
involved, or other exceptional circumstances, the Board may use 
additional procedures.
    (c) Regular expedited procedures. (1) Within 30 days after receiving 
the Board's acknowledgment of the appeal (see Sec. 16.7), each party 
shall submit to the Board and the other party any relevant background 
documents (organized as required under Sec. 16.8), with a cover letter 
(generally not to exceed ten pages) containing any arguments the party 
wishes to make.
    (2) Promptly after receiving the parties' submissions, the presiding 
Board member will arrange a telephone conference call to receive the 
parties' oral comments in response to each other's submissions. After 
notice to the parties, the Board will record the call. The Board member 
will advise the parties whether any opportunities for further briefing, 
submissions or oral presentations will be established. Cooperative 
efforts will be encouraged (see Sec. 16.8(d)).
    (3) The Board may require the parties to submit proposed findings 
and conclusions.
    (d) Special expedited procedures where there has already been 
review. Some HHS components (for example, the Public Health Service) use 
a board or other relatively independent reviewing authority to conduct a 
formal preliminary review process which results in a written decision 
based on a record including documents or statements presented after 
reasonable notice and opportunity to present such material. In such 
cases, the following rules apply to appeals of $25,000 or less instead 
of those under paragraph (c) of this section:
    (1) Generally, the Board's review will be restricted to whether the 
decision of the preliminary review authority was clearly erroneous. But 
if the Board determines that the record is inadequate, or that the 
procedures under which the record was developed in a given instance were 
unfair, the Board will not be restricted this way.
    (2) Within 30 days after receiving the Board's acknowledgment of 
appeal (see Sec. 16.7), the parties shall submit the following:
    (i) The appellant shall submit to the Board and the respondent a 
statement why the decision was clearly erroneous. Unless allowed by the 
Board after consultation with the respondent, the appellant shall not 
submit further documents.
    (ii) The respondent shall submit to the Board the record in the 
case. If the respondent has reason to believe that all materials in the 
record already are in the possession of the appellant, the respondent 
need only send the appellant a list of the materials submitted to the 
Board.
    (iii) The respondent may, if it wishes, submit a statement why the 
decision was not clearly erroneous.
    (3) The Board, in its discretion, may allow or require the parties 
to present further arguments or information.



Sec. 16.13  Powers and responsibilities.

    In addition to powers specified elsewhere in these procedures, Board 
members have the power to issue orders (including ``show cause'' 
orders); to examine witnesses; to take all steps necessary for the 
conduct of an orderly hearing; to rule on requests and motions, 
including motions to dismiss; to grant extensions of time for good 
reasons; to dismiss for failure to meet deadlines and other 
requirements; to close or suspend cases which are not ready for review; 
to order or assist the parties to submit relevant information; to remand 
a case for further action by the respondent; to waive or modify these 
procedures in a specific case with notice to the parties; to reconsider 
a Board decision where a party promptly alleges a clear error of fact or 
law; and to take any other action necessary to resolve disputes in 
accordance with the objectives of these procedures.



Sec. 16.14  How Board review is limited.

    The Board shall be bound by all applicable laws and regulations.



Sec. 16.15  Failure to meet deadlines and other requirements.

    (a) Since one of the objectives of administrative dispute resolution 
is to provide a decision as fast as possible consistent with fairness, 
the Board will not allow parties to delay the process unduly. The Board 
may grant extensions of time, but only if the party gives a good reason 
for the delay.

[[Page 79]]

    (b) If the appellant fails to meet any filing or procedural 
deadlines, appeal file or brief submission requirements, or other 
requirements established by the Board, the Board may dismiss the appeal, 
may issue an order requiring the party to show cause why the appeal 
should not be dismissed, or may take other action the Board considers 
appropriate.
    (c) If the respondent fails to meet any such requirements, the Board 
may issue a decision based on the record submitted to that point or take 
such other measures as the Board considers appropriate.



Sec. 16.16  Parties to the appeal.

    (a) The only parties to the appeal are the appellant and the 
respondent. If the Board determines that a third person is a real party 
in interest (for example, where the major impact of an audit 
disallowance would be on the grantee's contractor, not on the grantee), 
the Board may allow the third person to present the case on appeal for 
the appellant or to appear with a party in the case, after consultation 
with the parties and if the appellant does not object.
    (b) The Board may also allow other participation, in the manner and 
by the deadlines established by the Board, where the Board decides that 
the intervenor has a clearly identifiable and substantial interest in 
the outcome of the dispute, that participation would sharpen issues or 
otherwise be helpful in resolution of the dispute, and that 
participation would not result in substantial delay.



Sec. 16.17  Ex parte communications (communications outside the record).

    (a) A party shall not communicate with a Board or staff member about 
matters involved in an appeal without notice to the other party. If such 
communication occurs, the Board will disclose it to the other party and 
make it part of the record after the other party has an opportunity to 
comment. Board members and staff shall not consider any information 
outside the record (see Sec. 16.21 for what the record consists of) 
about matters involved in an appeal.
    (b) The above does not apply to the following: Communications among 
Board members and staff; communications concerning the Board's 
administrative functions or procedures; requests from the Board to a 
party for a document (although the material submitted in response also 
must be given to the other party); and material which the Board includes 
in the record after notice and an opportunity to comment.



Sec. 16.18  Mediation.

    (a) In cases pending before the Board. If the Board decides that 
mediation would be useful to resolve a dispute, the Board, in 
consultation with the parties, may suggest use of mediation techniques 
and will provide or assist in selecting a mediator. The mediator may 
take any steps agreed upon by the parties to resolve the dispute or 
clarify issues. The results of mediation are not binding on the parties 
unless the parties so agree in writing. The Board will internally 
insulate the mediator from any Board or staff members assigned to handle 
the appeal.
    (b) In other cases. In any other grants dispute, the Board may, 
within the limitations of its resources, offer persons trained in 
mediation skills to aid in resolving the dispute. Mediation services 
will only be offered at the request, or with the concurrence, of a 
responsible federal program official in the program under which the 
dispute arises. The Board will insulate the mediator if any appeal 
subsequently arises from the dispute.



Sec. 16.19  How to calculate deadlines.

    In counting days, include Saturdays, Sundays, and holidays; but if a 
due date would fall on a Saturday, Sunday or Federal holiday, then the 
due date is the next Federal working day.



Sec. 16.20  How to submit material to the Board.

    (a) All submissions should be addressed as follows: Departmental 
Grant Appeals Board, Room 2004, Switzer Building, 330 C Street SW., 
Washington, DC 20201.
    (b) All submissions after the notice of appeal should identify the 
Board's docket number (the Board's acknowledgement under Sec. 16.7 will 
specify the docket number).

[[Page 80]]

    (c) Unless the Board otherwise specifies, parties shall submit to 
the Board an original and two copies of all materials. Each submission 
other than the notice of appeal, must include a statement that one copy 
of the materials has been sent to the other party, identifying when and 
to whom the copy was sent.
    (d) Unless hand delivered, all materials should be sent to the Board 
and the other party by certified or registered mail, return receipt 
requested.
    (e) The Board considers material to be submitted on the date when it 
is postmarked or hand delivered to the Board.



Sec. 16.21  Record and decisions.

    (a) Each decision is issued by three Board members (see Sec. 
16.5(b)), who base their decision on a record consisting of the appeal 
file; other submissions of the parties; transcripts or other records of 
any meetings, conferences or hearings conducted by the Board; written 
statements resulting from conferences; evidence submitted at hearings; 
and orders and other documents issued by the Board. In addition, the 
Board may include other materials (such as evidence submitted in another 
appeal) after the parties are given notice and an opportunity to 
comment.
    (b) The Board will promptly notify the parties in writing of any 
disposition of a case and the basis for the disposition.



Sec. 16.22  The effect of an appeal.

    (a) General. Until the Board disposes of an appeal, the respondent 
shall take no action to implement the final decision appealed.
    (b) Exceptions. The respondent may--
    (1) Suspend funding (see Sec. 74.114 of this title);
    (2) Defer or disallow other claims questioned for reasons also 
disputed in the pending appeal;
    (3) In programs listed in Appendix A, B.(a)(1), implement a decision 
to disallow Federal financial participation claimed in expenditures 
reported on a statement of expenditures, by recovering, withholding or 
offsetting payments, if the decision is issued before the reported 
expenditures are included in the calculation of a subsequent grant; or
    (4) Take other action to recover, withhold, or offset funds if 
specifically authorized by statute or regulation.



Sec. 16.23  How long an appeal takes.

    The Board has established general goals for its consideration of 
cases, as follows (measured from the point when the Board receives the 
first submission after the notice of appeal):

--For regular review based on a written record under Sec. 16.8, 6 
months. When a conference under Sec. 16.10 is held, the goal remains at 
6 months, unless a requirement for post-conference briefing in a 
particular case renders the goal unrealistic.
--For cases involving a hearing under Sec. 16.11, 9 months.
--For the expedited process under Sec. 16.12, 3 months.

    These are goals, not rigid requirements. The paramount concern of 
the Board is to take the time needed to review a record fairly and 
adequately in order to produce a sound decision. Furthermore, many 
factors are beyond the Board's direct control, such as unforeseen delays 
due to the parties' negotiations or requests for extensions, how many 
cases are filed, and Board resources. On the other hand, the parties may 
agree to steps which may shorten review by the Board; for example, by 
waiving the right to submit a brief, by agreeing to shorten submission 
schedules, or by electing the expedited process.

         Appendix A to Part 16--What Disputes the Board Reviews

A. What this Appendix covers.
    This appendix describes programs which use the Board for dispute 
resolution, the types of disputes covered, and any conditions for Board 
review of final written decisions resulting from those disputes. 
Disputes under programs not specified in this appendix may be covered in 
a program regulation or in a memorandum of understanding between the 
Board and the head of the appropriate HHS operating component or other 
agency responsible for administering the program. If in doubt, call the 
Board. Even though a dispute may be covered here, the Board still may 
not be able to review it if the limits in paragraph F apply.

B. Mandatory grant programs.
    (a) The Board reviews the following types of final written decisions 
in disputes arising

[[Page 81]]

in HHS programs authorizing the award of mandatory grants:
    (1) Disallowances under Titles I, IV, VI, X, XIV, XVI(AABD), XIX, 
and XX of the Social Security Act, including penalty disallowances such 
as those under sections 403(g) and 1903(g) of the Act and fiscal 
disallowances based on quality control samples.
    (2) Disallowances in mandatory grant programs administered by the 
Public Health Service, including Title V of the Social Security Act.
    (3) Disallowances in the programs under sections 113 and 132 of the 
Developmental Disabilities Act.
    (4) Disallowances under Title III of the Older American Act.
    (5) Decisions relating to repayment and withholding under block 
grant programs as provided in 45 CFR 96.52.
    (6) Decisions relating to repayment and withholding under State 
Legalization Impact Assistance Grants as provided in 45 CFR 402.24 and 
402.25.
    (b) In some of these disputes, there is an option for review by the 
head of the granting agency prior to appeal to the Board. Where an 
appellant has requested review by the agency head first, the ``final 
written decision'' required by Sec. 16.3 for purposes of Board review 
will generally be the agency head's decision affirming the disallowance. 
If the agency head declines to review the disallowance or if the 
appellant withdraws its request for review by the agency head, the 
original disallowance decision is the ``final written decision.'' In the 
latter cases, the 30-day period for submitting a notice of appeal begins 
with the date of receipt of the notice declining review or with the date 
of the withdrawal letter.

C. Direct, discretionary project programs.
    (a) The Board reviews the following types of final written decisions 
in disputes arising in any HHS program authorizing the award of direct, 
discretionary project grants or cooperative agreements:
    (1) A disallowance or other determination denying payment of an 
amount claimed under an award, or requiring return or set-off of funds 
already received. This does not apply to determinations of award amount 
or disposition of unobligated balances, or selection in the award 
document of an option for disposition of program-related income.
    (2) A termination for failure to comply with the terms of an award.
    (3) A denial of a noncompeting continuation award under the project 
period system of funding where the denial is for failure to comply with 
the terms of a previous award.
    (4) A voiding (a decision that an award is invalid because it was 
not authorized by statute or regulation or because it was fraudulently 
obtained).
    (b) Where an HHS component uses a preliminary appeal process (for 
example, the Public Health Service), the ``final written decision'' for 
purposes of Board review is the decision issued as a result of that 
process.

D. Cost allocation and rate disputes.
    The Board reviews final written decisions in disputes which may 
affect a number of HHS programs because they involve cost allocation 
plans or rate determinations. These include decisions related to cost 
allocation plans negotiated with State or local governments and 
negotiated rates such as indirect cost rates, fringe benefit rates, 
computer rates, research patient care rates, and other special rates.

E. SSI agreement disputes.
    The Board reviews disputes in the Supplemental Security Income (SSI) 
program arising under agreements for Federal administration of State 
supplementary payments under section 1616 of the Social Security Act or 
mandatory minimum supplements under section 212 of Pub. L. 93-66. In 
these cases, the Board provides an opportunity to be heard and offer 
evidence at the Secretarial level of review as set out in the applicable 
agreements. Thus, the ``final written decision'' for purposes of Board 
review is that determination appealable to the Secretary under the 
agreement.

F. Where Board review is not available.
    The Board will not review a decision if a hearing under 5 U.S.C. 554 
is required by statute, if the basis of the decision is a violation of 
applicable civil rights or nondiscrimination laws or regulations (for 
example, Title VI of the Civil Rights Act), or if some other hearing 
process is established pursuant to statute.

G. How the Board determines whether it will review a case.
    Under Sec. 16.7, the Board Chair determines whether an appeal meets 
the requirements of this Appendix. If the Chair finds that there is some 
question about this, the Board will request the written opinion of the 
HHS component which issued the decision. Unless the Chair determines 
that the opinion is clearly erroneous, the Board will be bound by the 
opinion. If the HHS component does not respond within a time set by the 
Chair, or cannot determine whether the Board clearly does or does not 
have jurisdiction, the Board will take the appeal.

[46 FR 43817, Aug. 31, 1981, as amended at 47 FR 29492, July 6, 1982; 53 
FR 7864, Mar. 10, 1988; 62 FR 38218, July 17, 1997]



PART 17_RELEASE OF ADVERSE INFORMATION TO NEWS MEDIA--Table of Contents




Sec.
17.1 Definition.
17.2 Basic policy.
17.3 Precautions to be taken.

[[Page 82]]

17.4 Regulatory investigations and trial-type proceedings.
17.5 Context to be reflected.
17.6 Advance notice.
17.7 Retractions or corrections.

    Authority: 5 U.S.C. 301.

    Source: 41 FR 3, Jan. 2, 1976, unless otherwise noted.



Sec. 17.1  Definition.

    Adverse information released by an agency means any statement or 
release by the Department or any principal operating component made to 
the news media inviting public attention to an action or a finding by 
the Department or principal operating component of the Department which 
may adversely affect persons or organizations identified therein. This 
part does not apply to nor is it affected by any disclosure of records 
to the public in response to requests made under the Freedom of 
Information Act (Pub. L. 90-23). The criteria for such disclosures are 
set forth in the Department's Public Information Regulation (45 CFR Part 
5).



Sec. 17.2  Basic policy.

    All adverse information release to news media shall be factual in 
content and accurate in description. Disparaging terminology not 
essential to the content and purpose of the publicity shall be avoided.



Sec. 17.3  Precautions to be taken.

    The issuing organization shall take reasonable precautions to assure 
that information released is accurate and that its release fulfills an 
authorized purpose.



Sec. 17.4  Regulatory investigations and trial-type proceedings.

    Adverse information relating to regulatory investigations of 
specifically identified persons or organizations or to pending agency 
trial-type proceedings shall be released only in limited circumstances 
in accordance with the criteria outlined below:
    (a) Where the Department or a principal operating component 
determines that there is a significant risk that the public health or 
safety may be impaired or substantial economic harm may occur unless the 
public is notified immediately, it may release information to news media 
as one of the means of notifying the affected public speedily and 
accurately. However, where the Department or principal operating 
component determines that public harm can be avoided by immediate 
discontinuance of an offending practice, a respondent shall be allowed 
an opportunity, where feasible, to cease the practice (pending a legal 
test) in lieu of release of adverse information by the agency.
    (b) Where it is required in order to bring notice of pending agency 
adjudication to persons likely to desire to participate therein or 
likely to be affected by that or a related adjudication, the Department 
or principal operating component shall rely on the news media to the 
extent necessary to provide such notice even though it may be adverse to 
a respondent.



Sec. 17.5  Context to be reflected.

    The authority for and the character of the information shall be made 
clear, where appropriate, the release shall explain the nature of any 
studies performed, the sources of relevant data, the areas in which 
administrative findings of fact were made, and whether the information 
is based on allegations subject to subsequent adjudication.



Sec. 17.6  Advance notice.

    Any respondent or prospective respondent in an agency proceeding 
shall, if practicable and consistent with the nature of the proceeding, 
be given advance notice of information to be released about the 
proceeding and a reasonable opportunity to prepare in advance a response 
to the information released.



Sec. 17.7  Retractions or corrections.

    Where the Assistant Secretary for Public Affairs finds that 
information released by the Department was misleading or a misstatement 
of fact and any person named therein requests a retraction or 
correction, the Department shall issue a retraction or correction in the 
same manner to all of the media outlets that received the original 
information (or as many of them as is feasible). Where information shown 
to be misleading or misstatement of fact has been released by a 
principal

[[Page 83]]

operating component of the Department and any person named therein 
requests a retraction or correction, the agency head shall issue a 
retraction or correction in the same manner to all of the media outlets 
that received the original information (or as many of them as is 
feasible).



PART 30_CLAIMS COLLECTION--Table of Contents




                            Subpart A_General

Sec.
30.1 Purpose and scope.
30.2 Definitions.
30.3 Interagency claims.
30.4 Other administrative proceedings.
30.5 Other remedies.
30.6 Property claims.
30.7 Claims involving criminal activity or misconduct.
30.8 Claims arising from GAO exceptions.
30.9 Subdivision of claims.
30.10 Omissions not a defense.

                     Subpart B_Collection of Claims

30.11 Collection rule.
30.12 Notices to debtor.
30.13 Interest, administrative costs and late payment penalties.
30.14 Interest and charges pending waiver or review.
30.15 Administrative offset.
30.16 Use of credit reporting agencies.
30.17 Contracting for collection services.
30.18 Liquidation of collateral.
30.19 Installment payments.
30.20 Taxpayer information.
30.21 Army hold-up list.

                     Subpart C_Compromise of Claims

30.22 Compromise rule.
30.23 Exceptions.
30.24 Inability to collect the full amount.
30.25 Litigative probabilities.
30.26 Cost of collecting claim.
30.27 Enforcement policy.
30.28 Joint and several liability.
30.29 Further review of compromise offers.
30.30 Restriction.

        Subpart D_Termination or Suspension of Collection Action

30.31 Termination rule.
30.32 Exceptions.

         Subpart E_Referrals to the Department of Justice or GAO

30.33 Litigation.
30.34 Claims over $20,000.
30.35 GAO exceptions.

    Authority: Subchapter II of Chapter 37 of Title 31, United States 
Code, 5 U.S.C. 5514 and 5 U.S.C. 552a as amended by Pub. L. 97-365, 96 
Stat. 1749.

    Source: 52 FR 264, Jan. 5, 1987, unless otherwise noted.



                            Subpart A_General



Sec. 30.1  Purpose and scope.

    (a) This regulation prescribes standards and procedures for the 
officers and employees of the Department, including officers and 
employees of the various Operating Divisions and regional offices of the 
Department, charged with collection and disposition of debts owed to the 
United States.
    (b) These standards and procedures will be applied where a statute, 
regulation or contract does not prescribe different standards or 
procedures. The authority for the regulation lies in the Federal Claims 
Collection Act of 1966, as amended, 31 U.S.C. 3711 and 3716-3718; the 
Federal Claims Collection Standards, at 4 CFR Parts 101-105; related 
statutes (5 U.S.C. 5512 and 5514, 5 U.S.C. 552a) and regulations (5 CFR 
Part 550); and the common law. The covered activities include collecting 
claims in any amount; compromising claims, or suspending or terminating 
collection of claims that do not exceed $20,000, exclusive of interest 
and charges; and referring debts that cannot be disposed of by the 
Department to the Department of Justice or to the General Accounting 
Office for further administrative action or litigation. Further guidance 
may be found in the Departmental General Administration Manual, 
Personnel Manual, Accounting Manual and Grants Administration Manual, 
and any other manuals which may be issued by each Operating Division, 
office, or program.



Sec. 30.2  Definitions.

    In this part, unless the context otherwise requires--
    Amounts payable under the Social Security Act means payments by the 
Department to beneficiaries, providers, intermediaries, physicians, 
suppliers, carriers, States, or other contractors or grantees under a 
Social Security Act program, including: Title I (Grants to

[[Page 84]]

States for Old-Age Assistance and Medical Assistance for the Aged); 
Title II (Federal Old-Age Survivors, and Disability Insurance Benefits); 
Title III (Grants to States for Unemployment Compensation 
Administration); Title IV (Grants to States for Aid and Services to 
Needy Families with Children and for Child-Welfare Services); Title V 
(Maternal and Child Health and Crippled Children's Services); Title IX 
(Unemployment Compensation Program); Title X (Grants to States for Aid 
to the Blind); Title XI, Part B (Peer Review of the Utilization and 
Quality of Health Care Services); Title XII (Advances to State 
Unemployment Funds); Title XIV (Grants to States for Aid to Permanently 
and Totally Disabled); Title XVI (Supplemental Security Income for the 
Aged, Blind, and Disabled); Title XVII (Grants to States to Fight Mental 
Retardation); Title XVIII (Medicare); Title XIX (Medicaid); and Title XX 
(Block Grants to States for Social Services). Federal employee salaries 
and other payments made by the Department in the course of administering 
the provisions of the Social Security Act are not deemed to be ``payable 
under'' the Social Security Act for purposes of this regulation.
    Claim or Debt means an amount of money or other property owed to the 
United States. Debts include, but are not limited to amounts owed on 
account of loans made, insured or guaranteed by the United States; 
salary overpayments to employees; overpayments to program beneficiaries; 
overpayments to contractors and grantees, including overpayments arising 
from audit disallowances; excessive cash advances to employees, grantees 
and contractors; civil penalties and assessments; theft or loss of money 
or property; and damages.
    Debtor means an individual, organization, association, partnership, 
corporation, or a State or local government or subdivision indebted to 
the Department; or the person or entity with legal responsibility for 
assuming the debtor's obligation.
    Debts arising under the Social Security Act are overpayments to, or 
contributions, penalties or assessments owed by, beneficiaries, 
providers, intermediaries, physicians, suppliers, carriers, States or 
other contractors or grantees under Titles I, II, III, IV, V, IX, X, XI 
(Part B), XII, XIV, XVI, XVII, XVIII, XIX and XX of the Social Security 
Act. Salary overpayments and other debts that result from the 
administration of the provisions of the Social Security Act are not 
deemed to ``arise under'' the Social Security Act for purposes of this 
regulation.
    Department means the United States Department of Health and Human 
Services and each of its Operating Divisions and regional offices.
    Liquidated or certain in amount refers to a debt of an amount 
already fixed and determined by the Secretary, or which may be readily 
fixed and determined from the information available in the debt file, 
irrespective of any dispute by the debtor.
    Local government means a political subdivision, instrumentality, or 
authority of any State; the District of Columbia; the Commonwealth of 
Puerto Rico; a territory or possession of the United States; or an 
Indian tribe, band or nation.
    Operating Division means each separate component within the 
Department of Health and Human Services, and includes the Office of the 
Secretary, the Office of Human Development Services, the Family Support 
Administration, theCenters for Medicare & Medicaid Services, the Public 
Health Service and the Social Security Administration.
    Overdue refers to a debt not paid by the payment due date specified 
in the notice of the debt to the debtor (see Sec. 30.13(a)) and not the 
subject of a repayment agreement approved by the Secretary. Also, a debt 
subject to repayment agreement is considered overdue if the debtor fails 
to satisfy his or her obligations under that agreement. ``Overdue'' and 
``delinquent'' have the same meaning. See 4 CFR 101.2(b).
    Secretary means the Secretary of Health and Human Services or the 
Secretary's designee within any Operating Division or Regional Office.



Sec. 30.3  Interagency claims.

    This regulation does not apply to debts owed by other Federal 
agencies. These debts will be resolved by negotiation or referral to the 
General Accounting Office.

[[Page 85]]



Sec. 30.4  Other administrative proceedings.

    This regulation does not supersede or require omission or 
duplication of administrative proceedings required under contract, 
statute, regulation or other agency procedures. Examples: Resolution of 
audit findings under grants or contracts, Chapter 1-105, Grants 
Administration Manual (GAM); informal grant appeals, 45 CFR Part 75 
(Departmental), 42 CFR 50.401 et seq. (Public Health Service); formal 
appeals to the Departmental Grant Appeals Board, 45 CFR Part 16; and 
review under a procurement contract Disputes Clause and the Contract 
Disputes Act of 1978 (41 U.S.C. 601 et seq.), 48 CFR Part 33.



Sec. 30.5  Other remedies.

    The remedies and sanctions available to the Department under this 
regulation when collecting debts are not intended to be exclusive. The 
Secretary may impose other appropriate sanctions upon a debtor for 
inexcusable, prolonged or repeated failure to pay a debt. For example, 
the Secretary may stop doing business with a grantee, contractor, 
borrower or lender; convert the method of payment under a grant from an 
advance to a reimbursement method; or revoke a grantee's letter-of-
credit.



Sec. 30.6  Property claims.

    Any person who converts, or negligently loses or destroys personal 
property belonging, entrusted or loaned to the Department is liable for 
the return of the property or payment of its fair market value. A person 
who damages such property is liable for the cost of repairs or its fair 
market value, whichever is less. Collection of these debts means the 
recovery of the property, its fair market value, or the cost of repairs. 
Demand for payment of these claims means a demand for the return of the 
property or for payment of its fair market value or the cost of repairs.



Sec. 30.7  Claims involving criminal activity or misconduct.

    (a) A debtor whose indebtedness involves criminal activity is 
subject to punishment by fine or imprisonment as well as to a civil 
claim by the United States for compensation for the misappropriated 
funds or property. Examples of such activity are fraud, embezzlement and 
theft or misuse of Government money or property. See 18 U.S.C. 641, 643. 
The Secretary will refer cases of suspected criminal activity or 
misconduct to the Office of Inspector General. That office will 
investigate such cases, refer them to the Department of Justice for 
criminal prosecution and/or return them to the Secretary for collection, 
application of administrative sanctions or other disposition.
    (b) Debts involving anti-trust violations, fraud, false claims or 
misrepresentation--
    (1) Shall be referred by the Secretary to the Office of Inspector 
General for review. The Office of Inspector General shall refer the 
claim back to the Secretary for collection or other disposition to the 
extent authorized by the Department of Justice.
    (2) Shall not be compromised, terminated, suspended or otherwise 
disposed of by the Secretary under these regulations. Only the 
Department of Justice is authorized to compromise, terminate, suspend or 
otherwise dispose of such debts.



Sec. 30.8  Claims arising from GAO exceptions.

    The Secretary may not compromise but will collect, suspend or 
terminate collection of debts due on account of illegal, improper or 
incorrect payments shown in General Accounting Office notices of 
exception issued to certifying or disbursing officers. Only the General 
Accounting Office has the authority to compromise such debts.



Sec. 30.9  Subdivision of claims.

    Debts may not be subdivided to avoid the monetary ceilings imposed 
by 31 U.S.C. 3711(a) (2) and (3) on the Secretary's authority to 
compromise, suspend or terminate collection of debts. A debtor's 
liability arising from a particular incident or transaction will be 
considered a single debt in determining whether the claim exceeds 
$20,000 for purposes of compromising, suspending or terminating 
collection efforts.

[[Page 86]]



Sec. 30.10  Omissions not a defense.

    Failure by the Secretary to comply with any provision of this 
regulation may not serve as a defense to any debtor.



                     Subpart B_Collection of Claims



Sec. 30.11  Collection rule.

    (a) Aggressive agency action. The Secretary will take aggressive 
action to collect debts and reduce delinquencies. Collection efforts 
shall, at a minimum, normally include sending to the debtor's last known 
address a total of three progressively stronger written demands for 
payment at not more than 30-day intervals unless amounts are available 
for offset under section 30.15, or a response to the first or second 
demand indicates that further demand would be futile and the debtor's 
response does not require rebuttal.
    (b) Immediate action. When necessary to protect the Government's 
interest, written demand may be preceded by other appropriate action, 
such as withholding of amounts payable to the debtor or immediate 
referral of the debt for litigation or filing of a claim in bankruptcy 
court or against a decedent's estate.
    (c) Finding debtors. The Secretary will exhaust every reasonable 
effort to locate debtors, using such sources as telephone directories, 
city directories, postmasters, driving license records, automobile title 
and license records in State and local government agencies, the Internal 
Revenue Service, credit reporting agencies and skip locator services. 
Referral of a confess-judgment note to the appropriate United States 
Attorney's Office for entry of judgment will not be delayed because the 
debtor cannot be located.
    (d) Joint and several liability. Collection of the full amount of 
the debt will be pursued from each debtor jointly and severally liable.
    (e) Debtor disputes. A debtor who disputes a debt must promptly 
provide available supporting evidence.
    (f) Debt files. The Secretary will maintain an administrative file 
for each debt or debtor, documenting the debt(s), all administrative 
collection action, including communications to and from the debtor, and 
disposition of the debt(s). Information from a debt file relating to an 
individual may be disclosed only for purposes consistent with this 
regulation, the Privacy Act of 1974 (5 U.S.C. 552a), and any other 
applicable law.



Sec. 30.12  Notices to debtor.

    (a) Required notice. The first written demand for payment must 
inform the debtor of--
    (1) The amount and nature of the debt;
    (2) The date payment is due, which will generally be 30 days from 
the date the notice was mailed; and
    (3) The assessment under Sec. 30.13 of interest from the date the 
notice was mailed, and full administrative costs if payment is not 
received within the 30 days.
    (b) Other notice. Where applicable, the Secretary must inform the 
debtor in writing of--(1) His or her right to dispute the debt or 
request a waiver of the debt, citing the applicable review or waiver 
authority, the conditions for review or waiver, and the effect of the 
review or waiver request on collection of the debt, interest, charges 
and late payment penalties (see Sec. 30.14);
    (2) The office, address and telephone number that the debtor should 
contact to discuss repayment, reconsideration or waiver of the debt;
    (3) The proposed sanctions if the debt is overdue, including 
assessment of late payment penalties under 30.13 (if the debt is more 
than 90 days overdue) or referral of the debt to a credit reporting 
agency under Sec. 30.17, or to a collection agency under Sec. 30.18. 
(See also Sec. 30.5).
    (c) Exception. This section does not require duplication of any 
notice already contained in a written agreement, letter or other 
document signed by, or provided to the debtor.



Sec. 30.13  Interest, administrative costs and late payment penalties.

    (a) Interest. (1) Interest will accrue on all debts from the date 
notice of the debt and the interest requirement is first mailed to the 
last known address or hand-delivered to the debtor if the debt is not 
paid within 30 days from the date of mailing of the notice. Except as

[[Page 87]]

provided in paragraph (a)(2) of this section, or unless the Secretary 
determines a higher rate is necessary to protect the Government's 
interests, the Secretary shall charge an annual rate of interest as 
fixed by the Secretary of the Treasury after taking into consideration 
private consumer rates of interest prevailing on the date that the 
Department becomes entitled to recovery. This rate may be revised 
quarterly by the Secretary of the Treasury and shall be published by the 
HHS Assistant Secretary for Management and Budget quarterly in the 
Federal Register. Debtors who were not paying interest, or were paying 
interest at a different rate prior to October 25, 1982, may be charged 
interest at the above-stated rate in effect on the date that notice of 
the new interest requirement is mailed after 1982. The Secretary may use 
the advance billing procedure and include the interest notification 
prior to the debt being owed. Bills sent before a debt is due will 
include notification of the interest requirement. In these cases, 
interest will begin to accrue on the day after the due date.
    (2) The interest rate established in paragraph (a) of this section 
shall be no lower than the current value of funds rate, as set by the 
Secretary of the Treasury pursuant to 31 U.S.C. 3717, except that in the 
case of installment payment agreements under Sec. 30.19, such rate 
shall be no lower than the applicable rate determined from the U.S. 
Treasury ``Schedule of Certified Interest Rates with Range of 
Maturities.''
    (3) The Secretary may, at his or her discretion, extend the 30 day 
interest-free period an additional 30 days if the Secretary determines 
that such action is in the best interests of the Government, or 
otherwise warranted by equity and good conscience.
    (4) The rate of interest, as initially assessed, will remain fixed 
for the duration of the indebtedness; except that if a debtor defaults 
on a repayment agreement, interest may be set at the Treasury rate in 
effect on the date a new agreement is executed.
    (5) Interest will not be charged on interest, administrative costs 
or late payment penalties required by this section. However, if the 
debtor defaults on a previous repayment agreement, unpaid accrued 
interest, charges and late payment penalties under the defaulted 
agreement may be added to the principal to be paid under a new repayment 
agreement.
    (b) Administrative costs of collecting overdue debts. Delinquent 
debtors will be assessed the administrative costs incurred by the 
Department as a result of handling and collecting the overdue debts, 
based on either actual or average costs incurred. These costs will 
include direct (personnel, supplies, etc.) and indirect costs of 
collecting inhouse and contracting with collection agencies and may 
include the costs of providing hearings or any other form of review 
requested by debtors. See Sec. 30.14. These charges will be assessed 
monthly, or per payment period, throughout the period that the debt is 
overdue. Such costs may also be additive to other administrative costs 
if collection is being made for another Federal agency or unit.
    (c) Late payment penalties. A penalty charge of 6 percent a year 
will be assessed on a debt, a payment, or any portion thereof that is 
more than 90 days overdue. Late payment penalty charges will accrue from 
the date the debt, or portion thereof, became overdue until the overdue 
amount is paid. These charges will be assessed monthly, or per payment 
period. See also Sec. 30.14.
    (d) Social Security Act debts. (1) Unless specifically authorized by 
statute, regulations or written agreement, or unless the debts arise 
from, or involve, fraud or criminal activity, the Secretary will not 
charge interest on debts arising from payments to beneficiaries under 
Titles II, XVI and XVIII of Social Security Act. The charging of 
interest is appropriate on debts arising from section 1862(b) of the Act 
for Medicare payments for which a beneficiary has been reimbursed by a 
liable third party, in which case the charging of interest would be 
appropriate.
    (2) The Secretary will charge administrative costs or late payment 
penalties on debts arising under the Social Security Act where 
authorized by statute, regulations, or written agreement.

[[Page 88]]

    (e) Other debts not covered by 31 U.S.C. 3717. The Secretary will 
charge administrative costs or late payment penalties on debts arising 
under a contract executed prior to, and in effect on October 25, 1982, 
or debts owed by State or local governments where authorized by statute, 
regulation, or written agreement.
    (f) Allocation of payments. Partial or installment payments will be 
applied first to outstanding administrative cost charges and late 
payment penalties, second to accrued interest and third to outstanding 
principal.
    (g) Inactive claims. Interest, but not administrative cost charges 
or late payment penalties, will continue to accrue when collection of a 
debt is suspended under Sec. 30.33(a).
    (h) Waivers. The Secretary may waive collecting all or part of 
interest, administrative costs or late payment penalties, if--
    (1) The debt or the charges resulted from the agency's error, action 
or inaction (other than normal processing delays), and without fault on 
the part of the debtors; or
    (2) Collection in any manner authorized under this regulation would 
defeat the overall objectives of a Departmental program.



Sec. 30.14  Interest and charges pending waiver or review.

    (a) Rule. A debtor may either pay the debt, or be liable for 
interest on the uncollected debt, while a waiver determination, a bona 
fide dispute or a formal or informal review of the debt is pending. If a 
final determination is to the effect that any amount was properly a debt 
to HHS and the debtor chose to retain the amount in dispute, the 
Secretary shall collect or offset from any future payments to the 
debtor, an amount equal to the amount of the debt plus interest (as 
calculated under Sec. 30.13(a)) on such debt amount starting from the 
date the debtor was first made aware of the debt and ending when such 
debt is repaid. The debtor will also be assessed administrative cost 
charges and late payment penalties on the upaid debt for this period if 
the reviewing or hearing officer determines in writing that the request 
for a waiver, a hearing or other form of review was spurious.
    (b) Exception. Interest, late payment penalties and administrative 
cost charges will not be assessed pending consideration of waiver or 
review under a statute which prohibits collection of the debt during 
this period, unless the reviewing or hearing officer determines in 
writing that the request for a waiver, a hearing or other form of review 
was spurious.



Sec. 30.15  Administrative offset.

    (a) Rule. The Secretary will collect debts owed to the Department by 
administrative offset if--
    (1) The debt is liquidated or certain in amount;
    (2) Offset is not expressly or implicitly prohibited by statute or 
regulation;
    (3) Offset is cost-effective or has significant deterrent value;
    (4) Offset does not substantially impair or defeat program 
objectives; and
    (5) Overall, offset is best suited to further and protect the 
Government's interest.

The Secretary may consider financial impact of the proposed offset on 
the debtor in determining the method and amount of the offset.
    (b) Definitions. (1) ``Administrative Offset'' means satisfying a 
debt by withholding money payable by the Department to, or held by the 
Department for a debtor. Amounts available for offset include, for 
example, benefit payments to a program beneficiary overpaid under the 
same or a different program, amounts due a defaulting or overpaid 
contractor or grantee under the same or a different agreement, salaries 
of Federal employees, Federal income tax refunds and judgments held by 
the debtor against the United States. (Offset against judgments will be 
effected through the Comptroller General pursuant to 31 U.S.C. 3728.)
    (2) ``Hearing'' means either a review of the record or an oral 
hearing. A review of the record means a review of the documentary 
evidence by a designated hearing officer. An oral hearing means an 
informal conference before a designated hearing officer.
    (3) ``Hearing officer'' is an individual appointed by the Secretary 
to review

[[Page 89]]

and issue a final decision on an employee's dispute of a debt. In the 
case of an employee debt subject to 5 U.S.C. 5514, the hearing officer 
may not be an individual under the supervision of the Secretary; will 
normally be an independent contractor of the Department or an employee 
of another Federal agency, see 4 CFR 102.1 and 5 CFR 550.1107; and may 
be an administrative law judge if appointment of an independent 
contractor or an employee of another Federal agency is not feasible.
    (4) ``Pay'' means basic pay, special pay, incentive pay, retired 
pay, retainer pay, or, in case of an employee not entitled to basic pay, 
other authorized pay.
    (5) ``Disposable pay'' means the amount that remains from an 
employee's Federal pay after withholding of all deductions listed in 5 
CFR 581.105(b) and any other deductions required by law (including, but 
not limited to, Federal, State, and local income taxes; Social Security 
taxes, including Medicare taxes; and Federal retirement programs).
    (c) Scope. This section satisfies the standards in 4 CFR 102.3 and 
102.4 and 5 CFR Part 550, for offset under the common law, 31 U.S.C. 
3716, 5 U.S.C. 5514 and any other statute under which standards and 
procedures for offset have not otherwise been promulgated, including:
    (1) Offset of debts owed or to amounts payable, under a grant or 
contract; except that paragraphs (j)-(p) of this section do not apply. 
See Sec. 30.4.
    (2) Offset of debts owed by former employees from final salary and 
lump sum payments; and from the Civil Service Retirement and Disability 
Fund (which also requires compliance with 5 CFR Part 831, Subpart R);
    (3) Offset of salary overpayments and other debts under statutes 
such as 5 U.S.C. 5514 (or 31 U.S.C. 3716 in the case of commissioned 
officers), travel advances under 5 U.S.C. 5705, training expenses under 
5 U.S.C. 4108, debts of employees removed for cause under 5 U.S.C. 5511 
and amounts owed by accountable officers under 5 U.S.C. 5512, from the 
current pay of Federal employees, including employees of the Social 
Security Administration and other offices administering a Social 
Security Act program;
    (4) Offset of debts owed by state or local governments;
    (5) Offset of debts arising, or from amounts payable, under the 
Social Security Act, except that unless specifically authorized by 
statute, regulation, or written agreement, or unless the debts arise 
from, or involve, fraud or criminal activity, administrative offset will 
not be applied to recover debts arising from, or to withhold, payments 
to beneficiaries under Titles II, XVI, and XVIII of the Social Security 
Act with the exception of debts arising from section 1862(b) of the Act 
for Medicare payments for which a beneficiary has been reimbursed by a 
liable third party.
    (d) Exceptions. (1) So long as the conditions listed in paragraphs 
(a) (2)-(5) and (e) are met, offset may be effected with the debtor's 
consent without regard to the other provisions in this section.
    (2) This section does not apply to debts reduced to judgment, debts 
already subject to a written repayment or settlement agreement, or debts 
with respect to which the specified procedures have already been 
otherwise afforded. Debts reduced to judgment may be offset from the 
current pay of a Federal employee under Federal Personnel Manual 
Supplement 552-1.
    (3) This section does not apply to any adjustment to a Federal 
employee's pay arising out of the employee's request for, or change in, 
coverage under a Federal benefits program such as health or life 
insurance, which requires periodic deductions from pay, if the amount to 
be recovered was accumulated over four pay periods or less. Employees 
consent to deductions from pay whenever they elect or change coverage. 
Affected employees will receive a notice informing them of these 
retroactive adjustments to pay and the office to contact if the employee 
disputes the amount of the adjustment.
    (e) Advance payments. Under many programs, the Department advances 
funds to pay for a recipient's anticipated costs. Before offsetting such 
an advance payment in order to collect a debt, the Secretary may request 
an assurance that the recipient will incur

[[Page 90]]

additional allowable costs whose Federal share is at least equal to the 
amount of the offset plus the amount of funds actually advanced. If the 
Secretary believes that the recipient will not incur sufficient costs, 
the advance will not be offset. In such case, the Secretary may request 
cash payment or convert the method of paying the recipient from an 
advance to a reimbursement basis and collect the debt by offsetting 
payments for costs already incurred.
    (f) Multiple debts. Amounts available for offset will be applied to 
multiple debts in accordance with the best interests of the Department 
and the Government as determined on a case-by-case basis. Other factors 
being equal, recovery will be equally apportioned, except that debts 
owed to the Department will be satisfied before debts owed to other 
Federal agencies.
    (g) Statutory bar to offset. (1) Administrative offset will not be 
initiated more than 10 years after the Government'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 officer responsible for discovering or collecting the debt. For 
this purpose, a debt accrues when it is administratively determined to 
exist, when it is affirmed by an administrative appeals board or a court 
having jurisdiction, or when a debtor defaults on a repayment agreement, 
whichever is later. Offset is initiated when the notice of the proposed 
offset is mailed to the debtor under paragraph (i) of this section or 
under other agency procedures, when money payable to the debtor is first 
withheld, or when the Department requests offset from money held by 
another agency, whichever is first.
    (2) The 10 year statutory bar does not apply to offset of a debt 
arising out of the Social Security Act. However, offset against such 
debts will generally not be initiated more than 10 years after the debt 
accrued unless the Secretary did not previously have the necessary 
information or the means by which to collect the debt by administrative 
offset.
    (h) Offset against assigned claims. The Assignment of Claims Act of 
1940, 31 U.S.C. 3727, 41 U.S.C. 15, strictly limits the conditions under 
which a contractor or any other person or entity entitled to receive 
payments from the United States may assign his or her rights to the 
payments to a third party. The Federal Acquisition Regulations implement 
at 48 CFR Part 32, Subpart 32.8, the statutory conditions to assignment 
of a contractor's right to be paid by the United States for performance 
under a Federal procurement contract. A contractor may assign his or her 
right to payment by the United States only to a bank, trust company, or 
other financing institution, as security for a loan to the contrator.
    (1) The Secretary normally may not collect a debt owed by a 
contractor by offset from payments due the contractor if the contractor 
has properly assigned his or her rights to such payments to a financing 
institution, the assigned payments are due under a contract with a ``no 
setoff'' provision, and--
    (i) The contractor's debt to the United States arose independently 
of the contract; or
    (ii) The debt arose under the contract because of renegotiation, 
fines, penalties (other than penalties for noncompliance with the terms 
of the contract), taxes or social security contributions, or withholding 
or nonwithholding of taxes or social security contributions. 
Notwithstanding the satisfaction of all the conditions of this 
paragraph, offset may be appropriate under certain circumstances, for 
example: If the financing institution has made neither a loan nor a firm 
commitment to make a loan under the assignment; or to the extent that 
the amount due on the contract exceeds the amount of any loans made or 
expected to be made under a firm commitment.
    (2) The Secretary may not offset a debt from payments due any debtor 
if the debtor has properly assigned his or her right to such payments 
and the debt arose after the effective date of the assignment.
    (3) The Secretary may not attempt to satisfy the assignor's 
indebtedness by recovering payments already made to the assignee.

[[Page 91]]

    (i) Amount of offset. Whenever feasible debts will be offset in one 
lump sum, except that deductions from an employee's current pay pursuant 
to 5 U.S.C. 5514 may not exceed 15 percent of the employee's disposable 
pay for any pay period, unless the employee agrees in writing to a 
larger deduction. However, if the employee retires, resigns, or is 
discharged, or if his or her employment or active duty otherwise ends, 
an amount necessary to satisfy the debt may be offset immediately from 
payments of any nature due the individual.
    (j) Pre-offset requirements. Before effecting offset, the Secretary 
will send the debtor written notice of the following--
    (1) The nature and amount of the debt;
    (2) The agency intention to collect the debt by offsetting the lump 
sum or installments (stating the amount, frequency, proposed beginning 
date and duration of the installments) unless the debtor pays the debt 
or responds within 30 days from the date the notice was mailed to the 
debtor;
    (3) The interest, administrative cost charges and penalties that 
will or may be assessed under Sec. Sec. 30.13 and 30.14 if the debt is 
not paid, or the debtor has not consented to a lump sum offset, within 
30 days from the date the notice was mailed to the debtor;
    (4) The debtor's right, if a previous opportunity was not provided, 
to request within 15 days (unless otherwise provided by statute or 
regulation) from the date of mailing of the notice--
    (i) Copies of agency records pertaining to the debt;
    (ii) An alternative repayment schedule; or
    (iii) A hearing if the debtor contends no debt is owed, the debt is 
for a different amount, or the proposed offset does not comply with this 
section;
    (5) The debtor's right, if any, to request waiver of the debt, 
interest or changes, citing the applicable statutory authority, request 
procedures and waiver conditions and the effect of the waiver request on 
collection of the debt, interest and charges by offset;
    (6) The office, address and telephone number of whom the debtor 
should address any inquiries or requests;
    (7) The requirement that the hearing officer issue a decision at the 
earliest practical date; except that under 5 U.S.C. 5514, the decision 
may be issued no later than 60 days after the request for the hearing 
was filed unless the employee requested and was granted an extension;
    (8) That any knowingly false or frivolous statements, 
representations or evidence may subject the debtor to criminal or civil 
penalties under 18 U.S.C. 286, 287, 1001 and 1002 or 31 U.S.C. 3729-
3731; or also disciplinary action under 5 CFR Part 752 or any other 
applicable authority if the debtor is an employee;
    (9) Any other rights and remedies available to the debtor under the 
statutes or regulations governing the program under which the debt is 
being collected; and
    (10) That, unless otherwise provided by statute or contract, amounts 
collected and later waived or found not owed will be promptly refunded.
    (k) Alternative repayment proposal. A debtor may propose a different 
offset schedule or repayment by cash installments pursuant to Sec. 
30.19.
    (l) Request for hearing. A debtor may submit to the address 
specified in the notice letter a written request for a hearing to 
dispute the administrative determination of the existence or amount of 
the debt, or whether the proposed offset schedule complies with this 
section, before the initiation of collection by offset. The request must 
be postmarked no later than 15 days (unless otherwise provided by 
statute or regulation) from the date the notice was mailed to the 
debtor. The debtor must sign the request and briefly state each agency 
conclusion being disputed and the reasons for the dispute. Supporting 
facts, witnesses, and documents must be identified in the request. The 
request, with supporting documents, must, on its face, sufficiently 
raise a genuine issue of fact or law. Receipt of the request will be 
acknowledged. The Secretary may grant an extension or excuse a delay if 
the debtor shows good cause for late filing of a request for a hearing. 
A reasonable extension will be granted only if the debtor shows that the 
delay was caused by circumstances beyond the debtor's

[[Page 92]]

control or because the debtor did not receive notice, and was not 
otherwise aware of the time limit. A debtor who fails to meet the filing 
deadline or to request an extension waives the right to a hearing and 
will be immediately subject to offset.
    (m) Denial of request. The Secretary will summarily deny a request 
for an oral hearing pursuant to a written finding that the request 
raises no genuine issue of fact or law, or is otherwise spurious or 
frivolous. In addition, if the Secretary finds that the request raises 
issues which may properly constitute grounds for waiver of the debt 
under 5 U.S.C. 5584 or any other statute, the request will be deemed to 
be a request for a waiver and will be so handled with notification to 
the debtor.
    (n) Hearings--(1) Type of hearing. The hearing will normally be a 
review of the record, unless the hearing officer determines that a 
decision cannot be made without resolving an issue of credibility or 
veracity, in which case the hearing officer will provide for an oral 
hearing.
    (2) Date and place of oral hearing. The oral hearing will normally 
be held no later than 30 days from the date of receipt by the agency of 
the request for a hearing. The hearing officer will give the debtor and 
the Secretary at least 10 days prior notice of the hearing date, time, 
place, procedures and issues. The hearing officer, for good cause, may 
grant the parties each one request to change the hearing date and 
reschedule the hearing for the earliest practical date. To the extent 
feasible the hearing will be held at a location convenient to the 
debtor, and will be open to the public.
    (3) Oral hearing procedures. The hearing officer will:
    (i) Make a summary record of the hearing;
    (ii) Decide the order of hearing the evidence;
    (iii) Allow the debtor and the agency to introduce relevant evidence 
not previously submitted and informally call and cross examine 
witnesses;
    (iv) Question parties and witnesses as appropriate;
    (v) Allow the debtor and the agency to be represented by counsel; 
and
    (vi) Limit review of the case to the particulars of the agency 
determination challenged by the debtor.
    (o) Decision of hearing officer. The hearing officer will issue a 
written decision at the earliest practical date; but not later than 60 
days after a request for a hearing or extension is filed under 5 U.S.C. 
5514. The decision will, at a minimum, state the relevant facts, include 
the hearing officer's analysis, findings and conclusions based on the 
issues and, if unfavorable to the debtor, inform the debtor of any 
available rights or remedies.
    (p) Employee waiver requests. Requests for waiver of overpayments of 
pay under 5 U.S.C. 5584 will continue to be handled under 4 CFR parts 
91-93 and Chapter 4-40 of the HHS General Administration Manual, except 
that a waiver request made simultaneously with, or during the pendency 
of a request for review under this section may be referred for a 
decision under the waiver standards to the hearing officer reviewing the 
debt under this section.
    (q) Deductions. Unless an alternative repayment arrangement has been 
accepted, the Secretary may initiate offset 30 days after the date that 
notice of the proposed action was mailed to the debtor if no review or 
hearing is pending, or as soon as practical after a hearing officer's 
decision affirming the debt.
    (r) Protection of the Government's interest. Notwithstanding the 
provisions of paragraphs (j) through (q) of this section, the Secretary 
may take immediate action to delay a lump sum or final payment to the 
debtor whenever such action is necessary to protect the Government's 
ability to recover the debt by offset. The amount withheld may not 
exceed the amount of the debt plus any accrued or anticipated interest, 
administrative cost charges and penalties. The Secretary shall promptly 
send the debtor the notice specified in paragraph (j) of this section. 
The Secretary may not take final action to effect offset of the debt 
from the withheld amount until the procedures required by paragraphs (j) 
through (l) of this section have been exhausted. The appropriate amount 
will be paid to the debtor as soon as practical after the

[[Page 93]]

debt, or a portion of the debt, is found not to be owed.
    (s) Interagency offsets. The Secretary may offset a debt owed to 
another Federal agency from amounts due or payable by the Department to 
the debtor; or request another Federal agency to offset a debt owed to 
the Department. Pursuant to 31 U.S.C. 3720a, Department of the Treasury 
regulations, 26 CFR part 301, and HHS' implementing regulations, 45 CFR 
part 31, the Secretary may seek to offset an overdue debt from a Federal 
income tax refund due the debtor where reasonable attempts to obtain 
payment from the debtor have failed.
    (1) In attempting to collect a debt from an employee of another 
Federal agency by deduction from the debtor's pay, the Secretary will 
follow the procedures set forth in this section. When those procedures 
are exhausted, a written request for offset will be submitted to the 
employing agency. The request will--
    (i) Certify that the debt is valid;
    (ii) Certify the amount and basis of the debt;
    (iii) Certify the date the Government's right to collect the debt 
first accrued;
    (iv) Certify that this section has been approved by OPM;
    (v) Either--
    (A) Certify that the procedures required by this section have been 
complied with;
    (B) Include the employee's written consent to the offset or 
acknowledgment of receipt of the required procedures; or
    (C) If the debt is reduced to judgment, include a copy of the court 
judgment; and
    (vi) Indicate whether collection is to be made in a lump sum or by 
installments and the number, amount and beginning date of the 
installments.
    (2)(i) The Secretary may deduct from an employee's pay a debt owed 
to another Federal agency in accordance with this section. The creditor 
agency must submit the properly certified claim form described in 
paragraph (s)(1) of this section. No deductions will be made until a 
properly completed claim form is received.
    (ii) Before initiating deductions, the Secretary must send the 
employee a letter:
    (A) Transmitting a copy of the creditor agency's request;
    (B) Notifying the employee of the proposed action;
    (C) Instructing the employee to contact the creditor agency 
regarding payment or any dispute of the debt, the certification or the 
proposed collection; and
    (D) Informing the employee of the date that deduction will begin 
(which should be at the next officially established pay interval) and 
that deductions will continue until the debt is paid unless the creditor 
agency directs otherwise.
    (iii) The creditor agency must resolve any disputes concerning the 
debt or the offset and promptly inform the Department of any 
circumstances affecting the collection by offset. The Department may not 
review the merits of the creditor agency's decisions.
    (iv) The Secretary may temporarily withhold lump sum or final leave 
payments to the employee who is in the process of separating or to a 
former employee for no more than 30 days beyond normal processing time 
periods pending certification.
    (v) If the employee subject to salary offset is in the process of 
separating, and is entitled to payment from the Civil Service Retirement 
and Disability Fund, the Secretary will send OPM a copy of the creditor 
agency's original offset request. If the employee transfers to another 
Federal agency, the Secretary will certify in writing the total amount 
collected on the debt and send one copy of the certification to the 
employee and another to the creditor agency, with notice of the 
transfer. A copy of the certification, along with the creditor agency's 
original offset request will be inserted in the employee's official 
personnel folder.
    (vi) When a new Department employee transfers from another Federal 
agency and the employee's official personnel folder contains a creditor 
agency's offset request to the former employing agency and the former 
employing agency's certification of the amount of the debt already 
collected,

[[Page 94]]

the Secretary will resume collection by offset. If either item is 
missing, the creditor agency must comply with paragraph (s)(1).
    (t) Non-waiver of debtor rights by payment. Unless a statute or 
contract provides otherwise, a debtor does not waive any rights under 
law or contract by paying all or part of a debt by offset or cash 
payment.

(Approved by the Office of Management and Budget under control number 
0990-0148)



Sec. 30.16  Use of credit reporting agencies.

    (a) Overdue debts. (1) The Secretary will report overdue debts over 
$100 owed by individuals and all debts over $100 owed by business 
concerns and private non-profit organizations to consumer or commercial 
credit reporting agencies. Except as provided in paragraph (a)(3) of 
this section, beneficiary debts which arise under the Social Security 
Act may be reported under this section.
    (2) Debts owed by individuals, except debts arising under the Social 
Security Act, will be reported to consumer reporting agencies as defined 
in 31 U.S.C. 3701(a)(3) pursuant to 5 U.S.C. 552a(b)(12) and 31 U.S.C. 
3711(f). The Secretary must first give the individual, but not the 
corporate debtor at least 60 days' written notice that the debt is 
overdue and will be reported to a credit reporting agency (including the 
specific information that will be disclosed); that the debtor may 
dispute the accuracy and validity of the information being disclosed; 
and, if a previous opportunity was not provided, that the debtor may 
request review of the debt or rescheduling of payment. The Secretary may 
disclose only the individual's name, address and Social Security number, 
and the nature, amount, status and history of the debt.
    (3) Unless specifically authorized by statute, regulation or written 
agreement, or unless the debts arise from, or involve, fraud or criminal 
activity, overdue debts arising from payments to beneficaries under 
Titles II, XVI and XVIII of the Social Security Act will not be reported 
to credit reporting agencies. All other overdue debts of individuals 
which arise under the Social Security Act may be reported to credit 
reporting agencies subject to the conditions stated in paragraph (a)(2) 
of this section, except that such disclosure would be as a routine use 
under 5 U.S.C. 552a(b)(3), rather than a disclosure under 552a(b)(12).
    (b) Credit reports and locator services. The Secretary may also use 
credit reporting agencies to obtain credit reports to evaluate the 
financial status of loan applicants and potential contractors and 
grantees; to obtain credit reports when collecting or disposing of debts 
to determine a debtor's ability to repay a debt; and to locate debtors. 
In the case of an individual, the Secretary may disclose, as a routine 
use under 5 U.S.C. 552a(b)(3), only the individual's name, address, 
Social Security number and the purpose for which the information will be 
used.
    (c) Disclosures pertaining to individuals may be made to credit 
reporting agencies generally from the primary systems of records 
containing information about the debt or the loan, contract or grant 
application.
    (d) Addresses obtained from the Internal Revenue Service may be 
disclosed to credit reporting agencies only to obtain credit reports 
(see Sec. 30.21).



Sec. 30.17  Contracting for collection services.

    (a) Rule. Except as provided in paragraph (b) of this section, the 
Secretary may contract for collection services to recover outstanding 
debts and may pay the contractor's fee from the amounts collected, from 
funds specifically available for that purpose, or from a revolving fund. 
The amount of the fee must be consistent with prevailing commercial 
practice. The Secretary may contract for collection services only if 
reasonable in-house collection efforts and remedies were, or are likely 
to be, unsuccessful or not feasible; and the total amount of anticipated 
recoveries exceeds the total cost of the contract and incidental 
expenses. The Secretary must retain the authority to resolve disputes, 
compromise debts, terminate collection action (or recommend such action 
to the Department of Justice) and refer debts to the Department of 
Justice for litigation. Contracts for collection services must conform 
to the standards set forth in the Federal

[[Page 95]]

and Departmental Acquisitions Regulations at 48 CFR, Chapters 1 and 3. 
The Secretary may disclose to the contractor the information about 
debtors necessary to accomplish the purpose of the contract. The 
contractor must provide any data from its files relating to the account 
to the Secretary upon request or upon return of the account. The 
contractor will be subject to the Privacy Act of 1974, as amended, as 
specified in 5 U.S.C. 552a(m), and to applicable Federal and State laws 
and regulations regarding debt collection practices, including the Fair 
Debt Collection Practices Act, 15 U.S.C. 1692. The contractor will be 
strictly accountable for all amounts collected.
    (b) Social Security Act debts. (1) A contractor's fee for collecting 
debts arising under the Social Security Act may be paid from any funds 
available for that purpose, but not from the amounts collected unless 
those amounts belong to a revolving fund.
    (2) Unless specifically authorized by statute, regulation or written 
agreement, or unless the debts arise from, or involve, fraud or criminal 
activity, debts arising from payments to beneficiaries under Titles II, 
XVI and XVIII of the Social Security Act will not be referred to private 
collection agencies for collection.



Sec. 30.18  Liquidation of collateral.

    If the Secretary holds a security instrument with a power of sale or 
has physical possession of collateral, the Secretary will liquidate the 
security or collateral when it is cost-effective to do so and apply the 
proceeds to an overdue debt. The Secretary will give the debtor 
reasonable notice of the sale and an accounting of any surplus proceeds 
and will comply with other requirements under law or contract.



Sec. 30.19  Installment payments.

    The Secretary may enter into a written agreement with a debtor for 
payment of a debt in regular installments if payment in one lump sum, 
either by cash or offset, will cause the debtor extreme financial 
hardship. The debtor must submit sufficient information to determine his 
or her ability to pay. A request by a debtor for installment payment 
will delay initiation of offset under Sec. 30.15 only if the request is 
in writing, is accompanied by a statement with supporting documents 
indicating how the proposed offset would cause extreme financial 
hardship and, unless an extension is granted for good cause, is received 
by the Secretary no later than 15 days (unless otherwise provided by 
statute or regulation) from the date that notice of the proposed offset 
was mailed to the debtor. The Secretary will consider factors such as 
the amount of the debt, the length of the proposed repayment period, 
whether the debtor is willing to sign a confess-judgment note or give 
collateral, past dealings with the debtor and documentation indicating 
that the offset will cause the debtor extreme financial hardship and 
that the debtor will be financially capable of adhering to the terms of 
the agreement. The size and frequency of the payments will reasonably 
relate to the size of the debt and the debtor's present and future 
ability to pay. Whenever feasible, the installment agreement will 
provide for full payment of the debt, including interest and charges, in 
three years or less, and include a security or confess judgment 
provision. The full balance, including accrued interest, charges and 
penalties, will be immediately due and payable if the debtor defaults on 
any installment made pursuant to a repayment agreement. Interest under 
installment agreements will be payable at the applicable rate as 
provided in Sec. 30.13. When a debtor owes several debts and does not 
designate how an installment payment should be applied as among the 
various debts, the payment will be applied in accordance with Sec. 
30.15(f).

(Approved by the Office of Management and Budget under control number 
0990-0148)



Sec. 30.20  Taxpayer information.

    (a) The Secretary shall enter into reimbursable agreements with the 
Internal Revenue Service in accordance with IRS Revenue Procedure 83-29, 
26 CFR 601.702, to obtain the current mailing addresses of debtors and 
to find out whether applicants under included Federal loan programs have 
overdue tax accounts.
    (b) ``Included Federal loan program'' means any program under which 
the

[[Page 96]]

Department makes, guarantees or insures loans and which appears in the 
current list of included Federal loan programs published by the Director 
of the Office of Management and Budget in the Federal Register. An 
applicant for a loan under an included Federal loan program administered 
by the Department must furnish his or her taxpayer identification 
number, which, for an individual, means the Social Security number.
    (c) Tax delinquency information may not be redisclosed or used for 
any other purpose. Addresses obtained from the Internal Revenue Service 
may be used by the Department, its officers, employees, agents or 
contractors and other Federal agencies to collect or dispose of debts, 
but may be disclosed to consumer reporting agencies only to obtain 
credit reports, unless otherwise independently verified.



Sec. 30.21  Army hold-up list.

    The Secretary may use the Army hold-up list to report indebted 
contractors to the Department of the Army for inclusion in the list and 
to check whether a prospective contractor is indebted to another agency. 
The reported information will be limited to the contractor's name, 
address and taxpayer identification number if available, and the amount 
of the debt. The Secretary will promptly report any partial or full 
satisfaction or waiver of a reported debt and will screen the hold-up 
list periodically and request removal of any debt of less than $1,000 
that has been on the list for over twelve months.



                     Subpart C_Compromise of Claims



Sec. 30.22  Compromise rule.

    The Secretary may attempt to dispose of debts, including accrued 
interest, charges and penalties, by compromise settlement whenever the 
Department's ability to collect the full amount is uncertain because of 
the debtor's financial status or the litigation risks or because 
enforced collection would not be cost-effective. When the outstanding 
principal amount of the debt before compromise exceeds $20,000 and the 
debtor has exhausted all Departmental administrative remedies, the debt 
may be compromised only with the approval of the Department of Justice.



Sec. 30.23  Exceptions.

    The Secretary may not compromise debts--
    (a) Which arise out of exceptions made by the General Accounting 
Office in the accounts of accountable officers (only the General 
Accounting Office has authority to compromise such debts); or
    (b) Where there is an indication of fraud, the presentation of a 
false claim or misrepresentation by the debtor or any other party having 
an interest in the claim, or where the claim is based on conduct in 
violation of antitrust laws. (Only the Department of Justice has 
authority to compromise or terminate collection of these claims.)



Sec. 30.24  Inability to collect the full amount.

    (a) The Secretary may compromise a debt if the full amount cannot be 
collected because the debtor--
    (1) Is unable to pay the full amount within a reasonable time; or
    (2) Refuses to pay the full amount and the Government is unable to 
enforce full collection within a reasonable time.
    (b) Ability to pay. In determining a debtor's ability to pay, the 
Secretary may consider the age and health of the individual debtor; 
present and future income and assets; and the possibility of an improper 
transfer or concealment of assets by the debtor.
    (c) Amount of compromise. The amount of compromise will reasonably 
relate to the amount recoverable by enforced action, considering such 
factors as State or Federal exemptions available to the debtor, and the 
price that collateral will bring at a forced sale.
    (d) Installments. Compromises will be paid in one lump sum whenever 
possible. Payment by installments may be accepted on a case-by-case 
basis bearing in mind the conditions specified in Sec. 30.20.
    (e) Credit information. If reasonably up-to-date credit information 
to evaluate a compromise proposal is not available, the Secretary may 
obtain credit reports from credit reporting agencies

[[Page 97]]

or a statement from the debtor executed under penalty of perjury showing 
the debtor's assets and liabilities, income and expenses.



Sec. 30.25  Litigative probabilities.

    The Secretary may compromise a debt if the Government's ability to 
prove its case in court for the full amount claimed is doubtful either 
because of the legal issues involved or a bona fide dispute as to the 
facts. The amount accepted in compromise in such cases should fairly 
reflect the probability of prevailing on the issues and the prospects 
for full or partial recovery of a judgment, paying due regard to the 
availability of evidence and witnesses, and related pragmatic 
considerations.



Sec. 30.26  Cost of collecting claim.

    The Secretary may compromise a debt if the cost or deterrence value 
of collection do not justify the enforced collection of the full amount. 
The amount accepted in compromise in such cases may reflect an 
appropriate discount for the administrative and litigative costs of 
collection, taking into account the time which it will take to effect 
collection. Costs of collection may be a substantial factor in the 
settlement of small debts, but not normally in the settlement of large 
debts.



Sec. 30.27  Enforcement policy.

    Statutory penalties, forfeitures, or debts established as an aid to 
enforcement and to compel compliance may be compromised if not 
prohibited by law and consistent with the agency's enforcement policy.



Sec. 30.28  Joint and several liability.

    When two or more debtors are jointly and severally liable, a 
compromise with one debtor will not release the remaining debtors. The 
amount of a compromise with one debtor will not be considered a 
precedent or binding in determining the amount which will be required 
from other debtors jointly and severally liable on the debt.



Sec. 30.29  Further review of compromise offers.

    A debtor's firm written offer of compromise for a substantial amount 
may be referred to the General Accounting Office or to the Department of 
Justice when the acceptability of the offer is in doubt. (See 30.36).



Sec. 30.30  Restriction.

    The Secretary may not accept a percentage of a debtor's profits or 
stock in a debtor corporation in compromise of a debt.



        Subpart D_Termination or Suspension of Collection Action



Sec. 30.31  Termination rule.

    (a) The Secretary may terminate collection activity and write off a 
debt, including accrued interest, charges and penalties if the 
outstanding principal does not exceed $20,000 and:
    (1) The Government cannot collect or enforce collection of any 
significant sum from the debtor, having due regard for the judicial 
remedies available to the Government, the debtor's ability to pay (see 
Sec. 30.25(b)) and the exemptions available to the debtor under State 
and Federal law;
    (2) The debtor cannot be located, there is no security remaining to 
be liquidated, the applicable statute of limitations has run, and the 
prospects of collecting by offset are too remote to justify retention of 
the claim;
    (3) The cost of further collection action is likely to exceed the 
recoverable amount;
    (4) The basis for the claim has proved to be unsupportable; or
    (5) The evidence necessary to prove the claim cannot be produced or 
the necessary witnesses are unavailable.
    (b) As required by section 61(a)(2) of the Internal Revenue Code, 
income arising from the discharge in whole or in part of a debt is to be 
included in the debtor's gross income for the year in which the debt is 
discharged. The Secretary will report to the Internal Revenue Service, 
using Form 1099G, any amount over $600 which becomes uncollectible 
because the applicable statute of limitations expires or because the 
Government agrees with the

[[Page 98]]

debtor to forgive or compromise a debt. An amount which is in dispute, 
which is discharged under Title 11 of the Bankruptcy Act or which arises 
out of an overpayment which was already taxed, will not be reported. See 
IRS Instructions for Form 1096 and Revenue Procedure 83-48 for further 
instructions.



Sec. 30.32  Exceptions.

    (a) The Secretary may suspend, rather than terminate collection of a 
debt that arises out of its activities if the outstanding principal does 
not exceed $20,000 and the Government cannot collect or enforce 
collection of any significant sum from the debtor (e.g., the debtor 
cannot be located or is financially unable to pay), but the prospects of 
future collection are promising enough to justify periodic review of the 
debt, and there is no statute of limitations problem. Interest will 
accrue under Sec. 30.13(a).
    (b) Where a significant enforcement policy is involved, the 
Secretary will, instead of terminating or suspending collection, refer 
debts to the Department of Justice for litigation.



         Subpart E_Referrals to the Department of Justice or GAO



Sec. 30.33  Litigation.

    (a) Debts over $600 that cannot be collected or otherwise disposed 
of by the Secretary or its agents will be referred to the appropriate 
United States Attorney (if the amount does not exceed $100,000) or the 
Civil Division of the Department of Justice (if the amount exceeds 
$100,000) for litigation. Each referral will include all pertinent 
information, as required by the Claims Collection Litigation Report, 
including:
    (1) The most current address of the debtor or the name and address 
of the agent for a corporation upon whom service may be made;
    (2) Reasonably current credit data in the form of a credit report or 
a financial statement showing reasonable prospects of enforcing 
collection from the debtor, having due regard for the exemptions 
available to the debtor under State and Federal law and the judicial 
remedies available to the Government; and
    (3) A summary of prior collection efforts. Credit data may be 
omitted if a surety bond, insurance, or the sale of collateral will 
satisfy the claim in full; or the debtor is in bankruptcy or 
receivership, or is a unit of State or local government.
    (b) Debts of $600 or less, exclusive of interest and charges, may be 
referred for litigation if a significant enforcement policy is involved 
or the debtor is clearly able to pay and the Government can effectively 
enforce payment.



Sec. 30.34  Claims over $20,000.

    The Secretary may compromise or suspend or terminate collection of 
debts where the outstanding principal exceeds $20,000 only with the 
approval of, or referral to, the appropriate United States Attorney (if 
the debt does not exceed $100,000) or the Department of Justice (if the 
debt exceeds $100,000).



Sec. 30.35  GAO exceptions.

    The Secretary will refer to the General Accounting Office (GAO) 
debts arising from GAO audit exceptions.



PART 31_TAX REFUND OFFSET--Table of Contents




Sec.
31.1 Purpose and scope.
31.2 Definitions.
31.3 General rule.
31.4 Certification and referral of debt.
31.5 Notice.
31.6 Review of Departmental records.
31.7 Review of a determination that a debt is past-due and legally 
          enforceable.

    Authority: 31 U.S.C. 3720A, 31 CFR 285.2, E.O. 12866, E.O. 13258.

    Source: 68 FR 70445, Dec. 18, 2003, unless otherwise noted.



Sec. 31.1  Purpose and scope.

    (a) Purpose. This part prescribes the Department's standards and 
procedures for submitting past-due, legally enforceable debts to the 
Department of the Treasury for collection by tax refund offset.
    (b) Authority. These standards and procedures are authorized under 
the tax refund offset provision of the Deficit Reduction Act of 1984, as 
amended

[[Page 99]]

by the Debt Collection Improvement Act of 1996, codified at 31 U.S.C. 
3720A, and the implementing regulations issued by the Department of the 
Treasury at 31 CFR 285.2.
    (c) Scope. (1) This part applies to all Departmental Operating 
Divisions and Regional Offices that administer a program that gives rise 
to a past-due non-tax debt owed to the United States, and to all 
officers or employees of the Department authorized to collect such debt. 
This part does not apply to any debt or claim owed to the Department of 
Health and Human Services by another Federal agency.
    (2) Nothing in this part precludes the Department from pursuing 
other debt collection procedures, including administrative wage 
garnishment under part 32 of this title, to collect a debt that has been 
submitted to the Department of the Treasury under this part. The 
Department may use such debt collection procedures separately or in 
conjunction with the offset collection procedures of this part.



Sec. 31.2  Definitions.

    In this part, unless the context otherwise requires:
    Administrative offset means withholding funds payable by the United 
States (including funds payable by the United States on behalf of a 
State government) to, or held by the United States for, a person to 
satisfy a claim.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, Sunday, or a 
Federal legal holiday, in which case the next business day will be 
considered the last day of the period.
    Debt or claim means an amount of money, funds, or other property 
determined by an appropriate official to be owed to the United States 
from any individual, entity, organization, association, partnership, 
corporation, or State or local government or subdivision, except another 
Federal agency.
    Debtor means an individual, organization, association, partnership, 
corporation, or State or local government or subdivision indebted to the 
Government, or the person or entity with legal responsibility for 
assuming the debtor's obligation.
    Department means the Department of Health and Human Services, and 
each of its Operating Divisions and regional offices.
    Evidence of service means information retained by the Department 
indicating the nature of the document to which it pertains, the date of 
mailing of the document, and the address and name of the debtor to whom 
it is being sent. A copy of the dated and signed written notice of 
intent to offset provided to the debtor pursuant to this part may be 
considered evidence of service for purposes of this regulation. Evidence 
of service may be retained electronically so long as the manner of 
retention is sufficient for evidentiary purposes.
    FMS means the Financial Management Service, a bureau within the 
Department of the Treasury.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Legally enforceable means that there has been a final agency 
determination that the debt, in the amount stated, is due and there are 
no legal bars to collection action.
    Operating division means each separate component, within the 
Department of Health and Human Services, including, but not limited to, 
the Administration for Children and Families, Administration on Aging, 
the Centers for Disease Control and Prevention, the Centers for Medicare 
& Medicaid Services, the Food and Drug Administration, the National 
Institutes of Health, and the Office of the Secretary.
    Past-due debt means a debt which the debtor does not pay or 
otherwise resolve by the date specified in the initial demand for 
payment, or in an applicable written repayment agreement or other 
instrument, including a post-delinquency repayment agreement.
    Secretary means the Secretary of the Department of Health and Human 
Services, or the Secretary's designee within any Operating Division or 
Regional Office.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying

[[Page 100]]

number is the individual's social security number.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed to the United States by 
the payee(s) of a tax refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402 for any liabilities 
for any tax on the part of the person who made the overpayment.



Sec. 31.3  General rule.

    (a) Any past-due, legally enforceable debt of at least $25, or such 
other minimum amount as determined by the Secretary of the Treasury, 
shall be submitted to FMS for collection by tax refund offset.
    (b) FMS will compare tax refund payment records, as certified by the 
IRS, with records of debts submitted by the Department under this part. 
A match will occur when the taxpayer identification number and name of a 
payment certification record are the same as the taxpayer identifying 
number and name control of a debtor record. When a match occurs and all 
other requirements for tax refund offset have been met, FMS will reduce 
the amount of any tax refund payment payable to a debtor by the amount 
of any past-due legally enforceable debt. Any amounts not offset will be 
paid to the payee(s) listed in the payment certification record.



Sec. 31.4  Certification and referral of debt.

    (a) Certification. The Secretary shall certify to FMS that:
    (1) The debt is past-due and legally enforceable in the amount 
submitted and that the Department will ensure that collections are 
properly credited to the debt;
    (2) Except in the case of a judgment debt or as otherwise allowed by 
law, the debt is referred within ten (10) years after the Department's 
right of action accrues;
    (3) The Department has made reasonable efforts to obtain payment of 
the debt, and has:
    (i) Submitted the debt to FMS for collection by offset and complied 
with the administrative offset provision of 31 U.S.C. 3716(a) and 
related regulations, to the extent that collection by administrative 
offset is not prohibited by statute;
    (ii) Notified, or made a reasonable attempt to notify, the debtor 
that the debt is past-due, and unless paid within 60 days of the date of 
the notice, the debt may be referred to Treasury for tax refund offset. 
For purposes of this regulation, the Department has made a reasonable 
attempt to notify the debtor if the agency uses the current address 
information contained in the Department's records related to the debt. 
If address validation is desired or necessary, the Department may obtain 
information from the IRS pursuant to 26 U.S.C. 6103(m)(2)(4) or (5).
    (iii) Given the debtor at least 60 days to present evidence that all 
or part of the debt is not past-due or not legally enforceable, 
considered any evidence presented by the debtor, and determined that the 
debt is past-due and legally enforceable; and
    (iv) Provided the debtor with an opportunity to make a written 
agreement to repay the debt; and
    (4) The debt is at least $25.
    (b) Referral. (1) The Secretary shall submit past-due, legally 
enforceable debt information for tax refund offset in the time and 
manner prescribed by the Department of the Treasury.
    (2) For each debt referred under this part, the Secretary will 
include the following information:
    (i) The name and taxpayer identifying number, as defined in 26 
U.S.C. 6109, of the debtor responsible for the debt;
    (ii) The amount of such past-due and legally enforceable debt;
    (iii) The date on which the debt became past-due; and
    (iv) The designation of the Department referring the debt.
    (c) Correcting and updating referral. (1) After referring a debt 
under this part, the Secretary shall promptly notify the Department of 
the Treasury if:
    (i) An error was made with respect to information transmitted to the 
Department of the Treasury;

[[Page 101]]

    (ii) The Department receives a payment or credits a payment to the 
account of a debtor referred for tax refund offset; or
    (iii) The debt amount is otherwise incorrect.
    (2) The Department shall provide the certification required under 
paragraph (a) of this section for any increases to amounts owed.
    (d) Rejection of certification. If the Department of Treasury 
rejects a certification because it does not comply with the requirements 
of paragraph (a) of this section, upon notification of the rejection and 
the reason(s) for rejection, the Secretary will resubmit the debt with a 
corrected certification.



Sec. 31.5  Notice.

    (a) Requirements. If not previously included in the initial demand 
letter provided under section 30.11, at least 60 days before referring a 
debt for tax refund offset, the Secretary shall mail, by first class 
mail to the debtor's last known address, written notice informing the 
debtor of:
    (1) The nature and amount of the debt;
    (2) The determination that the debt is past-due and legally 
enforceable, and unless paid within 60 days after the date of the 
notice, the Secretary intends to enforce collection by referring the 
debt the Department of the Treasury for tax refund offset; and
    (3) The debtor's rights to:
    (i) Inspect and copy Department records relating to the debt;
    (ii) Enter into written agreement to repay the amount of the debt;
    (iii) Request review and present evidence that all or part of the 
debt is not past-due or not legally enforceable.
    (b) The Secretary will retain evidence of service indicating the 
date of mailing of the notice. The notice may be retained electronically 
so long as the manner of retention is sufficient for evidentiary 
purposes



Sec. 31.6  Review of Departmental records.

    (a) To inspect or copy Departmental records relating to the debt, 
the debtor must send a written request to the address designated in the 
notice described in section 31.5. The request must be received by the 
Department within 60 days from the date of the notice.
    (b) In response to a timely request as described in paragraph (a) of 
this section, the designated Department official shall notify the debtor 
of the location and time when the debtor may inspect and copy such 
records. If the debtor is unable to personally inspect such records as 
the result of geographical or other constraints, the Department will 
arrange to send copies of the records to the debtor.



Sec. 31.7  Review of a determination that a debt is past-due and legally 
enforceable.

    (a) Requesting a review. (1) If the debtor believes that all or part 
of the debt is not past-due or not legally enforceable, the debtor may 
request a review by the Department by sending a written request to the 
address provided in the notice. The written request must be received by 
the Department within 60 days from the date of the notice or, if the 
debtor has requested to inspect the records, within 30 days from the 
debtor's inspection of the records or the Department's mailing of the 
records under section 31.6(b), whichever is later.
    (2) The request for review must be signed by the debtor, state the 
amount disputed, and fully identify and explain the evidence that the 
debtor believes supports the debtor's position. The debtor must submit 
with the request any documents that the debtor wishes to be considered, 
or the debtor must state in the request that additional information will 
be submitted within the above specified time period.
    (3) Failure to timely request a review will be deemed an admission 
by the debtor that the debt is past-due and legally enforceable, and 
will result in a referral of the debt to the Department of the Treasury 
without further action.
    (b) Review. Upon the timely submission of evidence by the debtor, 
the Department shall review the dispute and shall consider its records 
and any documentation and evidence submitted by the debtor. The 
Department shall make a determination based on the review of the written 
record, and shall send a written notice of its decision to the

[[Page 102]]

debtor. There is no administrative appeal of this decision.
    (c) A debt that previously has been reviewed pursuant to this part, 
or that has been reduced to a judgment, will not be reconsidered under 
this part unless the evidence presented by the debtor disputes payments 
made or events occurring subsequent to the previous review or judgment.



PART 32_ADMINISTRATIVE WAGE GARNISHMENT--Table of Contents




Sec.
32.1 Purpose and scope.
32.2 Definitions.
32.3 General rule.
32.4 Notice.
32.5 Hearing.
32.6 Withholding order.
32.7 Certification by employer.
32.8 Amounts withheld.
32.9 Financial hardship.
32.10 Refunds.
32.11 Ending garnishment.
32.12 Right of action.

    Authority: 31 U.S.C. 3720D, 5 U.S.C. 552, 553, E.O. 12866, 12988, 
13808.

    Source: 68 FR 15093, Mar. 28, 2003, unless otherwise noted.



Sec. 32.1  Purpose and scope.

    (a) Purpose. This part prescribes the standards and procedures for 
the Department to collect money from a debtor's disposable pay by means 
of administrative wage garnishment to satisfy delinquent non-tax debts 
owed to the United States.
    (b) Authority. These standards and procedures are authorized under 
the wage garnishment provisions of the Debt Collection Improvement Act 
of 1996, codified at 31 U.S.C. 3720D, and the Department of the Treasury 
Administrative Wage Garnishment Regulations at 31 CFR 285.11.
    (c) Scope. (1) This part applies to all Departmental Operating 
Divisions and Regional Offices that administer a program that gives rise 
to a delinquent non-tax debt owed to the United States and to all 
officers or employees of the Department authorized to collect such debt.
    (2) This part shall apply notwithstanding any provision of State 
law.
    (3) Nothing in this part precludes the compromise of a debt or the 
suspension or termination of collection action in accordance with part 
30 of this title, or other applicable law or regulation.
    (4) The receipt of payments pursuant to this part does not preclude 
the Department from pursuing other debt collection remedies, including 
the offset of Federal payments to satisfy delinquent non-tax debt owed 
to the United States. The Department may pursue such debt collection 
remedies separately or in conjunction with administrative wage 
garnishment.
    (5) This part does not apply to the collection of delinquent non-tax 
debts owed to the United States from the wages of Federal employees from 
their Federal employment. Federal pay is subject to the Federal salary 
offset procedures set forth in 5 U.S.C. 5514 and other applicable laws.
    (6) Nothing in this part requires the Department to duplicate 
notices or administrative proceedings required by contract or other laws 
or regulations.



Sec. 32.2  Definitions.

    In this part, unless the context otherwise requires:
    Business day means Monday through Friday. For purposes of 
computation, the last day of the period will be included unless it is a 
Federal legal holiday, in which case the next business day following the 
holiday will be considered the last day of the period.
    Certificate of service means a certificate signed by an employee of 
the Department indicating the nature of the document to which it 
pertains, the date of mailing of the document, and to whom it is being 
sent.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, Sunday, or a 
Federal legal holiday, in which case the next business day will be 
considered the last day of the period.
    Debt or claim means an amount of money, funds, or property that has 
been determined by the Secretary to be owed to the United States by an 
individual, including debt administered by a third party as an agent of 
the Federal Government. A debt or claim includes, but is not limited to: 
amounts owed on

[[Page 103]]

account of loans made, insured or guaranteed by the Federal Government, 
including any deficiency or difference between the price obtained by the 
Federal Government upon selling the property and the amount owed to the 
Federal Government; overpayments to program beneficiaries; any amount 
the Federal Government is authorized by statute to collect for the 
benefit of any person; the unpaid share of any non-Federal partner in a 
program involving a Federal payment, including a matching or cost-
sharing payment of the non-Federal partner; any fine, civil penalty or 
assessment; and other amounts or money or property owed to the Federal 
Government.
    Debtor means an individual who owes a delinquent non-tax debt to the 
United States.
    Delinquent debt means any non-tax debt that has not been paid by the 
date specified in the Department's initial written demand for payment, 
or applicable payment agreement or instrument, unless other satisfactory 
payment arrangements have been made. For purposes of this part, 
``delinquent'' and ``overdue'' have the same meaning.
    Department means the United States Department of I-Iealth and 1--
luman Services, including each of its Operating Divisions and Regional 
Offices.
    Disposable pay means that part of the debtor's compensation 
(including, but not limited to, salary, bonuses, commissions, and 
vacation pay) from an employer remaining after the deduction of health 
insurance premiums and any amounts required by law to be withheld. For 
purposes of this part, ``amounts required by law to be withheld'' 
include amounts for deductions such as social security taxes and 
withholding taxes, but do not include any amount withheld pursuant to a 
court order.
    Employer means a person or entity that employs the services of 
others and that pays their wages or salaries. The term employer 
includes, but is not limited to, State and local Governments, but does 
not include an agency of the Federal Government as defined by 31 CFR 
285.11(c).
    Garnishment means the process of withholding amounts from an 
employee's disposable pay and paying those amounts to a creditor in 
satisfaction of a withholding order.
    Hearing means a review of the documentary evidence concerning the 
existence or amount of a debt, or the terms of a repayment schedule, 
provided such repayment schedule is established other than by a written 
agreement entered into pursuant to this part. If the hearing official 
determines that the issues in dispute cannot be resolved solely by 
review of the written record, such as when the validity of the debt 
turns on the issue of credibility or veracity, an oral hearing may be 
provided.
    Hearing official means any qualified individual, as determined by 
the Secretary, including a Departmental Appeals Board administrative law 
judge.
    Secretary means the Secretary of Health and Human Services, or the 
Secretary's designee within the Department.
    Withholding order for purposes of this part means ``Wage Garnishment 
Order (SF329B).'' Also for purposes of this part, the terms ``wage 
garnishment order'' and ``garnishment order'' have the same meaning as 
``withholding order.''



Sec. 32.3  General rule.

    (a) Except as provided in paragraph (b) of this section, whenever a 
delinquent debt is owed by an individual, the Secretary, or another 
federal agency collecting a debt on the Department's behalf (See 45 CFR 
part 30), may initiate proceedings administratively to garnish the wages 
of the delinquent debtor.
    (b) The Secretary may not garnish the wages of a debtor who the 
Secretary knows has been involuntarily separated from employment until 
the debtor has been re-employed continuously for at least 12 months. The 
debtor has the burden of informing the Secretary of the circumstances 
surrounding an involuntary separation from employment.



Sec. 32.4  Notice.

    (a) Notice requirements. At least 30 days before the initiation of 
garnishment proceedings, the Secretary shall

[[Page 104]]

mail, by first class mail, to the debtor's last known address a written 
notice informing the debtor of:
    (1) The nature and amount of the debt;
    (2) The intention of the Secretary to initiate proceedings to 
collect the debt through deductions from pay until the debt and all 
accumulated interest, penalties, and administrative costs are paid in 
full;
    (3) The debtor's right--
    (i) To inspect and copy Department records related to the debt;
    (ii) To enter into a written repayment agreement with the Department 
under terms agreeable to the Department;
    (iii) To a hearing, in accordance with Sec. 32.5, concerning the 
existence or the amount of the debt or the terms of the proposed 
repayment schedule under the garnishment order, except that the debtor 
is not entitled to a hearing concerning the proposed repayment schedule 
if the terms were established by written agreement pursuant to paragraph 
(a)(3)(ii) of this section; and
    (4) The time frames within which the debtor may exercise his or her 
rights.
    (b) The Secretary will keep a copy of the dated notice. The notice 
may be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.



Sec. 32.5  Hearing.

    (a) In general. Upon timely written request of the debtor, the 
Secretary shall provide a hearing, which at the Department's option may 
be oral or written, concerning the existence or amount of the debt, or 
the terms of a repayment schedule established other than by written 
agreement under Sec. 32.4(a)(3)(ii).
    (b) Request for hearing. (1) The request for a hearing must be 
signed by the debtor, state each issue being disputed, and identify and 
explain with reasonable specificity all facts and evidence that the 
debtor believes supports the debtor's position. Supporting documentation 
identified by the debtor should be attached to the request.
    (2) Effect of timely request. Subject to paragraph (j) of this 
section, if the debtor's written request is received on or before the 
15th business day following the mailing of the written notice required 
under this part, a withholding order shall not be issued under Sec. 
32.6 until the debtor has been provided the requested hearing and a 
decision in accordance with paragraphs (g) and (h) of this section has 
been rendered.
    (3) Failure to timely request a hearing. If the debtor's written 
request is received after the 15th business day following the mailing of 
the written notice required under this part, the Secretary shall provide 
a hearing to the debtor. However, the Secretary shall not delay the 
issuance of a withholding order unless the Secretary determines that the 
delay in submitting such request was caused by factors beyond the 
control of the debtor, or the Secretary receives information that the 
Secretary determines justifies a delay or cancellation of the 
withholding order.
    (c) Oral hearing. (1) For purposes of this section, a debtor shall 
be provided a reasonable opportunity for an oral hearing when the 
hearing official determines that the issues in dispute cannot be 
resolved by review of the documentary evidence, such as when the 
validity of the claim turns on the issue of credibility or veracity.
    (2) If the hearing official determines an oral hearing is 
appropriate, the hearing official will establish the date, time and 
location of the hearing. At the debtor's option, the oral hearing may be 
conducted in person or by telephone conference. The hearing official 
will notify the debtor of the date, time, and in the case of an in-
person hearing, the location of the hearing. All travel expenses 
incurred by the debtor in connection with an in-person hearing will be 
borne by the debtor.
    (d) Paper hearing. (1) If the hearing official determines an oral 
hearing is not required by this section, the hearing official shall 
afford the debtor a paper hearing, that is, the issues in dispute will 
be decided based upon a review of the written record.
    (2) The hearing official shall notify the debtor of the deadline for 
the submission of additional evidence if necessary for a review of the 
record.
    (e) Burden of proof. (1) The Secretary has the initial burden of 
proving the existence or amount of the debt.

[[Page 105]]

    (2) Thereafter, if the debtor disputes the existence or amount of 
the debt, the debtor must present by a preponderance of the evidence 
that no debt exists or that the amount is incorrect. When challenging 
the terms of a repayment schedule, the debtor must establish by a 
preponderance of the evidence that the terms of the repayment schedule 
are unlawful, would cause financial hardship to the debtor, or that 
collection of the debt may not be pursued due to operation of law.
    (f) Record. The hearing official shall maintain a summary record of 
any hearing provided under this part. A hearing is not required to be a 
formal evidentiary-type hearing, but witnesses who testify in an oral 
hearing must do so under oath or affirmation.
    (g) Date of decision. (1) The hearing official shall issue a written 
decision, as soon as practicable, but no later than sixty (60) days 
after the date on which the request for the hearing was received by the 
Department.
    (2) If the hearing official is unable to provide the debtor with a 
hearing and render a decision within 60 days after the receipt of the 
request for such hearing:
    (i) A withholding order may not be issued until the hearing is held 
and a decision is rendered; or
    (ii) A withholding order previously issued to the debtor's employer 
must be suspended beginning on the 61st day after the receipt of the 
hearing request and continuing until a hearing is held and a decision is 
rendered.
    (h) Content of decision. The written decision shall include:
    (1) A summary of the facts presented;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedule, if applicable.
    (i) Final agency action. The hearing official's decision will be the 
final agency action for the purposes of judicial review under the 
Administrative Procedure Act. 5 U.S.C. 701 et seq.
    (j) Failure to appear. In the absence of good cause shown, a debtor 
who fails to appear at a hearing will be deemed as not having timely 
filed a request for a hearing.



Sec. 32.6  Withholding order.

    (a) Unless the Secretary receives information that the Secretary 
determines justifies a delay or cancellation of a withholding order, the 
Secretary shall send, by first class mail, an SF-329A ``Letter to 
Employer & Important Notice to Employer,'' an SF-329B ``Wage Garnishment 
Order,'' an SF-329C ``Wage Garnishment Worksheet,'' and an SF-329D 
``Employer Certification,'' to the debtor's employer within 30 days 
after the debtor fails to make a timely request for a hearing, i.e., 
within 15 business days after mailing the notice required under this 
part, or, if the timely request for a hearing is made by the debtor, 
within 30 days after a final decision is made by the Secretary to 
proceed with garnishment.
    (b) The Secretary shall keep a copy of the dated letter to the 
employer and a copy of the wage garnishment order. The certificate of 
service may be retained electronically so long as the manner of 
retention is sufficient for evidentiary purposes.



Sec. 32.7  Certification by employer.

    The employer must complete and return the SF-329D, ``Employer 
Certification'' to the Department within 20 days of receipt.



Sec. 32.8  Amounts withheld.

    (a) After receipt of a withholding order issued under this part, the 
employer shall deduct from all disposable pay paid to the debtor during 
each pay period the amount of garnishment described in paragraph (b) of 
this section. The employer may use the SF-329C ``Wage Garnishment 
Worksheet'' to calculate the amount to be deducted from the debtor's 
disposable pay.
    (b) Subject to paragraphs (c) and (d) of this section, the amount of 
garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (2) The amount set forth in 15 U.S.C. 1673(a)(2) (Maximum allowable 
garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the amount 
by which a debtor's disposable pay exceeds an amount equivalent to 
thirty times the minimum wage. See 29 CFR 870.10.

[[Page 106]]

    (c)(1) Except as provided in paragraph (c)(2) of this section, when 
a debtor's pay is subject to multiple withholding orders, unless 
otherwise provided by Federal law, withholding orders issued pursuant to 
this part shall have priority over other withholding orders that are 
served later in time.
    (2) Notwithstanding the foregoing, withholding orders for family 
support shall have priority over withholding orders issued under this 
part.
    (3) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this part, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to a withholding order issued under this part shall be the 
lesser of:
    (i) The amount calculated under paragraph (b) of this section, or
    (ii) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (d) If the debtor owes more than one debt to the Department, the 
Secretary may issue multiple withholding orders provided that the total 
amount garnished from the debtor's pay for such orders does not exceed 
the amount set forth in paragraph (b) of this section.
    (e) An amount greater than that set forth in paragraphs (b) or (c) 
of this section may be withheld upon the written consent of the debtor.
    (f) The employer shall promptly pay to the Department all amounts 
withheld in accordance with the withholding order issued pursuant to 
this part.
    (g) The employer is not required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (h) Any assignment or allotment by an employee shall be void to the 
extent it interferes with or prohibits execution of the withholding 
order issued under this part, except for any assignment or allotment 
made pursuant to a family support judgment or order.
    (i) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the Secretary to discontinue wage withholding.
    (j) The withholding order, SF-329B ``Wage Garnishment Order,'' sent 
to the employer under Sec. 32.6, requires the employer to commence wage 
withholding on the first pay day after the employer receives the order. 
However, if the first pay day is within 10 days after receipt of the 
order, the employer may begin deductions on the second pay day.
    (k) An employer may not discharge, refuse to employ, or take 
disciplinary action against any debtor as a result of the issuance of a 
withholding order under this part.

[68 FR 15093, Mar. 28, 2003; 68 FR 24052, May 6, 2003]



Sec. 32.9  Financial hardship.

    (a) A debtor whose wages are subject to a withholding order may, at 
any time, request a review by the Department of the amount garnished, 
based on materially changed circumstances such as disability, divorce, 
or catastrophic illness which result in financial hardship.
    (b) A debtor requesting such a review under paragraph (a) of this 
section shall submit the basis for claiming that the current amount of 
garnishment results in a financial hardship to the debtor, along with 
supporting documentation. The Secretary shall consider any information 
submitted in accordance with this part.
    (c) If a financial hardship is found, the Secretary shall downwardly 
adjust, by an amount and for a period of time established by the 
Secretary, the amount garnished to reflect the debtor's financial 
condition. The Secretary will notify the employer of any adjustments to 
the amount to be withheld.



Sec. 32.10  Refunds.

    (a) If the hearing official, pursuant to a hearing under this part, 
determines that a debt is not legally due and owing to the United 
States, the Secretary shall promptly refund any amount collected by 
means of administrative wage garnishment.
    (b) Unless required by Federal law or contract, refunds under this 
part shall not bear interest.

[[Page 107]]



Sec. 32.11  Ending garnishment.

    (a) Once the Department has fully recovered the amounts owed by the 
debtor, including interest, penalties, and administrative costs assessed 
pursuant to and in accordance with part 30 of this title, the Secretary 
shall send the debtor's employer notification to discontinue wage 
withholding.
    (b) At least annually, the Secretary shall review its debtors' 
accounts to ensure that garnishment has been terminated for accounts 
that have been paid in full.



Sec. 32.12  Right of action.

    (a) The employer of a debtor subject to wage withholding pursuant to 
this part shall pay to the Department as directed in a withholding order 
issued under this part.
    (b) The Secretary may bring suit against an employer for any amount 
that the employer fails to withhold from wages owed and payable to a 
debtor in accordance with Sec. Sec. 32.6 and 32.8, plus attorney's 
fees, costs, and, if applicable, punitive damages.
    (c) A suit under this section may not be filed before the 
termination of the collection action involving a particular debtor, 
unless earlier filing is necessary to avoid expiration of any applicable 
statute of limitations period. For purposes of this section, 
``termination of collection action'' occurs when the Secretary has 
terminated collection action in accordance with part 30 of this title, 
or other applicable law or regulation.
    (d) Notwithstanding deemed to occur if from a debtor whose paragraph 
(c) of this section, termination of the collection action will be a 
period of one (1) year the Department does not receive any payments 
wages were subject to a garnishment order issued under this part.



PART 34_CLAIMS FILED UNDER THE MILITARY PERSONNEL AND CIVILIAN EMPLOYEES 
ACT--Table of Contents




Sec.
34.1 Purpose and scope.
34.2 Definitions.
34.3 Filing procedures and time limits.
34.4 Allowable claims.
34.5 Unallowable claims.
34.6 Reconsideration or appeal.
34.7 Payment procedures.
34.8 Computation of award and settlement.
34.9 Claims involving carriers or insurers.

    Authority: 31 U.S.C. 3721.

    Source: 69 FR 13257, Mar. 22, 2004, unless otherwise noted.



Sec. 34.1  Purpose and scope.

    (a) Purpose. This part prescribes polices and procedures for 
handling claims not in excess of $40,000.00 filed by employees against 
the Department of Health and Human Services under the Military Personnel 
and Civilian Employees Claims (MPCE) Act of 1964, 31 U.S.C. 3721, for 
damage to, or loss of, property against the Department. Under the MPCE 
Act, the Secretary may approve claims made against the Government by a 
federal government employee for damage to or loss of personal property 
that is incident to employment when the loss or damage is not due to any 
negligence on the part of employee.
    (b) Scope. This part applies to all Departmental Operating Divisions 
and Regional Offices that process and review claims under the MPCE Act. 
Nothing in this part shall be construed to bar other types of claims 
that are payable under other statutory authority such as, but not 
limited to, the Federal Tort Claims Act (28 U.S.C. 2671-2680).



Sec. 34.2  Definitions.

    In this part, unless the context otherwise requires:
    Claim means any claim filed by or on behalf of an employee for 
damage to, or loss of, property that is incident to the claimant's 
employment. This definition includes claims where the claimant is not 
the legal owner of the property in question, but has obtained 
authorization from the legal owner to posses or control the property.
    Claimant means an employee who has filed a claim with the Department 
under the MPCE Act.
    Damage or loss means total or partial destruction or loss of the 
item claimed.
    Department means the Department of Health and Human Services.
    Employee means an officer or employee of the Department.

[[Page 108]]

    Quarters means a house, apartment or other residence assigned by the 
government to an employee of the Department.



Sec. 34.3  Filing procedures and time limits.

    (a) Who may file a claim. A claim may be filed by the following 
individuals:
    (1) An employee;
    (2) An authorized agent or representative of an employee or 
employee's estate, regardless of whether the claim arose before or 
concurrent with an employee's death; and
    (3) A former employee or his authorized agent or representative if 
damage or loss occurred prior to the separation from the Department.
    (b) Requirements. A claim submitted under this part must be 
presented in writing to the Claims Officer (See paragraph (c) of this 
section). Claims may be submitted on a HHS-481 form, Employee Claim for 
Loss or Damage to Personal Property. All claims must be signed by the 
claimant or his authorized agent or representative. The HHS-Form can be 
obtained from the Claims Officer or downloaded from the Program Support 
Center's webpage at www.psc.gov. All claims must include the following:
    (1) Name and address of the claimant;
    (2) The office in which the claimant was employed at the time of 
loss, current office, if different, and telephone number;
    (3) Date of loss or damage;
    (4) Amount of claim;
    (5) Description of the property, including but not limited to type, 
design, model number, date acquired, value when acquired, value when 
lost, and estimation of repair or replacement cost;
    (6) Description of incident; and
    (7) If property was insured when loss or damage occurred, a 
statement indicating whether a claim was filed with an insurance 
carrier.
    (c) Where to file your claim. (1) Claimants employed with the 
Regional Offices should submit claims to the Chief Regional Counsel, 
Office of the General Counsel, within the claimant's Region.
    (2) All other claimants must submit claims to the Office of the 
General Counsel, General Law Division, Claims and Employment Law Branch, 
330 Independence Ave., SW., Room 4760, Cohen Building, Washington, DC 
20201.
    (d) Evidence required. You must submit the following:
    (1) Not less than two itemized signed estimates for the cost of 
repairs, or an itemized bill of repair for the damaged property;
    (2) In the event the property is not economically repairable or is 
totally lost or destroyed, proof of this fact, its market value before 
or after loss, purchase price, and date of acquisition of the property;
    (3) Proof of ownership or right to recover for the damage such as a 
receipt;
    (4) Police/incident report;
    (5) If property is insured, insurance information, such as insurance 
carrier, type of coverage, deductible, and whether claim has been filed 
and/or paid;
    (6) Travel orders, if applicable;
    (7) Any citations or traffic tickets, if applicable; and
    (8) Any other evidence required by the claims officer not specified 
above.
    (e) Time limit. (1) A claim filed under this section must be filed 
in writing with the Department within two years from the date of the 
incident.
    (2) If the claim accrues in the time of war or in the time of armed 
conflict in which any armed forces of the United States are engaged or 
if such a war or armed conflict occurs within two years after the claim 
accrues, and if good cause is shown, the claim shall be presented no 
more than two years after that cause ceases to exist, or two years after 
the war or armed conflict is terminated, whichever is earlier.
    (3) All required evidence in support of a claim submitted under this 
section must be forwarded to the claims officer within sixty days after 
request. Failure to do so will be deemed as an abandonment of the claim 
and the claim will be disallowed.



Sec. 34.4  Allowable claims.

    (a) What you can claim. (1) Claims for damage or loss may be allowed 
where possession of the property was lawful and reasonable under 
circumstances.
    (2) Claims for property damage or loss by fire, flood, hurricane, 
theft, or

[[Page 109]]

other serious occurrence may be allowed when the property is located 
inside:
    (i) Quarters that have been assigned or provided by the government; 
or
    (ii) Quarters outside the United States whether assigned by the 
government or not, except when a civilian employee outside the U.S. is a 
local inhabitant.
    (3) Claims for damage to, or loss of, property may be allowed when 
caused by:
    (i) Marine, air disaster, enemy action or threat thereof, or other 
extraordinary risks incurred incident to the performance of official 
duties by the claimant; and
    (ii) Efforts by the claimant to save human life or government 
property.
    (4) Property used for the benefit of the government. Claims may be 
allowed for damage to, or loss of, property used for the benefit of the 
government at the request, or with the knowledge and consent of, 
superior authority.
    (5) Claims for clothing and accessories may be allowed when loss or 
damage was caused by faulty or defective equipment or furnishings owned 
or managed by the Department.
    (6) Claims for stolen property, only if it is determined that the 
claimant exercised due care in protecting his property and there is 
clear evidence that a burglary or theft occurred.
    (7) Claims for automobiles, only when required to perform official 
business or parked on a government-owned or operated parking lot or 
garage incident to employment. This subsection does not include claims 
for damage or loss when traveling between place of residence and duty 
station, or when the loss or damage was caused by the negligence of a 
third party. If the automobile is a total loss, the maximum amount 
allowed is the value of the vehicle at the time of loss as determined by 
the National Automobile Dealer Association Appraisal Guide or similar 
publications.
    (8) Claims for any other meritorious claims in exceptional cases may 
be allowed by the Claims Officer.
    (9) Transportation or travel losses. Damage or loss of personal 
property, including baggage and household items, while being transported 
by a carrier, agent or agency of the government, or private conveyance, 
may be allowed only if the property is shipped under orders or in 
connection with travel orders.



Sec. 34.5  Unallowable claims.

    (a) What you cannot claim. (1) Claims for money or currency, such as 
intangible property (i.e. bankbooks, check, money orders, promissory 
notes, stock certificates, etc.).
    (2) Worn-out or unserviceable property.
    (3) Easily pilferable articles, such as jewelry, cameras, watches, 
and binoculars when they are shipped with household goods by a moving 
company or unaccompanied baggage. This does not apply to checked 
property or property in personal custody of the claimant or his agent 
provided proper security measures have been taken.
    (4) Government property.
    (5) Appraisal or estimate fees.
    (6) Automobiles, except when required to perform official business 
or parked on a government-owned or operated parking lot or garage 
incident to employment.
    (7) Loss or damage caused in whole or in part by the negligent or 
wrongful act of the claimant or his agent or employee.
    (8) Claims under $30.00.
    (9) Stolen property when it's determined that claimant failed to 
exercise due care in protecting his or her property.
    (10) Sales Tax. Reimbursements for the payment of sales tax incurred 
in connection with repairs or replacing an item will not be allowed.



Sec. 34.6  Reconsideration or appeal.

    (a) Requests for reconsideration or appeal shall be forwarded to the 
Associate General Counsel, General Law Division, Office of the General 
Counsel, within sixty days from the date of the Claims Officer's 
decision along with any new evidence supporting the claim.
    (b) A voucher or a supplemental voucher will be prepared by the 
Claims Officer if it is determined that the claimant's request for 
reconsideration should be allowed.

[[Page 110]]



Sec. 34.7  Payment procedures.

    (a) For all claims that are approved in whole or part, the claims 
officer shall prepare and mail a payment voucher to the claimant.
    (b) This voucher shall be mailed to the claimant with appropriate 
instructions.
    (c) Upon receipt of the signed payment voucher, the claims officer 
shall sign and forward the signed voucher to the office where the 
claimant is or was employed for processing.
    (d) Upon receipt of the signed payment voucher, the office in which 
the claimant is or was employed will submit the voucher for transmission 
to the Treasury Department for issuance of a check in the sum allowed.
    (e) Funds paid for settlement of allowed claims shall be made from 
appropriations of the office in which the claimant is or was employed.



Sec. 34.8  Computation of award and settlement.

    (a) The amount awarded on any item of property shall not exceed the 
adjusted cost of the item based on the cost of replacing it with a 
similar one of the same quality minus the appropriate depreciation rate. 
The amount normally payable on property damaged beyond economical repair 
shall not exceed its depreciated value. If the cost of repairs is less 
than the depreciated value it shall be considered economically 
repairable and the costs of repairs shall be the amount payable.
    (b) Depreciation in value of an item shall be determined by 
considering the type of article involved, its replacement cost, 
condition when lost or damaged beyond economical repair, and the time 
elapsed between the date of acquisition and the date of accrual of the 
claim.
    (c) Notwithstanding any other provision of law, settlements of 
claims under the MPCE Act are final and conclusive. The acceptance of a 
settlement constitutes a complete release of any claim against the 
United States and any employee of the government whose act or omission 
gave rise to the claim by reason of the same claim.



Sec. 34.9  Claims involving carriers or insurers.

    (a) Carriers. (1) If property is damaged, lost or destroyed while 
being shipped pursuant to authorized travel orders, the owner shall file 
a written claim for reimbursement against the carrier no later than nine 
months from the date of delivery or should have been made according to 
the terms of the contract. It shall be filed before or concurrent with 
submitting a claim against the government under this part.
    (2) The demand shall be made against the responsible carrier if more 
than one contract was issued, a separate demand shall be made against 
the last carrier on each such document, unless claimant knows which 
carrier was in possession of the property when the damage or loss 
occurred.
    (b) Insurers. (1) If property which is damaged, lost, or destroyed 
incident to the claimant's service is insured in whole or in part, the 
claimant shall inform the Claims Officer whether a claim was made with 
the insurance carrier.
    (2) The claimant shall inform the claims officer if he or she 
received a reimbursement from the insurance carrier for the item that 
was damaged or lost. The exact amount of the reimbursement must be 
reported.
    (3) If the claimant receives a reimbursement for the lost or damaged 
property from an insurance carrier, the maximum amount that can be 
recovered from the Department is the difference between an appropriate 
award under this regulation and the amount recovered from the insurance 
carrier. The claimant is responsible for submitting to the Department 
documentation that identifies the exact amount of the reimbursement.



PART 35_TORT CLAIMS AGAINST THE GOVERNMENT--Table of Contents




                            Subpart A_General

Sec.
35.1 Scope of regulations.

                          Subpart B_Procedures

35.2 Administrative claim; when presented; place of filing.

[[Page 111]]

35.3 Administrative claim; who may file.
35.4 Administrative claims; evidence and information to be submitted.
35.5 Investigation, examination, and determination of claims.
35.6 Final denial of claim.
35.7 Payment of approved claims.
35.8 Release.
35.9 Penalties.
35.10 Limitation on Department's authority.

    Authority: Sec. 1(a), 80 Stat. 306; 28 U.S.C. 2672; 28 CFR Part 14.

    Source: 32 FR 14101, Oct. 11, 1967, unless otherwise noted.



                            Subpart A_General



Sec. 35.1  Scope of regulations.

    The regulations in this part shall apply only to claims asserted 
under the Federal Tort Claims Act, as amended, 28 U.S.C. sections 2671-
2680, accruing on or after January 18, 1967, for money damages against 
the United States for damage to or loss of property or personal injury 
or death caused by the negligent or wrongful act or omission of any 
employee of the Department of Health and Human Services while acting 
within the scope of his office or employment.



                          Subpart B_Procedures



Sec. 35.2  Administrative claim; when presented; place of filing.

    (a) For purposes of the regulations in this part, a claim shall be 
deemed to have been presented when the Department of Health and Human 
Services receives, at a place designated in paragraph (b) of this 
section, an executed Standard Form 95 or other written notification of 
an incident accompanied by a claim for money damages in a sum certain 
for damage to or loss of property, for personal injury, or for death, 
alleged to have occurred by reason of the incident. A claim which should 
have been presented to the Department but which was mistakenly addressed 
to or filed with another Federal agency, shall be deemed to be presented 
to the Department as of the date that the claim is received by the 
Department. A claim mistakenly addressed to or filed with the Department 
shall forthwith be transferred to the appropriate Federal agency, if 
ascertainable, or returned to the claimant.
    (b) A claim presented in compliance with paragraph (a) of this 
section may be amended by the claimant at any time prior to final action 
by the Department Claims Officer or prior to the exercise of the 
claimant's option to bring suit under 28 U.S.C. 2675(a). Amendments 
shall be submitted in writing and signed by the claimant or his duly 
authorized agent or legal representative. Upon the timely filing of an 
amendment to a pending claim, the Department shall have 6 months in 
which to make a final disposition of the claim as amended and the 
claimant's option under 28 U.S.C. 2675(a) shall not accrue until 6 
months after the filing of an amendment.
    (c) Forms may be obtained and claims may be filed, with the office, 
local, regional, or headquarters, of the constituent organization having 
jurisdiction over the employee involved in the accident or incident, or 
with the Department of Health and Human Services Claims Officer, 
Washington, DC 20201.

[32 FR 14101, Oct. 11, 1967, as amended at 35 FR 4517, Mar. 13, 1970]



Sec. 35.3  Administrative claim; who may file.

    (a) A claim for injury to or loss of property may be presented by 
the owner of the property interest which is the subject of the claim, 
his duly authorized agent, or his legal representative.
    (b) A claim for personal injury may be presented by the injured 
person, his duly authorized agent, or his legal representative.
    (c) A claim based on death may be presented by the executor or 
administrator of the decedent's estate or by any other person legally 
entitled to assert such a claim under applicable state law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appear, or jointly. Whenever an insurer presents a

[[Page 112]]

claim asserting the rights of a subrogee, he shall present with his 
claim appropriate evidence that he has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or legal 
representative, show the title or legal capacity of the person signing, 
and be accompanied by evidence of his authority to present a claim on 
behalf of the claimant as agent, executor, administrator, parent, 
guardian, or other representative.



Sec. 35.4  Administrative claims; evidence and information to be submitted.

    (a) Death. In support of a claim based on death, the claimant may be 
required to submit the following evidence or information:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent.
    (2) Decedent's employment or occupation at time of death, including 
his monthly or yearly salary or earnings (if any), and the duration of 
his last employment or occupation.
    (3) Full names, addresses, birth dates, kinship, and marital status 
of the decedent's survivors, including identification of those survivors 
who were dependent for support upon the decedent at the time of his 
death.
    (4) Degree of support afforded by the decedent to each survivor 
dependent upon him for support at the time of his death.
    (5) Decedent's general physical and mental condition before death.
    (6) Itemized bills for medical and burial expenses incurred by 
reason of the incident causing death, or itemized receipts of payments 
for such expenses.
    (7) If damages for pain and suffering prior to death are claimed, a 
physician's detailed statement specifying the injuries suffered, 
duration of pain and suffering, any drugs administered for pain and the 
decedent's physical condition in the interval between injury and death.
    (8) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the death or the 
damages claimed.
    (b) Personal injury. In support of a claim for personal injury, 
including pain and suffering, the claimant may be required to submit the 
following evidence or information:
    (1) A written report by his attending physician or dentist setting 
forth the nature and extent of the injury, nature and extent of 
treatment, any degree of temporary or permanent disability, the 
prognosis, period of hospitalization, and any diminished earning 
capacity. In addition, the claimant may be required to submit to a 
physical or mental examination by a physician employed or designated by 
the Department or the constituent organization. A copy of the report of 
the examining physician shall be made available to the claimant upon the 
claimant's written request provided that claimant has, upon request, 
furnished the report referred to in the first sentence of this 
subparagraph and has made or agrees to make available to the Department 
or the operating agency any other physician's reports previously or 
thereafter made of the physical or mental condition which is the subject 
matter of his claim.
    (2) Itemized bills for medical, dental, and hospital expenses 
incurred, or itemized receipts of payment for such expenses.
    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected duration of and expenses for such treatment.
    (4) If a claim is made for loss of time from employment, a written 
statement from his employer showing actual time lost from employment, 
whether he is a full or part-time employee, and wages or salary actually 
lost.
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings actually 
lost.
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the personal injury 
or the damages claimed.
    (c) Property damage. In support of a claim for damage to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information:
    (1) Proof of ownership.

[[Page 113]]

    (2) A detailed statement of the amount claimed with respect to each 
item of property.
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs.
    (4) A statement listing date of purchase, purchase price, market 
value of the property as of date of damage, and salvage value, where 
repair is not economical.
    (5) Any other evidence or information which may have a bearing 
either on the responsibility of the United States for the injury to or 
loss of property or the damages claimed.
    (d) Time limit. All evidence required to be submitted by this 
section shall be furnished by the claimant within a reasonable time. 
Failure of a claimant to furnish evidence necessary to a determination 
of his claim within three months after a request therefor has been 
mailed to his last known address may be deemed an abandonment of the 
claim. The claim may be thereupon disallowed.



Sec. 35.5  Investigation, examination, and determination of claims.

    When a claim is received, the constituent agency out of whose 
activities the claim arose shall make such investigation as may be 
necessary or appropriate for a determination of the validity of the 
claim and thereafter shall forward the claim, together with all 
pertinent material, and a recommendation based on the merits of the 
case, with regard to allowance or disallowance of the claim, to the 
Department Claims Officer to whom authority has been delegated to 
adjust, determine, compromise and settle all claims hereunder.



Sec. 35.6  Final denial of claim.

    (a) Final denial of an administrative claim shall be in writing and 
sent to the claimant, his attorney, or legal representative by certified 
or registered mail. The notification of final denial may include a 
statement of the reasons for the denial and shall include a statement 
that, if the claimant is dissatisfied with the Department's action, he 
may file suit in an appropriate U.S. District Court not later than 6 
months after the date of mailing of the notification.
    (b) Prior to the commencement of suit and prior to the expiration of 
the 6-month period after the date of mailing, by certified or registered 
mail of notice of final denial of the claim as provided in 28 U.S.C. 
2401(b), a claimant, his duly authorized agent, or legal representative, 
may file a written request with the Department for reconsideration of a 
final denial of a claim under paragraph (a) of this section. Upon the 
timely filing of a request for reconsideration the Department shall have 
6 months from the date of filing in which to make a final disposition of 
the claim and the claimant's option under 28 U.S.C. 2675(a) to bring 
suit shall not accrue until 6 months after the filing of a request for 
reconsideration. Final Department action on a request for 
reconsideration shall be effected in accordance with the provisions of 
paragraph (a) of this section.

[32 FR 14101, Oct. 11, 1967, as amended at 35 FR 4517, Mar. 13, 1970]



Sec. 35.7  Payment of approved claims.

    (a) Upon allowance of his claim, claimant or his duly authorized 
agent shall sign the voucher for payment, Standard Form 1145, before 
payment is made.
    (b) When the claimant is represented by an attorney, the voucher for 
payment (SF 1145) shall designate both the claimant and his attorney as 
``payees.'' The check shall be delivered to the attorney whose address 
shall appear on the voucher.



Sec. 35.8  Release.

    Acceptance by the claimant, his agent or legal representative, of 
any award, compromise or settlement made hereunder, shall be final and 
conclusive on the claimant, his agent or legal representative and any 
other person on whose behalf or for whose benefit the claim has been 
presented, and shall constitute a complete release of any claim against 
the United States and against any employee of the Government whose act 
or omission gave rise to the claim, by reason of the same subject 
matter.

[[Page 114]]



Sec. 35.9  Penalties.

    A person who files a false claim or makes a false or fraudulent 
statement in a claim against the United States may be liable to a fine 
of not more than $10,000 or to imprisonment of not more than 5 years, or 
both (18 U.S.C. 287.1001), and, in addition, to a forfeiture of $2,000 
and a penalty of double the loss or damage sustained by the United 
States (31 U.S.C. 231).



Sec. 35.10  Limitation on Department's authority.

    (a) An award, compromise or settlement of a claim hereunder in 
excess of $25,000 shall be effected only with the prior written approval 
of the Attorney General or his designee. For the purposes of this 
paragraph, a principal claim and any derivative or subrogated claim 
shall be treated as a single claim.
    (b) An administrative claim may be adjusted, determined, compromised 
or settled hereunder only after consultation with the Department of 
Justice when, in the opinion of the Department:
    (1) A new precedent or a new point of law is involved; or
    (2) A question of policy is or may be involved; or
    (3) The United States is or may be entitled to indemnity or 
contribution from a third party and the Department is unable to adjust 
the third party claim; or
    (4) The compromise of a particular claim, as a practical matter, 
will or may control the disposition of a related claim in which the 
amount to be paid may exceed $25,000.
    (c) An administrative claim may be adjusted, determined, compromised 
or settled only after consultation with the Department of Justice when 
it is learned that the United States or an employee, agent or cost plus 
contractor of the United States is involved in litigation based on a 
claim arising out of the same incident or transaction.



PART 36_INDEMNIFICATION OF HHS EMPLOYEES--Table of Contents




Sec. 36.1  Policy.

    (a) The Department of Health and Human Services may indemnify, in 
whole or in part, its employees (which for the purpose of this 
regulation includes former employees) for any verdict, judgment or other 
monetary award which is rendered against any such employee, provided 
that the conduct giving rise to the verdict, judgment or award was taken 
within the scope of his or her employment with the Department and that 
such indemnification is in the interest of the United States, as 
determined by the Secretary, or his or her designee, in his or her 
discretion.
    (b) The Department of Health and Human Services may settle or 
compromise a personal damage claim against its employee by the payment 
of available funds, at any time, provided the alleged conduct giving 
rise to the personal damage claim was taken within the scope of 
employment and that such settlement or compromise is in the interest of 
the United States, as determined by the Secretary, or his or her 
designee, in his or her discretion.
    (c) Absent exceptional circumstances, as determined by the Secretary 
or his or her designee, the Department will not entertain a request 
either to agree to indemnify or to settle a personal damage claim before 
entry of an adverse verdict, judgment or monetary award.
    (d) When an employee of the Department of Health and Human Services 
becomes aware that an action has been filed against the employee in his 
or her individual capacity as a result of conduct taken within the scope 
of his or her employment, the employee should immediately notify the 
Department that such an action is pending.
    (e) The employee may, thereafter, request either (1) indemnification 
to satisfy a verdict, judgment or award entered against the employee or 
(2) payment to satisfy the requirements of a settlement proposal. The 
employee shall submit a written request, with documentation including 
copies of the verdict, judgment, award or settlement proposal, as 
appropriate, to the head of

[[Page 115]]

his employing component, who shall thereupon submit to the General 
Counsel, in a timely manner, a recommended disposition of the request. 
The General Counsel shall also seek the views of the Department of 
Justice. The General Counsel shall forward the request, the employing 
component's recommendation and the General Counsel's recommendation to 
the Secretary for decision.
    (f) Any payment under this section either to indemnify a Department 
of Health and Human Services employee or to settle a personal damage 
claim shall be contingent upon the availability of appropriated funds of 
the employing component of the Department of Health and Human Services.

(Authority: 5 U.S.C. 301)

[53 FR 11280, Apr. 6, 1988]



PART 46_PROTECTION OF HUMAN SUBJECTS--Table of Contents




  Subpart A_Basic HHS Policy for Protection of Human Research Subjects

Sec.
46.101 To what does this policy apply?
46.102 Definitions.
46.103 Assuring compliance with this policy--research conducted or 
          supported by any Federal Department or Agency.
46.104-46.106 [Reserved]
46.107 IRB membership.
46.108 IRB functions and operations.
46.109 IRB review of research.
46.110 Expedited review procedures for certain kinds of research 
          involving no more than minimal risk, and for minor changes in 
          approved research.
46.111 Criteria for IRB approval of research.
46.112 Review by institution.
46.113 Suspension or termination of IRB approval of research.
46.114 Cooperative research.
46.115 IRB records.
46.116 General requirements for informed consent.
46.117 Documentation of informed consent.
46.118 Applications and proposals lacking definite plans for involvement 
          of human subjects.
46.119 Research undertaken without the intention of involving human 
          subjects.
46.120 Evaluation and disposition of applications and proposals for 
          research to be conducted or supported by a Federal Department 
          or Agency.
46.121 [Reserved]
46.122 Use of Federal funds.
46.123 Early termination of research support: Evaluation of applications 
          and proposals.
46.124 Conditions.

 Subpart B_Additional Protections for Pregnant Women, Human Fetuses and 
                      Neonates Involved in Research

46.201 To what do these regulations apply?
46.202 Definitions.
46.203 Duties of IRBs in connection with research involving pregnant 
          women, fetuses, and neonates.
46.204 Research involving pregnant women or fetuses.
46.205 Research involving neonates.
46.206 Research involving, after delivery, the placenta, the dead fetus 
          or fetal material.
46.207 Research not otherwise approvable which presents an opportunity 
          to understand, prevent, or alleviate a serious problem 
          affecting the health or welfare of pregnant women, fetuses, or 
          neonates.

Subpart C_Additional Protections Pertaining to Biomedical and Behavioral 
                Research Involving Prisoners as Subjects

46.301 Applicability.
46.302 Purpose.
46.303 Definitions.
46.304 Composition of Institutional Review Boards where prisoners are 
          involved.
46.305 Additional duties of the Institutional Review Boards where 
          prisoners are involved.
46.306 Permitted research involving prisoners.

 Subpart D_Additional Protections for Children Involved as Subjects in 
                                Research

46.401 To what do these regulations apply?
46.402 Definitions.
46.403 IRB duties.
46.404 Research not involving greater than minimal risk.
46.405 Research involving greater than minimal risk but presenting the 
          prospect of direct benefit to the individual subjects.
46.406 Research involving greater than minimal risk and no prospect of 
          direct benefit to individual subjects, but likely to yield 
          generalizable knowledge about the subject's disorder or 
          condition.
46.407 Research not otherwise approvable which presents an opportunity 
          to understand, prevent, or alleviate a serious problem 
          affecting the health or welfare of children.
46.408 Requirements for permission by parents or guardians and for 
          assent by children.
46.409 Wards.


[[Page 116]]


    Authority: 5 U.S.C. 301; 42 U.S.C. 289(a).

    Editorial Note: The Department of Health and Human Services issued a 
notice of waiver regarding the requirements set forth in part 46, 
relating to protection of human subjects, as they pertain to 
demonstration projects, approved under section 1115 of the Social 
Security Act, which test the use of cost--sharing, such as deductibles, 
copayment and coinsurance, in the Medicaid program. For further 
information see 47 FR 9208, Mar. 4, 1982.



  Subpart A_Basic HHS Policy for Protection of Human Research Subjects

    Authority: 5 U.S.C. 301; 42 U.S.C. 289, 42 U.S.C. 300v-1(b).

    Source: 56 FR 28012, 28022, June 18, 1991, unless otherwise noted.



Sec. 46.101  To what does this policy apply?

    (a) Except as provided in paragraph (b) of this section, this policy 
applies to all research involving human subjects conducted, supported or 
otherwise subject to regulation by any federal department or agency 
which takes appropriate administrative action to make the policy 
applicable to such research. This includes research conducted by federal 
civilian employees or military personnel, except that each department or 
agency head may adopt such procedural modifications as may be 
appropriate from an administrative standpoint. It also includes research 
conducted, supported, or otherwise subject to regulation by the federal 
government outside the United States.
    (1) Research that is conducted or supported by a federal department 
or agency, whether or not it is regulated as defined in Sec. 46.102(e), 
must comply with all sections of this policy.
    (2) Research that is neither conducted nor supported by a federal 
department or agency but is subject to regulation as defined in Sec. 
46.102(e) must be reviewed and approved, in compliance with Sec. 
46.101, Sec. 46.102, and Sec. 46.107 through Sec. 46.117 of this 
policy, by an institutional review board (IRB) that operates in 
accordance with the pertinent requirements of this policy.
    (b) Unless otherwise required by department or agency heads, 
research activities in which the only involvement of human subjects will 
be in one or more of the following categories are exempt from this 
policy:
    (1) Research conducted in established or commonly accepted 
educational settings, involving normal educational practices, such as 
(i) research on regular and special education instructional strategies, 
or (ii) research on the effectiveness of or the comparison among 
instructional techniques, curricula, or classroom management methods.
    (2) Research involving the use of educational tests (cognitive, 
diagnostic, aptitude, achievement), survey procedures, interview 
procedures or observation of public behavior, unless:
    (i) Information obtained is recorded in such a manner that human 
subjects can be identified, directly or through identifiers linked to 
the subjects; and (ii) any disclosure of the human subjects' responses 
outside the research could reasonably place the subjects at risk of 
criminal or civil liability or be damaging to the subjects' financial 
standing, employability, or reputation.
    (3) Research involving the use of educational tests (cognitive, 
diagnostic, aptitude, achievement), survey procedures, interview 
procedures, or observation of public behavior that is not exempt under 
paragraph (b)(2) of this section, if:
    (i) The human subjects are elected or appointed public officials or 
candidates for public office; or (ii) federal statute(s) require(s) 
without exception that the confidentiality of the personally 
identifiable information will be maintained throughout the research and 
thereafter.
    (4) Research, involving the collection or study of existing data, 
documents, records, pathological specimens, or diagnostic specimens, if 
these sources are publicly available or if the information is recorded 
by the investigator in such a manner that subjects cannot be identified, 
directly or through identifiers linked to the subjects.
    (5) Research and demonstration projects which are conducted by or 
subject to the approval of department or agency heads, and which are 
designed to study, evaluate, or otherwise examine:

[[Page 117]]

    (i) Public benefit or service programs; (ii) procedures for 
obtaining benefits or services under those programs; (iii) possible 
changes in or alternatives to those programs or procedures; or (iv) 
possible changes in methods or levels of payment for benefits or 
services under those programs.
    (6) Taste and food quality evaluation and consumer acceptance 
studies, (i) if wholesome foods without additives are consumed or (ii) 
if a food is consumed that contains a food ingredient at or below the 
level and for a use found to be safe, or agricultural chemical or 
environmental contaminant at or below the level found to be safe, by the 
Food and Drug Administration or approved by the Environmental Protection 
Agency or the Food Safety and Inspection Service of the U.S. Department 
of Agriculture.
    (c) Department or agency heads retain final judgment as to whether a 
particular activity is covered by this policy.
    (d) Department or agency heads may require that specific research 
activities or classes of research activities conducted, supported, or 
otherwise subject to regulation by the department or agency but not 
otherwise covered by this policy, comply with some or all of the 
requirements of this policy.
    (e) Compliance with this policy requires compliance with pertinent 
federal laws or regulations which provide additional protections for 
human subjects.
    (f) This policy does not affect any state or local laws or 
regulations which may otherwise be applicable and which provide 
additional protections for human subjects.
    (g) This policy does not affect any foreign laws or regulations 
which may otherwise be applicable and which provide additional 
protections to human subjects of research.
    (h) When research covered by this policy takes place in foreign 
countries, procedures normally followed in the foreign countries to 
protect human subjects may differ from those set forth in this policy. 
[An example is a foreign institution which complies with guidelines 
consistent with the World Medical Assembly Declaration (Declaration of 
Helsinki amended 1989) issued either by sovereign states or by an 
organization whose function for the protection of human research 
subjects is internationally recognized.] In these circumstances, if a 
department or agency head determines that the procedures prescribed by 
the institution afford protections that are at least equivalent to those 
provided in this policy, the department or agency head may approve the 
substitution of the foreign procedures in lieu of the procedural 
requirements provided in this policy. Except when otherwise required by 
statute, Executive Order, or the department or agency head, notices of 
these actions as they occur will be published in the Federal Register or 
will be otherwise published as provided in department or agency 
procedures.
    (i) Unless otherwise required by law, department or agency heads may 
waive the applicability of some or all of the provisions of this policy 
to specific research activities or classes of research activities 
otherwise covered by this policy. Except when otherwise required by 
statute or Executive Order, the department or agency head shall forward 
advance notices of these actions to the Office for Human Research 
Protections, Department of Health and Human Services (HHS), or any 
successor office, and shall also publish them in the Federal Register or 
in such other manner as provided in department or agency procedures.\1\
---------------------------------------------------------------------------

    \1\ Institutions with HHS-approved assurances on file will abide by 
provisions of title 45 CFR part 46 subparts A-D. Some of the other 
Departments and Agencies have incorporated all provisions of title 45 
CFR part 46 into their policies and procedures as well. However, the 
exemptions at 45 CFR 46.101(b) do not apply to research involving 
prisoners, subpart C. The exemption at 45 CFR 46.101(b)(2), for research 
involving survey or interview procedures or observation of public 
behavior, does not apply to research with children, subpart D, except 
for research involving observations of public behavior when the 
investigator(s) do not participate in the activities being observed.

[56 FR 28012, 28022, June 18, 1991; 56 FR 29756, June 28, 1991, as 
amended at 70 FR 36328, June 23, 2005]

[[Page 118]]



Sec. 46.102  Definitions.

    (a) Department or agency head means the head of any federal 
department or agency and any other officer or employee of any department 
or agency to whom authority has been delegated.
    (b) Institution means any public or private entity or agency 
(including federal, state, and other agencies).
    (c) Legally authorized representative means an individual or 
judicial or other body authorized under applicable law to consent on 
behalf of a prospective subject to the subject's participation in the 
procedure(s) involved in the research.
    (d) Research means a systematic investigation, including research 
development, testing and evaluation, designed to develop or contribute 
to generalizable knowledge. Activities which meet this definition 
constitute research for purposes of this policy, whether or not they are 
conducted or supported under a program which is considered research for 
other purposes. For example, some demonstration and service programs may 
include research activities.
    (e) Research subject to regulation, and similar terms are intended 
to encompass those research activities for which a federal department or 
agency has specific responsibility for regulating as a research 
activity, (for example, Investigational New Drug requirements 
administered by the Food and Drug Administration). It does not include 
research activities which are incidentally regulated by a federal 
department or agency solely as part of the department's or agency's 
broader responsibility to regulate certain types of activities whether 
research or non-research in nature (for example, Wage and Hour 
requirements administered by the Department of Labor).
    (f) Human subject means a living individual about whom an 
investigator (whether professional or student) conducting research 
obtains
    (1) Data through intervention or interaction with the individual, or
    (2) Identifiable private information.

Intervention includes both physical procedures by which data are 
gathered (for example, venipuncture) and manipulations of the subject or 
the subject's environment that are performed for research purposes. 
Interaction includes communication or interpersonal contact between 
investigator and subject. Private information includes information about 
behavior that occurs in a context in which an individual can reasonably 
expect that no observation or recording is taking place, and information 
which has been provided for specific purposes by an individual and which 
the individual can reasonably expect will not be made public (for 
example, a medical record). Private information must be individually 
identifiable (i.e., the identity of the subject is or may readily be 
ascertained by the investigator or associated with the information) in 
order for obtaining the information to constitute research involving 
human subjects.
    (g) IRB means an institutional review board established in accord 
with and for the purposes expressed in this policy.
    (h) IRB approval means the determination of the IRB that the 
research has been reviewed and may be conducted at an institution within 
the constraints set forth by the IRB and by other institutional and 
federal requirements.
    (i) Minimal risk means that the probability and magnitude of harm or 
discomfort anticipated in the research are not greater in and of 
themselves than those ordinarily encountered in daily life or during the 
performance of routine physical or psychological examinations or tests.
    (j) Certification means the official notification by the institution 
to the supporting department or agency, in accordance with the 
requirements of this policy, that a research project or activity 
involving human subjects has been reviewed and approved by an IRB in 
accordance with an approved assurance.



Sec. 46.103  Assuring compliance with this policy--research conducted or 
supported by any Federal Department or Agency.

    (a) Each institution engaged in research which is covered by this 
policy and which is conducted or supported by a federal department or 
agency shall provide written assurance satisfactory to the department or 
agency head that it will comply with the requirements

[[Page 119]]

set forth in this policy. In lieu of requiring submission of an 
assurance, individual department or agency heads shall accept the 
existence of a current assurance, appropriate for the research in 
question, on file with the Office for Human Research Protections, HHS, 
or any successor office, and approved for federalwide use by that 
office. When the existence of an HHS-approved assurance is accepted in 
lieu of requiring submission of an assurance, reports (except 
certification) required by this policy to be made to department and 
agency heads shall also be made to the Office for Human Research 
Protections, HHS, or any successor office.
    (b) Departments and agencies will conduct or support research 
covered by this policy only if the institution has an assurance approved 
as provided in this section, and only if the institution has certified 
to the department or agency head that the research has been reviewed and 
approved by an IRB provided for in the assurance, and will be subject to 
continuing review by the IRB. Assurances applicable to federally 
supported or conducted research shall at a minimum include:
    (1) A statement of principles governing the institution in the 
discharge of its responsibilities for protecting the rights and welfare 
of human subjects of research conducted at or sponsored by the 
institution, regardless of whether the research is subject to federal 
regulation. This may include an appropriate existing code, declaration, 
or statement of ethical principles, or a statement formulated by the 
institution itself. This requirement does not preempt provisions of this 
policy applicable to department- or agency-supported or regulated 
research and need not be applicable to any research exempted or waived 
under Sec. 46.101 (b) or (i).
    (2) Designation of one or more IRBs established in accordance with 
the requirements of this policy, and for which provisions are made for 
meeting space and sufficient staff to support the IRB's review and 
recordkeeping duties.
    (3) A list of IRB members identified by name; earned degrees; 
representative capacity; indications of experience such as board 
certifications, licenses, etc., sufficient to describe each member's 
chief anticipated contributions to IRB deliberations; and any employment 
or other relationship between each member and the institution; for 
example: full-time employee, part-time employee, member of governing 
panel or board, stockholder, paid or unpaid consultant. Changes in IRB 
membership shall be reported to the department or agency head, unless in 
accord with Sec. 46.103(a) of this policy, the existence of an HHS-
approved assurance is accepted. In this case, change in IRB membership 
shall be reported to the Office for Human Research Protections, HHS, or 
any successor office.
    (4) Written procedures which the IRB will follow (i) for conducting 
its initial and continuing review of research and for reporting its 
findings and actions to the investigator and the institution; (ii) for 
determining which projects require review more often than annually and 
which projects need verification from sources other than the 
investigators that no material changes have occurred since previous IRB 
review; and (iii) for ensuring prompt reporting to the IRB of proposed 
changes in a research activity, and for ensuring that such changes in 
approved research, during the period for which IRB approval has already 
been given, may not be initiated without IRB review and approval except 
when necessary to eliminate apparent immediate hazards to the subject.
    (5) Written procedures for ensuring prompt reporting to the IRB, 
appropriate institutional officials, and the department or agency head 
of (i) any unanticipated problems involving risks to subjects or others 
or any serious or continuing noncompliance with this policy or the 
requirements or determinations of the IRB and (ii) any suspension or 
termination of IRB approval.
    (c) The assurance shall be executed by an individual authorized to 
act for the institution and to assume on behalf of the institution the 
obligations imposed by this policy and shall be filed in such form and 
manner as the department or agency head prescribes.
    (d) The department or agency head will evaluate all assurances 
submitted in accordance with this policy through

[[Page 120]]

such officers and employees of the department or agency and such experts 
or consultants engaged for this purpose as the department or agency head 
determines to be appropriate. The department or agency head's evaluation 
will take into consideration the adequacy of the proposed IRB in light 
of the anticipated scope of the institution's research activities and 
the types of subject populations likely to be involved, the 
appropriateness of the proposed initial and continuing review procedures 
in light of the probable risks, and the size and complexity of the 
institution.
    (e) On the basis of this evaluation, the department or agency head 
may approve or disapprove the assurance, or enter into negotiations to 
develop an approvable one. The department or agency head may limit the 
period during which any particular approved assurance or class of 
approved assurances shall remain effective or otherwise condition or 
restrict approval.
    (f) Certification is required when the research is supported by a 
federal department or agency and not otherwise exempted or waived under 
Sec. 46.101 (b) or (i). An institution with an approved assurance shall 
certify that each application or proposal for research covered by the 
assurance and by Sec. 46.103 of this Policy has been reviewed and 
approved by the IRB. Such certification must be submitted with the 
application or proposal or by such later date as may be prescribed by 
the department or agency to which the application or proposal is 
submitted. Under no condition shall research covered by Sec. 46.103 of 
the Policy be supported prior to receipt of the certification that the 
research has been reviewed and approved by the IRB. Institutions without 
an approved assurance covering the research shall certify within 30 days 
after receipt of a request for such a certification from the department 
or agency, that the application or proposal has been approved by the 
IRB. If the certification is not submitted within these time limits, the 
application or proposal may be returned to the institution.

(Approved by the Office of Management and Budget under Control Number 
0990-0260)

[56 FR 28012, 28022, June 18, 1991; 56 FR 29756, June 28, 1991, as 
amended at 70 FR 36328, June 23, 2005]



Sec. Sec. 46.104-46.106  [Reserved]



Sec. 46.107  IRB membership.

    (a) Each IRB shall have at least five members, with varying 
backgrounds to promote complete and adequate review of research 
activities commonly conducted by the institution. The IRB shall be 
sufficiently qualified through the experience and expertise of its 
members, and the diversity of the members, including consideration of 
race, gender, and cultural backgrounds and sensitivity to such issues as 
community attitudes, to promote respect for its advice and counsel in 
safeguarding the rights and welfare of human subjects. In addition to 
possessing the professional competence necessary to review specific 
research activities, the IRB shall be able to ascertain the 
acceptability of proposed research in terms of institutional commitments 
and regulations, applicable law, and standards of professional conduct 
and practice. The IRB shall therefore include persons knowledgeable in 
these areas. If an IRB regularly reviews research that involves a 
vulnerable category of subjects, such as children, prisoners, pregnant 
women, or handicapped or mentally disabled persons, consideration shall 
be given to the inclusion of one or more individuals who are 
knowledgeable about and experienced in working with these subjects.
    (b) Every nondiscriminatory effort will be made to ensure that no 
IRB consists entirely of men or entirely of women, including the 
institution's consideration of qualified persons of both sexes, so long 
as no selection is made to the IRB on the basis of gender. No IRB may 
consist entirely of members of one profession.
    (c) Each IRB shall include at least one member whose primary 
concerns are in scientific areas and at least one member whose primary 
concerns are in nonscientific areas.
    (d) Each IRB shall include at least one member who is not otherwise 
affiliated with the institution and who is not part of the immediate 
family of a person who is affiliated with the institution.
    (e) No IRB may have a member participate in the IRB's initial or 
continuing review of any project in which

[[Page 121]]

the member has a conflicting interest, except to provide information 
requested by the IRB.
    (f) An IRB may, in its discretion, invite individuals with 
competence in special areas to assist in the review of issues which 
require expertise beyond or in addition to that available on the IRB. 
These individuals may not vote with the IRB.



Sec. 46.108  IRB functions and operations.

    In order to fulfill the requirements of this policy each IRB shall:
    (a) Follow written procedures in the same detail as described in 
Sec. 46.103(b)(4) and, to the extent required by, Sec. 46.103(b)(5).
    (b) Except when an expedited review procedure is used (see Sec. 
46.110), review proposed research at convened meetings at which a 
majority of the members of the IRB are present, including at least one 
member whose primary concerns are in nonscientific areas. In order for 
the research to be approved, it shall receive the approval of a majority 
of those members present at the meeting.



Sec. 46.109  IRB review of research.

    (a) An IRB shall review and have authority to approve, require 
modifications in (to secure approval), or disapprove all research 
activities covered by this policy.
    (b) An IRB shall require that information given to subjects as part 
of informed consent is in accordance with Sec. 46.116. The IRB may 
require that information, in addition to that specifically mentioned in 
Sec. 46.116, be given to the subjects when in the IRB's judgment the 
information would meaningfully add to the protection of the rights and 
welfare of subjects.
    (c) An IRB shall require documentation of informed consent or may 
waive documentation in accordance with Sec. 46.117.
    (d) An IRB shall notify investigators and the institution in writing 
of its decision to approve or disapprove the proposed research activity, 
or of modifications required to secure IRB approval of the research 
activity. If the IRB decides to disapprove a research activity, it shall 
include in its written notification a statement of the reasons for its 
decision and give the investigator an opportunity to respond in person 
or in writing.
    (e) An IRB shall conduct continuing review of research covered by 
this policy at intervals appropriate to the degree of risk, but not less 
than once per year, and shall have authority to observe or have a third 
party observe the consent process and the research.

(Approved by the Office of Management and Budget under Control Number 
0990-0260)

[56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 
2005]



Sec. 46.110  Expedited review procedures for certain kinds of research 
involving no more than minimal risk, and for minor changes in approved 
research.

    (a) The Secretary, HHS, has established, and published as a Notice 
in the Federal Register, a list of categories of research that may be 
reviewed by the IRB through an expedited review procedure. The list will 
be amended, as appropriate after consultation with other departments and 
agencies, through periodic republication by the Secretary, HHS, in the 
Federal Register. A copy of the list is available from the Office for 
Human Research Protections, HHS, or any successor office.
    (b) An IRB may use the expedited review procedure to review either 
or both of the following:
    (1) Some or all of the research appearing on the list and found by 
the reviewer(s) to involve no more than minimal risk,
    (2) Minor changes in previously approved research during the period 
(of one year or less) for which approval is authorized.

Under an expedited review procedure, the review may be carried out by 
the IRB chairperson or by one or more experienced reviewers designated 
by the chairperson from among members of the IRB. In reviewing the 
research, the reviewers may exercise all of the authorities of the IRB 
except that the reviewers may not disapprove the research. A research 
activity may be disapproved only after review in accordance with the 
non-expedited procedure set forth in Sec. 46.108(b).

[[Page 122]]

    (c) Each IRB which uses an expedited review procedure shall adopt a 
method for keeping all members advised of research proposals which have 
been approved under the procedure.
    (d) The department or agency head may restrict, suspend, terminate, 
or choose not to authorize an institution's or IRB's use of the 
expedited review procedure.

[56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 
2005]



Sec. 46.111  Criteria for IRB approval of research.

    (a) In order to approve research covered by this policy the IRB 
shall determine that all of the following requirements are satisfied:
    (1) Risks to subjects are minimized: (i) By using procedures which 
are consistent with sound research design and which do not unnecessarily 
expose subjects to risk, and (ii) whenever appropriate, by using 
procedures already being performed on the subjects for diagnostic or 
treatment purposes.
    (2) Risks to subjects are reasonable in relation to anticipated 
benefits, if any, to subjects, and the importance of the knowledge that 
may reasonably be expected to result. In evaluating risks and benefits, 
the IRB should consider only those risks and benefits that may result 
from the research (as distinguished from risks and benefits of therapies 
subjects would receive even if not participating in the research). The 
IRB should not consider possible long-range effects of applying 
knowledge gained in the research (for example, the possible effects of 
the research on public policy) as among those research risks that fall 
within the purview of its responsibility.
    (3) Selection of subjects is equitable. In making this assessment 
the IRB should take into account the purposes of the research and the 
setting in which the research will be conducted and should be 
particularly cognizant of the special problems of research involving 
vulnerable populations, such as children, prisoners, pregnant women, 
mentally disabled persons, or economically or educationally 
disadvantaged persons.
    (4) Informed consent will be sought from each prospective subject or 
the subject's legally authorized representative, in accordance with, and 
to the extent required by Sec. 46.116.
    (5) Informed consent will be appropriately documented, in accordance 
with, and to the extent required by Sec. 46.117.
    (6) When appropriate, the research plan makes adequate provision for 
monitoring the data collected to ensure the safety of subjects.
    (7) When appropriate, there are adequate provisions to protect the 
privacy of subjects and to maintain the confidentiality of data.
    (b) When some or all of the subjects are likely to be vulnerable to 
coercion or undue influence, such as children, prisoners, pregnant 
women, mentally disabled persons, or economically or educationally 
disadvantaged persons, additional safeguards have been included in the 
study to protect the rights and welfare of these subjects.



Sec. 46.112  Review by institution.

    Research covered by this policy that has been approved by an IRB may 
be subject to further appropriate review and approval or disapproval by 
officials of the institution. However, those officials may not approve 
the research if it has not been approved by an IRB.



Sec. 46.113  Suspension or termination of IRB approval of research.

    An IRB shall have authority to suspend or terminate approval of 
research that is not being conducted in accordance with the IRB's 
requirements or that has been associated with unexpected serious harm to 
subjects. Any suspension or termination of approval shall include a 
statement of the reasons for the IRB's action and shall be reported 
promptly to the investigator, appropriate institutional officials, and 
the department or agency head.

(Approved by the Office of Management and Budget under Control Number 
0990-0260)

[56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 
2005]



Sec. 46.114  Cooperative research.

    Cooperative research projects are those projects covered by this 
policy

[[Page 123]]

which involve more than one institution. In the conduct of cooperative 
research projects, each institution is responsible for safeguarding the 
rights and welfare of human subjects and for complying with this policy. 
With the approval of the department or agency head, an institution 
participating in a cooperative project may enter into a joint review 
arrangement, rely upon the review of another qualified IRB, or make 
similar arrangements for avoiding duplication of effort.



Sec. 46.115  IRB records.

    (a) An institution, or when appropriate an IRB, shall prepare and 
maintain adequate documentation of IRB activities, including the 
following:
    (1) Copies of all research proposals reviewed, scientific 
evaluations, if any, that accompany the proposals, approved sample 
consent documents, progress reports submitted by investigators, and 
reports of injuries to subjects.
    (2) Minutes of IRB meetings which shall be in sufficient detail to 
show attendance at the meetings; actions taken by the IRB; the vote on 
these actions including the number of members voting for, against, and 
abstaining; the basis for requiring changes in or disapproving research; 
and a written summary of the discussion of controverted issues and their 
resolution.
    (3) Records of continuing review activities.
    (4) Copies of all correspondence between the IRB and the 
investigators.
    (5) A list of IRB members in the same detail as described is Sec. 
46.103(b)(3).
    (6) Written procedures for the IRB in the same detail as described 
in Sec. 46.103(b)(4) and Sec. 46.103(b)(5).
    (7) Statements of significant new findings provided to subjects, as 
required by Sec. 46.116(b)(5).
    (b) The records required by this policy shall be retained for at 
least 3 years, and records relating to research which is conducted shall 
be retained for at least 3 years after completion of the research. All 
records shall be accessible for inspection and copying by authorized 
representatives of the department or agency at reasonable times and in a 
reasonable manner.

(Approved by the Office of Management and Budget under Control Number 
0990-0260)

[56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 
2005]



Sec. 46.116  General requirements for informed consent.

    Except as provided elsewhere in this policy, no investigator may 
involve a human being as a subject in research covered by this policy 
unless the investigator has obtained the legally effective informed 
consent of the subject or the subject's legally authorized 
representative. An investigator shall seek such consent only under 
circumstances that provide the prospective subject or the representative 
sufficient opportunity to consider whether or not to participate and 
that minimize the possibility of coercion or undue influence. The 
information that is given to the subject or the representative shall be 
in language understandable to the subject or the representative. No 
informed consent, whether oral or written, may include any exculpatory 
language through which the subject or the representative is made to 
waive or appear to waive any of the subject's legal rights, or releases 
or appears to release the investigator, the sponsor, the institution or 
its agents from liability for negligence.
    (a) Basic elements of informed consent. Except as provided in 
paragraph (c) or (d) of this section, in seeking informed consent the 
following information shall be provided to each subject:
    (1) A statement that the study involves research, an explanation of 
the purposes of the research and the expected duration of the subject's 
participation, a description of the procedures to be followed, and 
identification of any procedures which are experimental;
    (2) A description of any reasonably foreseeable risks or discomforts 
to the subject;
    (3) A description of any benefits to the subject or to others which 
may reasonably be expected from the research;
    (4) A disclosure of appropriate alternative procedures or courses of 
treatment, if any, that might be advantageous to the subject;

[[Page 124]]

    (5) A statement describing the extent, if any, to which 
confidentiality of records identifying the subject will be maintained;
    (6) For research involving more than minimal risk, an explanation as 
to whether any compensation and an explanation as to whether any medical 
treatments are available if injury occurs and, if so, what they consist 
of, or where further information may be obtained;
    (7) An explanation of whom to contact for answers to pertinent 
questions about the research and research subjects' rights, and whom to 
contact in the event of a research-related injury to the subject; and
    (8) A statement that participation is voluntary, refusal to 
participate will involve no penalty or loss of benefits to which the 
subject is otherwise entitled, and the subject may discontinue 
participation at any time without penalty or loss of benefits to which 
the subject is otherwise entitled.
    (b) Additional elements of informed consent. When appropriate, one 
or more of the following elements of information shall also be provided 
to each subject:
    (1) A statement that the particular treatment or procedure may 
involve risks to the subject (or to the embryo or fetus, if the subject 
is or may become pregnant) which are currently unforeseeable;
    (2) Anticipated circumstances under which the subject's 
participation may be terminated by the investigator without regard to 
the subject's consent;
    (3) Any additional costs to the subject that may result from 
participation in the research;
    (4) The consequences of a subject's decision to withdraw from the 
research and procedures for orderly termination of participation by the 
subject;
    (5) A statement that significant new findings developed during the 
course of the research which may relate to the subject's willingness to 
continue participation will be provided to the subject; and
    (6) The approximate number of subjects involved in the study.
    (c) An IRB may approve a consent procedure which does not include, 
or which alters, some or all of the elements of informed consent set 
forth above, or waive the requirement to obtain informed consent 
provided the IRB finds and documents that:
    (1) The research or demonstration project is to be conducted by or 
subject to the approval of state or local government officials and is 
designed to study, evaluate, or otherwise examine: (i) Public benefit of 
service programs; (ii) procedures for obtaining benefits or services 
under those programs; (iii) possible changes in or alternatives to those 
programs or procedures; or (iv) possible changes in methods or levels of 
payment for benefits or services under those programs; and
    (2) The research could not practicably be carried out without the 
waiver or alteration.
    (d) An IRB may approve a consent procedure which does not include, 
or which alters, some or all of the elements of informed consent set 
forth in this section, or waive the requirements to obtain informed 
consent provided the IRB finds and documents that:
    (1) The research involves no more than minimal risk to the subjects;
    (2) The waiver or alteration will not adversely affect the rights 
and welfare of the subjects;
    (3) The research could not practicably be carried out without the 
waiver or alteration; and
    (4) Whenever appropriate, the subjects will be provided with 
additional pertinent information after participation.
    (e) The informed consent requirements in this policy are not 
intended to preempt any applicable federal, state, or local laws which 
require additional information to be disclosed in order for informed 
consent to be legally effective.
    (f) Nothing in this policy is intended to limit the authority of a 
physician to provide emergency medical care, to the extent the physician 
is permitted to do so under applicable federal, state, or local law.

(Approved by the Office of Management and Budget under Control Number 
0990-0260)

[56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 
2005]

[[Page 125]]



Sec. 46.117  Documentation of informed consent.

    (a) Except as provided in paragraph (c) of this section, informed 
consent shall be documented by the use of a written consent form 
approved by the IRB and signed by the subject or the subject's legally 
authorized representative. A copy shall be given to the person signing 
the form.
    (b) Except as provided in paragraph (c) of this section, the consent 
form may be either of the following:
    (1) A written consent document that embodies the elements of 
informed consent required by Sec. 46.116. This form may be read to the 
subject or the subject's legally authorized representative, but in any 
event, the investigator shall give either the subject or the 
representative adequate opportunity to read it before it is signed; or
    (2) A short form written consent document stating that the elements 
of informed consent required by Sec. 46.116 have been presented orally 
to the subject or the subject's legally authorized representative. When 
this method is used, there shall be a witness to the oral presentation. 
Also, the IRB shall approve a written summary of what is to be said to 
the subject or the representative. Only the short form itself is to be 
signed by the subject or the representative. However, the witness shall 
sign both the short form and a copy of the summary, and the person 
actually obtaining consent shall sign a copy of the summary. A copy of 
the summary shall be given to the subject or the representative, in 
addition to a copy of the short form.
    (c) An IRB may waive the requirement for the investigator to obtain 
a signed consent form for some or all subjects if it finds either:
    (1) That the only record linking the subject and the research would 
be the consent document and the principal risk would be potential harm 
resulting from a breach of confidentiality. Each subject will be asked 
whether the subject wants documentation linking the subject with the 
research, and the subject's wishes will govern; or
    (2) That the research presents no more than minimal risk of harm to 
subjects and involves no procedures for which written consent is 
normally required outside of the research context.
    In cases in which the documentation requirement is waived, the IRB 
may require the investigator to provide subjects with a written 
statement regarding the research.

(Approved by the Office of Management and Budget under Control Number 
0990-0260)

[56 FR 28012, 28022, June 18, 1991, as amended at 70 FR 36328, June 23, 
2005]



Sec. 46.118  Applications and proposals lacking definite plans for 
involvement of human subjects.

    Certain types of applications for grants, cooperative agreements, or 
contracts are submitted to departments or agencies with the knowledge 
that subjects may be involved within the period of support, but definite 
plans would not normally be set forth in the application or proposal. 
These include activities such as institutional type grants when 
selection of specific projects is the institution's responsibility; 
research training grants in which the activities involving subjects 
remain to be selected; and projects in which human subjects' involvement 
will depend upon completion of instruments, prior animal studies, or 
purification of compounds. These applications need not be reviewed by an 
IRB before an award may be made. However, except for research exempted 
or waived under Sec. 46.101 (b) or (i), no human subjects may be 
involved in any project supported by these awards until the project has 
been reviewed and approved by the IRB, as provided in this policy, and 
certification submitted, by the institution, to the department or 
agency.



Sec. 46.119  Research undertaken without the intention of involving human 
subjects.

    In the event research is undertaken without the intention of 
involving human subjects, but it is later proposed to involve human 
subjects in the research, the research shall first be reviewed and 
approved by an IRB, as provided in this policy, a certification 
submitted, by the institution, to the department or agency, and final 
approval given to the proposed change by the department or agency.

[[Page 126]]



Sec. 46.120  Evaluation and disposition of applications and proposals 
for research to be conducted or supported by a Federal Department or Agency.

    (a) The department or agency head will evaluate all applications and 
proposals involving human subjects submitted to the department or agency 
through such officers and employees of the department or agency and such 
experts and consultants as the department or agency head determines to 
be appropriate. This evaluation will take into consideration the risks 
to the subjects, the adequacy of protection against these risks, the 
potential benefits of the research to the subjects and others, and the 
importance of the knowledge gained or to be gained.
    (b) On the basis of this evaluation, the department or agency head 
may approve or disapprove the application or proposal, or enter into 
negotiations to develop an approvable one.



Sec. 46.121  [Reserved]



Sec. 46.122  Use of Federal funds.

    Federal funds administered by a department or agency may not be 
expended for research involving human subjects unless the requirements 
of this policy have been satisfied.



Sec. 46.123  Early termination of research support: Evaluation of 
applications and proposals.

    (a) The department or agency head may require that department or 
agency support for any project be terminated or suspended in the manner 
prescribed in applicable program requirements, when the department or 
agency head finds an institution has materially failed to comply with 
the terms of this policy.
    (b) In making decisions about supporting or approving applications 
or proposals covered by this policy the department or agency head may 
take into account, in addition to all other eligibility requirements and 
program criteria, factors such as whether the applicant has been subject 
to a termination or suspension under paragarph (a) of this section and 
whether the applicant or the person or persons who would direct or has 
have directed the scientific and technical aspects of an activity has 
have, in the judgment of the department or agency head, materially 
failed to discharge responsibility for the protection of the rights and 
welfare of human subjects (whether or not the research was subject to 
federal regulation).



Sec. 46.124  Conditions.

    With respect to any research project or any class of research 
projects the department or agency head may impose additional conditions 
prior to or at the time of approval when in the judgment of the 
department or agency head additional conditions are necessary for the 
protection of human subjects.



 Subpart B_Additional Protections for Pregnant Women, Human Fetuses and 
                      Neonates Involved in Research

    Source: 66 FR 56778, Nov. 13, 2001, unless otherwise noted.



Sec. 46.201  To what do these regulations apply?

    (a) Except as provided in paragraph (b) of this section, this 
subpart applies to all research involving pregnant women, human fetuses, 
neonates of uncertain viability, or nonviable neonates conducted or 
supported by the Department of Health and Human Services (DHHS). This 
includes all research conducted in DHHS facilities by any person and all 
research conducted in any facility by DHHS employees.
    (b) The exemptions at Sec. 46.101(b)(1) through (6) are applicable 
to this subpart.
    (c) The provisions of Sec. 46.101(c) through (i) are applicable to 
this subpart. Reference to State or local laws in this subpart and in 
Sec. 46.101(f) is intended to include the laws of federally recognized 
American Indian and Alaska Native Tribal Governments.
    (d) The requirements of this subpart are in addition to those 
imposed under the other subparts of this part.



Sec. 46.202  Definitions.

    The definitions in Sec. 46.102 shall be applicable to this subpart 
as well. In addition, as used in this subpart:

[[Page 127]]

    (a) Dead fetus means a fetus that exhibits neither heartbeat, 
spontaneous respiratory activity, spontaneous movement of voluntary 
muscles, nor pulsation of the umbilical cord.
    (b) Delivery means complete separation of the fetus from the woman 
by expulsion or extraction or any other means.
    (c) Fetus means the product of conception from implantation until 
delivery.
    (d) Neonate means a newborn.
    (e) Nonviable neonate means a neonate after delivery that, although 
living, is not viable.
    (f) Pregnancy encompasses the period of time from implantation until 
delivery. A woman shall be assumed to be pregnant if she exhibits any of 
the pertinent presumptive signs of pregnancy, such as missed menses, 
until the results of a pregnancy test are negative or until delivery.
    (g) Secretary means the Secretary of Health and Human Services and 
any other officer or employee of the Department of Health and Human 
Services to whom authority has been delegated.
    (h) Viable, as it pertains to the neonate, means being able, after 
delivery, to survive (given the benefit of available medical therapy) to 
the point of independently maintaining heartbeat and respiration. The 
Secretary may from time to time, taking into account medical advances, 
publish in the Federal Register guidelines to assist in determining 
whether a neonate is viable for purposes of this subpart. If a neonate 
is viable then it may be included in research only to the extent 
permitted and in accordance with the requirements of subparts A and D of 
this part.



Sec. 46.203  Duties of IRBs in connection with research involving pregnant 
women, fetuses, and neonates.

    In addition to other responsibilities assigned to IRBs under this 
part, each IRB shall review research covered by this subpart and approve 
only research which satisfies the conditions of all applicable sections 
of this subpart and the other subparts of this part.



Sec. 46.204  Research involving pregnant women or fetuses.

    Pregnant women or fetuses may be involved in research if all of the 
following conditions are met:
    (a) Where scientifically appropriate, preclinical studies, including 
studies on pregnant animals, and clinical studies, including studies on 
nonpregnant women, have been conducted and provide data for assessing 
potential risks to pregnant women and fetuses;
    (b) The risk to the fetus is caused solely by interventions or 
procedures that hold out the prospect of direct benefit for the woman or 
the fetus; or, if there is no such prospect of benefit, the risk to the 
fetus is not greater than minimal and the purpose of the research is the 
development of important biomedical knowledge which cannot be obtained 
by any other means;
    (c) Any risk is the least possible for achieving the objectives of 
the research;
    (d) If the research holds out the prospect of direct benefit to the 
pregnant woman, the prospect of a direct benefit both to the pregnant 
woman and the fetus, or no prospect of benefit for the woman nor the 
fetus when risk to the fetus is not greater than minimal and the purpose 
of the research is the development of important biomedical knowledge 
that cannot be obtained by any other means, her consent is obtained in 
accord with the informed consent provisions of subpart A of this part;
    (e) If the research holds out the prospect of direct benefit solely 
to the fetus then the consent of the pregnant woman and the father is 
obtained in accord with the informed consent provisions of subpart A of 
this part, except that the father's consent need not be obtained if he 
is unable to consent because of unavailability, incompetence, or 
temporary incapacity or the pregnancy resulted from rape or incest.
    (f) Each individual providing consent under paragraph (d) or (e) of 
this section is fully informed regarding the reasonably foreseeable 
impact of the research on the fetus or neonate;
    (g) For children as defined in Sec. 46.402(a) who are pregnant, 
assent and permission are obtained in accord with the provisions of 
subpart D of this part;

[[Page 128]]

    (h) No inducements, monetary or otherwise, will be offered to 
terminate a pregnancy;
    (i) Individuals engaged in the research will have no part in any 
decisions as to the timing, method, or procedures used to terminate a 
pregnancy; and
    (j) Individuals engaged in the research will have no part in 
determining the viability of a neonate.



Sec. 46.205  Research involving neonates.

    (a) Neonates of uncertain viability and nonviable neonates may be 
involved in research if all of the following conditions are met:
    (1) Where scientifically appropriate, preclinical and clinical 
studies have been conducted and provide data for assessing potential 
risks to neonates.
    (2) Each individual providing consent under paragraph (b)(2) or 
(c)(5) of this section is fully informed regarding the reasonably 
foreseeable impact of the research on the neonate.
    (3) Individuals engaged in the research will have no part in 
determining the viability of a neonate.
    (4) The requirements of paragraph (b) or (c) of this section have 
been met as applicable.
    (b) Neonates of uncertain viability. Until it has been ascertained 
whether or not a neonate is viable, a neonate may not be involved in 
research covered by this subpart unless the following additional 
conditions are met:
    (1) The IRB determines that:
    (i) The research holds out the prospect of enhancing the probability 
of survival of the neonate to the point of viability, and any risk is 
the least possible for achieving that objective, or
    (ii) The purpose of the research is the development of important 
biomedical knowledge which cannot be obtained by other means and there 
will be no added risk to the neonate resulting from the research; and
    (2) The legally effective informed consent of either parent of the 
neonate or, if neither parent is able to consent because of 
unavailability, incompetence, or temporary incapacity, the legally 
effective informed consent of either parent's legally authorized 
representative is obtained in accord with subpart A of this part, except 
that the consent of the father or his legally authorized representative 
need not be obtained if the pregnancy resulted from rape or incest.
    (c) Nonviable neonates. After delivery nonviable neonate may not be 
involved in research covered by this subpart unless all of the following 
additional conditions are met:
    (1) Vital functions of the neonate will not be artificially 
maintained;
    (2) The research will not terminate the heartbeat or respiration of 
the neonate;
    (3) There will be no added risk to the neonate resulting from the 
research;
    (4) The purpose of the research is the development of important 
biomedical knowledge that cannot be obtained by other means; and
    (5) The legally effective informed consent of both parents of the 
neonate is obtained in accord with subpart A of this part, except that 
the waiver and alteration provisions of Sec. 46.116(c) and (d) do not 
apply. However, if either parent is unable to consent because of 
unavailability, incompetence, or temporary incapacity, the informed 
consent of one parent of a nonviable neonate will suffice to meet the 
requirements of this paragraph (c)(5), except that the consent of the 
father need not be obtained if the pregnancy resulted from rape or 
incest. The consent of a legally authorized representative of either or 
both of the parents of a nonviable neonate will not suffice to meet the 
requirements of this paragraph (c)(5).
    (d) Viable neonates. A neonate, after delivery, that has been 
determined to be viable may be included in research only to the extent 
permitted by and in accord with the requirements of subparts A and D of 
this part.



Sec. 46.206  Research involving, after delivery, the placenta, the dead 
fetus or fetal material.

    (a) Research involving, after delivery, the placenta; the dead 
fetus; macerated fetal material; or cells, tissue, or organs excised 
from a dead fetus, shall be conducted only in accord with any applicable 
Federal, State, or local laws and regulations regarding such activities.

[[Page 129]]

    (b) If information associated with material described in paragraph 
(a) of this section is recorded for research purposes in a manner that 
living individuals can be identified, directly or through identifiers 
linked to those individuals, those individuals are research subjects and 
all pertinent subparts of this part are applicable.



Sec. 46.207  Research not otherwise approvable which presents an opportunity 
to understand, prevent, or alleviate a serious problem affecting the health or 
          welfare of pregnant women, fetuses, or neonates.

    The Secretary will conduct or fund research that the IRB does not 
believe meets the requirements of Sec. Sec. 46.204 or 46.205 only if:
    (a) The IRB finds that the research presents a reasonable 
opportunity to further the understanding, prevention, or alleviation of 
a serious problem affecting the health or welfare of pregnant women, 
fetuses or neonates; and
    (b) The Secretary, after consultation with a panel of experts in 
pertinent disciplines (for example: science, medicine, ethics, law) and 
following opportunity for public review and comment, including a public 
meeting announced in the Federal Register, has determined either:
    (1) That the research in fact satisfies the conditions of Sec. 
46.204, as applicable; or
    (2) The following:
    (i) The research presents a reasonable opportunity to further the 
understanding, prevention, or alleviation of a serious problem affecting 
the health or welfare of pregnant women, fetuses or neonates;
    (ii) The research will be conducted in accord with sound ethical 
principles; and
    (iii) Informed consent will be obtained in accord with the informed 
consent provisions of subpart A and other applicable subparts of this 
part.



Subpart C_Additional Protections Pertaining to Biomedical and Behavioral 
                Research Involving Prisoners as Subjects

    Source: 43 FR 53655, Nov. l6, l978, unless otherwise noted.



Sec. 46.301  Applicability.

    (a) The regulations in this subpart are applicable to all biomedical 
and behavioral research conducted or supported by the Department of 
Health and Human Services involving prisoners as subjects.
    (b) Nothing in this subpart shall be construed as indicating that 
compliance with the procedures set forth herein will authorize research 
involving prisoners as subjects, to the extent such research is limited 
or barred by applicable State or local law.
    (c) The requirements of this subpart are in addition to those 
imposed under the other subparts of this part.



Sec. 46.302  Purpose.

    Inasmuch as prisoners may be under constraints because of their 
incarceration which could affect their ability to make a truly voluntary 
and uncoerced decision whether or not to participate as subjects in 
research, it is the purpose of this subpart to provide additional 
safeguards for the protection of prisoners involved in activities to 
which this subpart is applicable.



Sec. 46.303  Definitions.

    As used in this subpart:
    (a) Secretary means the Secretary of Health and Human Services and 
any other officer or employee of the Department of Health and Human 
Services to whom authority has been delegated.
    (b) DHHS means the Department of Health and Human Services.
    (c) Prisoner means any individual involuntarily confined or detained 
in a penal institution. The term is intended to encompass individuals 
sentenced to such an institution under a criminal or civil statute, 
individuals detained in other facilities by virtue of statutes or 
commitment procedures which provide alternatives to criminal prosecution 
or incarceration in a penal institution, and individuals detained 
pending arraignment, trial, or sentencing.
    (d) Minimal risk is the probability and magnitude of physical or 
psychological harm that is normally encountered in the daily lives, or 
in the routine medical, dental, or psychological examination of healthy 
persons.

[[Page 130]]



Sec. 46.304  Composition of Institutional Review Boards where prisoners 
are involved.

    In addition to satisfying the requirements in Sec. 46.107 of this 
part, an Institutional Review Board, carrying out responsibilities under 
this part with respect to research covered by this subpart, shall also 
meet the following specific requirements:
    (a) A majority of the Board (exclusive of prisoner members) shall 
have no association with the prison(s) involved, apart from their 
membership on the Board.
    (b) At least one member of the Board shall be a prisoner, or a 
prisoner representative with appropriate background and experience to 
serve in that capacity, except that where a particular research project 
is reviewed by more than one Board only one Board need satisfy this 
requirement.

[43 FR 53655, Nov. 16, 1978, as amended at 46 FR 8386, Jan. 26, 1981]



Sec. 46.305  Additional duties of the Institutional Review Boards where 
prisoners are involved.

    (a) In addition to all other responsibilities prescribed for 
Institutional Review Boards under this part, the Board shall review 
research covered by this subpart and approve such research only if it 
finds that:
    (1) The research under review represents one of the categories of 
research permissible under Sec. 46.306(a)(2);
    (2) Any possible advantages accruing to the prisoner through his or 
her participation in the research, when compared to the general living 
conditions, medical care, quality of food, amenities and opportunity for 
earnings in the prison, are not of such a magnitude that his or her 
ability to weigh the risks of the research against the value of such 
advantages in the limited choice environment of the prison is impaired;
    (3) The risks involved in the research are commensurate with risks 
that would be accepted by nonprisoner volunteers;
    (4) Procedures for the selection of subjects within the prison are 
fair to all prisoners and immune from arbitrary intervention by prison 
authorities or prisoners. Unless the principal investigator provides to 
the Board justification in writing for following some other procedures, 
control subjects must be selected randomly from the group of available 
prisoners who meet the characteristics needed for that particular 
research project;
    (5) The information is presented in language which is understandable 
to the subject population;
    (6) Adequate assurance exists that parole boards will not take into 
account a prisoner's participation in the research in making decisions 
regarding parole, and each prisoner is clearly informed in advance that 
participation in the research will have no effect on his or her parole; 
and
    (7) Where the Board finds there may be a need for follow-up 
examination or care of participants after the end of their 
participation, adequate provision has been made for such examination or 
care, taking into account the varying lengths of individual prisoners' 
sentences, and for informing participants of this fact.
    (b) The Board shall carry out such other duties as may be assigned 
by the Secretary.
    (c) The institution shall certify to the Secretary, in such form and 
manner as the Secretary may require, that the duties of the Board under 
this section have been fulfilled.



Sec. 46.306  Permitted research involving prisoners.

    (a) Biomedical or behavioral research conducted or supported by DHHS 
may involve prisoners as subjects only if:
    (1) The institution responsible for the conduct of the research has 
certified to the Secretary that the Institutional Review Board has 
approved the research under Sec. 46.305 of this subpart; and
    (2) In the judgment of the Secretary the proposed research involves 
solely the following:
    (i) Study of the possible causes, effects, and processes of 
incarceration, and of criminal behavior, provided that the study 
presents no more than minimal risk and no more than inconvenience to the 
subjects;
    (ii) Study of prisons as institutional structures or of prisoners as 
incarcerated persons, provided that the study

[[Page 131]]

presents no more than minimal risk and no more than inconvenience to the 
subjects;
    (iii) Research on conditions particularly affecting prisoners as a 
class (for example, vaccine trials and other research on hepatitis which 
is much more prevalent in prisons than elsewhere; and research on social 
and psychological problems such as alcoholism, drug addiction and sexual 
assaults) provided that the study may proceed only after the Secretary 
has consulted with appropriate experts including experts in penology 
medicine and ethics, and published notice, in the Federal Register, of 
his intent to approve such research; or
    (iv) Research on practices, both innovative and accepted, which have 
the intent and reasonable probability of improving the health or well-
being of the subject. In cases in which those studies require the 
assignment of prisoners in a manner consistent with protocols approved 
by the IRB to control groups which may not benefit from the research, 
the study may proceed only after the Secretary has consulted with 
appropriate experts, including experts in penology medicine and ethics, 
and published notice, in the Federal Register, of his intent to approve 
such research.
    (b) Except as provided in paragraph (a) of this section, biomedical 
or behavioral research conducted or supported by DHHS shall not involve 
prisoners as subjects.



 Subpart D_Additional Protections for Children Involved as Subjects in 
                                Research

    Source: 48 FR 9818, Mar. 8, 1983, unless otherwise noted.



Sec. 46.401  To what do these regulations apply?

    (a) This subpart applies to all research involving children as 
subjects, conducted or supported by the Department of Health and Human 
Services.
    (1) This includes research conducted by Department employees, except 
that each head of an Operating Division of the Department may adopt such 
nonsubstantive, procedural modifications as may be appropriate from an 
administrative standpoint.
    (2) It also includes research conducted or supported by the 
Department of Health and Human Services outside the United States, but 
in appropriate circumstances, the Secretary may, under paragraph (e) of 
Sec. 46.101 of Subpart A, waive the applicability of some or all of the 
requirements of these regulations for research of this type.
    (b) Exemptions at Sec. 46.101(b)(1) and (b)(3) through (b)(6) are 
applicable to this subpart. The exemption at Sec. 46.101(b)(2) 
regarding educational tests is also applicable to this subpart. However, 
the exemption at Sec. 46.101(b)(2) for research involving survey or 
interview procedures or observations of public behavior does not apply 
to research covered by this subpart, except for research involving 
observation of public behavior when the investigator(s) do not 
participate in the activities being observed.
    (c) The exceptions, additions, and provisions for waiver as they 
appear in paragraphs (c) through (i) of Sec. 46.101 of Subpart A are 
applicable to this subpart.

[48 FR 9818, Mar. 8, 1983; 56 FR 28032, June 18, 1991; 56 FR 29757, June 
28, 1991]



Sec. 46.402  Definitions.

    The definitions in Sec. 46.102 of Subpart A shall be applicable to 
this subpart as well. In addition, as used in this subpart:
    (a) Children are persons who have not attained the legal age for 
consent to treatments or procedures involved in the research, under the 
applicable law of the jurisdiction in which the research will be 
conducted.
    (b) Assent means a child's affirmative agreement to participate in 
research. Mere failure to object should not, absent affirmative 
agreement, be construed as assent.
    (c) Permission means the agreement of parent(s) or guardian to the 
participation of their child or ward in research.
    (d) Parent means a child's biological or adoptive parent.
    (e) Guardian means an individual who is authorized under applicable 
State or local law to consent on behalf of a child to general medical 
care.

[[Page 132]]



Sec. 46.403  IRB duties.

    In addition to other responsibilities assigned to IRBs under this 
part, each IRB shall review research covered by this subpart and approve 
only research which satisfies the conditions of all applicable sections 
of this subpart.



Sec. 46.404  Research not involving greater than minimal risk.

    HHS will conduct or fund research in which the IRB finds that no 
greater than minimal risk to children is presented, only if the IRB 
finds that adequate provisions are made for soliciting the assent of the 
children and the permission of their parents or guardians, as set forth 
in Sec. 46.408.



Sec. 46.405  Research involving greater than minimal risk but presenting 
the prospect of direct benefit to the individual subjects.

    HHS will conduct or fund research in which the IRB finds that more 
than minimal risk to children is presented by an intervention or 
procedure that holds out the prospect of direct benefit for the 
individual subject, or by a monitoring procedure that is likely to 
contribute to the subject's well-being, only if the IRB finds that:
    (a) The risk is justified by the anticipated benefit to the 
subjects;
    (b) The relation of the anticipated benefit to the risk is at least 
as favorable to the subjects as that presented by available alternative 
approaches; and
    (c) Adequate provisions are made for soliciting the assent of the 
children and permission of their parents or guardians, as set forth in 
Sec. 46.408.



Sec. 46.406  Research involving greater than minimal risk and no prospect 
of direct benefit to individual subjects, but likely to yield generalizable 
knowledge about the subject's disorder or condition.

    HHS will conduct or fund research in which the IRB finds that more 
than minimal risk to children is presented by an intervention or 
procedure that does not hold out the prospect of direct benefit for the 
individual subject, or by a monitoring procedure which is not likely to 
contribute to the well-being of the subject, only if the IRB finds that:
    (a) The risk represents a minor increase over minimal risk;
    (b) The intervention or procedure presents experiences to subjects 
that are reasonably commensurate with those inherent in their actual or 
expected medical, dental, psychological, social, or educational 
situations;
    (c) The intervention or procedure is likely to yield generalizable 
knowledge about the subjects' disorder or condition which is of vital 
importance for the understanding or amelioration of the subjects' 
disorder or condition; and
    (d) Adequate provisions are made for soliciting assent of the 
children and permission of their parents or guardians, as set forth in 
Sec. 46.408.



Sec. 46.407  Research not otherwise approvable which presents an opportunity 
to understand, prevent, or alleviate a serious problem affecting the health or 
welfare of children.

    HHS will conduct or fund research that the IRB does not believe 
meets the requirements of Sec. 46.404, Sec. 46.405, or Sec. 46.406 
only if:
    (a) The IRB finds that the research presents a reasonable 
opportunity to further the understanding, prevention, or alleviation of 
a serious problem affecting the health or welfare of children; and
    (b) The Secretary, after consultation with a panel of experts in 
pertinent disciplines (for example: science, medicine, education, 
ethics, law) and following opportunity for public review and comment, 
has determined either:
    (1) That the research in fact satisfies the conditions of Sec. 
46.404, Sec. 46.405, or Sec. 46.406, as applicable, or
    (2) The following:
    (i) The research presents a reasonable opportunity to further the 
understanding, prevention, or alleviation of a serious problem affecting 
the health or welfare of children;
    (ii) The research will be conducted in accordance with sound ethical 
principles;
    (iii) Adequate provisions are made for soliciting the assent of 
children and the permission of their parents or guardians, as set forth 
in Sec. 46.408.

[[Page 133]]



Sec. 46.408  Requirements for permission by parents or guardians and for 
assent by children.

    (a) In addition to the determinations required under other 
applicable sections of this subpart, the IRB shall determine that 
adequate provisions are made for soliciting the assent of the children, 
when in the judgment of the IRB the children are capable of providing 
assent. In determining whether children are capable of assenting, the 
IRB shall take into account the ages, maturity, and psychological state 
of the children involved. This judgment may be made for all children to 
be involved in research under a particular protocol, or for each child, 
as the IRB deems appropriate. If the IRB determines that the capability 
of some or all of the children is so limited that they cannot reasonably 
be consulted or that the intervention or procedure involved in the 
research holds out a prospect of direct benefit that is important to the 
health or well-being of the children and is available only in the 
context of the research, the assent of the children is not a necessary 
condition for proceeding with the research. Even where the IRB 
determines that the subjects are capable of assenting, the IRB may still 
waive the assent requirement under circumstances in which consent may be 
waived in accord with Sec. 46.116 of Subpart A.
    (b) In addition to the determinations required under other 
applicable sections of this subpart, the IRB shall determine, in 
accordance with and to the extent that consent is required by Sec. 
46.116 of Subpart A, that adequate provisions are made for soliciting 
the permission of each child's parents or guardian. Where parental 
permission is to be obtained, the IRB may find that the permission of 
one parent is sufficient for research to be conducted under Sec. 46.404 
or Sec. 46.405. Where research is covered by Sec. Sec. 46.406 and 
46.407 and permission is to be obtained from parents, both parents must 
give their permission unless one parent is deceased, unknown, 
incompetent, or not reasonably available, or when only one parent has 
legal responsibility for the care and custody of the child.
    (c) In addition to the provisions for waiver contained in Sec. 
46.116 of Subpart A, if the IRB determines that a research protocol is 
designed for conditions or for a subject population for which parental 
or guardian permission is not a reasonable requirement to protect the 
subjects (for example, neglected or abused children), it may waive the 
consent requirements in Subpart A of this part and paragraph (b) of this 
section, provided an appropriate mechanism for protecting the children 
who will participate as subjects in the research is substituted, and 
provided further that the waiver is not inconsistent with Federal, state 
or local law. The choice of an appropriate mechanism would depend upon 
the nature and purpose of the activities described in the protocol, the 
risk and anticipated benefit to the research subjects, and their age, 
maturity, status, and condition.
    (d) Permission by parents or guardians shall be documented in 
accordance with and to the extent required by Sec. 46.117 of Subpart A.
    (e) When the IRB determines that assent is required, it shall also 
determine whether and how assent must be documented.



Sec. 46.409  Wards.

    (a) Children who are wards of the state or any other agency, 
institution, or entity can be included in research approved under Sec. 
46.406 or Sec. 46.407 only if such research is:
    (1) Related to their status as wards; or
    (2) Conducted in schools, camps, hospitals, institutions, or similar 
settings in which the majority of children involved as subjects are not 
wards.
    (b) If the research is approved under paragraph (a) of this section, 
the IRB shall require appointment of an advocate for each child who is a 
ward, in addition to any other individual acting on behalf of the child 
as guardian or in loco parentis. One individual may serve as advocate 
for more than one child. The advocate shall be an individual who has the 
background and experience to act in, and agrees to act in, the best 
interests of the child for the duration of the child's participation in 
the research and who is not associated in any way (except in the role as 
advocate or member of the IRB) with the research,

[[Page 134]]

the investigator(s), or the guardian organization.



PART 50_U.S. EXCHANGE VISITOR PROGRAM_REQUEST FOR WAIVER OF THE TWO-YEAR 
FOREIGN RESIDENCE REQUIREMENT--Table of Contents




Sec.
50.1 Authority.
50.2 Exchange Visitor Waiver Review Board.
50.3 Policy.
50.4 Waivers for research.
50.5 Waivers for the delivery of health care service.
50.6 Procedures for submission of application to HHS.
50.7 Personal hardship, persecution and visa extension considerations.
50.8 Compliance.

    Authority: 75 Stat. 527 (22 U.S.C. 2451 et seq.); 84 Stat. 116 (8 
U.S.C. 1182(e)).

    Source: 49 FR 9900, Mar. 16, 1984, unless otherwise noted.



Sec. 50.1  Authority.

    Under the authority of Mutual Educational and Cultural Exchange Act 
of 1961 (75 Stat. 527) and the Immigration and Nationality Act as 
amended (84 Stat. 116), the Department of Health and Human Services is 
an ``interested United States Government agency'' with the authority to 
request the Department of State to recommend to the Attorney General 
waiver of the two-year foreign residence requirement for Exchange 
Visitors under the Mutual Educational and Cultural Exchange Program. HHS 
eligibility requirement criteria for waivers are in addition to and 
independent of the existing waiver and visa criteria established by the 
Immigration and Naturalization Service (INS), the Department of State, 
and the Department of Labor. The waiver regulations described in this 
part do not relieve alien physicians seeking a waiver of the 2-year 
foreign residence requirement from complying with the terms and 
conditions imposed on their admission to the United States.

[67 FR 77695, Dec. 19, 2002]



Sec. 50.2  Exchange Visitor Waiver Review Board.

    (a) Establishment. The Exchange Visitor Waiver Review Board is 
established to carry out the Department's responsibilities under the 
Exchange Visitor Program.
    (b) Functions. The Exchange Visitor Waiver Review Board is 
responsible for making thorough and equitable evaluations of 
applications submitted by institutions, acting on behalf of Exchange 
Visitors, to HHS for a favorable recommendation to the Department of 
State that the two-year foreign residence requirement for Exchange 
Visitors under the Exchange Visitor Program be waived.
    (c) Membership. The Exchange Visitor Waiver Review Board consists of 
no fewer than three members and two alternates, of whom no fewer than 
three will consider any particular application. The Director of the 
Office of Global Health Affairs, Office of the Secretary, is an ex 
officio member of the Board and serves as its Chairman. The Director may 
designate a staff member of the Office of the Secretary to serve as 
member and Chairman of the Board in the Director's absence. The 
Assistant Secretary for Health appoints two regularly assigned members 
and two alternates to consider applications concerning health, 
biomedical research, and related fields. The Chairman may request the 
heads of operating divisions of the Department to appoint additional 
members to consider applications in other fields of interest to the 
Department. The Board may obtain expert advisory opinions from other 
sources. The Board may establish a workgroup from the operating 
divisions of the Department to consider applications for waivers based 
on the need for the delivery of health care services to underserved 
populations.

[49 FR 9900, Mar. 16, 1984, as amended at 67 FR 77695, Dec. 19, 2002]



Sec. 50.3  Policy.

    (a) Policy for waivers. The Department of Health and Human Services 
endorses the philosophy that Exchange Visitors are committed to return 
home for at least two years after completing their program. This 
requirement was imposed to prevent the Program from becoming a stepping 
stone to immigration and to ensure that Exchange Visitors make available 
to their home countries their new knowledge and skills obtained in the 
United States.

[[Page 135]]

The Department will request waivers for the delivery of health care 
service to carry out the Department's mission to increase access to care 
for the nation's most medically underserved individuals. However, in 
keeping with the philosophy of the Program, the Exchange Visitor Waiver 
Review Board may determine the appropriate numbers and geographic areas 
for waivers for the delivery of health care service.
    (b) Criteria for waivers. The Exchange Visitor Waiver Review Board 
carefully applies stringent and restrictive criteria to its 
consideration of requests that it support waivers for Exchange Visitors. 
Each application is evaluated individually based on the facts available.
    (c) Waiver for members of Exchange Visitor's family. Where a 
decision is made to request a waiver for an Exchange Visitor, a waiver 
will also be requested for the spouse and children, if any, if they have 
J-2 visa status. When both members of a married couple are Exchange 
Visitors in their own right (i.e., each has J-1 visa status), separate 
applications must be submitted for each of them.

[67 FR 77696, Dec. 19, 2002]



Sec. 50.4  Waivers for research.

    In determining whether to request a waiver for an Exchange Visitor 
engaged in the conduct of research, the Board considers the following 
key factors:
    (a) The program or activity at the applicant institution or 
organization in which the Exchange Visitor is employed must be of high 
priority and of national or international significance in an area of 
interest to the Department.
    (b) The Exchange Visitor must be needed as an integral part of the 
program or activity, or of an essential component thereof, so that loss 
of his/her services would necessitate discontinuance of the program, or 
a major phase of it. Specific evidence must be provided on how the loss 
or unavailability of the individual's services would adversely affect 
the initiation, continuance, completion, or success of the program or 
activity. The applicant organization/institution must clearly 
demonstrate that a suitable replacement for the Exchange Visitor cannot 
be found through recruitment or any other means. The Board will not 
request a waiver when the principal problem appears to be one of 
administrative, budgetary, or program inconvenience to the institution 
or other employer.
    (c) The Exchange Visitor must possess outstanding qualifications, 
training and experience well beyond the usually expected accomplishments 
at the graduate, postgraduate, and residency levels, and must clearly 
demonstrate the capability to make original and significant 
contributions to the program. The Board will not request a waiver simply 
because an individual has specialized training or experience or is 
occupying a senior staff position in a university, hospital, or other 
institution.

[67 FR 77696, Dec. 19, 2002]



Sec. 50.5  Waivers for the delivery of health care service.

    In determining whether to request a waiver for an Exchange Visitor 
to deliver health care service, the Board will consider information from 
and coordinate with State Departments of Public Health (or the 
equivalent), other ``interested government agencies'' which request 
waivers, and other relevant agencies. The Board requires the following 
criteria for requests for waivers for the delivery of health care 
service:
    (a) The Exchange Visitor must submit a statement that he or she does 
not have pending and will not submit any other ``interested government 
agency'' waiver request while HHS processes the waiver request being 
submitted.
    (b) Waivers are limited to primary care physicians and general 
psychiatrists who have completed their primary care or psychiatric 
residency training programs no more than12 months before the date of 
commencement of employment under the contract described in subparagraph 
(d). This 12-month eligibility limitation is to ensure that the 
physicians' primary care training is current and they are not engaged in 
subspecialty training. This HHS eligibility requirement relates only to 
eligibility for an HHS

[[Page 136]]

waiver request and does not relieve physicians of the responsibility to 
maintain lawful status. Alien physicians are strongly encouraged to 
begin the waiver process as early as they possibly can while still in 
the residency training program. Early filing of the waiver request by 
the alien physician, coupled with timely processing of the request by 
the relevant government agencies, will facilitate the timely completion 
of the waiver process before the authorized J-1 admission expires, and 
the physician's subsequent application for change of nonimmigrant status 
from J-1 to H-1B.
    (c) Primary care physicians are defined as: physicians practicing 
general internal medicine, pediatrics, family practice or obstetrics/
gynecology willing to work in a primary care Health Professional 
Shortage Area (HPSA) or Medically Underserved Area or Population (MUA/
P); and general psychiatrists who are willing to work in a Mental Health 
HPSA. Note: these HHS eligibility criteria for waivers are in addition 
to and independent of the existing waiver and visa criteria established 
by the Immigration and Naturalization Service (INS), the Department of 
State, and the Department of Labor.
    (d) The Exchange Visitor must have entered a contract with the 
applicant employer. This contract must:
    (1) Require the Exchange Visitor to provide primary medical care in 
a facility physically located in an HHS-designated primary care HPSA or 
MUA/P, or general psychiatric care in a Mental Health HPSA.
    (2) Require the Exchange Visitor to complete a term of employment of 
not less than three years providing primary care health services for not 
less than 40 hours per week.
    (3) Require the Exchange Visitor to:
    (i) Be licensed by the State where he or she will practice;
    (ii) Have completed a residency in one of the following specialties: 
family practice, general pediatrics, obstetrics/gynecology, general 
internal medicine, or general psychiatry; and
    (iii) Be either board certified or board eligible in the relevant 
primary care discipline.
    (4) Be terminable only for cause until completion of the three-year 
commitment, except that, with the agreement of the alien physician, the 
employer may assign the contract to another eligible employer with the 
prior approval of HHS and compliance with all applicable INS and 
Department of Labor requirements. Prior to approving an assignment of 
the contract, HHS will review and consider the health care needs of the 
alien physician's current and proposed new locations, as well as the 
reasons for the request.
    (5) Not contain a restrictive covenant or non-compete clause which 
prevents or discourages the physician from continuing to practice in any 
HHS-designated primary care HPSA or MUA/P or Mental Health HPSA after 
the period of obligation under the contract has expired.
    (6) Provide that any amendment to the contract complies with all 
applicable Federal statutes, regulations and HHS policy.
    (7) Be consistent with all applicable Federal statutes, regulations 
and HHS policy.
    (e) The facility or practice sponsoring the physician:
    (1) Must provide health services to individuals without 
discriminating against them because either they are unable to pay for 
those services or payment for those health services will be made under 
Medicare or Medicaid.
    (2) May charge no more than the usual and customary rate prevailing 
in the geographic area in which the services are provided.
    (3) Must provide care on a sliding fee scale for persons at or below 
200 percent of poverty income level. Persons with third-party insurance 
may be charged the full fee for service.
    (4) Must post a notice in a conspicuous location in the patient 
waiting area at the practice site to notify patients of the charges for 
service as required in this paragraph.
    (5) Must provide evidence that the applicant facility made 
unsuccessful efforts to recruit a physician who is a United States 
physician for the position to be filled by the Exchange Visitor.

[[Page 137]]

    (6) Must provide a statement by the head of the facility to confirm 
the facility is located in a specific, designated HPSA or MUA/P, and 
that it provides medical care to Medicaid and Medicare eligible patients 
and to the uninsured indigent.
    (f) The employer and the alien physician must submit information to 
the Secretary at the times and in the manner that the Secretary may 
reasonably require.

[67 FR 77696, Dec. 19, 2002]



Sec. 50.6  Procedures for submission of application to HHS.

    (a) The Exchange Visitor Waiver Review Board will review 
applications submitted by private or non-federal institutions, 
organizations, or agencies or by a component agency of HHS. The Board 
will not accept applications submitted by Exchange Visitors or, unless 
under extenuating and exceptional circumstances, other U.S. Government 
Agencies.
    (b) Applications, instruction sheets and information are available 
from the Executive Secretary, Exchange Visitor Waiver Review Board. An 
authorized official of the applicant institution (educational 
institution, hospital, laboratory, corporation, etc.) must sign the 
completed application. The applicant institution must send the completed 
application to the address indicated on the instruction sheet.

[67 FR 77697, Dec. 19, 2002]



Sec. 50.7  Personal hardship, persecution and visa extension considerations.

    (a) It is not within the Department's jurisdiction to consider 
applications for waiver based on:
    (1) Exceptional hardship to the exchange visitor's American or 
legally resident alien spouse or child; or
    (2) The alien's unwillingness to return to the country of his/her 
nationality or last residence on the grounds that he/she or family 
members would be subject to persecution on account of race, religion or 
political opinion.
    (b) Likewise, this Department is not responsible for considering 
requests to extend visas.
    (c) Inquiries concerning the above should be directed to the 
District Office of the Immigration and Naturalization Service which has 
jurisdiction over the exchange visitor's place of residence in the 
United States.

[49 FR 9900, Mar. 16, 1984. Redesignated at 67 FR 77696, Dec. 19, 2002]



Sec. 50.8  Compliance.

    If an alien physician acquires H-1B nonimmigrant status following 
approval by the INS of a request for waiver, then he or she becomes 
subject not only to the terms and conditions of the waiver, but also the 
terms and conditions of the H-1B nonimmigrant status. Failure to comply 
with those conditions will make that physician subject to removal from 
the United States by the INS.

[67 FR 77697, Dec. 19, 2002]



PART 51_CRITERIA FOR EVALUATING COMPREHENSIVE PLAN TO REDUCE RELIANCE ON 
ALIEN PHYSICIANS--Table of Contents




Sec.
51.1 Purpose.
51.2 Application.
51.3 Who is eligible to apply?
51.4 How will the plans be evaluated?

    Authority: Sec. 212, Immigration and Nationality Act, Pub. L. 82-
114, as amended by Pub. L. 97-116, 95 Stat. 1611 (8 U.S.C. 
1182(j)(2)(A)).

    Source: 48 FR 2539, Jan. 20, 1983, unless otherwise noted.



Sec. 51.1  Purpose.

    The purpose of this regulation is to establish criteria for review 
and evaluation of the comprehensive plans of Graduate Medical Education 
Programs to reduce reliance on alien physicians, as required by the 
Immigration and Nationality Act Amendments of 1981, Pub. L. 97-116, for 
the waiver of certain requirements for exchange visitors who are coming 
to the United States to participate in programs of graduate medical 
education or training.



Sec. 51.2  Application.

    Materials covering procedures for applying for substantial 
disruption waivers (including the comprehensive plan) may be obtained 
from the Educational

[[Page 138]]

Commission for Foreign Medical Graduates, 3624 Market Street, 
Philadelphia, Pennsylvania 19104.

    Explanatory Note: The Department of State entered into an agreement 
with the Educational Commission for Foreign Medical Graduates in 1971 
whereby the latter was designated the authority to administer the 
issuance of the Form IAP-66 in all cases involving the admission, 
certification, transfer or extension of stay for foreign physicians in 
exchange visitor status who are receiving graduate medical education or 
training. The Commission was further designated the authority (Federal 
Register, Volume 44, No. 59, March 26, 1979), to process waiver requests 
under the ``substantial disruption'' provision of Pub. L. 94-484, as 
amended, within criteria to be provided by the United States Information 
Agency on advice from the Department of Health and Human Services 
(formerly Department of Health, Education, and Welfare).



Sec. 51.3  Who is eligible to apply?

    Sponsors which had alien physicians in their exchange visitor 
programs on January 10, 1978, are eligible to apply. For purposes of 
this regulation, the term ``program'' relates to a graduate medical 
education program having an exchange visitor program for physicians 
participating in graduate medical education or training. An ``exchange 
visitor program'' is a program of a sponsor, designed to promote 
interchange of persons, knowledge and skills, and the interchange of 
developments in the field of education, the arts and sciences, and is 
concerned with one or more categories of participants to promote mutual 
understanding between the people of the United States and the people of 
other countries.



Sec. 51.4  How will the plans be evaluated?

    After consultation with the Federal Substantial Disruption Waiver 
Board (seven Federal representatives charged with the responsibility of 
reviewing substantial disruption waiver applications), the Secretary of 
Health and Human Services will make recommendations to the Director, 
United States Information Agency, for the purpose of granting waivers. 
The Secretary will consider the following factors in determining whether 
or not a plan is satisfactory:
    (a) The extent of the specific problems that the program or 
institution anticipates without a waiver, including, for example,
    (1) Curtailment of services currently provided,
    (2) Downgrading of medical care currently being provided,
    (3) Reduction in the number of inpatients and outpatients receiving 
care,
    (4) Inadequate medical coverage for population served, or
    (5) Inadequate supervision of junior residents.
    (b) The adequacy of the alternative resources and methods (including 
use of physician assistants (as defined in 42 CFR 57.802), nurse 
practitioners (as defined in 42 CFR 57.2402), and other non-physician 
providers) that have been considered and have been and will be applied 
to reduce such disruption in the delivery of health services, especially 
in primary medical care manpower shortage areas, as established under 
section 332 of the Public Health Service Act, and for medicaid patients. 
This may include, for example:
    (1) Greater reliance on fully licensed physicians, and on physician 
assistants, nurse practitioners and other non-physician personnel in an 
expanded role in the delivery of health care, such as admission patient 
histories, making patient rounds, recording patient progress notes, 
doing the initial and follow-up evaluation of patients, performing 
routine laboratory and related studies, or
    (2) Utilization of the team approach to health care delivery 
(individuals functioning as an integral part of an interprofessional 
team of health personnel organized under the leadership of a physician 
working toward more efficient and/or more effective delivery of health 
services).
    (c) The extent to which changes (including improvement of 
educational and medical services) have been considered and which have 
been or will be applied to make the program more attractive to graduates 
of medical schools who are citizens of the United States, as 
demonstrated, for example, by:
    (1) Adding additional services to the existing programs to provide a 
broader educational experience for residents,

[[Page 139]]

    (2) Expanding affiliations with other residency programs to offer a 
broader experience for residents,
    (3) Expanding undergraduate clerkships to provide a broader 
educational experience.
    (4) Creating or modifying administrative units which will provide 
broader clinical experiences, or
    (5) Initiating research projects.
    (d) The adequacy of the recruitment efforts which have been and will 
be undertaken to attract graduates of medical schools who are citizens 
of the United States, as demonstrated, for example, by:
    (1) Broad-based advertisement of the program and of the institution 
through notices in journals, contacts with medical schools, etc.
    (2) Forming committees for the purpose of recruiting U.S. citizens.
    (3) Working with national organizations which are involved with 
medical students and U.S. graduate medical trainees, e.g., the American 
Medical Student Association and the Physician National House Staff 
Association, to attract U.S. citizens.
    (e) The extent to which the program on a year-by-year basis has 
phased down its dependence upon aliens who are graduates of foreign 
medical schools so that the program will not be dependent upon the 
admission to the program of any additional such aliens after December 
31, 1983.



PART 57_VOLUNTEER SERVICES--Table of Contents




Sec.
57.1 Applicability.
57.2 Definitions.
57.3 Volunteer service programs.
57.4 Acceptance and use of volunteer services.
57.5 Services and benefits available to volunteers.

    Authority: Sec. 223, 58 Stat. 683, as amended by 81 Stat. 539: 42 
U.S.C. 217b.

    Source: 34 FR 13868, Aug. 29, 1969, unless otherwise noted.



Sec. 57.1  Applicability.

    The regulations in this part apply to the acceptance of volunteer 
and uncompensated services for use in the operation of any health care 
facility of the Department or in the provision of health care.



Sec. 57.2  Definitions.

    As used in the regulations in this part:
    Secretary means the Secretary of Health and Human Services.
    Department means the Department of Health and Human Services.
    Volunteer services are services performed by individuals (hereafter 
called volunteers) whose services have been offered to the Government 
and accepted under a formal agreement on a without compensation basis 
for use in the operation of a health care facility or in the provision 
of health care.
    Health care means services to patients in Department facilities, 
beneficiaries of the Federal Government, or individuals or groups for 
whom health services are authorized under the programs of the 
Department.
    Health care facility means a hospital, clinic, health center, or 
other facility established for the purpose of providing health care.



Sec. 57.3  Volunteer service programs.

    Programs for the use of volunteer services may be established by the 
Secretary, or his designee, to broaden and strengthen the delivery of 
health services, contribute to the comfort and well being of patients in 
Department hospitals or clinics, or expand the services required in the 
operation of a health care facility. Volunteers may be used to 
supplement, but not to take the place of, personnel whose services are 
obtained through the usual employment procedures.



Sec. 57.4  Acceptance and use of volunteer services.

    The Secretary, or his designee, shall establish requirements for: 
Accepting volunteer services from individuals or groups of individuals, 
using volunteer services, giving appropriate recognition to volunteers, 
and maintaining records of volunteer services.



Sec. 57.5  Services and benefits available to volunteers.

    (a) The following provisions of law may be applicable to volunteers 
whose

[[Page 140]]

services are offered and accepted under the regulations in this part:
    (1) Subchapter I of Chapter 81 of Title 5 of the United States Code 
relating to medical services for work related injuries;
    (2) Title 28 of the United States Code relating to tort claims;
    (3) Section 7903 of Title 5 of the United States Code relating to 
protective clothing and equipment; and
    (4) Section 5703 of Title 5 of the United States Code relating to 
travel and transportation expenses.
    (b) Volunteers may also be provided such other benefits as are 
authorized by law or by administrative action of the Secretary or his 
designee.



PART 60_NATIONAL PRACTITIONER DATA BANK FOR ADVERSE INFORMATION ON 
PHYSICIANS AND OTHER HEALTH CARE PRACTITIONERS--Table of Contents




                      Subpart A_General Provisions

Sec.
60.1 The National Practitioner Data Bank.
60.2 Applicability of these regulations.
60.3 Definitions.

                   Subpart B_Reporting of Information

60.4 How information must be reported.
60.5 When information must be reported.
60.6 Reporting errors, omissions, and revisions.
60.7 Reporting medical malpractice payments.
60.8 Reporting licensure actions taken by Boards of Medical Examiners.
60.9 Reporting adverse actions on clinical privileges.

 Subpart C_Disclosure of Information by the National Practitioner Data 
                                  Bank

60.10 Information which hospitals must request from the National 
          Practitioner Data Bank.
60.11 Requesting information from the National Practitioner Data Bank.
60.12 Fees applicable to requests for information.
60.13 Confidentiality of National Practitioner Data Bank information.
60.14 How to dispute the accuracy of National Practitioner Data Bank 
          information.

    Authority: Secs. 401-432 of the Health Care Quality Improvement Act 
of 1986, Pub. L. 99-660, 100 Stat. 3784-3794, as amended by section 402 
of Pub. L. 100-177, 101 Stat. 1007-1008 (42 U.S.C. 11101-11152).

    Source: : 54 FR 42730, Oct. 17, 1989, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 60.1  The National Practitioner Data Bank.

    The Health Care Quality Improvement Act of 1986 (the Act), title IV 
of Pub. L. 99-660, as amended, authorizes the Secretary to establish 
(either directly or by contract) a National Practitioner Data Bank to 
collect and release certain information relating to the professional 
competence and conduct of physicians, dentists and other health care 
practitioners. These regulations set forth the reporting and disclosure 
requirements for the National Practitioner Data Bank.



Sec. 60.2  Applicability of these regulations.

    The regulations in this part establish reporting requirements 
applicable to hospitals; health care entities; Boards of Medical 
Examiners; professional societies of physicians, dentists or other 
health care practitioners which take adverse licensure of professional 
review actions; and entities (including insurance companies) making 
payments as a result of medical malpractice actions or claims. They also 
establish procedures to enable individuals or entities to obtain 
information from the National Practitioner Data Bank or to dispute the 
accuracy of National Practitioner Data Bank information.

[59 FR 61555, Dec. 1, 1994]



Sec. 60.3  Definitions.

    Act means the Health Care Quality Improvement Act of 1986, title IV 
of Pub. L. 99-660, as amended.
    Adversely affecting means reducing, restricting, suspending, 
revoking, or denying clinical privileges or membership in a health care 
entity.
    Board of Medical Examiners, or Board, means a body or subdivision of 
such body which is designated by a State for the purpose of licensing, 
monitoring and disciplining physicians or dentists. This term includes a 
Board of Osteopathic Examiners or its subdivision, a

[[Page 141]]

Board of Dentistry or its subdivision, or an equivalent body as 
determined by the State. Where the Secretary, pursuant to section 
423(c)(2) of the Act, has designated an alternate entity to carry out 
the reporting activities of Sec. 60.9 due to a Board's failure to 
comply with Sec. 60.8, the term Board of Medical Examiners or Board 
refers to this alternate entity.
    Clinical privileges means the authorization by a health care entity 
to a physician, dentist or other health care practitioner for the 
provision of health care services, including privileges and membership 
on the medical staff.
    Dentist means a doctor of dental surgery, doctor of dental medicine, 
or the equivalent who is legally authorized to practice dentistry by a 
State (or who, without authority, holds himself or herself out to be so 
authorized).
    Formal peer review process means the conduct of professional review 
activities through formally adopted written procedures which provide for 
adequate notice and an opportunity for a hearing.
    Health care entity means:
    (a) A hospital;
    (b) An entity that provides health care services, and engages in 
professional review activity through a formal peer review process for 
the purpose of furthering quality health care, or a committee of that 
entity; or
    (c) A professional society or a committee or agent thereof, 
including those at the national, State, or local level, of physicians, 
dentists, or other health care practitioners that engages in 
professional review activity through a formal peer review process, for 
the purpose of furthering quality health care.

For purposes of paragraph (b) of this definition, an entity includes: a 
health maintenance organization which is licensed by a State or 
determined to be qualified as such by the Department of Health and Human 
Services; and any group or prepaid medical or dental practice which 
meets the criteria of paragraph (b).
    Health care practitioner means an individual other than a physician 
or dentist, who is licensed or otherwise authorized by a State to 
provide health care services.
    Hospital means an entity described in paragraphs (1) and (7) of 
section 1861(e) of the Social Security Act.
    Medical malpractice action or claim means a written complaint or 
claim demanding payment based on a physician's, dentists or other health 
care practitioner's provision of or failure to provide health care 
services, and includes the filing of a cause of action based on the law 
of tort, brought in any State or Federal Court or other adjudicative 
body.
    Physician means a doctor of medicine or osteopathy legally 
authorized to practice medicine or surgery by a State (or who, without 
authority, holds himself or herself out to be so authorized).
    Professional review action means an action or recommendation of a 
health care entity:
    (a) Taken in the course of professional review activity;
    (b) Based on the professional competence or professional conduct of 
an individual physician, dentist or other health care practitioner which 
affects or could affect adversely the health or welfare of a patient or 
patients; and
    (c) Which adversely affects or may adversely affect the clinical 
privileges or membership in a professional society of the physician, 
dentist or other health care practitioner.
    (d) This term excludes actions which are primarily based on:
    (1) The physician's, dentist's or other health care practitioner's 
association, or lack of association, with a professional society or 
association;
    (2) The physician's, dentist's or other health care practitioner's 
fees or the physician's, dentist's or other health care practitioner's 
advertising or engaging in other competitive acts intended to solicit or 
retain business;
    (3) The physician's, dentist's or other health care practitioner's 
participation in prepaid group health plans, salaried employment, or any 
other manner of delivering health services whether on a fee-for-service 
or other basis;
    (4) A physician's, dentist's or other health care practitioner's 
association with, supervision of, delegation of authority to, support 
for, training of, or participation in a private group practice with, a 
member or members of a

[[Page 142]]

particular class of health care practitioner or professional; or
    (5) Any other matter that does not relate to the competence or 
professional conduct of a physician, dentist or other health care 
practitioner.
    Professional review activity means an activity of a health care 
entity with respect to an individual physician, dentist or other health 
care practitioner:
    (a) To determine whether the physician, dentist or other health care 
practitioner may have clinical privileges with respect to, or membership 
in, the entity;
    (b) To determine the scope or conditions of such privileges or 
membership; or
    (c) To change or modify such privileges or membership.
    Secretary means the Secretary of Health and Human Services and any 
other officer or employee of the Department of Health and Human Services 
to whom the authority involved has been delegated.
    State means the fifty States, the District of Columbia, Puerto Rico, 
the Virgin Islands, Guam, American Samoa, and the Northern Mariana 
Islands.

[54 FR 42730, Oct. 17, 1989; 54 FR 43890, Oct. 27, 1989]



                   Subpart B_Reporting of Information



Sec. 60.4  How information must be reported.

    Information must be reported to the Data Bank or to a Board of 
Medical Examiners as required under Sec. Sec. 60.7, 60.8, and 60.9 in 
such form and manner as the Secretary may prescribe.



Sec. 60.5  When information must be reported.

    Information required under Sec. Sec. 60.7, 60.8, and 60.9 must be 
submitted to the Data Bank within 30 days following the action to be 
reported, beginning with actions occurring on or after September 1, 
1990, as follows:
    (a) Malpractice Payments (Sec. 60.7). Persons or entities must 
submit information to the Data Bank within 30 days from the date that a 
payment, as described in Sec. 60.7, is made. If required under Sec. 
60.7, this information must be submitted simultaneously to the 
appropriate State licensing board.
    (b) Licensure Actions (Sec. 60.8). The Board must submit 
information within 30 days from the date the licensure action was taken.
    (c) Adverse Actions (Sec. 60.9). A health care entity must report 
an adverse action to the Board within 15 days from the date the adverse 
action was taken. The Board must submit the information received from a 
health care entity within 15 days from the date on which it received 
this information. If required under Sec. 60.9, this information must be 
submitted by the Board simultaneously to the appropriate State licensing 
board in the State in which the health care entity is located, if the 
Board is not such licensing Board.

[54 FR 42730, Oct. 17, 1989, as amended at 55 FR 50003, Dec. 4, 1990]



Sec. 60.6  Reporting errors, omissions, and revisions.

    (a) Persons and entities are responsible for the accuracy of 
information which they report to the Data Bank. If errors or omissions 
are found after information has been reported, the person or entity 
which reported it must send an addition or correction to the Data Bank 
or, in the case of reports made under Sec. 60.9, to the Board of 
Medical Examiners, as soon as possible.
    (b) An individual or entity which reports information on licensure 
or clinical privileges under Sec. Sec. 60.8 or 60.9 must also report 
any revision of the action originally reported. Revisions include 
reversal of a professional review action or reinstatement of a license. 
Revisions are subject to the same time constraints and procedures of 
Sec. Sec. 60.5, 60.8, and 60.9, as applicable to the original action 
which was reported.

(Approved by the Office of Management and Budget under control number 
0915-0126)

[54 FR 42730, Oct. 17, 1989, as amended at 55 FR 50004, Dec. 4, 1990]



Sec. 60.7  Reporting medical malpractice payments.

    (a) Who must report. Each entity, including an insurance company, 
which makes a payment under an insurance policy, self-insurance, or 
otherwise, for the benefit of a physician, dentist or

[[Page 143]]

other health care practitioner in settlement of or in satisfaction in 
whole or in part of a claim or a judgment against such physician, 
dentist, or other health care practitioner for medical malpractice, must 
report information as set forth in paragraph (b) to the Data Bank and to 
the appropriate State licensing board(s) in the State in which the act 
or omission upon which the medical malpractice claim was based. For 
purposes of this section, the waiver of an outstanding debt is not 
construed as a ``payment'' and is not required to be reported.
    (b) What information must be reported. Entities described in 
paragraph (a) must report the following information:
    (1) With respect to the physician, dentist or other health care 
practitioner for whose benefit the payment is made--
    (i) Name,
    (ii) Work address,
    (iii) Home address, if known,
    (iv) Social Security number, if known, and if obtained in accordance 
with section 7 of the Privacy Act of 1974,
    (v) Date of birth,
    (vi) Name of each professional school attended and year of 
graduation,
    (vii) For each professional license: the license number, the field 
of licensure, and the name of the State or Territory in which the 
license is held,
    (viii) Drug Enforcement Administration registration number, if 
known,
    (ix) Name of each hospital with which he or she is affiliated, if 
known;
    (2) With respect to the reporting entity--
    (i) Name and address of the entity making the payment,
    (ii) Name, title, and telephone number of the responsible official 
submitting the report on behalf of the entity, and
    (iii) Relationship of the reporting entity of the physician, 
dentists, or other health care practitioner for whose benefit the 
payment is made;
    (3) With respect to the judgment or settlement resulting in the 
payment--
    (i) Where an action or claim has been filed with an adjudicative 
body, identification of the adjudicative body and the case number,
    (ii) Date or dates on which the act(s) or omission(s) which gave 
rise to the action or claim occurred,
    (iii) Date of judgment or settlement,
    (iv) Amount paid, date of payment, and whether payment is for a 
judgment or a settlement,
    (v) Description and amount of judgment or settlement and any 
conditions attached thereto, including terms of payment,
    (vi) A description of the acts or omissions and injuries or 
illnesses upon which the action or claim was based,
    (vii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary, and
    (viii) Other information as required by the Secretary from time to 
time after publication in the Federal Register and after an opportunity 
for public comment.
    (c) Sanctions. Any entity that fails to report information on a 
payment required to be reported under this section is subject to a civil 
money penalty of up to $10,000 for each such payment involved. This 
penalty will be imposed pursuant to procedures at 42 CFR part 1003.
    (d) Interpretation of information. A payment in settlement of a 
medical malpractice action or claim shall not be construed as creating a 
presumption that medical malpractice has occurred.

(Approved by the Office of Management and Budget under control number 
0915-0126)

[54 FR 42730, Oct. 17, 1989, as amended at 59 FR 61555, Dec. 1, 1994]



Sec. 60.8  Reporting licensure actions taken by Boards of Medical Examiners.

    (a) What actions must be reported. Each Board of Medical Examiners 
must report to the Data Bank any action based on reasons relating to a 
physician's or dentist's professional competence or professional 
conduct-
    (1) Which revokes or suspends (or otherwise restricts) a physician's 
or dentist's license,
    (2) Which censures, reprimands, or places on probation a physician 
or dentist, or
    (3) Under which a physician's or dentist's license is surrendered.

[[Page 144]]

    (b) Information that must be reported. The Board must report the 
following information for each action:
    (1) The physician's or dentist's name,
    (2) The physician's or dentist's work address,
    (3) The physician's or dentist's home address, if known,
    (4) The physician's or dentist's Social Security number, if known, 
and if obtained in accordance with section 7 of the Privacy Act of 1974,
    (5) The physician's or dentist's date of birth,
    (6) Name of each professional school attended by the physician or 
dentist and year of graduation,
    (7) For each professional license, the physician's or dentist's 
license number, the field of licensure and the name of the State or 
Territory in which the license is held,
    (8) The physician's or dentist's Drug Enforcement Administration 
registration number, if known,
    (9) A description of the acts or omissions or other reasons for the 
action taken,
    (10) A description of the Board action, the date the action was 
taken, and its effective date,
    (11) Classification of the action in accordance with a reporting 
code adopted by the Secretary, and
    (12) Other information as required by the Secretary from time to 
time after publication in the Federal Register and after an opportunity 
for public comment.
    (c) Sanctions. If, after notice of noncompliance and providing 
opportunity to correct noncompliance, the Secretary determines that a 
Board has failed to submit a report as required by this section, the 
Secretary will designate another qualified entity for the reporting of 
information under Sec. 60.9.

(Approved by the Office of Management and Budget under control number 
0915-0126)



Sec. 60.9  Reporting adverse actions on clinical privileges.

    (a) Reporting to the Board of Medical Examiners--(1) Actions that 
must be reported and to whom the report must be made. Each health care 
entity must report to the Board of Medical Examiners in the State in 
which the health care entity is located the following actions:
    (i) Any professional review action that adversely affects the 
clinical privileges of a physician or dentist for a period longer than 
30 days;
    (ii) Acceptance of the surrender of clinical privileges or any 
restriction of such privileges by a physician or dentist--
    (A) While the physician or dentist is under investigation by the 
health care entity relating to possible incompetence or improper 
professional conduct, or
    (B) In return for not conducting such an investigation or 
proceeding; or
    (iii) In the case of a health care entity which is a professional 
society, when it takes a professional review action concerning a 
physician or dentist.
    (2) Voluntary reporting on other health care practitioners. A health 
care entity may report to the Board of Medical Examiners information as 
described in paragraph (a)(3) of this section concerning actions 
described in paragraph (a)(1) in this section with respect to other 
health care practitioners.
    (3) What information must be reported. The health care entity must 
report the following information concerning actions described in 
paragraph (a)(1) of this section with respect to the physician or 
dentist:
    (i) Name,
    (ii) Work address,
    (iii) Home address, if known,
    (iv) Social Security number, if known, and if obtained in accordance 
with section 7 of the Privacy Act of 1974,
    (v) Date of birth,
    (vi) Name of each professional school attended and year of 
graduation,
    (vii) For each professional license: the license number, the field 
of licensure, and the name of the State or Territory in which the 
license is held,
    (viii) Drug Enforcement Administration registration number, if 
known,
    (ix) A description of the acts or omissions or other reasons for 
privilege loss, or, if known, for surrender,
    (x) Action taken, date the action was taken, and effective date of 
the action, and
    (xi) Other information as required by the Secretary from time to 
time after publication in the Federal Register

[[Page 145]]

and after an opportunity for public comment.
    (b) Reporting by the Board of Medical Examiners to the National 
Practitioner Data Bank. Each Board must report, in accordance with 
Sec. Sec. 60.4 and 60.5, the information reported to it by a health 
care entity and any known instances of a health care entity's failure to 
report information as required under paragraph (a)(1) of this section. 
In addition, each Board must simultaneously report this information to 
the appropriate State licensing board in the State in which the health 
care entity is located, if the Board is not such licensing board.
    (c) Sanctions--(1) Health care entities. If the Secretary has reason 
to believe that a health care entity has substantially failed to report 
information in accordance with Sec. 60.9, the Secretary will conduct an 
investigation. If the investigation shows that the health care entity 
has not complied with Sec. 60.9, the Secretary will provide the entity 
with a written notice describing the noncompliance, giving the health 
care entity an opportunity to correct the noncompliance, and stating 
that the entity may request, within 30 days after receipt of such 
notice, a hearing with respect to the noncompliance. The request for a 
hearing must contain a statement of the material factual issues in 
dispute to demonstrate that there is cause for a hearing. These issues 
must be both substantive and relevant. The hearing will be held in the 
Washington, DC, metropolitan area. The Secretary will deny a hearing if:
    (i) The request for a hearing is untimely,
    (ii) The health care entity does not provide a statement of material 
factual issues in dispute, or
    (iii) The statement of factual issues in dispute is frivolous or 
inconsequential.

In the event that the Secretary denies a hearing, the Secretary will 
send a written denial to the health care entity setting forth the 
reasons for denial. If a hearing is denied, or if as a result of the 
hearing the entity is found to be in noncompliance, the Secretary will 
publish the name of the health care entity in the Federal Register. In 
such case, the immunity protections provided under section 411(a) of the 
Act will not apply to the health care entity for professional review 
activities that occur during the 3-year period beginning 30 days after 
the date of publication of the entity's name in the Federal Register.
    (2) Board of Medical Examiners. If, after notice of noncompliance 
and providing opportunity to correct noncompliance, the Secretary 
determines that a Board has failed to report information in accordance 
with paragraph (b) of this section, the Secretary will designate another 
qualified entity for the reporting of this information.

(Approved by the Office of Management and Budget under control number 
0915-0126)

[54 FR 42730, Oct. 17, 1989, as amended at 59 FR 61555, Dec. 1, 1994]



 Subpart C_Disclosure of Information by the National Practitioner Data 
                                  Bank



Sec. 60.10  Information which hospitals must request from the National 
Practitioner Data Bank.

    (a) When information must be requested. Each hospital, either 
directly or through an authorized agent, must request information from 
the Data Bank concerning a physician, dentist or other health care 
practitioner as follows:
    (1) At the time a physician, dentist or other health care 
practitioner applies for a position on its medical staff (courtesy or 
otherwise), or for clinical privileges at the hospital; and
    (2) Every 2 years concerning any physician, dentist, or other health 
care practitioner who is on its medical staff (courtesy or otherwise), 
or has clinical privileges at the hospital.
    (b) Failure to request information. Any hospital which does not 
request the information as required in paragraph (a) of this section is 
presumed to have knowledge of any information reported to the Data Bank 
concerning this physician, dentist or other health care practitioner.
    (c) Reliance on the obtained information. Each hospital may rely 
upon the information provided by the Data Bank to the hospital. A 
hospital shall not be

[[Page 146]]

held liable for this reliance unless the hospital has knowledge that the 
information provided was false.

(Approved by the Office of Management and Budget under control number 
0915-0126)



Sec. 60.11  Requesting information from the National Practitioner Data Bank.

    (a) Who may request information and what information may be 
available. Information in the Data Bank will be available, upon request, 
to the persons or entities, or their authorized agents, as described 
below:
    (1) A hospital that requests information concerning a physician, 
dentist or other health care practitioner who is on its medical staff 
(courtesy or otherwise) or has clinical privileges at the hospital,
    (2) A physician, dentist, or other health care practitioner who 
requests information concerning himself or herself,
    (3) Boards of Medical Examiners or other State licensing boards,
    (4) Health care entities which have entered or may be entering 
employment or affiliation relationships with a physician, dentist or 
other health care practitioner, or to which the physician, dentist or 
other health care practitioner has applied for clinical privileges or 
appointment to the medical staff,
    (5) An attorney, or individual representing himself or herself, who 
has filed a medical malpractice action or claim in a State or Federal 
court or other adjudicative body against a hospital, and who requests 
information regarding a specific physician, dentist, or other health 
care practitioner who is also named in the action or claim. Provided, 
that this information will be disclosed only upon the submission of 
evidence that the hospital failed to request information from the Data 
Bank as required by Sec. 60.10(a), and may be used solely with respect 
to ligitation resulting from the action or claim against the 
hospital,11(6) A health care entity with respect to professional review 
activity, and
    (7) A person or entity who requests information in a form which does 
not permit the identification of any particular health care entity, 
physician, dentist, or other health care practitioner.
    (b) Procedures for obtaining National Practitioner Data Bank 
information. Persons and entities may obtain information from the Data 
Bank by submitting a request in such form and manner as the Secretary 
may prescribe. These requests are subject to fees as described in Sec. 
60.12.

[54 FR 42730, Oct. 17, 1989; 54 FR 43890, Oct. 27, 1989]



Sec. 60.12  Fees applicable to requests for information.

    (a) Policy on Fees. The fees described in this section apply to all 
requests for information from the Data Bank. These fees are authorized 
by section 427(b)(4) of the Health Care Quality Improvement Act of 1986 
(42 U.S.C. 11137). They reflect the costs of processing requests for 
disclosure and of providing such information. The actual fees will be 
announced by the Secretary in periodic notices in the Federal Register.
    (b) Criteria for determining the fee. The amount of each fee will be 
determined based on the following criteria:
    (1) Use of electronic data processing equipment to obtain 
information--the actual cost for the service, including computer search 
time, runs, printouts, and time of computer programmers and operators, 
or other employees,
    (2) Photocopying or other forms of reproduction, such as magnetic 
tapes--actual cost of the operator's time, plus the cost of the machine 
time and the materials used,
    (3) Postage--actual cost, and
    (4) Sending information by special methods requested by the 
applicant, such as express mail or electronic transfer--the actual cost 
of the special service.
    (c) Assessing and collecting fees. The Secretary will announce 
through notice in the Federal Register from time to time the methods of 
payment of Data Bank fees. In determining these methods, the Secretary 
will consider efficiency, effectiveness, and convenience for the Data 
Bank users and the Department. Methods may include:

[[Page 147]]

credit card; electronic fund transfer; check; and money order.

[54 FR 42730, Oct. 17, 1989, as amended at 60 FR 27899, May 26, 1995; 64 
FR 9922, Mar. 1, 1999]



Sec. 60.13  Confidentiality of National Practitioner Data Bank information.

    (a) Limitations on disclosure. Information reported to the Data Bank 
is considered confidential and shall not be disclosed outside the 
Department of Health and Human Services, except as specified in Sec. 
60.10, Sec. 60.11 and Sec. 60.14. Persons and entities which receive 
information from the Data Bank either directly or from another party 
must use it solely with respect to the purpose for which it was 
provided. Nothing in this paragraph shall prevent the disclosure of 
information by a party which is authorized under applicable State law to 
make such disclosure.
    (b) Penalty for violations. Any person who violates paragraph (a) 
shall be subject to a civil money penalty of up to $10,000 for each 
violation. This penalty will be imposed pursuant to procedures at 42 CFR 
part 1003.



Sec. 60.14  How to dispute the accuracy of National Practitioner Data Bank 
information.

    (a) Who may dispute National Practitioner Data Bank information. Any 
physician, dentist or other health care practitioner may dispute the 
accuracy of information in the Data Bank concerning himself or herself. 
The Secretary will routinely mail a copy of any report filed in the Data 
Bank to the subject individual.
    (b) Procedures for filing a dispute. A physician, dentist or other 
health care practitioner has 60 days from the date on which the 
Secretary mails the report in question to him or her in which to dispute 
the accuracy of the report. The procedures for disputing a report are:
    (1) Informing the Secretary and the reporting entity, in writing, of 
the disagreement, and the basis for it,
    (2) Requesting simultaneously that the disputed information be 
entered into a ``disputed'' status and be reported to inquirers as being 
in a ``disputed'' status, and
    (3) Attempting to enter into discussion with the reporting entity to 
resolve the dispute.
    (c) Procedures for revising disputed information. (1) If the 
reporting entity revises the information originally submitted to the 
Data Bank, the Secretary will notify all entities to whom reports have 
been sent that the original information has been revised.
    (2) If the reporting entity does not revise the reported 
information, the Secretary will, upon request, review the written 
information submitted by both parties (the physician, dentist or other 
health care practitioner), and the reporting entity. After review, the 
Secretary will either--
    (i) If the Secretary concludes that the information is accurate, 
include a brief statement by the physician, dentist or other health care 
practitioner describing the disagreement concerning the information, and 
an explanation of the basis for the decision that it is accurate, or
    (ii) If the Secretary concludes that the information was incorrect, 
send corrected information to previous inquirers.

(Approved by the Office of Management and Budget under control number 
0915-0126)

[54 FR 42730, Oct. 17, 1989, as amended at 54 FR 43890, Oct. 27, 1989]



PART 61_HEALTHCARE INTEGRITY AND PROTECTION DATA BANK FOR FINAL ADVERSE 
INFORMATION ON HEALTH CARE PROVIDERS, SUPPLIERS AND PRACTITIONERS--Table 
of Contents




                      Subpart A_General Provisions

Sec.
61.1 The Healthcare Integrity and Protection Data Bank.
61.2 Applicability of these regulations.
61.3 Definitions.

                   Subpart B_Reporting of Information

61.4 How information must be reported.
61.5 When information must be reported.
61.6 Reporting errors, omissions, revisions, or whether an action is on 
          appeal.
61.7 Reporting licensure actions taken by Federal or State licensing and 
          certification agencies.

[[Page 148]]

61.8 Reporting Federal or State criminal convictions related to the 
          delivery of a health care item or service.
61.9 Reporting civil judgments related to the delivery of a health care 
          item or service.
61.10 Reporting exclusions from participation in Federal or State health 
          care programs.
61.11 Reporting other adjudicated actions or decisions.

  Subpart C_Disclosure of Information by the Healthcare Integrity and 
                          Protection Data Bank

61.12 Requesting information from the Healthcare Integrity and 
          Protection Data Bank.
61.13 Fees applicable to requests for information.
61.14 Confidentiality of Healthcare Integrity and Protection Data Bank 
          information.
61.15 How to dispute the accuracy of Healthcare Integrity and Protection 
          Data Bank information.
61.16 Immunity.

    Authority: 42 U.S.C. 1320a-7e.

    Source: 64 FR 57758, Oct. 26, 1999, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 61.1  The Healthcare Integrity and Protection Data Bank.

    (a) Section 1128E of the Social Security Act (the Act) authorizes 
the Secretary of Health and Human Services (the Secretary) to implement 
a national health care fraud and abuse data collection program for the 
reporting and disclosing of certain final adverse actions taken against 
health care providers, suppliers, or practitioners. Section 1128E of the 
Act also directs the Secretary to maintain a database of final adverse 
actions taken against health care providers, suppliers or practitioners. 
This data bank will be known as the Healthcare Integrity and Protection 
Data Bank (HIPDB). Settlements in which no findings or admissions of 
liability have been made will be excluded from being reported. However, 
if another action is taken against the provider, supplier or 
practitioner of a health care item or service as a result of or in 
conjunction with the settlement, that action is reportable to the HIPDB.
    (b) Section 1128E of the Act also requires the Secretary to 
implement the HIPDB in such a manner as to avoid duplication with the 
reporting requirements established for the National Practitioner Data 
Bank (NPDB) (See 45 CFR part 60). In accordance with the statute, the 
reporter responsible for reporting the final adverse actions to both the 
HIPDB and the NPDB will be required to submit only one report, provided 
that reporting is made through the Department's consolidated reporting 
mechanism that will sort the appropriate actions into the HIPDB, NPDB, 
or both.
    (c) The regulations in this part set forth the reporting and 
disclosure requirements for the HIPDB.



Sec. 61.2  Applicability of these regulations.

    The regulations in this part establish reporting requirements 
applicable to Federal and State Government agencies and to health plans, 
as the terms are defined under Sec. 61.3.



Sec. 61.3  Definitions.

    The following definitions apply to this part:
    Act means the Social Security Act.
    Affiliated or associated means health care entities with which a 
subject of a final adverse action has a commercial relationship, 
including but not limited to, organizations, associations, corporations, 
or partnerships. It also includes a professional corporation or other 
business entity composed of a single individual.
    Any other negative action or finding by a Federal or State licensing 
agency means any action or finding that under the State's law is 
publicly available information, and rendered by a licensing or 
certification authority, including but not limited to, limitations on 
the scope of practice, liquidations, injunctions and forfeitures. This 
definition also includes final adverse actions rendered by a Federal or 
State licensing or certification authority, such as exclusions, 
revocations or suspension of license or certification that occur in 
conjunction with settlements in which no finding of liability has been 
made (although such a settlement itself is not reportable under the 
statute). This

[[Page 149]]

definition excludes administrative fines or citations and corrective 
action plans and other personnel actions, unless they are:
    (1) Connected to the delivery of health care services, and
    (2) Taken in conjunction with other licensure or certification 
actions such as revocation, suspension, censure, reprimand, probation or 
surrender.
    Civil judgment means a court-ordered action rendered in a Federal or 
State court proceeding, other than a criminal proceeding. This reporting 
requirement does not include Consent Judgments that have been agreed 
upon and entered to provide security for civil settlements in which 
there was no finding or admission of liability.
    Criminal conviction means a conviction as described in section 
1128(i) of the Act.
    Exclusion means a temporary or permanent debarment of an individual 
or entity from participation in any Federal or State health-related 
program, in accordance with which items or services furnished by such 
person or entity will not be reimbursed under any Federal or State 
health-related program.
    Government agency includes, but is not limited to--
    (1) The U.S. Department of Justice;
    (2) The U.S Department of Health and Human Services;
    (3) Any other Federal agency that either administers or provides 
payment for the delivery of health care services, including, but not 
limited to, the U.S. Department of Defense and the U.S. Department of 
Veterans Affairs;
    (4) Federal and State law enforcement agencies, including States 
Attorneys General and law enforcement investigators;
    (5) State Medicaid Fraud Control Units; and
    (6) Federal or State agencies responsible for the licensing and 
certification of health care providers, suppliers or licensed health 
care practitioners. Examples of such State agencies include Departments 
of Professional Regulation, Health, Social Services (including State 
Survey and Certification and Medicaid Single State agencies), Commerce 
and Insurance.
    Health care provider means a provider of services as defined in 
section 1861(u) of the Act; any health care entity (including a health 
maintenance organization, preferred provider organization or group 
medical practice) that provides health care services and follows a 
formal peer review process for the purpose of furthering quality health 
care, and any other health care entity that, directly or through 
contracts, provides health care services.
    Health care supplier means a provider of medical and other health 
care services as described in section 1861(s) of the Act; or any 
individual or entity, other than a provider, who furnishes, whether 
directly or indirectly, or provides access to, health care services, 
supplies, items, or ancillary services (including, but not limited to, 
durable medical equipment suppliers, manufacturers of health care items, 
pharmaceutical suppliers and manufacturers, health record services such 
as medical, dental and patient records, health data suppliers, and 
billing and transportation service suppliers). The term also includes 
any individual or entity under contract to provide such supplies, items 
or ancillary services; health plans as defined in this section 
(including employers that are self-insured); and health insurance 
producers (including but not limited to agents, brokers, solicitors, 
consultants and reinsurance intermediaries).
    Health plan means a plan, program or organization that provides 
health benefits, whether directly, through insurance, reimbursement or 
otherwise, and includes but is not limited to--
    (1) A policy of health insurance;
    (2) A contract of a service benefit organization;
    (3) A membership agreement with a health maintenance organization or 
other prepaid health plan;
    (4) A plan, program, agreement or other mechanism established, 
maintained or made available by a self insured employer or group of self 
insured employers, a practitioner, provider or supplier group, third 
party administrator, integrated health care delivery system, employee 
welfare association, public service group or organization or 
professional association; and

[[Page 150]]

    (5) An insurance company, insurance service or insurance 
organization that is licensed to engage in the business of selling 
health care insurance in a State and which is subject to State law which 
regulates health insurance.
    Licensed health care practitioner, licensed practitioner, or 
practitioner means, with respect to a State, an individual who is 
licensed or otherwise authorized by the State to provide health care 
services (or any individual who, without authority, holds himself or 
herself out to be so licensed or authorized).
    Organization name means the subject's business or employer at the 
time the underlying acts occurred. If more than one business or employer 
is involved, the one most closely related to the underlying acts should 
be reported in the ``organization name,'' field with the others being 
reported in the ``affiliated or associated health care entities'' field.
    Organization type means a brief description of the nature of that 
business or employer.
    Other adjudicated actions or decisions means formal or official 
final actions taken against a health care provider, supplier or 
practitioner by a Federal or State governmental agency or a health plan; 
which include the availability of a due process mechanism, and; are 
based on acts or omissions that affect or could affect the payment, 
provision or delivery of a health care item or service. For example, a 
formal or official final action taken by a Federal or State governmental 
agency or a health plan may include, but is not limited to, a personnel-
related action such as suspensions without pay, reductions in pay, 
reductions in grade for cause, terminations or other comparable actions. 
A hallmark of any valid adjudicated action or decision is the 
availability of a due process mechanism. The fact that the subject 
elects not to use the due process mechanism provided by the authority 
bringing the action is immaterial, as long as such a process is 
available to the subject before the adjudicated action or decision is 
made final. In general, if an ``adjudicated action or decision'' follows 
an agency's established administrative procedures (which ensure that due 
process is available to the subject of the final adverse action), it 
would qualify as a reportable action under this definition. This 
definition specifically excludes clinical privileging actions taken by 
Federal or State Government agencies and similar paneling decisions made 
by health plans. This definition does not include overpayment 
determinations made by Federal or State Government programs, their 
contractors or health plans; and it does not include denial of claims 
determinations made by Government agencies or health plans. For health 
plans that are not Government entities, an action taken following 
adequate notice and the opportunity for a hearing that meets the 
standards of due process set out in section 412(b) of the HCQIA (42 
U.S.C. 11112(b)) also would qualify as a reportable action under this 
definition.
    Secretary means the Secretary of Health and Human Services and any 
other officer or employee of the Department of Health and Human Services 
to whom the authority involved has been delegated.
    State means any of the fifty States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands and Guam.
    Voluntary surrender means a surrender made after a notification of 
investigation or a formal official request by a Federal or State 
licensing or certification authority for a health care provider, 
supplier or practitioner to surrender the license or certification 
(including certification agreements or contracts for participation in 
Federal or State health care programs). The definition also includes 
those instances where a health care provider, supplier or practitioner 
voluntarily surrenders a license or certification (including program 
participation agreements or contracts) in exchange for a decision by the 
licensing or certification authority to cease an investigation or 
similar proceeding, or in return for not conducting an investigation or 
proceeding, or in lieu of a disciplinary action.

[64 FR 57758, Oct. 26, 1999, as amended at 65 FR 70507, Nov. 24, 2000; 
70 FR 53954, Sept. 13, 2005]

[[Page 151]]



                   Subpart B_Reporting of Information



Sec. 61.4  How information must be reported.

    Information must be reported to the HIPDB as required under 
Sec. Sec. 61.6, 61.7, 61.8, 61.9, 61.10, 61.11 and 61.15 in such form 
and manner as the Secretary may prescribe.



Sec. 61.5  When information must be reported.

    (a) Information required under Sec. Sec. 61.7, 61.8, 61.9, 61.10 
and 61.11 must be submitted to the HIPDB--
    (1) Within 30 calendar days from the date the final adverse action 
was taken or the date when the reporting entity became aware of the 
final adverse action; or
    (2) By the close of the entity's next monthly reporting cycle, 
whichever is later.
    (b) The date the final adverse action was taken, its effective date 
and duration of the action would be contained in the information 
reported to the HIPDB under Sec. Sec. 61.7, 61.8, 61.9, 61.10 and 
61.11.



Sec. 61.6  Reporting errors, omissions, revisions or whether an action is 
on appeal.

    (a) If errors or omissions are found after information has been 
reported, the reporter must send an addition or correction to the HIPDB. 
The HIPDB will not accept requests for readjudication of the case.
    (b) A reporter that reports information on licensure, criminal 
convictions, civil or administrative judgments, exclusions, or 
adjudicated actions or decisions under Sec. Sec. 61.7, 61.8, 61.9, 
61.10 or 61.11 also must report any revision of the action originally 
reported. Revisions include, but are not limited to, reversal of a 
criminal conviction, reversal of a judgment or other adjudicated 
decisions or whether the action is on appeal, and reinstatement of a 
license.
    (c) The subject will receive a copy of all reports, including 
revisions and corrections to the report.
    (d) Upon receipt of a report, the subject--
    (1) Can accept the report as written;
    (2) May provide a statement to the HIPDB that will be permanently 
appended to the report, either directly or through a designated 
representative (The HIPDB will distribute the statement to queriers, 
where identifiable, and to the reporting entity and the subject of the 
report. The HIPDB will not edit the statement; only the subject can, 
upon request, make changes to the statement); or
    (3) May follow the dispute process in accordance with Sec. 61.15.



Sec. 61.7  Reporting licensure actions taken by Federal or State 
licensing and certification agencies.

    (a) What actions must be reported. Federal and State licensing and 
certification agencies must report to the HIPDB the following final 
adverse actions that are taken against a health care provider, supplier, 
or practitioner (regardless of whether the final adverse action is the 
subject of a pending appeal)--
    (1) Formal or official actions, such as revocation or suspension of 
a license or certification agreement or contract for participation in 
Federal or State health care programs (and the length of any such 
suspension), reprimand, censure or probation;
    (2) Any other loss of the license or loss of the certification 
agreement or contract for participation in Federal or State health care 
programs, or the right to apply for, or renew, a license or 
certification agreement or contract of the provider, supplier, or 
practitioner, whether by operation of law, voluntary surrender, non-
renewal (excluding nonrenewals due to nonpayment of fees, retirement, or 
change to inactive status), or otherwise; and
    (3) Any other negative action or finding by such Federal or State 
agency that is publicly available information.
    (b) Entities described in paragraph (a) of this section must report 
the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Name;
    (ii) Social Security Number (or Individual Taxpayer Identification 
Number (ITIN));
    (iii) Home address or address of record;

[[Page 152]]

    (iv) Sex; and
    (v) Date of birth.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) Organization name and type;
    (ii) Occupation and specialty, if applicable;
    (iii) National Provider Identifier (NPI), when issued by theCenters 
for Medicare & Medicaid Services (CMS);
    (iv) Name of each professional school attended and year of 
graduation; and
    (v) With respect to the State professional license (including 
professional certification and registration) on which the reported 
action was taken, the license number, the field of licensure, and the 
name of the State or territory in which the license is held.
    (3) If the subject is an organization, identifiers, including:
    (i) Name;
    (ii) Business address;
    (iii) Federal Employer Identification Number (FEIN), or Social 
Security Number (or ITIN) when used by the subject as a Taxpayer 
Identification Number (TIN);
    (iv) The NPI, when issued by CMS;
    (v) Type of organization; and
    (vi) With respect to the State license (including certification and 
registration) on which the reported action was taken, the license and 
the name of the State or territory in which the license is held.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based;
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary;
    (iii) Classification of the action taken in accordance with a 
reporting code adopted by the Secretary, and the amount of any monetary 
penalty resulting from the reported action;
    (iv) The date the action was taken, its effective date and duration;
    (v) If the action is on appeal;
    (vi) Name of the agency taking the action;
    (vii) Name and address of the reporting entity; and
    (viii) The name, title and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) Entities described in paragraph (a) of this section should 
report, if known, the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name (s) used;
    (ii) Other address;
    (iii) FEIN, when used by the individual as a TIN; and
    (iv) If deceased, date of death.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) Other State professional license number(s), field(s) of 
licensure, and the name(s) of the State or territory in which the 
license is held;
    (ii) Other numbers assigned by Federal or State agencies, to 
include, but not limited to Drug Enforcement Administration (DEA) 
registration number(s), Unique Physician Identification Number(s) 
(UPIN), and Medicaid and Medicare provider number(s);
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated; and
    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used;
    (ii) Other address(es) used;
    (iii) Other FEIN(s) or Social Security Numbers (or ITIN) used;
    (iv) Other NPI(s) used;
    (v) Other State license number(s) and the name(s) of the State or 
territory in which the license is held;
    (vi) Other numbers assigned by Federal or State agencies, to 
include, but not limited to Drug Enforcement Administration (DEA) 
registration number(s), Clinical Laboratory Improvement Act (CLIA) 
number(s), Food and Drug Administration (FDA) number(s), and Medicaid 
and Medicare provider number(s);
    (vii) Names and titles of principal officers and owners;
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated; and
    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.

[[Page 153]]

    (4) For all subjects:
    (i) If the subject will be automatically reinstated; and
    (ii) The date of appeal, if any.
    (d) Sanctions for failure to report. The Secretary will provide for 
a publication of a public report that identifies those Government 
agencies that have failed to report information on adverse actions as 
required to be reported under this section.

[64 FR 57758, Oct. 26, 1999, as amended at 69 FR 33868, June 17, 2004]



Sec. 61.8  Reporting Federal or State criminal convictions related to the 
delivery of a health care item or service.

    (a) Who must report. Federal and State prosecutors must report 
criminal convictions against health care providers, suppliers, and 
practitioners related to the delivery of a health care item or service 
(regardless of whether the conviction is the subject of a pending 
appeal).
    (b) Entities described in paragraph (a) of this section must report 
the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Name;
    (ii) Social Security Number (or ITIN);
    (iii) Home address or address of record;
    (iv) Sex; and
    (v) Date of birth.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) Organization name and type;
    (ii) Occupation and specialty, if applicable; and
    (iii) National Provider Identifier (NPI), when issued by theCenters 
for Medicare & Medicaid Services (CMS).
    (3) If the subject is an organization, identifiers, including:
    (i) Name;
    (ii) Business address;
    (iii) Federal Employer Number (FEIN), or Social Security Number (or 
ITIN) when used by the subject as a Taxpayer Identification Number 
(TIN);
    (iv) The NPI, when issued by CMS; and
    (v) Type of organization.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based;
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary;
    (iii) Name and location of court or judicial venue in which the 
action was taken;
    (iv) Docket or court file number;
    (v) Type of action taken;
    (vi) Statutory offense(s) and count(s);
    (vii) Name of primary prosecuting agency (or the plaintiff in civil 
actions);
    (viii) Date of sentence or judgment;
    (ix) Length of incarceration, detention, probation, community 
service or suspended sentence;
    (x) Amounts of any monetary judgment, penalty, fine, assessment or 
restitution;
    (xi) Other sentence, judgment or orders;
    (xii) If the action is on appeal;
    (xiii) Name and address of the reporting entity; and
    (xiv) The name, title and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) Entities described in paragraph (a) of this section should 
report, if known, the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name (s) used;
    (ii) Other address; and
    (iii) FEIN, when used by the individual as a TIN.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) State professional license (including professional certification 
and registration) number(s), field(s) of licensure, and the name(s) of 
the State or territory in which the license is held;
    (ii) Other numbers assigned by Federal or State agencies, to 
include, but not limited to Drug Enforcement Administration (DEA) 
registration number(s), Unique Physician Identification Number(s) 
(UPIN), and Medicaid and Medicare provider number(s);
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated; and

[[Page 154]]

    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used;
    (ii) Other address(es) used;
    (iii) Other FEIN(s) or Social Security Numbers(s) (or ITINs) used;
    (iv) Other NPI(s) used;
    (v) State license (including certification and registration) 
number(s) and the name(s) of the State or territory in which the license 
is held;
    (vi) Other numbers assigned by Federal or State agencies, to 
include, but not limited to Drug Enforcement Administration (DEA) 
registration number(s), Clinical Laboratory Improvement Act (CLIA) 
number(s), Food and Drug Administration (FDA) number(s), and Medicaid 
and Medicare provider number(s);
    (vii) Names and titles of principal officers and owners;
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated; and
    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (4) For all subjects:
    (i) Prosecuting agency's case number;
    (ii) Investigative agencies involved;
    (iii) Investigative agencies case of file number(s); and
    (iv) The date of appeal, if any.
    (d) Sanctions for failure to report. The Secretary will provide for 
publication of a public report that identifies those Government agencies 
that have failed to report information on criminal convictions as 
required to be reported under this section.

[64 FR 57758, Oct. 26, 1999, as amended at 69 FR 33868, June 17, 2004]



Sec. 61.9  Reporting civil judgments related to the delivery of a health 
care item or service.

    (a) Who must report. Federal and State attorneys and health plans 
must report civil judgments against health care providers, suppliers, or 
practitioners related to the delivery of a health care item or service 
(regardless of whether the civil judgment is the subject of a pending 
appeal). If a Government agency is party to a multi-claimant civil 
judgment, it must assume the responsibility for reporting the entire 
action, including all amounts awarded to all the claimants, both public 
and private. If there is no Government agency as a party, but there are 
multiple health plans as claimants, the health plan which receives the 
largest award must be responsible for reporting the total action for all 
parties.
    (b) Entities described in paragraph (a) of this section must report 
the information as required in Sec. 61.8(b).
    (c) Entities described in paragraph (a) of this section should 
report, if known the information as described in Sec. 61.8(c).
    (d) Sanctions for failure to report. Any health plan that fails to 
report information on a civil judgment required to be reported under 
this section will be subject to a civil money penalty (CMP) of not more 
than $25,000 for each such adverse action not reported. Such penalty 
will be imposed and collected in the same manner as CMPs under 
subsection (a) of section 1128A of the Act. The Secretary will provide 
for publication of a public report that identifies those Government 
agencies that have failed to report information on civil judgments as 
required to be reported under this section.



Sec. 61.10  Reporting exclusions from participation in Federal or State 
health care programs.

    (a) Who must report. Federal and State Government agencies must 
report health care providers, suppliers, or practitioners excluded from 
participating in Federal or State health care programs, including 
exclusions that were made in a matter in which there was also a 
settlement that is not reported because no findings or admissions of 
liability have been made (regardless of whether the exclusion is the 
subject of a pending appeal) .
    (b) Entities described in paragraph (a) of this section must report 
the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Name;
    (ii) Social Security Number (or ITIN);

[[Page 155]]

    (iii) Home address or address of record;
    (iv) Sex; and
    (v) Date of birth.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) Organization name and type;
    (ii) Occupation and specialty, if applicable; and
    (iii) National Provider Identifier (NPI), when issued by theCenters 
for Medicare & Medicaid Services (CMS).
    (3) If the subject is an organization, identifiers, including:
    (i) Name;
    (ii) Business address;
    (iii) Federal Employer Identification Number (FEIN), or Social 
Security Number (or ITIN) when used by the subject as a Taxpayer 
Identification Number (TIN);
    (iv) The NPI, when issued by CMS; and
    (v) Type of organization.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based;
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary;
    (iii) Classification of the action taken in accordance with a 
reporting code adopted by the Secretary, and the amount of any monetary 
penalty resulting from the reported action;
    (iv) The date the action was taken, its effective date and duration;
    (v) If the action is on appeal;
    (vi) Name of the agency taking the action;
    (vii) Name and address of the reporting entity; and
    (viii) The name, title and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) Entities described in paragraph (a) of this section should 
report, if known, the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name(s) used;
    (ii) Other address;
    (iii) FEIN, when used by the individual as a TIN;
    (iv) Name of each professional school attended and year of 
graduation; and
    (v) If deceased, date of death.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) State professional license (including professional registration 
and certification) number(s), field(s) of licensure, and the name(s) of 
the State or Territory in which the license is held;
    (ii) Other numbers assigned by Federal or State agencies, to 
include, but not limited to Drug Enforcement Administration (DEA) 
registration number(s), Unique Physician Identification Number(s) 
(UPIN), and Medicaid and Medicare provider number(s);
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated; and
    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used;
    (ii) Other address(es) used;
    (iii) Other FEIN(s) or Social Security Numbers(s) (or ITINs) used;
    (iv) Other NPI(s) used;
    (v) State license (including registration and certification) 
number(s) and the name(s) of the State or territory in which the license 
is held;
    (vi) Other numbers assigned by Federal or State agencies, to 
include, but not limited to Drug Enforcement Administration (DEA) 
registration number(s), Clinical Laboratory Improvement Act (CLIA) 
number(s), Food and Drug Administration (FDA) number(s), and Medicaid 
and Medicare provider number(s);
    (vii) Names and titles of principal officers and owners;
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated; and
    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (4) For all subjects:
    (i) If the subject will be automatically reinstated; and
    (ii) The date of appeal, if any.
    (d) Sanctions for failure to report. The Secretary will provide for 
publication of a public report that identifies those Government agencies 
that have failed to report information on exclusions or

[[Page 156]]

debarments as required to be reported under this section.

[64 FR 57758, Oct. 26, 1999, as amended at 69 FR 33869, June 17, 2004]



Sec. 61.11  Reporting other adjudicated actions or decisions.

    (a) Who must report. Federal and State governmental agencies and 
health plans must report other adjudicated actions or decisions as 
defined in Sec. 61.3 related to the delivery, payment or provision of a 
health care item or service against health care providers, suppliers, 
and practitioners (regardless of whether the other adjudicated action or 
decision is subject to a pending appeal).
    (b) Entities described in paragraph (a) of this section must report 
the information as required in Sec. 61.10(b).
    (c) Entities described in paragraph (a) of this section should 
report, if known the information as described in Sec. 61.10(c).
    (d) Sanctions for failure to report. Any health plan that fails to 
report information on an other adjudicated action or decision required 
to be reported under this section will be subject to a civil money 
penalty (CMP) of not more than $25,000 for each such action not 
reported. Such penalty will be imposed and collected in the same manner 
as CMPs under subsection (a) of section 1128A of the Act. The Secretary 
will provide for publication of a public report that identifies those 
Government agencies that have failed to report information on other 
adjudicated actions as required to be reported under this section.



  Subpart C_Disclosure of Information by the Healthcare Integrity and 
                          Protection Data Bank



Sec. 61.12  Requesting information from the Healthcare Integrity and 
Protection Data Bank.

    (a) Who may request information and what information may be 
available. Information in the HIPDB will be available, upon request, to 
the following persons or entities, or their authorized agents--
    (1) Federal and State Government agencies;
    (2) Health plans;
    (3) A health care practitioner, provider, or supplier requesting 
information concerning himself, herself or itself; and
    (4) A person or entity requesting statistical information, which 
does not permit identification of any individual or entity. (For 
example, researchers can use statistical information to identify the 
total number of practitioners excluded from the Medicare and Medicaid 
programs. Similarly, health plans can use statistical information to 
develop outcome measures in their efforts to monitor and improve quality 
care.)
    (b) Procedures for obtaining HIPDB information. Eligible individuals 
and entities may obtain information from the HIPDB by submitting a 
request in such form and manner as the Secretary may prescribe. These 
requests are subject to fees set forth in Sec. 61.13. The HIPDB will 
comply with the Department's principles of fair information practice by 
providing each subject of a report with a copy when the report is 
entered into the HIPDB.
    (c) Information provided in response to self-queries. (1) At the 
time subjects request information as part of a ``self-query,'' the 
subject will receive--
    (i) Any report(s) in the HIPDB specific to them; and
    (ii) A disclosure history from the HIPDB of the name(s) of any 
entity (or entities) that have previously received the report(s).
    (2) The disclosure history will be restricted in accordance with the 
Privacy Act regulations set forth in 45 CFR part 5b.



Sec. 61.13  Fees applicable to requests for information.

    (a) Policy on fees. The fees described in this section apply to all 
requests for information from the HIPDB, except requests from Federal 
agencies. However, for purposes of verification and dispute resolution 
at the time the report is accepted, the HIPDB will provide a copy--at 
the time a report has been submitted automatically, without a request 
and free of charge--of every

[[Page 157]]

report to the health care provider, supplier or practitioner who is the 
subject of the report. For the same purpose, the Department will provide 
a copy of the report--at the time a report has been submitted 
automatically, without a request and free of charge--to the reporter 
that submitted it. The fees are authorized by section 1128E(d)(2) of the 
Act, and they reflect the full costs of operating the database. The 
actual fees will be announced by the Secretary in periodic notices in 
the Federal Register.
    (b) Criteria for determining the fee. The amount of each fee will be 
determined based on the following criteria --
    (1) Direct and indirect personnel costs;
    (2) Physical overhead, consulting, and other indirect costs 
including rent and depreciation on land, buildings and equipment;
    (3) Agency management and supervisory costs;
    (4) Costs of enforcement, research and establishment of regulations 
and guidance;
    (5) Use of electronic data processing equipment to collect and 
maintain information--the actual cost of the service, including computer 
search time, runs and printouts; and
    (6) Any other direct or indirect costs related to the provision of 
services.
    (c) Assessing and collecting fees. The Secretary will announce 
through periodic notice in the Federal Register the method of payment of 
fees. In determining these methods, the Secretary will consider 
efficiency, effectiveness and convenience for users and for the 
Department. Methods may include credit card, electronic funds transfer 
and other methods of electronic payment.



Sec. 61.14  Confidentiality of Healthcare Integrity and Protection Data 
Bank information.

    Information reported to the HIPDB is considered confidential and 
will not be disclosed outside the Department, except as specified in 
Sec. Sec. 61.12 and 61.15. Persons and entities receiving information 
from the HIPDB, either directly or from another party, must use it 
solely with respect to the purpose for which it was provided. Nothing in 
this section will prevent the disclosure of information by a party from 
its own files used to create such reports where disclosure is otherwise 
authorized under applicable State or Federal law.



Sec. 61.15  How to dispute the accuracy of Healthcare Integrity and 
Protection Data Bank information.

    (a) Who may dispute the HIPDB information. The HIPDB will routinely 
mail or transmit electronically to the subject a copy of the report 
filed in the HIPDB. In addition, as indicated in Sec. 61.12(a)(3), the 
subject may also request a copy of such report. The subject of the 
report or a designated representative may dispute the accuracy of a 
report concerning himself, herself or itself as set forth in paragraph 
(b) of this section.
    (b) Procedures for disputing a report with the reporting entity. If 
the subject disagrees with the reported information, the subject must 
request in writing that the HIPDB enter the report into ``disputed 
status.''
    (2) The HIPDB will send the report, with a notation that the report 
has been placed in ``disputed status,'' to queriers (where 
identifiable), the reporting entity and the subject of the report.
    (3) The subject must attempt to enter into discussion with the 
reporting entity to resolve the dispute. If the reporting entity revises 
the information originally submitted to the HIPDB, the HIPDB will notify 
the subject and all entities to whom reports have been sent that the 
original information has been revised. If the reporting entity does not 
revise the reported information, or does not respond to the subject 
within 60 days, the subject may request that the Secretary review the 
report for accuracy. The Secretary will decide whether to correct the 
report within 30 days of the request. This time frame may be extended 
for good cause. The subject also may provide a statement to the HIPDB, 
either directly or through a designated representative, that will 
permanently append the report.
    (c) Procedures for requesting a Secretarial review. The subject must 
request, in writing, that the Secretary of the

[[Page 158]]

Department review the report for accuracy. The subject must return this 
request to the HIPDB along with appropriate materials that support the 
subject's position. The Secretary will only review the accuracy of the 
reported information, and will not consider the merits or 
appropriateness of the action or the due process that the subject 
received.
    (2) After the review, if the Secretary--
    (i) Concludes that the information is accurate and reportable to the 
HIPDB, the Secretary will inform the subject and the HIPDB of the 
determination. The Secretary will include a brief statement (Secretarial 
Statement) in the report that describes the basis for the decision. The 
report will be removed from ``disputed status.'' The HIPDB will 
distribute the corrected report and statement(s) to previous queriers 
(where identifiable), the reporting entity and the subject of the 
report.
    (ii) Concludes that the information contained in the report is 
inaccurate, the Secretary will inform the subject of the determination 
and direct the HIPDB or the reporting entity to revise the report. The 
Secretary will include a brief statement (Secretarial Statement) in the 
report describing the findings. The HIPDB will distribute the corrected 
report and statement (s) to previous queriers (where identifiable), the 
reporting entity and the subject of the report.
    (iii) Determines that the disputed issues are outside the scope of 
the Department's review, the Secretary will inform the subject and the 
HIPDB of the determination. The Secretary will include a brief statement 
(Secretarial Statement) in the report describing the findings. The 
report will be removed from ``disputed status.'' The HIPDB will 
distribute the report and the statement(s) to previous queriers (where 
identifiable), the reporting entity and the subject of the report.
    (iv) Determines that the adverse action was not reportable and 
therefore should be removed from the HIPDB, the Secretary will inform 
the subject and direct the HIPDB to void the report. The HIPDB will 
distribute a notice to previous queriers (where identifiable), the 
reporting entity and the subject of the report that the report has been 
voided.

[64 FR 57758, Oct. 26, 1999, as amended at 64 FR 71041, Dec. 20, 1999]



Sec. 61.16  Immunity.

    Individuals, entities or their authorized agents and the HIPDB shall 
not be held liable in any civil action filed by the subject of a report 
unless the individual, entity or authorized agent submitting the report 
has actual knowledge of the falsity of the information contained in the 
report.



PART 63_GRANT PROGRAMS ADMINISTERED BY THE OFFICE OF THE ASSISTANT 
SECRETARY FOR PLANNING AND EVALUATION--Table of Contents




                            Subpart A_General

Sec.
63.1 Purpose and scope.
63.2 Eligibility for award.
63.3 Program announcements and solicitations.
63.4 Cooperative arrangements.
63.5 Effective date of approved grant.
63.6 Evaluation of applications.
63.7 Disposition of applications.
63.8 Supplemental regulations and grant conditions.

                     Subpart B_Financial Provisions

63.16 Scope of subpart.
63.17 Amount of award.
63.18 Limitations on costs.
63.19 Budget revisions and minor deviations.
63.20 Period during which grant funds may be obligated.
63.21 Obligation and liquidation by grantee.
63.22 Cost sharing.
63.23 Telecommunications Demonstration Grants.

                      Subpart C_Special Provisions

63.30 Scope of subpart.
63.31 Protection of human subjects.
63.32 Data collection instruments.
63.33 Treatment of animals.
63.34 Principal investigators.
63.35 Dual compensation.
63.36 Fees to Federal employees.
63.37 Leasing facilities.
63.38 Publications.
63.39 Religious worship or instruction.


[[Page 159]]


    Authority: Sec. 602, Community Services Act (42 U.S.C. 2942); sec. 
1110, Social Security Act (42 U.S.C. 1310).

    Source: 40 FR 23295, May 29, 1975, unless otherwise noted.



                            Subpart A_General



Sec. 63.1  Purpose and scope.

    (a) Applicability. Except to the extent inconsistent with an 
applicable Federal statute the regulations in this part apply to all 
grant awards of Federal assistance made by the Assistant Secretary for 
Planning and Evaluation or his designee, hereinafter referred to in this 
part as the Assistant Secretary. Such grants include those under section 
232 of the Community Services Act (42 U.S.C. 2835), section 1110 of the 
Social Security Act (42 U.S.C. 1310), section 392A of the Communications 
Act of 1934, and such other authority as may be delegated to the 
Assistant Secretary for policy research activities.
    (b) Exceptions to applicability. The award and administration of 
contracts and cooperative agreements by the Assistant Secretary shall 
not be covered by this subchapter. Contracts entered into by the 
Assistant Secretary shall be subject to the regulations in 41 CFR 
Chapters 1 and 3. Generally, the Assistant Secretary will select between 
grant and contract procedures and instruments, both with regard to the 
solicitation process and with respect to unsolicited proposals, on the 
basis of criteria set forth in the proposed revision of 41 CFR 3-1.53 
published at 39 FR 27469 at any subsequent revision thereof.
    (c) Objectives--(1) Policy Research. The overall objective of policy 
research activities is to obtain information, as it relates to the 
mission of the Department of Health and Human Services, about the basic 
causes of and methods for preventing and eliminating poverty and 
dependency and about improved methods for delivering human resources 
services. Such information is obtained through the conduct of basic and 
applied research, statistical analyses, and demonstrations and 
evaluations which have demonstrated a high probability of impacting on 
the formulation or modification of major Departmental policies and 
programs.
    (2) Telecommunications Demonstrations. The overall objective of the 
Telecommunications Demonstration Program is to promote the development 
of nonbroadcast telecommunications facilities and services for the 
transmission, distribution, and delivery of health, education, and 
social service information.

[40 FR 23295, May 29, 1975, as amended at 42 FR 36149, July 13, 1977]



Sec. 63.2  Eligibility for award.

    (a) Groups and organizations eligible. Except where otherwise 
prohibited by law, any public or nonprofit private agency, institution, 
or organization which is found by the Assistant Secretary to be 
authorized and qualified by educational, scientific, or other relevant 
competence to carry out a proposed project in accordance with the 
regulations of this subchapter shall be eligible to receive a grant 
under this part.
    (b) Project eligible--(1) Policy Research. Any project found by the 
Assistant Secretary to be a research, pilot, evaluation, or 
demonstration project within the meaning of this section and Sec. 63.1 
shall be eligible for an award. Eligible projects may include planning, 
policy modeling or research utilization studies; experiments; 
demonstrations; field investigations; statistical data collections or 
analyses; or other types of investigation or studies, or combinations 
thereof, and may either be limited to one aspect of a problem or 
subject, or may consist of two or more related problems or subjects for 
concurrent or consecutive investigation and may involve multiple 
disciplines, facilities, and resources.
    (2) Telecommunications Demonstrations. Any projects which meet the 
special criteria in Sec. 63.6(c) shall be eligible for a 
telecommunications demonstration grant.

[40 FR 23295, May 29, 1975, as amended at 42 FR 36149, July 13, 1977]



Sec. 63.3  Program announcements and solicitations.

    (a) In each fiscal year the Assistant Secretary may from time to 
time solicit applications through one or more

[[Page 160]]

general or specialized program announcements. Such announcements will be 
published in the Federal Register as notices and will include:
    (1) A clear statement of the type(s) of applications requested;
    (2) A specified plan, time(s) of application, and criteria for 
reviewing and approving applications;
    (3) Any grant terms or conditions of general applicability (other 
than those set forth in this part) which are necessary (i) to meet the 
statutory requirements of applicable legislation, (ii) to assure or 
protect the advancement of the project, or (iii) to conserve grant 
funds.
    (b) Applications for grants: Any applicant eligible for grant 
assistance may submit on or before such cutoff date or dates as the 
Assistant Secretary may announce in program solicitations, an 
application containing such pertinent information and in accordance with 
the forms and instructions as prescribed herein and additional forms and 
instructions as may be specified by the Assistant Secretary. Such 
application shall be executed by the applicant or an official or 
representative of the applicant duly authorized to make such 
application. The Assistant Secretary may require any party eligible for 
assistance under this subchapter to submit a preliminary proposal for 
review and approval prior to the acceptance of an application submitted 
under these provisions.
    (c) All applications and preliminary proposals should be addressed 
to:

Grants Officer, Office of the Assistant Secretary for Planning and 
Evaluation, Department of Health and Human Services, 330 Independence 
Avenue, SW, Room 5027, Washington, DC 20201.



Sec. 63.4  Cooperative arrangements.

    (a) Eligible parties may enter into cooperative arrangements with 
other eligible parties, including those in another State, to apply for 
assistance.
    (b) A joint application made by two or more applicants for 
assistance under this subchapter may have separate budgets corresponding 
to the programs, services and activities performed by each of the joint 
applicants or may have a combined budget. If joint applications present 
separate budgets, the Assistant Secretary may make separate awards, or 
may award a single grant authorizing separate amounts for each of the 
joint applicants.
    (c) In the case of each cooperative arrangement authorized under 
paragraph (a) of this section and receiving assistance, except where the 
Assistant Secretary makes separate awards under paragraph (b) of this 
section all such applicants (1) shall be deemed to be joint legal 
recipients of the grant award and (2) shall be jointly and severally 
responsible for administering the project assisted under such grant.



Sec. 63.5  Effective date of approved grant.

    Federal financial participation is normally available only with 
respect to obligations incurred subsequent to the effective date of an 
approved project. The effective date of the project will be set forth in 
the notification of grant award. Grantees may be reimbursed for costs 
resulting from obligations incurred before the effective date of the 
grant award if such costs are authorized by the Assistant Secretary in 
the notification of grant award or subsequently in writing, and 
otherwise would be allowable as costs of the grant under the applicable 
regulations and grant terms and conditions.



Sec. 63.6  Evaluation of applications.

    (a) Review procedures. All applications filed in accordance with 
Sec. 63.3 shall be evaluated by the Assistant Secretary through 
officers, employees, and such experts or consultants engaged for this 
purpose as he/she determines are specially qualified in the areas of 
research pursued by this office. The evaluation criteria below will be 
supplemented each fiscal year by a program announcement outlining 
priorities and objectives for policy research, and by other general or 
specialized solicitations. Such supplements may modify the criteria in 
paragraphs (b) and (c) of this section to provide greater specificity or 
otherwise improve their applicability to a given announcement or 
solicitation.
    (b) Criteria for evaluation of Policy Research Projects. Review of 
applications under paragraph (a) of this section will take into account 
such factors as:

[[Page 161]]

    (1) Scientific merit and the significance of the project in relation 
to policy objectives;
    (2) Feasibility of the project;
    (3) Soundness of research design, statistical technique, and 
procedures and methodology;
    (4) Theoretical and technical soundness of the proposed plan of 
operation including consideration of the extent to which:
    (i) The objectives of the proposed project are sharply defined, 
clearly stated, and capable of being attained by the proposed 
procedures;
    (ii) The objectives of the proposed project show evidence of 
contributing to the achievement of policy objectives;
    (iii) Provisions are made for adequate evaluation of the 
effectiveness of the project and for determining the extent to which the 
objectives are accomplished; and
    (iv) Appropriate provisions are made for satisfactory inservice 
training connected with project services.
    (5) Expected potential for utilizing the results of the proposed 
project in other projects or programs for similar purposes;
    (6) Sufficiency of size, scope, and duration of the project so as to 
secure productive results;
    (7) Adequacy of qualifications and experience, including managerial, 
of personnel;
    (8) Adequacy of facilities and other resources; and
    (9) Reasonableness of estimated cost in relation to anticipated 
results.
    (c) Criteria for evaluation of Telecommunications Demonstrations 
Projects. Review of applications for Telecommunications Demonstrations 
grants will take into account such factors as are listed in paragraphs 
(c) (1) through (10) of this section. Each applicant must include in the 
application, prior to final evaluation by the Assistant Secretary, 
documentation indicating specifically and separately how and to what 
extent each of these criteria have been or will be met:
    (1) That the project for which application is made demonstrates 
innovative methods or techniques of utilizing nonbroadcast 
telecommunications equipment or facilities to satisfy the purpose of 
this authority;
    (2) That the project will have original research value which will 
demonstrate to other potential users that such methods or techniques are 
feasible and cost-effective;
    (3) That the services to be provided are responsive to local needs 
as identified and assessed by the applicant;
    (4) That the applicant has assessed existing telecommunications 
facilities (if any) in the proposed service area and explored their use 
of interconnection in conjunction with the project;
    (5) That there is significant local commitment (e.g., evidence of 
support, participation, and contribution by local institutions and 
agencies) to the proposed project, indicating that it fulfills local 
needs, and gives some promise that operational systems will result from 
successful demonstrations and will be supported by service recipients or 
providers;
    (6) That demonstrations and related activities assisted under this 
section will remain under the administration and control of the 
applicant;
    (7) That the applicant has the managerial and technical capability 
to carry out the project for which the application is made;
    (8) That the facilities and equipment acquired or developed pursuant 
to the applications will be used substantially for the transmission, 
distribution, and delivery of health, education, or social service 
information, and that use of such facilities and equipment may be shared 
among these and additional public or other services;
    (9) That the provision has been made to submit a summary and factual 
evaluation of the results of the demonstration at least annually for 
each year in which funds are received, in the form of a report suitable 
for dissemination to groups representative of national health, 
education, and social service telecommunications interests; and,
    (10) That the project has potential for stimulating cooperation and 
sharing among institutions and agencies, both within and across 
disciplines.

[[Page 162]]

    (d) Applicant's performance on prior award. Where the applicant has 
previously received an award from the Department of Health and Human 
Services, the applicant's compliance or noncompliance with requirements 
applicable to such prior award as reflected in past written evaluation 
reports, memoranda on performance, and completeness of required 
submissions: Provided, That in any case where the Assistant Secretary 
proposes to deny assistance based upon the applicant's noncompliance 
with requirements applicable to a prior award, he shall do so only after 
affording the applicant reasonable notice and an opportunity to rebut 
the proposed basis for denial of assistance.

[40 FR 23295, May 29, 1975, as amended at 42 FR 36149, July 13, 1977]



Sec. 63.7  Disposition of applications.

    (a) Approval, disapproval, or deferral. On the basis of the review 
of an application pursuant to Sec. 63.6 the Assistant Secretary will 
either (1) approve the application in whole or in part, for such amount 
of funds and subject to such conditions as he/she deems necessary or 
desirable for the completion of the approved project, (2) disapprove the 
application, or (3) defer action on the application for such reasons as 
lack of funds or a need for further review.
    (b) Notification of disposition. The Assistant Secretary will notify 
the applicant in writing of the disposition of its application. A signed 
notification of grant award will be issued to notify the applicant of an 
approved project application.



Sec. 63.8  Supplemental regulations and grant conditions.

    (a) Grants under section 232 of the Community Services Act. (1) Any 
grants awarded with funds appropriated under section 232 of the 
Community Services Act shall be subject to the following regulations 
issued by the Director of the Community Services Administration 
(formerly the Office of Economic Opportunity):

45 CFR 1060.2...........................  (Income Poverty Guidelines.)
45 CFR 1060.3...........................  (Limitation on Benefits to
                                           Those Voluntarily Poor.)
45 CFR 1067.1...........................  (Suspension and Termination of
                                           Assistance.)
45 CFR 1068.6...........................  (Grantee Compliance with IRS
                                           Requirements for Withheld
                                           Federal Income and Social
                                           Security Taxes.)
45 CFR 1069.1...........................  (Employee Participation in
                                           Direct Action.)
45 CFR 1069.2...........................  (Limitations with Respect to
                                           Unlawful Demonstrations,
                                           Rioting, and Civil
                                           Disturbances.)
45 CFR 1070.1...........................  (Public Access to Grantee
                                           Information.)
 


No other portions of Chapter X of this title are applicable to such 
grants.
    (2) Grants awarded with funds appropriated under section 232 of the 
Community Services Act shall also be subject to the applicable statutory 
requirements in sections 242, 243, and 244, and title VI of the 
Community Services Act. The Assistant Secretary will advise grantees of 
the nature of these requirements at or prior to the time of award.
    (3) In the event that any provision of this part is inconsistent 
with a provision of law or a regulation referenced in paragraphs (a)(1) 
and (2) of this section with respect to any grant funded under section 
232 of the Community Services Act, the provision of this part shall, to 
the extent of any such inconsistency, not be effective.
    (b) Grants under other statutory authority. Grants awarded by the 
Assistant Secretary may be subject to regulations, other than those set 
forth in this part, which have been issued under the authority of 
statutes authorizing particular awards. In such a case, that fact will 
be set forth in the program announcement soliciting applications for 
such grants published in the Federal Register pursuant to Sec. 63.3.
    (c) Other regulations applicable to grants under this part. Federal 
financial assistance provided under this part shall be subject to the 
following additional regulations except as otherwise provided in this 
part:
    (1) Part 74 of this title, establishing uniform administrative 
requirements and cost principles for grants by the Department of Health 
and Human Services.
    (2) Part 80 of this title, effectuating the provisions of title VI 
of the Civil Rights Act of 1964; and
    (3) Part 16 of this title, establishing a Departmental Grant Appeals 
Board for the resolution of specified post-award grant disputes.

[[Page 163]]



                     Subpart B_Financial Provisions



Sec. 63.16  Scope of subpart.

    This subpart sets forth supplemental financial provisions which 
apply to all grants awarded by the Assistant Secretary, except as 
specified in Sec. 63.23 of this subpart.

[40 FR 23295, May 29, 1975, as amended at 42 FR 36149, July 13, 1977]



Sec. 63.17  Amount of award.

    Federal assistance shall be provided only to meet allowable costs 
incurred by the award recipient in carrying out an approved project in 
accordance with the authorizing legislation and the regulations of this 
part.



Sec. 63.18  Limitations on costs.

    The amount of the award shall be set forth in the grant award 
document. The total cost to the Government will not exceed the amount 
set forth in the grant award document or any modification thereof 
approved by the Assistant Secretary which meets the requirements of 
applicable statutes and regulations. The Government shall not be 
obligated to reimburse the grantee for costs incurred in excess of such 
amount unless and until the Assistant Secretary has notified the grantee 
in writing that such amount has been increased and has specified such 
increased amount in a revised grant award document. Such revised amount 
shall thereupon constitute the maximum cost to the Government for the 
performance of the grant.



Sec. 63.19  Budget revisions and minor deviations.

    Pursuant to Sec. 74.102(d) of this title, paragraphs (b)(3) and 
(b)(4) of that section are waived.



Sec. 63.20  Period during which grant funds may be obligated.

    (a) The amount of the grant award shall remain available for 
obligation by the grantee during the period specified in the grant award 
or until otherwise terminated. Such period may be extended by revision 
of the grant with or without additional funds pursuant to paragraph (b) 
of this section where otherwise permitted by law.
    (b) When it is determined that special or unusual circumstances will 
delay the completion of the project beyond the period for obligation, 
the grantee must in writing request the Assistant Secretary to extend 
such period and must indicate the reasons therefor.



Sec. 63.21  Obligation and liquidation by grantee.

    Obligations will be considered to have been incurred by a grantee on 
the basis of documentary evidence of binding commitments for the 
acquisition of goods or property or for the performance of work, except 
that funds for personal services, for services performed by public 
utilities, for travel, and for the rental of facilities, shall be 
considered to have been obligated as of the time such services were 
rendered, such travel was performed, and such rented facilities were 
used, respectively.



Sec. 63.22  Cost sharing.

    Policy Research funds shall not be used to pay any recipient of a 
grant for the conduct of a research project an amount equal to as much 
as the entire cost of the project.



Sec. 63.23  Telecommunications Demonstration Grants.

    The provisions of this section apply only to grants awarded under 
authority of 392A of the Communications Act of 1934.
    (a) Funds provided under the Telecommunications Demonstrations 
Program shall be available to support the planning, development, and 
acquisition or leasing of facilities and equipment necessary to the 
demonstration. However, funds shall not be available for the 
construction, remodeling, or repair of structures to house facilities or 
equipment acquired or developed with such funds, except that such funds 
may be used for minor remodeling which is necessary for and incident to 
the installation of such facilities or equipment.
    (b) Funds shall not be available for the development of programming 
materials or content.
    (c) The funding of any demonstration under this authority shall 
continue for not more than three years from the date of the original 
grant or contract.

[[Page 164]]

    (1) Applications for assistance under the Act may project goals and 
activities over a period of up to three years. Approval of a multi-year 
project is intended to offer the project a reasonable degree of 
stability over time and to facilitiate additional long range planning.
    (2) Applications proposing a multi-year project must be accompanied 
by an explanation of the need for multi-year support, an overview of the 
objectives and activities proposed, and budget estimates to attain these 
objectives in any proposed subsequent year.
    (3) Subject to the availability of funds, an application for 
assistance to continue a project during the project period will be 
reviewed on a non-competitive basis to determine--
    (i) If the award recipient has complied with the award terms and 
conditions, the Act, and applicable regulations;
    (ii) The effectiveness of the project to date in terms of progress 
toward its goals, or the constructive changes proposed as a result of 
the ongoing evaluation of the project; and,
    (iii) If continuation of the project would be in the best interests 
of the Government.
    (d) The use of equipment in demonstration projects shall be subject 
to the rules and regulations of the Federal Communications Commission 
(FCC), and grant funds may not be expended or obligated for purchase, 
lease, or use of such equipment prior to appropriate and necessary 
coordination by the grantee with the Commission. In particular:
    (1) For any project requiring a new or modification of an existing 
authorization(s) from the FCC, application(s) to the FCC for such 
authorization(s) must have been tendered for filing prior to the closing 
date established by any solicitation for grant applications offered 
under the Telecommunications Demonstration Program.
    (2) If the project is to be associated with an existing 
telecommunications activity requiring an FCC authorization, such 
operating authority for that activity must be current and valid.
    (3) For any project requiring a new or modification of an existing 
authorization(s) from the FCC, the applicant must file with the 
Secretary of Health and Human Services a copy of each FCC application 
and any amendments thereto.
    (4) For any project requiring a new or modification of an existing 
authorization(s) from the FCC, the applicant must tender for filing with 
the FCC a copy of the application to the Secretary for a 
telecommunications demonstration grant.
    (5) If the applicant fails to file required applications by the 
closing date established by the solicitation for grant applications, or 
if the FCC returns as substantially incomplete or deficient, dismisses, 
or denies an application required for the project, or any part thereof, 
or for the operation of any facility with which the project is 
associated, the Secretary may return the application for Federal 
assistance.
    (e) For the purposes of this program, the term ``non-broadcast 
telecommunications facilities'' includes but is not limited to, cable 
television systems, communications satellite systems and related 
terminal equipment, and other methods of transmitting, emitting, or 
receiving images and sounds or intelligence by means of wire, radio, 
optical, electromagnetic, and other means (including non-broadcast 
utilization of telecommunications equipment normally associated with 
broadcasting use).
    (f) Each applicant shall provide such information as the Assistant 
Secretary deems necessary to make a Federal assessment of the impact of 
the project on the quality of the human environment in accordance with 
section 102(2)(C) of the National Environmental Policy Act of 1969 
(including the National Historical Preservation Act and other 
environmental acts). (42 U.S.C. 4332(2)(C)).

[42 FR 36149, July 13, 1977]



                      Subpart C_Special Provisions



Sec. 63.30  Scope of subpart.

    This subpart sets forth supplemental special provisions which apply 
to all grants awarded by the Assistant Secretary.

[[Page 165]]



Sec. 63.31  Protection of human subjects.

    All grants made pursuant to this part are subject to the specific 
provisions of Part 46 of this subtitle relating to the protection of 
human subjects.



Sec. 63.32  Data collection instruments.

    (a) Definitions. For the purposes of this section ``Child'' means an 
individual who has not attained the legal age of consent to participate 
in research as determined under the applicable law of the jurisdiction 
in which such research is to be conducted.
    ``Data-collection instruments'' means tests, questionnaires, 
inventories, interview schedules or guides, rating scales, and survey 
plans or any other forms which are used to collect information on 
substantially identical items from 10 or more respondents.
    ``Respondents'' means individuals or organizations from whom 
information is collected.
    (b) Applicability. This section does not apply to instruments which 
deal solely with (1) functions of technical proficiency, such as 
scholastic aptitude or school achievement, or (2) routine demographic 
information.
    (c) Protection of privacy. (1) No project supported under this part 
may involve the use of data collection instruments which constitute 
invasion of personal privacy through inquiries regarding such matters as 
religion, sex, race, or politics.
    (2) A grantee which proposes to use a data collection instrument 
shall set forth in the grant application an explanation of the 
safeguards which will be used to restrict the use and disclosure of 
information so obtained to purposes directly connected with the project, 
including provisions for the destruction of such instruments where no 
longer needed for the purposes of the project.
    (d) Clearance of instruments. (1) Grantees will not be required to 
submit data-collection instruments to the Assistant Secretary or obtain 
the Assistant Secretary's approval for the use of these instruments, 
except where the notification of grant award specifically so provides.
    (2) If a grantee is required under paragraph (d)(1) of this section 
to submit data-collection instruments for the approval of the Assistant 
Secretary or if a grantee wishes the Assistant Secretary to review a 
data-collection instrument, the grantee shall submit seven copies of the 
document to the Assistant Secretary along with seven copies of the 
Office of Management and Budget's standard form No. 83 and seven copies 
of the Supporting Statement as required in the ``Instructions for 
Requesting OMB Approval under the Federal Reports Act'' (Standard form 
No. 83A).
    (e) Responsibility for collection of information. A grantee shall 
not in any way represent or imply (either in a letter of transmittal, in 
the data-gathering instruments themselves, or in any other manner) that 
the information is being collected by or for the Federal Government or 
any department, agency or instrumentality thereof. Basic responsibility 
for the study and the data-gathering instruments rests with the grantee.
    (f) Parental consent. In the case of any survey using data-
collection instruments in which children are involved as respondents, 
the grantee, in addition to observing the other requirements contained 
in this section, and in Part 46 of this subtitle as appropriate, shall 
provide assurances satisfactory to the Assistant Secretary that informed 
consent will be obtained from the parents of each such respondent prior 
to the use of such instruments, except that a waiver from the 
requirements of this paragraph for specific data-collection activities 
may be granted upon the written request by the grantee and a 
determination by the Assistant Secretary that a waiver is necessary in 
order to fully carry out the purposes of the grant.



Sec. 63.33  Treatment of animals.

    If animals are utilized in any project receiving assistance, the 
applicant for such assistance shall provide assurances satisfactory to 
the Assistant Secretary that such animals will be provided with proper 
care and humane treatment; in accordance with the Animal Welfare Act (7 
U.S.C. 2131 et seq.) and regulations set forth in (9 CFR Parts 1, 2, 3, 
4).

[[Page 166]]



Sec. 63.34  Principal investigators.

    The principal investigator(s) designated in successful grant 
applications as responsible for the conduct of the approved project, 
shall not be replaced without the prior approval of the Assistant 
Secretary or his designee. Failure to seek and acquire such approval may 
result in the grant award being terminated in accordance with the 
procedures set forth in Sec. 74.114 of this subtitle or such other 
regulations as may be indicated in the grant terms and conditions.



Sec. 63.35  Dual compensation.

    If a project staff member or consultant of one grantee is involved 
simultaneously in two or more projects supported by any funds either 
under this part or otherwise, he/she may not be compensated for more 
than 100 percent of his/her time from any funds during any part of the 
period of dual involvement.



Sec. 63.36  Fees to Federal employees.

    The grantee shall not use funds from any sources to pay a fee to, or 
travel expenses of, employees of the Federal Government for lectures, 
attending program functions, or any other activities in connection with 
the grant.



Sec. 63.37  Leasing facilities.

    In the case of a project involving the leasing of a facility, the 
grantee shall demonstrate that it will have the right to occupy, to 
operate, and, if necessary, to maintain and improve the leased facility 
during the proposed period of the project.



Sec. 63.38  Publications.

    Any publication or presentation resulting from or primarily related 
to Federal financial assistance under this part shall contain an 
acknowledgement essentially as follows:

    The activity which is the subject of this report was supported in 
whole or part by a grant from the Office of the Assistant Secretary for 
Planning and Evaluation, Department of Health and Human Services. 
However, the opinions expressed herein do not necessarily reflect the 
position or policy of that Office and no official endorsement by that 
Office should be inferred.



Sec. 63.39  Religious worship or instruction.

    Federal funds shall not be used for the making of any payment for 
religious worship or instruction, or for the construction, operation, or 
maintenance of so much of any facility as is used or to be used for 
sectarian instruction or as a place for religious instruction.



PART 73_STANDARDS OF CONDUCT--Table of Contents




                      Subpart A_General Provisions

Sec.
73.735-101 Purpose.
73.735-102 Definitions.
73.735-103 Applicability.

                       Subpart B_Responsibilities

73.735-201 Employees and supervisors.
73.735-202 Management officials.

                      Subpart C_Conduct on the Job

73.735-301 Courtesy and consideration for others.
73.735-302 Support of department programs.
73.735-303 Use of government funds.
73.735-304 Use of government property.
73.735-305 Conduct in Federal buildings.
73.735-306 Sexual harassment.
73.735-307 Use of official information.

                     Subpart D_Financial Obligations

73.735-401 General provisions.

               Subpart E_Gifts, Entertainment, and Favors

73.735-501 Prohibited acceptance of gifts, entertainment, and favors.
73.735-502 Permissible acceptance of gifts, entertainment, and favors.
73.735-503 Criminal provisions relating to gifts, entertainment, and 
          favors.
73.735-504 Gifts to official superiors.
73.735-505 Acceptance of awards and prizes.
73.735-506 Gifts and decorations from foreign governments.
73.735-507 Acceptance of travel and subsistence.
73.735-508 Other prohibitions.

                      Subpart F_Political Activity

73.735-601 Applicability.
73.735-602 Permissible activities.
73.735-603 Prohibited activities.

                      Subpart G_Outside Activities

73.735-701 General provisions.

[[Page 167]]

73.735-702 Criminal prohibitions on outside activities.
73.735-703 Statutory prohibitions related to employment by a foreign 
          government.
73.735-704 Professional and consultative services.
73.735-705 Writing and editing.
73.735-706 Teaching, lecturing, and speechmaking.
73.735-707 Holding office in professional societies.
73.735-708 Administrative approval of certain outside activities.
73.735-709 Annual reporting of outside activities.
73.735-710 Maintenance of records.

                      Subpart H_Financial Interest

73.735-801 Participation in matters affecting a personal financial 
          interest.
73.735-802 Executive order prohibitions.
73.735-803 Prohibition against involvement in financial transactions 
          based on information obtained through Federal employment.
73.735-804 Waiver of the prohibitions in this subpart.
73.735-805 Advice and guidance on conflicts matters.
73.735-806 Documentation and publication of opinions.

                 Subpart I_Reporting Financial Interests

73.735-901 Reporting requirement of the Ethics in Government Act of 
          1978.
73.735-902 Reporting requirements for certain employees not covered by 
          the Ethics in Government Act of 1978.
73.735-903 Action if conflicts of interest or possible conflicts are 
          noted.
73.735-904 Resolution of apparent or actual conflicts of interest.

   Subpart J_Provisions Relating to Experts, Consultants and Advisory 
                            Committee Members

73.735-1001 Coverage.
73.735-1002 Ethical standards of conduct.
73.735-1003 Conflicts of interest statutes.
73.735-1004 Requesting waivers or exemptions.
73.735-1005 Salary from two sources.
73.735-1006 Reporting financial interests.
73.735-1007 Political activity.

      Subpart K_Special Government Employees Other Than Consultants

73.735-1101 General provision.

                      Subpart L_Disciplinary Action

73.735-1201 General provisions.

                     Subpart M_Reporting Violations

73.735-1301 Responsibility for reporting possible criminal violations.
73.735-1302 Responsibility for reporting allegations of misconduct.
73.735-1303 Prohibition of reprisals.
73.735-1304 Referral of matters arising under the standards of this 
          part.

       Subpart N_Conduct and Responsibilities of Former Employees

73.735-1401 Prohibitions against post-employment conflicts of interest.

Appendix A to Part 73--List of Some Offenses for Which Disciplinary 
          Action May Be Taken
Appendix B to Part 73--Code of Ethics for Government Service

    Authority: 5 U.S.C. 7301, 42 U.S.C. 216; E.O. 11222, 30 FR 6469; 5 
CFR 735.101 et seq.

    Source: 46 FR 7369, Jan. 23, 1981, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 73.735-101  Purpose.

    To assure that the business of the Department of Health and Human 
Services (HHS) is conducted effectively, objectively, and without 
improper influence or the appearance of improper influence, employees 
and special Government employees must be persons of integrity and must 
observe high standards of honesty, impartiality, and behavior. They must 
not engage in any conduct prejudicial to the Government and must avoid 
conflicts of private interests with public duties and responsibilities. 
In accord with these principles, the regulations in this part are issued 
to inform HHS employees and special Government employees what standards 
of conduct are expected of them in performing their duties and what 
activities are permitted or prohibited both while they are employed and 
after their employment with the Department is ended.



Sec. 73.735-102  Definitions.

    In this part:
    (a) Employee means an officer or employee of HHS other than a 
special Government employee and includes Commissioned Officers of the 
Public Health Service who are on active duty, and individuals on 
assignment or detail

[[Page 168]]

to HHS pursuant to the Intergovernmental Personnel Act (5 U.S.C. 3371-
3376). The term also includes HHS employees who are detailed to non-
Federal or other Federal organizations. At times the term ``regular 
employee'' is used in place of ``employee'' to make a clear distinction 
between special Government employees and others employed by the Federal 
government.
    (b) Special Government employee means an individual who is retained, 
designated, appointed, or employed to perform temporary duties either on 
a full-time or intermittent basis, with or without compensation, for not 
to exceed 130 days during any period of 365 consecutive days.
    (c) Person means an individual, a corporation, a company, an 
association, a firm, a partnership or any other organization.
    (d) Former employee means a former employee of HHS or former special 
Government employee as defined in paragraph (b) of this section.
    (e) Principal Operating Component has the meaning given to that term 
in the Department's General Administration Manual. In addition, when 
used in these regulations, it includes the Office of the Secretary.
    (f) Department means the Department of Health and Human Services.



Sec. 73.735-103  Applicability.

    (a) The regulations in this part apply to all employees of the 
Department and to special Government employees to the extent indicated 
in Subparts J and K. They apply whether an employee is on leave, 
including leave without pay, or on duty.
    (b) These regulations may be supplemented by regulations governing 
principal operating components, or sub-units of principal operating 
components, provided the clearance and publication requirements for 
standards of conduct regulations are met and approval is obtained from 
the Department Ethics Counselor and the Assistant Secretary for 
Personnel Administration.



                       Subpart B_Responsibilities



Sec. 73.735-201  Employees and supervisors.

    (a) Employees and special Government employees shall be responsible 
for observing all generally accepted rules of conduct and the specific 
provisions of law and the regulations of this part that apply to them. 
They are required to become familiar with these regulations and to 
exercise informed judgments to avoid misconduct or conflicts of 
interest. They shall secure approvals when required and file financial 
disclosure reports or statements in accordance with the provisions of 
this part. Failure to observe any of these regulations may be cause for 
disciplinary action. Some of the provisions are required by law and 
carry criminal penalties which are in addition to any disciplinary 
action which could be taken. When employees have doubts about any 
provision, they should consult their supervisor, personnel office, or 
the Department Ethics Counselor or a deputy counselor.
    (b) Supervisors, because of their day-to-day relationships with 
employees, are responsible to a large degree for making sure high 
standards of conduct are maintained. They must become familiar with the 
Department's standards of conduct regulations and apply the standards to 
the work they do and supervise. Supervisors shall take suitable action, 
including disciplinary action in accordance with Subpart L of these 
regulations, when violations occur.



Sec. 73.735-202  Management officials.

    (a) The Department has an obligation to enforce the requirements of 
this part in all respects and to help employees, special Government 
employees, and supervisors carry out their responsibilities to maintain 
high standards of ethical conduct. This includes an obligation for 
managers to provide information and training concerning the HHS conduct 
regulations, to provide advice and guidance with respect to them, and to 
review for possible conflicts of interest certain outside activities and 
financial interests of employees. The officials responsible for 
discharging the Department's oligations

[[Page 169]]

in this regard are identified in paragraphs (b) through (f) of this 
section.
    (b) Department Ethics Counselor. The Assistant General Counsel, 
Business and Administrative Law Division, shall be the Department Ethics 
Counselor and shall serve as the Designated Agency Official for matters 
arising under the Ethics in Government Act of 1978, (Pub. L. 95-521). 
The responsibilities of the Department Ethics Counselor shall include:
    (1) Rendering authoritative advice and guidance on matters of 
general applicability under the standards of this part and all other 
laws and regulations governing employee conduct, with particular 
reference to conflicts of interest matters.
    (2) Coordinating the Department's counselling and training services 
regarding conflicts of interest and assuring that employees of the 
Department are kept informed of developments in conflict of interest 
laws and other related matters of ethics.
    (3) Receiving information on conflicts of interest and appearances 
of conflicts of interest involving employees of the Department and 
forwarding this information to the appropriate management official, or 
the Inspector General, as necessary, with his or her legal evaluation of 
the matters addressed.
    (4) Reviewing the financial disclosure reports, requests for 
approval of outside activities, and similar reports filed by Executive 
level officers, non-career executives, deputy ethics counselors, and 
Schedule C employees in the Office of the Secretary for the purpose of 
identifying and resolving possible and actual conflicts of interest.
    (5) Maintaining liaison with the Office of Government Ethics.
    (6) Advising management officials on the resolution of conflicts of 
interest by any of the remedies set forth in Sec. 73.735-904 of this 
part.
    (7) Maintaining accurate and complete documentation of all formal 
guidance and advice regarding conflict of interest matters subject to 
the provisions of this part, except for routine or repetitious cases 
where the guidance given is not precedential.
    (8) Maintaining and publishing from time to time a list of those 
circumstances or situations which have resulted or may result in 
noncompliance with conflict of interest laws or regulations. [Section 
206(b)(7), Pub. L. 95-521].
    (9) Designating and training an appropriate number of reviewing 
officials to assist him or her in carrying out the duties of the 
Designated Agency Offical under the Ethics in Government Act.
    (10) Maintaining effective lines of communication with deputy ethics 
counselors on all matters regarding employee conduct and ethics.
    (c) Deputy Ethics Counselors. Assistant General Counsels and 
Regional Attorneys are designated deputy ethics counselors to assist the 
Department's Counselor in carrying out his or her responsibilities, 
particularly with respect to employees in the organization in which the 
deputy counselor serves. Regional Attorneys shall provide such 
assistance for all employees of the Department in organizations for 
which the Principal Regional Official provides personnel services.
    (d) The Assistant Secretary for Personnel Administration shall be 
responsible for developing and issuing procedures and requirements for 
the implementation of these regulations and for monitoring the 
application of such procedures and requirements throughout the 
Department.
    (e) Heads of Principal Operating Components and the Assistant 
Secretary for Management and Budget for the Office of the Secretary 
shall be ultimately responsible for assuring that persons who work for 
their respective organizations comply with the standards of this part. 
Their responsibilities shall include:
    (1) Designating officials to review and approve outside activity 
requests in accordance with Sec. 73.735-708 of this part or statements 
of employment or financial interests under Sec. 73.735-902. A list of 
the officials designated for these purposes shall be provided to the 
Department Ethics Counselor and to the Assistant Secretary for Personnel 
Administration and shall be updated in January and July of each year.
    (2) Designating for the components of his or her organization, other 
than those for which a principal regional official provides personnel 
services, one

[[Page 170]]

or more individuals to oversee and coordinate the administrative aspects 
of these regulations. Responsibilities of such a person include making 
sure each employee or special government employee is provided a copy of 
these regulations, or an appropriate summary thereof; ensuring that 
training in the requirements of the regulations is provided to 
supervisors and to new employees; providing for the distribution, 
receipt, review and retention of financial interest reports and 
statements as directed by the Department Ethics Counselor and the 
Assistant Secretary for Personnel Administration; sending annual 
reminders as required; providing for a file of outside work requests; 
giving information and assistance to employees on a day-to-day basis; 
and making available to employees the names and addresses of the 
Department's Ethics Counselor and deputy ethics counselors.
    (f) Principal Regional Officials (PROs) shall designate one or more 
regional employees to perform, for components for which personnel 
services are provided by the PROs, the responsibilities in paragraph 
(e)(2) of this section.



                      Subpart C_Conduct on the Job



Sec. 73.735-301  Courtesy and consideration for others.

    (a) An employee's conduct on the job is, in all respects, of concern 
to the Federal government. Courtesy, consideration, and promptness in 
dealing with the public must be shown in carrying out official 
responsibilities, and actions which deny the dignity of individuals or 
conduct which is disrespectful to others must be avoided. Employees must 
recognize that inattention to matters of common courtesy can adversely 
affect the quality of service the Department is responsible for 
providing. Where appropriate, courtesy to the public should be included 
in the standards for employee performance.
    (b) Of equal importance is the requirement that courtesy be shown in 
day-by-day interaction with co-workers. Employees shall be polite to and 
considerate of other employees, and shall respect their needs and 
concerns in the work environment.



Sec. 73.735-302  Support of department programs.

    (a) When a Department program is based on law, Executive Order or 
regulation, every employee has a positive obligation to make it function 
as efficiently and economically as possible and to support it as long as 
it is a part of recognized public policy. An employee may, therefore, 
properly make an address explaining and interpreting such a program, 
citing its achievements, defending it against uninformed or unjust 
criticism, or soliciting views for improving it.
    (b) An employee shall not, either directly or indirectly, use 
appropriated funds to influence, or attempt to influence, a Member of 
Congress to favor or oppose legislation. However, when authorized by his 
or her supervisor, an employee is not prohibited from:
    (1) Testifying, on request, as a representative of the Department on 
pending legislation or proposals before Congressional Committees; or
    (2) Assisting Congressional Committees in drafting bills or reports 
on request, when it is clear that the employee is serving solely as a 
technical expert under the direction of committee leadership.
    (c) All employees shall be familiar with regulations and published 
instructions that relate to their official duties and responsibilities 
and shall comply with those directives. This includes carrying out 
proper orders from officials authorized to give them.
    (d) Employees are required to assist the Inspector General and other 
investigative officials in the performance of their duties or functions. 
This requirement includes the giving of statements or evidence to 
investigators of the Inspector General's office or other HHS 
investigators authorized to conduct investigations into potential 
violations.



Sec. 73.735-303  Use of government funds.

    (a) An employee shall not:
    (1) Improperly use official travel;
    (2) Improperly use payroll and other vouchers and documents on which 
Government payments are based;
    (3) Take or fail to account for funds with which the employee is 
entrusted in his or her official position; or

[[Page 171]]

    (4) Take other Government funds for personal use. Violation of these 
prohibitions carry criminal penalties.
    (b) In addition, employees shall avoid wasteful actions or behavior 
in the performance of their assigned duties.



Sec. 73.735-304  Use of government property.

    (a) An employee shall not directly or indirectly use, or allow the 
use of, Government property of any kind, including property leased to 
the Government, for other than officially approved activities. An 
Employee has a positive duty to protect and conserve Government 
property, including equipment, supplies, and other property entrusted or 
issued to him or her. For example:
    (1) Only official documents and materials may be processed on 
Government reproduction facilities. Both supervisors and employees must 
assure that this rule is strictly followed. (Exception for employee 
welfare and recreation associations is stated in Chapter 25-10, General 
Administration Manual. Exception for labor organizations is stated in 
Personnel Instruction 711-1.)
    (2) Employees may drive or use Government automobiles or aircraft 
only on official business. Use of a Government owned, leased, or rented 
vehicle or aircraft for non-official purposes may result in suspension 
for at least 30 days or removal from the Federal service. 31 U.S.C. 
638a.

    Example: Normally, use of a Government automobile by travel between 
home and place of duty would not be considered official business and 
could not be authorized. An exception to this rule might be appropriate 
in a situation where an employee is required to leave early in the 
morning to attend a meeting in a distant city, or to return late in the 
day from such a meeting. Allowing the employee to drive a government car 
to his or her home the night before in order to leave from home, or to 
return to his or her home in the evening upon completion of the trip is 
permissible, provided the employee does not use the car for any personal 
reason.



Sec. 73.735-305  Conduct in Federal buildings.

    (a) 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.
    (b) An employee shall not while in or on Government-owned or leased 
property or while on duty for the Government solicit alms and 
contributions, engage in commercial soliciting and vending, display or 
distribute commercial advertisements, or collect private debts.
    (c) The prohibitions in paragraphs (a) and (b) of this section do 
not preclude:
    (1) Activities necessitated by an employee's law enforcement duties;
    (2) Participation in Federally sponsored fund-raising activities 
conducted pursuant to Executive Order 10927, or similar HHS-approved 
activities; or
    (3) Buying a lottery ticket at an authorized State lottery outlet 
for a lottery authorized by State law and conducted by an agency of a 
State within that State.
    (d) General Services Administration regulations on ``Conduct on 
Federal Property'' apply to all property under the control of the 
General Services Administration, and they are also applicable to all 
buildings and space under the control of this Department. These 
regulations prohibit, among other things, gambling, being intoxicated, 
and possession, distribution, or use of narcotic or dangerous drugs on 
the premises. The GSA regulations are found in Subpart 101-20.3 of the 
GSA Regulations, 41 CFR 101-20.3.



Sec. 73.735-306  Sexual harassment.

    Sexual harassment is deliberate unsolicited verbal comments, 
gestures, or physical contact of a sexual nature which are unwelcome. 
Sexual harassment is unacceptable conduct and is expressly prohibited. 
In addition, supervisors and managers are prohibited from taking or 
promising personnel actions in exchange for sexual favors, or failing to 
take an action because an employee or applicant for employment, refuses 
to engage in sexual conduct. This same prohibition applies to 
relationships between Department personnel who take or recommend action 
on a grant or contract and the grantee or contractor. Those employees 
who

[[Page 172]]

wish to file a complaint of sexual harassment should contact the Office 
of Equal Employment Opportunity (EEO) within their respective agencies 
for guidance. (Time frames for pursuing a charge alleging sexual 
harassment are the same as for any other complaint based on allegations 
of sex discrimination.)



Sec. 73.735-307  Use of official information.

    (a) The public interest requires that certain information in the 
possession of the Government be kept confidential, and released only 
with general or specific authority under Department or operating 
component regulations. Such information may involve the national 
security or be private, personal, or business information which has been 
furnished to the Government in confidence. In addition, information in 
the possession of the Government and not generally available may not be 
used for private gain. The following paragraphs set forth the rules to 
be followed by Department employees in handling information in official 
files or documents:
    (1) Classified information. Employees who have access to information 
which is classified for security reasons in accordance with Executive 
Order 12065 are responsible for its custody and safekeeping, and for 
assuring that it is not disclosed to unauthorized persons. See the 
Department's Security Manual, Part 3 for details.
    (2) Security and investigative information. Security and 
investigative data received from Government agencies or other sources 
for official use only within the Department or developed under a pledge 
of confidence is not to be divulged to unauthorized persons or agencies.
    (3) Information obtained in confidence. Certain Department units 
(e.g., Food and Drug Administration, and the Social Security 
Administration) obtain in the course of their program activities certain 
information from businesses or individuals which they are forbidden by 
law from disclosing. These statutory prohibitions are found in 21 U.S.C. 
331j, and 18 U.S.C. 1905. Each employee is responsible for observing 
these laws.
    (4) Use of information for private gain. Government employees are 
sometimes able to obtain information about some action the Government is 
about to take or some other matter which is not generally known. 
Information of this kind shall not be used by the employee to further 
his or her or someone else's private financial or other interests. Such 
a use of official information is clearly a violation of a public trust. 
Employees shall not, directly or indirectly, make use of, or permit 
others to make use of, for the purpose of furthering any private 
interest, official information not made available to the general public.
    (b) The Privacy Act provides criminal penalties for an employee who 
willfully discloses individually identifiable information from records, 
disclosure of which is prohibited by that Act. 5 U.S.C. 552a(i).



                     Subpart D_Financial Obligations



Sec. 73.735-401  General provisions.

    (a) The Department considers the indebtedness of its employees to be 
a matter of their own concern. However, employees shall not by failure 
to meet their just financial obligations reflect adversely on the 
Government as their employer. Employees are expected to pay each just 
financial obligation in a proper and timely manner. A ``just financial 
obligation'' is one acknowledged by the employee or reduced to judgment 
by a court, or one imposed by law such as Federal, State, or local 
taxes. ``In a proper and timely manner'' is a manner which the 
Department determines does not, under the circumstances, reflect 
adversely on the part of an employee in meeting his or her financial 
obligations, particularly those that relate to support of the employee's 
family, to payment of Federal, State, or local taxes, or to payments to 
tax-supported institutions such as a city or State hospital, or 
educational institution. If for some reason an employee is unable to pay 
these obligations promptly, he or she is expected to make satisfactory 
arrangements for payment and abide by these arrangements.
    (b) Disciplinary action may be considered when an employee has 
handled

[[Page 173]]

his or her financial affairs in such a way that:
    (1) Action on complaints received from creditors requires the use of 
a considerable amount of official time, or
    (2) It appears that financial difficulties are impairing the 
employee's efficiency on the job, or
    (3) Because of the employee's financial irresponsibility, the 
attitude of the general public toward the Department may be adversely 
affected; and the employee after counseling does not make arrangements 
to meet his or her financial obligations.



               Subpart E_Gifts, Entertainment, and Favors



Sec. 73.735-501  Prohibited acceptance of gifts, entertainment, and 
favors.

    (a) Except as provided in Sec. Sec. 73.735-502 and 73.735-506, an 
employee shall not directly or indirectly solicit or accept anything of 
monetary value, including gifts, gratuities, favors, entertainment or 
loans from a person who the employee knows, or should know because of 
the nature of the employee's work:
    (1) Has, or is seeking to obtain, contractual or other business or 
financial relations with the employee's principal operating component, 
or sub-unit thereof; or with a component of the Department with respect 
to which the employee has official duties;
    (2) Conducts operations or activities that are regulated by the 
employee's principal operating component, or sub-unit thereof or by a 
component of the Department with respect to which the employee has 
official duties; or
    (3) Has interests that may be substantially affected by the 
performance or non-performance of the employee's official duties.
    (b) Employees may not designate a person or an organization, 
including charitable or non-profit organizations, to accept any gift 
which an employee is prohibited from accepting directly.



Sec. 73.735-502  Permissible acceptance of gifts, entertainment, and 
favors.

    (a) An employee may accept a gift, gratuity, favor, entertainment, 
loan or similar favor of monetary value which stems from a family 
relationship such as that between the employee and his or her parents, 
spouse or children, if it is clear that the relationship is the 
motivating factor.
    (b) Loans from banks or other financial institutions may be accepted 
on customary terms.
    (c) Unsolicited advertising or promotional material such as pens, 
note pads, calendars and similar items of nominal intrinsic value may be 
accepted.
    (d) An employee may accept food or refreshment of nominal value on 
infrequent occasions in the ordinary course of a luncheon or dinner 
meeting or on an inspection tour only if the employee is properly in 
attendance and there is not a reasonable opportunity to pay.

    Example 1: Employee is on the premises of Company participating in a 
meeting at a normal mealtime. A representative of Company provides a 
meal for all meeting participants from a Company facility and there is 
no established method for payment. Employee may accept.
    Example 2: Employee is on the premises of Company and he or she goes 
outside for lunch with a representative of the Company. The 
representative offers to pay the bill. Since it is practical for the 
employee to pay for his or her own meal, the employee may not accept.

    (e) An employee may also accept food or refreshment of nominal value 
on infrequent occasions if the food and/or refreshment is offered to all 
participants or attendees of a meeting or convention.

    Example 1: During the course of a convention of a professional 
organization a luncheon open to all attendees is sponsored by a 
corporation which conducts business with the Department and the employee 
has official dealings with representatives of the corporation. The 
employee may attend the luncheon.



Sec. 73.735-503  Criminal provisions relating to gifts, entertainment, 
and favors.

    (a) The law provides criminal penalties for whoever, directly or 
indirectly:
    (1) Receives or accepts anything of value for or because of any 
official act the employee has performed or will perform; or

[[Page 174]]

    (2) Gives, offers or promises anything of value for the performance 
of an official act or to influence the performance of an official act. 
18 USC 201.
    (b) The law prohibits an employee from receiving any salary or any 
contribution to, or supplementation of, his or her salary as 
compensation for services as an officer or employee of the Government 
from any source other than the United States or any State, county or 
municipality. This law does not prohibit an employee from continuing to 
participate in a bona fide pension, retirement, group life, health or 
accident insurance, profit-sharing, stock bonus or other employee 
welfare or benefit plan maintained by a former employer. 18 U.S.C. 209.

    Example 1: A corporate executive is asked to accept a position in 
the Department. The corporation offers to continue to pay the executive 
the difference between his or her salary as a Government employee and 
that received by an employee of the corporation. Such payment would be 
considered to be ``compensation for'' the employee's Government service 
and is prohibited.
    Example 2: A corporate executive is asked to accept a position in 
the Department. The corporation proposes to pay him or her a special 
severance payment in anticipation of this or her serving in the 
Government. This proposal would be prohibited because there is no 
distinction between the proposed lump-sum payment and the prohibited 
continuation of salary payments described in the example above.
    Example 3: A corporate executive is asked to accept a position in 
the Department. The corporation has an established policy which provides 
for an amount of severance pay to be paid any departing executive and 
proposes to make payment based on that policy when the executive leaves. 
The executive may accept the payment. Under these circumstances it is 
clear that the severance pay is in payment for past services not in 
anticipation of the future services for the Government.



Sec. 73.735-504  Gifts to official 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 or herself. 5 U.S.C. 7351. This section does not prohibit a 
voluntary gift of nominal value or donation in nominal amount made on a 
special occasion such as marriage, illness or retirement.



Sec. 73.735-505  Acceptance of awards and prizes.

    (a) Employees may accept awards, including cash awards, given in 
recognition of a meritorious public contribution or achievement. 
However, if there is any indication that the award may improperly 
influence the employee in the performance of his or her offical duties, 
advice about the acceptance of it should be sought from a deputy ethics 
counselor. Also, an employee may not accept an award from an 
organization which the employee knows, or should know, has a contractual 
or other business arrangement with, or is regulated by, the principal 
operating component, or a sub-unit, in which he or she is employed or 
with respect to which the employee has official duties, unless 
acceptance is approved by the head of the employee's principal operating 
component. The head of the component may not approve acceptance unless 
he or she is satisfied that no actual conflict of interest would result.
    (b) Employees may generally accept trophies, entertainment, rewards, 
and prizes given to competitors in contests or events which are open to 
the public.
    (c) Employees may not accept gifts, awards, decorations or other 
things of value from a foreign government except as provided in Sec. 
73.735-506.



Sec. 73.735-506  Gifts and decorations from foreign governments.

    (a) An employee may not request or otherwise encourage the tender of 
a gift or decorations from a foreign government or official thereof.
    (b) An employee may accept from a foreign government:
    (1) A gift which is in the nature of medical treatment or an 
educational scholarship;
    (2) A tangible gift of minimal value tendered or received as a mark 
of courtesy; (``Minimal value'' means a retail value in the United 
States at the time of acceptance of not more than one hundred dollars, 
unless the Administrator of the General Services Administration adjusts 
the value by regulation.) or

[[Page 175]]

    (3) A tangible gift of more than minimal value when it appears that 
to refuse the gift would be likely to cause offense or embarrassment or 
otherwise adversely affect the foreign relations of the United States. 
However, the acceptance of such a gift would be on behalf of the United 
States and the gift would become the property of the United States. See 
the Department's General Administration Manual, Chapter 20-25 for 
information regarding the disposition of a gift accepted under these 
circumstances.
    (c) An employee may also accept from a foreign government gifts of 
travel or expenses for travel (such as transportation, food and lodging) 
that take place entirely outside the United States and are of more than 
minimal value, if such acceptance is consistent with the interests of 
the United States and is approved by the travel approving authority in 
accordance with the Department's Travel Manual. See General 
Administration Manual, Chapter 20-25 for a requirement to report such 
travel.
    (d) An employee may accept, retain, and wear a decoration tendered 
in recognition of active field service in time of combat operations or 
awarded for other outstanding or unusually meritorious performance, 
subject to the approval of the Secretary or his or her designee.
    (e) Members of an employee's family and household are also subject 
to the regulations in this section. A member of an employee's family and 
household is a relative by blood, marriage or adoption who is a resident 
of the household. However, if a member of an employee's family and 
household is employed by another agency of the Government, the offer or 
acceptance of a gift shall be treated under the regulations of that 
agency.
    (f) For purposes of this section ``foreign government'' means:
    (1) Any unit of foreign government authority including any foreign 
national, state, local and municipal government;
    (2) Any international or multinational organization whose membership 
is composed of any unit of foreign government described in paragraph 
(f)(1) of this section; or
    (3) Any agent or representative of any such unit or organization 
when acting as such agent or representative. (5 U.S.C. 7342)



Sec. 73.735-507  Acceptance of travel and subsistence.

    (a) Except as provided in paragraph (b) of this section, employees 
may accept accommodations, subsistence, and travel in cash or in kind in 
connection with official travel for attendance at meetings, conferences, 
training in non-Governmental facilities or for performing advisory 
services, if approved in accordance with the provisions of the HHS 
Travel Manual. (5 U.S.C. 4111; 42 U.S.C. 3506)
    (b) Employees may not accept accommodations, subsistence, or travel 
in cash or in kind in connection with official travel from a non-
Governmental source with which they have official dealings unless 
Government or commercial travel and/or accommodations are not available. 
If travel and/or subsistence is accepted for official travel under these 
circumstances, such acceptance and the basis for it must be reported in 
writing to the Head of the Principal Operating Component or Assistant 
Secretary for Management and Budget for the Office of the Secretary.



Sec. 73.735-508  Other prohibitions.

    Employees shall avoid any action whether or not specifically 
prohibited by this part, 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 in the performance 
of their Government duties;
    (e) Making a Government decision outside official channels; or
    (f) Affecting adversely the confidence of the public in the 
integrity of the Government.

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                      Subpart F_Political Activity



Sec. 73.735-601  Applicability.

    (a) All employees in the Executive Branch of the Federal Government, 
including non-career employees, are subject to basic political activity 
restrictions in subchapter III of chapter 73 of title 5, United States 
Code (the former Hatch Act) and Civil Service Rule IV. Employees are 
individually responsible for refraining from prohibited political 
activity. Ignorance of a prohibition does not excuse a violation. This 
subpart summarizes provisions of law and regulation concerning political 
activity of employees. The Federal Personnel Manual and other 
publications of the Office of Personnel Management contain more detailed 
information on this subject. These may be reviewed in Department 
personnel offices, or will be made available by the Ethics Counselor, or 
the deputy counselor for the employee's organizational component.
    (b) The Secretary and Under Secretary are exempt from the 
prohibitions concerning active participation in political management and 
political campaigns. Also exempt are other officials of the Department, 
except the Inspector General and Deputy Inspector General, who are 
appointed by the President by and with the advice and consent of the 
Senate, and who determine policies to be pursued by the United States in 
the nationwide administration of Federal laws.
    (c) Intermittent employees are subject to the restrictions when in 
active duty status only and for the entire 24 hours of any day of actual 
employment.
    (d) Employees on leave, on leave without pay, or on furlough even 
though an employee's resignation has been accepted, are subject to the 
restrictions. Separated employees who have received a lump-sum payment 
for annual leave are not subject to the restriction during the period 
covered by the lump-sum payment or thereafter, provided they do not 
return to Federal employment during that period. Employees are not 
permitted to take a leave of absence to work with a political candidate, 
committee, or organization or to become a candidate for office with the 
understanding that they will resign their position if nominated or 
elected.
    (e) Employees are accountable for political activity by another 
person acting as their agent or under the employee's direction or 
control, if they are thus accomplishing indirectly what they may not 
lawfully do directly and openly.
    (f) Though officers in the Public Health Service Commissioned Corps 
are not subject to the restrictions in Subchapter III of Chapter 73 of 
Title 5, United States Code, the provisions of this subpart apply to 
them.



Sec. 73.735-602  Permissible activities.

    (a) Section 7324 of Title 5, United States Code, provides that 
employees have the right to vote as they please and to express their 
opinions on political subjects and candidates. Generally, however, 
employees are prohibited from taking an active part in political 
management or political campaigns or using official authority or 
influence to interfere with an election or affect its results. There are 
some exemptions from the restrictions of the statute:
    (1) Employees may engage in political activity in connection with 
any question not specifically identified with a national or State 
political party. They also may engage in political activity in 
connection with an election, if none of the candidates represents a 
party any of whose candidates for presidential elector received votes at 
the last preceding election at which presidential electors were 
selected.
    (2) An exception relates to political campaigns within, or in 
communities adjacent to, the District of Columbia, or in communities the 
majority of whose voters are employees of the Federal government. 
Communities to which the exception applies are specifically designated 
by the Office of Personnel Management. Information regarding the 
localities and the conditions under which the exceptions are granted may 
be obtained from personnel offices or the Department Counselor or deputy 
counselors.
    (b) A covered employee is permitted to:
    (1) Register and vote in any election;

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    (2) Express his or her opinion as an individual citizen privately 
and publicly on political subjects and candidates;
    (3) Display a political picture, sticker, badge or button;
    (4) Participate in the nonpartisan activities of a civic, community, 
social, labor, or professional organization, or of a similar 
organization;
    (5) Be a member of a political party or other political organization 
and participate in its activities to the extent consistent with law;
    (6) Attend a political convention, rally, fund raising function; or 
other political gathering;
    (7) Sign a political petition as an individual citizen;
    (8) Make a financial contribution to a political party organization;
    (9) Take an active part, as an independent candidate, or support of 
an independent candidate, in a partisan election in localities 
identified as permissible for such activities by the Office of Personnel 
Management;
    (10) Take an active part, as a candidate or in support of a 
candidate, in a nonpartisan election;
    (11) Be politically active in connection with a question which is 
not specifically identified with a political party, such as a 
constitutional amendment, referendum, approval of a municipal ordinance 
or any other question or issue of a similar character;
    (12) Serve as an election judge or clerk, or in a similar position 
to perform nonpartisan duties as prescribed by State or local law; and
    (13) Otherwise participate fully in public affairs, except as 
prohibited by law, in a manner which does not materially compromise his 
or her efficiency or integrity as an employee or the neutrality, 
efficiency, or integrity of his or her agency.
    (c) The head of a principal operating component may prohibit or 
limit the participation of an employee or class of employees of his or 
her component in an activity permitted by paragraph (b) of this section, 
if participation in the activity would interfere with the efficient 
performance of official duties, or create a conflict or apparent 
conflict of interest.



Sec. 73.735-603  Prohibited activities.

    (a) The following are prohibited activities:
    (1) Serving as an officer of a political party, a member of a 
national, State or local committee of a political party, an officer or 
member of a committee of a partisan political club, or being a candidate 
for any of these positions;
    (2) Organizing or reorganizing a political party organization or 
political club;
    (3) Directly or indirectly soliciting, receiving, collecting, 
handling, disbursing, or accounting for assessments, contributions, or 
other funds for a partisan political purpose or in connection with a 
partisan election;
    (4) Organizing, selling tickets to, seeking support for, or actively 
participating in a fund-raising activity of, a political party or 
political club;
    (5) Taking an active part in managing the political party campaign 
of a candidate for public office or political office;
    (6) Being a candidate for, or campaigning for, an elective public 
office, except as permitted in Sec. 73.735-602(b)(9);
    (7) Taking an active part in an organized solicitation of votes in 
support of or in opposition to a candidate for public office or 
political party office;
    (8) Acting as recorder, watcher, challenger, or similar officer at 
the polls on behalf of a political party or candidate in a partisan 
election;
    (9) Driving voters to the polls on behalf of a political paty or a 
candidate in a partisan election;
    (10) Endorsing or opposing a candidate in a partisan election in a 
political advertisement, a broadcast, campaign literature, or similar 
material;
    (11) Serving as a delegate, alternate, or proxy to a political party 
convention;
    (12) Addressing a State or national convention or caucus, or a rally 
or similar gathering of a political party, in support of or in 
opposition to a candidate for public or political party office, or on a 
partisan political question; and
    (13) Initiating or circulating a nominating petition for a candidate 
in a partisan election.

[[Page 178]]

    (b) In addition, certain political activities are prohibited by 
Federal criminal law:
    (1) Officers and employees may not directly or indirectly solicit or 
receive, or be in any way involved in soliciting or receiving, any 
assessment, subscription or contribution for any political purpose 
whatever from another officer or employee. This prohibition extends to 
one who acts as a mere agent or messenger for the purpose of turning the 
contribution over to a political organization. 18 U.S.C. 602.
    (2) All persons, whether employees or not, are prohibited from 
soliciting in any manner, or receiving a contribution of, money or a 
thing of value, in any room or building occupied in the discharge of 
official duties by any officer or employee of the United States. 18 
U.S.C. 603. This prohibition extends to the sending of a letter 
soliciting political contributions for delivery in a Government 
building.
    (3) No officer or employee may directly or indirectly give to any 
other officer, employee or person in the service of the United States, 
any money or other thing of value to be applied to the promotion of any 
political objective. 18 U.S.C. 607.
    (4) Discrimination for giving or withholding any contribution for 
any political purpose and discrimination based on political influence or 
recommendations is prohibited.
    (c) Various other laws prohibit certain activities in connection 
with political campaigns and elections. They include:
    (1) Intimidating, threatening, or coercing voters in Federal 
elections (18 U.S.C. 594).
    (2) Using official authority in interfering with a Federal election 
by a person employed in any administrative position by the United States 
or by any department, independent establishment, or agency of the United 
States or by any State, agency, or political subdivision thereof in 
connection with any activity financed in whole or in part by Federal 
funds (18 U.S.C. 595).
    (3) Promising Federal employment, compensation, or any benefit from 
Federal funds, in return for political activity or support (18 U.S.C. 
600).
    (4) Depriving anyone of employment, compensation, or any benefit 
derived from Federal relief or work relief funds on account of race, 
creed, color, or political activity (18 U.S.C. 601).
    (5) Soliciting, assessing, or receiving subscriptions or 
contributions for political purpose from anyone on Federal relief or 
work relief (18 U.S.C. 604).



                      Subpart G_Outside Activities



Sec. 73.735-701  General provisions.

    (a) Outside employment may be appropriate when it will not adversely 
affect performance of an employee's official duties and will not reflect 
discredit on the Government or the Department. Such work may include 
civic, charitable, religious, and community undertakings. There are 
certain types of outside work, however, which give rise to a real or 
apparent conflict of interest. Some of these are prohibited by law. 
Others are prohibited by regulation, as discussed in paragraph (b) of 
this section, or by criteria developed by heads of operating components 
for application within a particular component. All of these provisions 
are binding, but they do not necessarily include all possible conflicts 
of interest. In all instances, good judgment must be used to avoid a 
conflict between an employee's Federal responsibilities and outside 
activities.
    (b) An employee shall not engage in outside employment or other 
outside activity not compatible with the full and proper discharge of 
the duties and responsibilities of his or her Government employment 
whether or not in violation of any specific provision of law. 
Incompatible activities include, but are not limited to:
    (1) Acceptance of a fee, compensation, gift, payment of expense, or 
any other thing of monetary value in any circumstances in which 
acceptance may result in, or create the appearance of, conflicts of 
interest;
    (2) Outside employment which tends to impair the employee's mental 
or physical capacity to perform Government duties and responsibilities 
in an acceptable manner;
    (3) Work which identifies the Department or any employee in his or 
her official capacity with any organization

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commercializing products relating to work conducted by the Department, 
or with any commercial advertising matter, or work performed under such 
circumstances as to give the impression that it is an official act of 
the Department or represents an official point of view;
    (4) Outside work or activity that takes the employee's time and 
attention during his official work hours.
    (c) An employee shall not receive any salary or anything of monetary 
value from a private source as compensation for services to the 
Government. For example, a Department employee may be called upon, as a 
part of his or her official duties, to participate in a professional 
meeting sponsored by a non-Government organization, or to contribute a 
paper or other writing prepared on official time for publication under 
non-Government auspices. The employee must not accept an honorarium or 
fee for such services, even though the organization accepting the 
service customarily makes such a payment to those who participate. Nor 
may the employee accept a contribution to some charity, educational 
institution, or the like, in appreciation of the services furnished by 
the Department employee who cannot accept the usual payment. All offers 
to make such a contribution must be refused. Any employee with whom such 
a question is raised shall explain that the service involved was 
provided as an official action of the Department and is authorized by 
law. Under these circumstances, it is inappropriate for any payment to 
be made, even indirectly and to a third party, for services which are 
furnished without charge by the Government.
    (d) Other than as provided in paragraph (c) of this section, 
employees may receive compensation or other things of monetary value for 
any lecture, discussion, writing or appearance the subject matter of 
which is in part devoted to the responsibility, programs or operations 
of the Department so long as the activity is undertaken in a personal 
capacity, is not performed as official duty, is not done while on 
official time, and does not create a conflict of interest or appearance 
of conflict of interest. However, such activities are considered outside 
employment and may be undertaken only as provided in this subpart.
    (e) This section does not restrict the acceptance of compensation or 
other things of monetary value for any lecture, discussion, writing or 
appearance, the subject matter of which is not devoted to the 
responsibilities, programs, or operations of the Department and which 
are undertaken in a private capacity and in accordance with Sec. Sec. 
73.735-704, 73.735-705, or 73.735-706.
    (f) Federal law limits the amount of honorarium that may be paid any 
employee for any one speech, writing or appearance to $2,000.00 (not to 
include amounts for actual travel and subsistence expenses for the 
employee and his or her spouse) and an aggregate of $25,000.00 in any 
calendar year. This limitation applies to such activities whether or not 
the subject matter is related to the responsibilities, programs or 
operations of the Department. (2 U.S.C. 441i) The term ``honorarium'' 
means payment of money or other thing of value whether made gratuitously 
or as a fee for an appearance, speech or article but does not include 
salary or compensation made for services rendered on a continuing basis, 
such as for teaching, or as proceeds from the sale of a book or similar 
undertaking.
    (g) An employee who is a Presidential appointee covered by section 
401(a) of Executive Order 11222 shall not 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 his or 
her component, or which draws substantially on official data or ideas 
which have not or will not on request become public information.
    (h) Application of these general provisions to some specific 
activities is discussed below.



Sec. 73.735-702  Criminal prohibitions on outside activities.

    (a) An employee may not, with or without compensation, represent 
another before any Government agency, court or commission in connection

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with any proceeding, application, request for a ruling, contract, claim 
or other particular matter in which the United States is a party or has 
a direct and substantial interest. (18 U.S.C. 203 and 205)
    (b) An employee may not act as agent or attorney for anyone else in 
prosecuting any claim against the United States (18 U.S.C. 205).
    (c) As an exception to the above, if it is not inconsistent with the 
performance of his or her duties, an employee may act without 
compensation as an agent or attorney for another employee, or a person 
under active consideration for Federal employment, who is the subject of 
disciplinary, loyalty, or other personnel administration proceedings in 
connection with those proceedings at the administrative level. For 
example, an employee may represent another employee who is the subject 
of disciplinary action, or the complainant in a discrimination 
proceeding, at all stages within the Department and before the Merit 
Systems Protection Board or Equal Employment Opportunity Commission but 
not in Federal Court. It would be inconsistent with the performance of 
official duties for a supervisor to represent subordinate employees.
    (d) The law and these regulations do not prohibit an employee from 
acting, with or without compensation, as agent or attorney for his or 
her parents, spouse, child or any person for whom, or estate for which, 
he or she is acting as fiduciary provided that the head of the principal 
operating component or his or her designee approve. Such approval, if 
granted, must be granted in accordance with the procedures for approval 
of outside activity. However, the employee may not do so if the 
particular matter is one in which he or she has participated personally 
and substantially or which is his or her official responsibility. (18 
U.S.C. 205).



Sec. 73.735-703  Statutory prohibitions related to employment by a 
foreign government.

    Employees, including officers in the Public Health Service (PHS) 
Commissioned Corps and retired officers of the Regular Commissioned 
Corps of the PHS, may not, without the consent of Congress, be employed 
by a foreign government or agency of a foreign government (Art. I, Sec. 
9, U.S. Const.). Congress has consented to such employment by Reserve 
Commissioned Officers of the PHS not on active duty and by Retired 
Regular Commissioned Officers (37 U.S.C. 801, note) if approved under 
regulations of the Department of State. 22 CFR part 3a.



Sec. 73.735-704  Professional and consultative services.

    (a) Employees may engage in outside professional or consultative 
work only after meeting certain conditions. Except as provided in 
Sec. Sec. 73.735-705 and 73.735-706 for activities discussed in those 
sections, the conditions which must be met are:
    (1) The work is not to be rendered, with or without compensation, to 
organizations, institutions, or state or local governments with which 
the official duties of the employee are directly related, or indirectly 
related if the indirect relationship is significant enough to cause the 
existence of conflict or apparent conflict of interest; or
    (2) The work is not to be rendered for compensation to help a 
person, institution, or government unit prepare or aid in the 
preparation of grant applications, contract proposals, program reports, 
and other material which are designed to become the subject of dealings 
between the institutions or government units and the Federal Government. 
All requests to perform consultative services, either compensated or 
uncompensated, for institutions or government units which have recently 
negotiated or may in the near future seek a contract or grant from this 
Department must be carefully appraised to avoid any conflict or apparent 
conflict of interest.
    (b) Advance administrative approval in accordance with Sec. 73.735-
708 of this subpart must be obtained. Such approval is required whether 
or not the services are for compensation, and whether or not related to 
the employee's official duties.
    (c) For the purpose of this section, ``professional and consultative 
work'' is performance of work requiring knowledge of an advanced type in 
a field of science or learning customarily

[[Page 181]]

acquired by a course of specialized instruction and study in an 
institution of higher education, or hospital which requires the exercise 
of judgment and discretion in its performance and is primarily 
intellectual in nature as opposed to manual, mechanical or physical 
work.
    (d) Membership on a Board of Directors, Board of Regents, Board of 
Trustees, Planning Commission, Advisory Council or Committee, or on any 
similar body which provides advice, counsel, or consultation, shall be 
considered outside consultative services for which advance 
administrative approval is required.



Sec. 73.735-705  Writing and editing.

    (a) Employees are encouraged to engage in outside writing and 
editing whether or not done for compensation, when such activity is not 
otherwise prohibited. Such writing and editing, though not a part of 
official duties, may be on a directly related subject or entirely 
unrelated. Certain conditions must be met in either case, however, and 
certain clearances or approvals are prescribed according to the content 
of the material as set forth in paragraphs (b) through (e) of this 
section.
    (b) Conditions applying to writing and editing done not as a part of 
official duties.
    (1) The following conditions shall apply to all writing and editing 
whether related or unrelated to the employee's official duties:
    (i) Government-financed time or supplies shall not be used by the 
author or by other Government employees in connection with the activity; 
and
    (ii) Official support must not be expressed or implied in the 
material itself or advertising or promotional material, including book 
jackets and covers, relating to the employee and his or her contribution 
to the publication.
    (2) If the writing or editing activity is unrelated to the 
employee's official duties or other responsibilities and programs of the 
Federal government, the employee must:
    (i) Make no mention of his or her official title or affiliation with 
the Department, or
    (ii) Use his or her official title or affiliation with the 
Department in a way that will not suggest or convey official endorsement 
of the work.
    (3) If the writing or editing activity is related to the employee's 
official duties or other responsibilities and programs of the Federal 
government, the employee must:
    (i) Make no mention of his or her official title or affiliation with 
the Department, or
    (ii) Use his or her official title or affiliation with the 
Department and a disclaimer as provided in paragraph (c) of this 
section, or
    (iii) Submit the material for clearance within the operating 
component, under procedures established by the component. When clearance 
is denied at any lower level, the employee shall have recourse for 
review up to the head of the principal operating component. This 
clearance will show there are no official objections to the activity and 
the employee may then use his or her official title or affiliation with 
the Department usually without a disclaimer.
    (c) Disclaimers. (1) Except where the requirement for disclaimer is 
waived as a result of official clearance, disclaimers shall be used in 
all writing and editing related to the employee's official duties or 
other responsibilities and programs of the Federal government:
    (i) In which the employee identifies himself or herself by official 
title or affiliation with the Department, or
    (ii) When the prominence of the employee or the employee's position 
might lead the public to associate him or her with the Department, even 
without identification other than name.
    (2) Disclaimers shall read as follows unless a different wording is 
approved by the Assistant General Counsel, Business and Administrative 
Law Division, Office of the General Counsel: ``This (article, book, 
etc.) was (written, edited) by (employee's name) in (his or her) private 
capacity. No official suport or endorsement by (name of operating 
component or of Department) is intended or should be inferred.''
    (d) Advance approval. Advance approval is required in accordance 
with Sec. 73.735-708 of this subpart when one or more of the following 
conditions apply:

[[Page 182]]

    (1) Any Government information is used which is not available on 
request to persons outside the Government;
    (2) Material is written or edited which pertains to subject matter 
directly related to an employee's official duties; (This includes 
editing for scientific or professional journals which is related to his 
or her official duties.)
    (3) Material is written or edited which pertains to any Government-
sponsored research or other studies for which clinical case records or 
other material of a confidential nature are used or to which access is 
limited for persons outside the Government. Such use will not be 
permitted unless made under safeguards established by the operating 
component to retain the confidentiality of the material, and such use is 
determined to be in the public interest.



Sec. 73.735-706  Teaching, lecturing, and speechmaking.

    (a) Employees are encouraged to engage in teaching and lecturing 
activities which are not part of their official duties when certain 
conditions are met. These conditions, which apply to outside teaching 
and lecturing (including giving single addresses such as commencement 
and Memorial Day speeches) whether or not done for compensation, are:
    (1) No Government-financed time, or Government supplies not 
otherwise available to the public, are used in connection with such 
activity;
    (2) Government travel or per diem funds are not used for the sole 
purpose of obtaining or performing such teaching or lecturing;
    (3) Such teaching or lecturing is not dependent on specific 
information which would not otherwise be available to the public;
    (4) Teaching, lecturing, or writing may not be for the purpose of 
the special preparation of a person or class of persons for an 
examination of the Office of Personnel Management or Board of Examiners 
for the Foreign Service, that depends on information obtained as a 
result of the employee's Government employment, except when that 
information has been made available to the general public or will be 
made available on request;
    (5) Such activities do not involve knowingly instructing persons on 
dealing with particular matters pending before Government organizations 
with which the employee is associated in an official capacity;
    (6) Advance approval is obtained when required by paragraph (b) of 
this section.
    (b) Advance approval. Advance approval must be obtained in 
accordance with Sec. 73.735-708 of this subpart before an employee may:
    (1) Teach or lecture for an institution which has or is likely to 
have official dealings with the bureau or comparable organizational unit 
in which he or she is employed;
    (2) Use, for teaching or lecturing purposes, clinical case records 
or other material of a confidential nature or to which access is limited 
for persons outside the Government. Such use will not be permitted 
unless made under safeguards established by the operating component to 
retain the confidentiality of the material, and such use is determined 
to be in the public interest.



Sec. 73.735-707  Holding office in professional societies.

    (a) Employees may be members of professional societies and be 
elected or appointed to office in such a society. Activity in 
professional associations is generally desirable from the point of view 
of both the Department and the employee. Employees shall avoid, however, 
any real or apparent conflict of interest in connection with such 
membership. For example, they must not:
    (1) Directly or indirectly commit the Department or any portion of 
it on any matter unless such action is taken in an official capacity;
    (2) Permit their names to be attached to documents the distribution 
of which would be likely to embarrass the Department; or
    (3) Serve in capacities involving them as representatives of non-
Government organizations in dealing with the Government.
    (b) In undertaking any office or function beyond ordinary membership 
in a professional association, a Department employee must obtain advance 
approval in accordance with Sec. 73.735-708 of this subpart in any 
situation in which

[[Page 183]]

his or her responsibilities as an officer would relate to his or her 
official duties or would create a real or apparent conflict of interest 
with responsibilities as a Department employee. For example, advance 
administrative approval must be obtained:
    (1) Before an employee who is responsible for review and approval of 
grants or contracts, or is in a supervisory position over those who 
conduct review and approval, may hold office, or be a trustee or member 
of the governing board, or the chairman or member of a committee, in any 
organization which has or is seeking a grant or contract with the bureau 
or comparable organizational unit in which he or she is employed;
    (2) Before an employee may hold office in an organization which 
customarily expresses publicly views on matters of legislative or 
administrative policy within the specific areas of concern to the 
Department.



Sec. 73.735-708  Administrative approval of certain outside activities.

    (a) Scope. As specified in Sec. 73.735-704 through 707, an employee 
is required to obtain advance administrative approval to engage in the 
following outside activities:
    (1) Certain writing or editing activities;
    (2) Certain types of teaching and lecturing;
    (3) All professional and consultative services;
    (4) Any other outside activity for which the head of a principal 
operating component or the head of a sub-unit of a principal operating 
component imposes internal requirements for administrative approval; and
    (5) Certain office-holding activities in professional societies.
    (b) Requests for Administrative Approval. An employee seeking to 
engage in any of the activities for which advance approval is required 
shall make a written request for administrative approval a reasonable 
time before beginning the activity. (See Sec. 73.735-202(e)(1)). This 
request should be directed to the employee's supervisor who will forward 
it to the official authorized to approve outside work requests for the 
employee's component. The request should include the following 
information:
    (1) Employee's name, position title, grade or rank;
    (2) Nature of the activity, fully describing the specific duties or 
services for which approval is requested;
    (3) Name and business of person or organization for which work will 
be done, or statement that work will be self-employment. If self-
employment, employee must state whether activity will be conducted alone 
or with partners;
    (4) Place where work will be performed;
    (5) Estimated total time to be devoted to activity. If on a 
continuing basis, indicate estimated time per year and the anticipated 
termination date;
    (6) Whether services can be performed entirely outside of usual duty 
hours. If not, the estimated number of hours absent from work should be 
indicated;
    (7) Method or basis of compensation if any (e.g., fee, per diem, per 
annum, or other).
    (8) Where an employee seeks approval to provide consultative or 
professional services to organizations including governments which have 
been awarded or may apply for a Federal grant or contract, the request 
shall also include full details on any aspect of the professional and 
consultative services which could relate in any way, either directly or 
indirectly, to grant applications, contract proposals, program reports, 
and other material which are designed to become the subject of dealings 
between the grantee or contractor and the Government. (See Sec. 73.735-
704(a)(2))
    (c) The Department Ethics Counselor will review and approve outside 
work requests for Executive level officers, non-career executives, 
deputy ethics counselors, and Schedule C employees in the Office of the 
Secretary.
    (d) Granting Approval of Certain Activities. The approving official 
shall review each request submitted under paragraph (b) of this section, 
and appraise each request on the basis of the standards of this part and 
all other applicable laws, regulations or internal rules of the 
principal operating component or sub-unit thereof. He or she should 
consult with a deputy ethics

[[Page 184]]

counselor or the Department Ethics Counselor in all cases that raise a 
difficult or novel question of law or fact. The approving official shall 
approve or disapprove each request and communicate his or her decision 
in writing to the employee.



Sec. 73.735-709  Annual reporting of outside activities.

    By September 10 of each year the approving official shall require a 
report from each person for whom outside work has been approved during 
the past year. The report shall show:
    (a) For the 12 months just past (ending August 31):
    (1) Whether the anticipated work was actually performed for the 
person or organization named in the request for approval;
    (2) Actual amount of time spent on the activity.
    (b) For the forthcoming 12 months (ending August 31):
    (1) Whether it is anticipated that the outside work will continue;
    (2) Whether any change is anticipated with respect to information 
supplied in accordance with the original request on which approval was 
based.



Sec. 73.735-710  Maintenance of records.

    The official responsible for the administrative aspects of these 
regulations (Sec. 73.735-202) shall make provisions for the retention 
and filing of requests for approval of outside work (or copies of such 
requests), a copy of the notification of approval or disapproval, and 
the annual report.



                      Subpart H_Financial Interest



Sec. 73.735-801  Participation in matters affecting a personal financial 
interest.

    (a) An employee shall not participate personally and substantially 
as a Government employee in a matter in which any of the following 
individuals or organizations has a financial interest:
    (1) The employee;
    (2) The employee's spouse;
    (3) The employee's minor child;
    (4) An organization in which the employee serves as an officer, 
director, trustee, partner, or employee; or
    (5) A person or organization with which the employee is negotiating 
for prospective employment or has an arrangement for prospective 
employment. Criminal penalties may be imposed under 18 U.S.C. 208 for 
violations of the prohibition.
    (b) Applying the provision of 18 U.S.C. 208:
    (1) A ``financial interest'' is any interest of monetary value which 
may be directly and predictably affected by the official action of an 
employee. There is no minimum amount of value or control that 
constitutes a financial interest.

    Example 1: An employee owns a single share of stock in a widely-held 
corporation. If the corporation is likely to be affected by a matter in 
which the employee participates as a Government official, the employee 
may violate 18 U.S.C. 208.
    Example 2: An employee has a paid part-time position with a non-
federal organization. If the organization is likely to be affected by a 
matter in which the employee participates as a Government official, the 
employee would violate 18 U.S.C. 208.

    (2) The prohibition of 18 U.S.C. 208 applies to personal and 
substantial involvement by an employee in a matter, exercised through 
decision, approval, disapproval, recommendation, investigation, giving 
advice, or other significant effort regarding the matter.

    Example 1: An employee is a member of a panel that evaluates 
proposals for contracts and makes recommendations as to their award. If 
the employee's spouse owns stock in a company which submits a proposal 
that is reviewed by the panel, the employee would violate 18 U.S.C. 208 
even though the panel recommendation may be rejected by the contracting 
officer.
    Example 2: An employee is on a leave of absence from a university. 
He or she would violate 18 U.S.C. 208 by participating in the drafting 
of regulations which would have a ``direct and predictable effect'' upon 
universities in general and, therefore, upon the employee's university.

    (3) An employee must know that the financial interest exists in 
order to violate 18 U.S.C. 208.

    Example: An employee inherited a beneficial interest in a trust. He 
or she does not, however, have actual knowledge of the specific property 
held by the trustee. If the trust contains stock in a corporation which 
may be affected by the employee's official actions, he or she would not 
violate 18 U.S.C.

[[Page 185]]

208 in taking official action affecting the corporation.

    (4) Negotiation for prospective employment includes both an 
indication of interest on the part of the employee in working for an 
organization and an affirmative action on the part of the organization 
to show consideration of the employee.

    Example 1: An employee of the Department sends resumes and cover 
letters to fifty prospective employers, all of whom regularly have 
dealings with HHS. Forty employers do not respond; however, ten respond 
with cordial form letters stating that the employee's resume will be 
retained for future reference. For purposes of the 18 U.S.C. 208 
prohibition, the employee is negotiating for prospective employment at 
the time he or she sends resumes.
    Example 2: At a site visit to a grantee institution, an employee who 
is officially responsible for a grant to that institution informs an 
officer of the institution that he or she is seeking a new position 
outside HHS. The grantee subsequently makes a conditional offer of 
employment to the employee who promptly responds by asking for an 
opportunity to discuss salary and related matters. Under these 
circumstances, a negotiation for prospective employment is underway.

    (c) An employee may obtain approval to participate in his or her 
official capacity in a matter in which he or she has a direct or 
indirect financial interest, if the interest is not so substantial as to 
affect the integrity of his or her official duties. An employee who 
believes that such participation is warranted should follow the 
procedures in Sec. 73.735-804.
    (d) An employee convicted of violating 18 U.S.C. 208 may be fined up 
to $10,000, or imprisoned up to two years, or both.



Sec. 73.735-802  Executive order prohibitions.

    (a) Basic prohibition of Executive Order 11222. (1) An employee 
shall not have a direct or indirect financial interest that conflicts 
substantially, or appears to conflict substantially, with his or her 
duties as a Federal employee.
    (2) An employee need not have a financial interest that actually 
conflicts with his or her duties to violate the prohibition of E.O. 
11222. Any financial interest that could reasonably be viewed as an 
interest which might compromise the employee's integrity, whether or not 
this is in fact true, is subject to this prohibition.
    (3) Except as provided in Sec. 73.735-802 (b) and (c), an employee 
who has an indirect financial interest in a business entity through the 
ownership of shares in a widely-held mutual fund or other regulated 
investment company will not violate E.O. 11222. Stocks in business 
entities held by an intermediary such as a mutual fund are generally too 
remote or inconsequential to affect the integrity of an employee's 
services.
    (b) Employees in regulatory activities. (1) An employee who is 
working in a regulatory activity shall not have a financial interest in 
any company whose business activities are subject to the regulations of 
the particular activity with which the employee is associated, unless 
the regulated activities of the company are an insignificant part of its 
total business operations.
    (2) An employee working in a regulatory activity may not hold shares 
in a mutual fund or other regulated investment company which specializes 
in holdings in industries that are regulated by the particular activity 
in which he or she is employed.

    Example: An employee working for the Bureau of Laboratories, Centers 
for Disease Control, may not hold shares in a regulated investment 
company which specializes in holdings that include medical testing 
laboratories.

    (c) Employees having procurement or contracting responsibilities.
    (1) An employee who serves as a procurement or contracting officer 
shall not have a financial interest in a company or companies with which 
he or she in the course of his or her official duties would be likely to 
have procurement or contracting relationships.
    (2) A procurement or contracting officer may not hold shares in a 
mutual fund or other regulated investment company that specializes in 
holdings in industries with which such officer would be likely to have 
procurement or contracting relationships.

    Example: A contracting officer in the Social Security Administration 
owns shares in the XYZ Mutual Fund which specializes in stock in firms 
manufacturing electronic data processing equipment. Ownership of XYZ 
Mutual Fund shares would be prohibited in

[[Page 186]]

this instance. On the other hand, a contracting officer for a Public 
Health Service hospital, who is not likely to have responsibility for 
major contracts relating to electronic data processing, could hold such 
shares.



Sec. 73.735-803  Prohibition against involvement in financial 
transactions based on information obtained through Federal employment.

    An employee shall not engage in, directly or indirectly, a financial 
transaction as a result of, or in primary reliance upon, any information 
gained through his or her official duties. Information gained through 
official duties are those facts and other data that relate to the 
employee's official duties or to the functions of the employing 
component and would not be available to the employee were he or she not 
an officer of the Federal government.

    Example 1: An employee working part-time for a consulting firm that 
does no business with the employee's principal operating component, in 
the area of health care planning advises it, based upon his or her 
knowledge of a new health care planning program about to be initiated by 
the Public Health Service. The employee's knowledge of the program was 
acquired solely through reading policy statements and other PHS 
literature available to the public under the Freedom of Information Act. 
In such case, the employee would not violate this regulation if the 
outside activity was otherwise approvable under Subpart G.
    Example 2: A contracting officer with detailed knowledge of a 
negotiated procurement contract invests in a corporation that is likely 
to indirectly profit from the award of that contract. The officer's 
decision to invest is based upon technical details of the successful 
contract proposal that would not otherwise be available to a private 
citizen. The officer would violate this regulation in such a situation.



Sec. 73.735-804  Waiver of the prohibitions in this subpart.

    (a) An employee may request approval to participate in his or her 
official capacity in a matter in which he or she has a direct or 
indirect financial interest if the employee believes the interest is so 
remote and inconsequential that it would not affect the integrity of his 
or her official duties. Also an employee who has a financial interest 
that would otherwise be prohibited under these regulations may request 
an exemption from the prohibition for the reason stated in the preceding 
sentence.
    (b) The request shall be in writing and shall include the following 
information:
    (1) Employee's name, occupational title, grade or rank and Federal 
salary;
    (2) Full description of financial interest: including whether 
ownership, service as officer, partner, etc.;
    (3) Business or activity in which financial interest exists;
    (4) Description of official matter in which employee is requesting 
approval to participate;
    (5) Basis for requesting determination that the interest is ``not so 
substantial as to be deemed likely to affect the integrity of the 
services which the Government may expect.'' (If based on a small total 
value of investment, supply appropriate information on total value, such 
as total shares held and latest quoted market price. If other basis, 
explain fully.)

The request should be sent through usual administrative channels to the 
official responsible for reviewing financial disclosure reports or 
statements for the employee's organization (Subpart I). That official, 
after conferring with a deputy ethics counselor or with the Department 
Ethics Counselor as appropriate, will make a decision about the 
exemption or exception and inform the employee in writing.



Sec. 73.735-805  Advice and guidance on conflicts matters.

    (a) Whenever an employee has a question about the appropriate course 
of conduct to be followed in a matter that may involve an actual or 
apparent conflict of interest, he or she should immediately consult with 
his or her supervisor or a deputy ethics counselor, or both. If a 
supervisor who is consulted determines that the matter warrants further 
consideration, he or she may, in conjunction with the employee, submit 
the details of the matter, in writing, to the appropriate deputy ethics 
counselor. These details should include a description of:
    (1) The activity, relationship, or interest giving rise to the 
question posed by the employee;

[[Page 187]]

    (2) The duties or official responsibilities of the employee(s) 
involved;
    (3) The nature of the actual or apparent conflict of interest; and
    (4) Any other information that may be helpful in reviewing the 
problem.
    (b) Upon receiving the submission of an employee or a supervisor, 
the deputy ethics counselor will develop any additional information 
about the matter as necessary, and will confer with the Department 
Ethics Counselor as appropriate. The Department Ethics Counselor and the 
head of the principal operating component or his or her designee will be 
informed of any serious violation of the standards of this subpart or 
any other conflict of interest law. Questions of first impression or 
other unusual matters shall be brought to the attention of the 
Department Ethics Counselor and the head of the principal operating 
component or his or her designee.
    (c) On the basis of all information gathered including, where 
appropriate, the advice of the Department Ethics Counselor, the deputy 
ethics counselor will:
    (1) Decide that there is no violation or potential violation of the 
standards of this subpart or any other law and so notify the employee 
and his or her supervisor in writing; or
    (2) Decide that a violation or potential violation of the standards 
of this subpart or other law has occurred or may occur, and that the 
employee involved shall take one or more of the steps set forth in Sec. 
731.735-904 to resolve the problem and notify the employee and his or 
her supervisor in writing; or
    (3) Decide that, although no violation of this subpart or other law 
has occurred, the nature of the matter is such that the employee should 
periodically report any additional information that would require 
reconsideration of the initial submission.



Sec. 73.735-806  Documentation and publication of opinions.

    (a) The Department Ethics Counselor, deputy ethics counselors, and 
any other individuals required to be involved in the review and 
resolution of violations or potential violations of this subpart shall 
maintain full and accurate documentation of the formal advice and 
guidance given.
    (b) From time to time, the Department Ethics Counselor shall publish 
summaries of advisory opinions issued by his or her office, deleting, as 
necessary, any personal identifiers or other information which may give 
rise to an unwarranted invasion of personal privacy. These summaries 
shall be distributed to all deputy ethics counselors, heads of principal 
operating components, and principal regional officials.
    (c) From time to time, the Department Ethics Counselor shall publish 
an index of all summaries issued in accordance with paragraph (b) of 
this section, and shall distribute these indexes to all deputy ethics 
counselors and heads of principal operating components who shall in turn 
make them available for review by supervisors and interested employees.



                 Subpart I_Reporting Financial Interests



Sec. 73.735-901  Reporting requirement of the Ethics in Government Act 
of 1978.

    (a) Applicability. The following employees and special Government 
employees shall submit public financial disclosure reports in accordance 
with the provisions of Title II of the Ethics in Government Act of 1978, 
Pub. L. 95-521, as amended:
    (1) Officers and employees (including consultants who will work more 
than 60 days in a calendar year) whose positions are classified at GS-16 
or above of the General Schedule, or whose basic rate of pay (excluding 
``step'' increases) under other pay schedules is equal to, or greater 
than, the rate for GS-16 (step 1);
    (2) Members of the uniformed services whose pay grade is 0-7 or 
above;
    (3) Officers and employees in any other positions determined by the 
Director of the Office of Government Ethics to be of equal 
classification to GS-16;
    (4) Administrative Law Judges;
    (5) Employees in the excepted service in positions which are of a 
confidential or policy-making character, unless their position has been 
excluded by the

[[Page 188]]

Director of the Office of Government Ethics;
    (6) Department Ethics Counselor; and
    (7) Deputy Ethics Counselors.


An employee who thinks that his or her position has been improperly 
included under the reporting requirements of this part may obtain a 
review of that determination by writing to the Department Ethics 
Counselor.
    (b) Filing Dates. Employees listed in Sec. 73.735-901 (a) of this 
subpart shall file a financial disclosure report:
    (1) Within 5 days after the transmittal by the President to the 
Senate of their nomination to a position requiring Senate confirmation, 
or
    (2) Within 30 days after assuming a covered position not requiring 
Senate confirmation unless the employee has left another covered 
position listed in Sec. 73.735-901 (a) of this subpart, or
    (3) Within 30 days after terminating Federal employment or assuming 
a position which is not listed in Sec. 73.735-901 (a) of this subpart; 
and
    (4) By May 15 of each calendar year, unless the employee has in that 
calendar year already submitted a financial disclosure report covering 
the preceding calendar year.
    (c) Submission of reports. (1) Executive level officers, non-career 
executives, deputy ethics counselors and Schedule C employees in the 
Office of the Secretary who are required to report in accordance with 
Sec. 73.735-901 (a) of this subpart shall submit their reports to the 
Department Ethics Counselor.
    (2) All other employees required to report in accordance with Sec. 
73.735-901 (a) of this subpart shall submit their reports to the 
reviewing official for their organizational component under procedures 
described in the Department's Personnel Manual. Personnel offices will 
keep a list of reviewing officials and will give each covered employee 
the name of the official to whom his or her report should be sent.
    (d) Review and certification of reports. (1) Each report submitted 
in accordance with this section shall be reviewed by the appropriate 
reviewing official within 60 days of its receipt. Upon reviewing a 
report and finding that the information contained therein reveals no 
conflict of interest or other violation of any provision of this part or 
applicable law, the reviewing officer shall certify the report with his 
or her signature.
    (2) The certification of a report filed in accordance with this 
section shall have the concurrence of the Office of the General Counsel.
    (3) Action to be taken by the reviewing official if the individual 
is not in compliance with applicable laws and regulations is discussed 
in Sec. 73.735-903 and Sec. 73.735-904.



Sec. 73.735-902  Reporting requirements for certain employees not covered 
by the Ethics in Government Act of 1978.

    (a) Applicability. The following employees and special Government 
employees shall submit confidential statements of employment and 
financial interests in accordance with the provisions of this subpart, 
provided they are not required to submit financial disclosure reports 
under Sec. 73.735-901. A list of the positions in this Department whose 
incumbents are required to file financial interest statements as 
prescribed by this subpart is available for review in all of the 
Departments servicing personnel offices.
    (1) Officers and employees in positions classified at GS-13 or above 
(or comparable pay level) who have decision-making responsibility for 
the following matters:
    (i) Contracting or procurement,
    (ii) Administering or monitoring grants or subsidies,
    (iii) Regulating or auditing private or other non-Federal 
enterprises, or
    (iv) Other activities where the decision or action would have an 
economic impact on the interest of any non-Federal enterprise.
    (2) Incumbents of any other positions designated by the head of the 
principal operating component, or by the Assistant Secretary for 
Management and Budget for the Office of the Secretary, to report 
employment and financial interests in order to protect the integrity of 
the Government and to avoid possible conflicts of interest. The 
designation of any such positions below the GS-13 grade must be approved 
by the Office of Personnel Management.
    (3) All experts, consultants, or advisory committee members who are 
not

[[Page 189]]

required to submit a public financial disclosure report in accordance 
with the Ethics in Government Act except:
    (i) Doctors, dentists and allied medical specialists performing 
services for, or consulted as to the diagnosis or treatment of, 
individual patients; or
    (ii) Veterinarians performing services for or consulted as to care 
and service to animals.
    (b) Filing dates. (1) Experts, consultants, and advisory committee 
members shall file a confidential Statement of Employment and Financial 
Interest no later than the date employment commences and shall file 
supplemental statements as necessary to keep all information submitted 
current and accurate.
    (2) Other individuals covered by Sec. 73.735-902 (a) of this 
subpart shall:
    (i) File a confidential statement no later than 30 days after 
assuming a covered position unless the employee, within 30 days before 
assuming the position, left another covered position in HHS that is 
included in Sec. 73.735-901(a) or Sec. 73.735-902(a) of this subpart; 
and
    (ii) Report changes in or additions to the information in the 
statement as of June 30 of each calendar year, or a different date set 
by employee's component with authorization by the Office of Personnel 
Management.
    (c) Submission and review of financial statements. (1) Heads of 
principal operating components, the Assistant Secretary for Management 
and Budget, and principal regional officials for employees under their 
appointing authority shall establish procedures to ensure that financial 
statements from covered employees are received and updated on a timely 
basis and are referred to the appropriate reviewing officials for review 
and certification. (See Sec. 73.735-202 (e)(1)).
    (2) The reviewing official shall review statements to determine 
whether conflicts of interest or apparent conflicts might arise from the 
activities reported thereon. If the review discloses no conflict or 
apparent conflict, the reviewing official shall certify the statement 
with his or her signature. Action to take if the individual is not in 
compliance with applicable laws and regulations is discussed in Sec. 
73.735-903 and Sec. 73.735-904.



Sec. 73.735-903  Action if conflicts of interest or possible conflicts 
are noted.

    (a) If after reviewing a financial disclosure report or a financial 
interest statement, a reviewing official believes that additional 
information is needed, he or she shall tell the individual submitting 
such report what additional information is required and the time by 
which it must be submitted.
    (b) If the reviewing official is of the opinion that, on the basis 
of information submitted, the reporting individual is not in compliance 
with applicable laws and regulations, he or she shall notify the 
individual, afford him or her a reasonable opportunity for a written or 
oral response, and after consideration of such response, determine 
whether or not the individual is in compliance.
    (c) If the reviewing official determines that an individual is not 
in compliance with applicable laws and regulations, he or she shall 
notify the individual of that determination in writing and, after an 
opportunity for personal consultation, determine and notify the 
individual of the action, including those actions set forth in Sec. 
73.735-904, that would be appropriate to assure compliance with such 
laws and regulations, and the date by which such action should be taken. 
The action required and the date for taking it shall be determined by 
the nature of the financial interest or other relationship, the 
particular circumstances of the reporting individual (including his or 
her ability to resolve the problem), and other factors which the 
reviewing official deems relevant. In no case, however, should the date 
be later than 90 days after the reporting individual is notified of the 
reviewing official's opinion.
    (d) If steps for assuring compliance with applicable laws and 
regulations are not taken by the date set in paragraph (c) of this 
section, the matter shall be referred to the Department Ethics 
Counselor.



Sec. 73.735-904  Resolution of apparent or actual conflicts of interest.

    (a) Disqualification from participating in a particular matter or 
category of matters is an appropriate

[[Page 190]]

method for resolving apparent or actual conflicts of interest when the 
interest or activity giving rise to the problem:
    (1) Bears a direct or indirect relationship to particular, 
identifiable duties of the employee involved; and
    (2) Is not so substantial as to affect or give the appearance of 
affecting the integrity of the services which the Government may expect 
of the employee. Whenever disqualification is employed to resolve an 
apparent or actual conflict of interest, the disqualified employee shall 
sign a written statement reflecting the scope of the disqualification 
and the precise nature of the conflicting interest or activity. The 
reviewing official shall keep a file of all such disqualification 
statements and shall monitor compliance with these statements on a 
regular basis.
    (b) Change of assignment is an appropriate method for resolving 
apparent or actual conflicts of interest when the interest giving rise 
to the problem bears a direct or indirect relationship to particular, 
identifiable duties of the employee involved, and those duties 
constitute a significant portion of the employee's position.
    (c) Waiver under 18 U.S.C. 208(b) is an appropriate method for 
resolving apparent or actual conflicts of interest when:
    (1) The employee seeking the waiver reported the financial interest 
that bears some relationship to his or her official duties, and the 
reviewing official, in consultation with a deputy ethics counselor or 
the Department Ethics Counselor, determines that the financial interest 
is not so substantial as to be deemed likely to affect the integrity of 
the services which the Government may expect from such employee; or
    (2) By general rule or regulation published in the Federal Register, 
the Department has exempted the financial interest from the requirements 
of 18 U.S.C. 208 and this part as being too remote or too 
inconsequential to affect the integrity of the Government officers' 
service.
    (d) A trust containing a financial interest which may give rise to 
an apparent or actual conflict of interest is an appropriate method of 
resolving such conflicts when:
    (1) The trust is qualified under section 202(f) of the Ethics in 
Government Act of 1978 (Pub. L. 95-521), as amended, and subject to the 
regulations of the Office of Government Ethics; or
    (2) In the opinion of the Department's Ethics Counselor, it is 
sufficiently independent of the employee involved so that the integrity 
of the employee's services to the Government are not compromised.
    (e) Divestiture is an appropriate method for resolving actual 
conflicts of interest when the nature of the financial interest is such 
that the conflict of interest cannot be adequately resolved by any of 
the methods set forth in paragraphs (a), (b), (c), and (d) of this 
section.
    (f) Terminating an appointment as a method for resolving an actual 
conflict of interest should be used only when it is clear that no other 
remedy can be found which would be acceptable to both the Department and 
the employee. Generally, this method will be employed only in the most 
extreme cases. Such a termination would be subject to adverse action.



   Subpart J_Provisions Relating to Experts, Consultants and Advisory 
                            Committee Members



Sec. 73.735-1001  Coverage.

    (a) For purposes of this subpart the title ``consultant'' will be 
used to include those who are appointed to serve as experts, consultants 
or members of advisory committees. All persons who serve as an employee 
of the Government in the capacity of a consultant are covered by the 
provisions of this subpart irrespective of:
    (1) The title by which designated;
    (2) The statutory authority under which services are obtained;
    (3) The duration of the period for which services are obtained;
    (4) Whether services are obtained by appointment or invitation and 
acceptance;
    (5) Whether services are compensated or rendered without 
compensation;
    (6) Whether or not services are obtained pursuant to a statute 
excepting employees or special Government employees from conflict of 
interest statutes.

[[Page 191]]

    (b) When the service is for less than 130 days in a service year, 
experts, consultants, and advisory committee members are included in the 
group of employees designated by law (18 U.S.C. 202) as ``Special 
Government employees.''



Sec. 73.735-1002  Ethical standards of conduct.

    (a) Like other Federal employees, an individual serving in a 
consultant capacity must conduct himself or herself according to ethical 
behavior standards of the highest order. In particular, such an 
individual must:
    (1) Refrain from any use of office which is, or appears to be, 
motivated by a private gain for himself or herself or other persons, 
particularly those with whom he or she has family, business, or 
financial ties. The fact that desired gain, if it materializes, will not 
take place at the expense of the Government makes his or her actions no 
less improper.
    (2) Conduct himself or herself in a manner devoid of any suggestion 
that he or she is exploiting Government employment for private 
advantage. A consultant must not, on the basis of any inside 
information, enter into any speculation or recommend speculation to 
members of his or her family or business associates, in commodities, 
land, or the securities of any private company. This injunction applies 
even though the consultant's duties have no connection whatever with the 
Government programs or activities which may affect the value of such 
commodities, land, or securities. He or she should be careful in all 
personal financial activities to avoid any appearance of acting on the 
basis of information obtained in the course of his or her Government 
work.
    (3) Refrain from using information not generally available to those 
outside the Government for the special benefit of a business or other 
entity by which the consultant is employed or retained or in which he or 
she has a financial interest. Information not available to private 
industry should remain confidential in the consultant's hands and not be 
divulged to his or her private employer or clients. In cases of doubt 
whether information is generally available to the public, the consultant 
should confer with the person for whom he or she provides services, with 
the office having functional responsibility for a specific type of 
information, or, as appropriate, with the officials designated in Sec. 
73.735-202 to give interpretive and advisory service.
    (4) Where requested by a private enterprise to act for it in a 
consultant or advisory capacity and the request appears motivated by the 
desire for inside information, make a choice between acceptance of the 
tendered private employment and continuation of his or her Government 
consultancy. He or she may not engage in both.
    (5) Not use his or her position in any way to coerce, or give the 
appearance of coercing, anyone to provide a financial benefit to him or 
her or another person, particularly one with whom the consultant has 
family, business, or financial ties.
    (6) Not receive or solicit anything of value as a gift, gratuity, 
loan, entertainment, or favor for himself or herself or another person, 
particularly one with whom he or she has family, business, or financial 
ties if the acceptance would result in loss of complete independence or 
impartiality in serving the Government. All consultants are subject to 
the restrictions in Sec. 73.735-506 of this part concerning gifts and 
decorations from foreign governments.
    (b) Consultants may engage in other employment so long as there is 
no real or apparent conflict between the consultant's private employment 
and his or her official duties. See Sec. 73.735 Subpart G. The regular 
employment of a consultant who is a special Government employee is not 
considered outside work for purposes of Subpart G. Also, the limitation 
in Sec. 73.735-701(f) regarding the amount of an honorarium that may be 
received does not apply to special Government employees.
    (c) A consultant who has questions about conflicts of interest or 
the application of the regulations in this part to him or her or to his 
or her assigned work should make inquiry of the person for whom services 
are provided. That person may direct the consultant to the Department 
Ethics Counselor or

[[Page 192]]

a deputy ethics counselor for interpretative and advisory services as 
provided in Sec. 73.735-202.



Sec. 73.735-1003  Conflicts of interest statutes.

    (a) Each consultant should acquaint himself or herself with sections 
203, 205, 207 and 208 of title 18, United States Code, all of which 
carry criminal penalties related to conflicts of interest. The 
restraints imposed by the four criminal sections are summarized in 
paragraphs (b) and (c) of this section.
    (b) 18 U.S.C. 203 and 205.
    (1) These two sections in general operate to preclude a person who 
works for the Government, except in the discharge of his or her official 
duties, from representing anyone else before a court or Government 
agency in a matter in which the United States is a party or has a direct 
and substantial interest. The prohibition applies whether or not 
compensation is received for the representation. However, if the 
individual is a special Government employee, this restriction applies 
only if:
    (i) The representation involves a matter in which the individual has 
at any time participated personally and substantially in the course of 
his or her Government employment; or
    (ii) The individual has served the Department for more than 60 days 
in the immediately preceding period of 365 days, and the matter is one 
which is pending before the Department. This second restraint applies 
whether or not the matter is one in which the individual participated 
personally and substantially in his or her Government employment. These 
two provisions apply to a special Government employee on days when he or 
she does not serve the Government as well as on the days when services 
are rendered, and they apply to both paid and unpaid representation.
    (2) To a considerable extent the prohibitions of sections 203 and 
205 are aimed at the sale of influence to gain special favors for 
private businesses and other organizations and at the misuse of 
governmental position or information. In accordance with these aims, a 
consultant, even when not compelled to do so by sections 203 and 205, 
should make every effort in his or her private work to avoid any 
personal contact with respect to negotiations for contracts or grants 
with the component of the department in which he or she is serving, if 
the subject matter is related to the subject matter of his or her 
consultancy or other service. This will not always be possible to 
achieve where, for example, a consultant has an executive position with 
his or her regular employer which requires him or her to participate 
personally in contract negotiations with the department or agency he or 
she is advising. Whenever this is the case, the consultant should 
participate in the negotiations for his or her employer only after 
advising the responsible Government official of his or her involvement 
in other matters in the Department. In other instances an occasional 
consultant may have technical knowledge which is indispensable to his or 
her regular employer in his efforts to formulate a research and 
development contract or a research grant, and for the same reason, it is 
in the interest of the Government that the consultant should take part 
in negotiations for his or her private employer. Again, the individual 
should participate only after advising the responsible Government 
official of the relevant facts.
    (3) Section 205 permits both the Government and the private employer 
of a special Government employee to benefit, in certain cases, from his 
or her performance of work under a grant or contract for which he or she 
would otherwise be disqualified because of having participated in the 
matter for the Government or because it is pending in a component in 
which the consultant had served more than 60 days in the past year. This 
provision gives the head of a department the authority, notwithstanding 
any prohibition in either section 203 or 205, to allow a special 
Government employee to represent before such department or agency either 
his or her regular employer or another person or organization in the 
performance of work under a grant or contract. As a basis for this 
action, the Secretary must first make a certification in writing, 
published in the Federal Register, that it is required by the national 
interest.

[[Page 193]]

    (4) Section 205 contains two other exemptive provisions, which apply 
to both special and regular Government employees. See Sec. 73.735-702.
    (c) 18 U.S.C. 207 applies to individuals who have left Government 
service. See Subpart N of these regulations.
    (d) 18 U.S.C. 208 bears on the activities of Government personnel, 
including special Government employees, in the course of their official 
duties. In general, it prevents a Government employee from participating 
as such in a particular matter in which, to his or her knowledge, he or 
she, his or her spouse, minor child, partner, or a profit or non-profit 
enterprise with which he or she is connected has a financial interest. 
However, the section permits an employee's agency to grant him or her an 
ad hoc exemption if the interest is not so substantial as to affect the 
integrity of his or her services. Insignificant interests may also be 
waived by a general rule or regulation. The matters in which special 
Government employees are disqualified by section 208 are not limited to 
those involving a specific party or parties in which the United States 
is a party or has an interest, as in the case of sections 203, 205 and 
207. Section 208 therefore extends to matters in addition to contracts, 
grants, judicial and quasi-judicial proceedings, and other matters of an 
adversary nature. Accordingly, a special Government employee, like all 
government employees, should in general be disqualified from 
participating as such in a matter of any type the outcome of which will 
have a direct and predictable effect upon the financial interests 
covered by the section.

However, the power of exemption may be exercised in this situation if 
the special Government employee renders advice of a general nature from 
which no preference or advantage over others might be gained by any 
particular person or organization. The power of exemption may also be 
exercised where the financial interests involved are minimal in value.



Sec. 73.735-1004  Requesting waivers or exemptions.

    (a) A consultant may present in writing to the official for whom he 
or she provides services requests for the waivers or exemptions 
specified in Sec. 73.735-1003. That official will take, or refer the 
request for, action as appropriate, and will see that the employee 
receives advice or decision on his or her request.
    (b) A file of all waivers or exemptions granted shall be maintained 
in such manner that information can be given promptly on individual 
cases or statistics provided upon request. Generally, these records, 
together with written advice given in connection with less formal 
requests concerning questions of ethical standards, are kept with the 
employee's statement of employment and financial interests or financial 
disclosure report (Sec. 73.735-1006).
    (c)(1) Waiver for reviewers from certain multi-campus institutions. 
Applicability of the prohibitions of 18 U.S.C. 208(a) and this subpart 
are hereby waived pursuant to a determination that the interest involved 
is too remote or too inconsequential to affect the integrity of a 
special Government employee's review of a funding application or 
contract proposal from one campus of one of the following multi-campus 
institutions, where the interest consists solely of employment as a 
faculty member (including Department Chairman) at a separate campus of 
the same multi-campus institution:

    The University of Alabama system consisting of the University of 
Alabama, the University of Alabama in Birmingham, and the University of 
Alabama in Huntsville.
    The campuses of the University of California.
    The system consisting of Colorado State University, the University 
of Southern Colorado, and Fort Lewis College.
    The Indiana University system consisting of eight universities on 
nine campuses, with the exception of the system-wide schools: the School 
of Business; the School of Dentistry; the School of Medicine; the School 
of Nursing; and the School of Public and Environmental Affairs.
    The University of Nebraska system consisting of the University of 
Nebraska--Lincoln, the University of Nebraska at Omaha, and the 
University of Nebraska Medical Center.
    The campuses of the State University of New York.
    The Oregon system of higher education consisting of the University 
of Oregon, Oregon State University, Oregon Health

[[Page 194]]

Sciences University, Portland State University, Western Oregon State 
College, Southern Oregon State College, Eastern Oregon State College, 
and the Oregon Institute of Technology.
    The campuses of the University of Tennessee.
    The separate universities comprising the University of Texas System.
    The separate universities comprising the University of Wisconsin 
System.

    (2) Institutions that are not subject to 18 U.S.C. 208(a) and the 
subpart, because they are not part of the same organization within the 
State. The following State institutions and systems of higher education 
have been determined to be separate from each other to such a degree 
that no waiver is necessary in order to permit a faculty member 
(including Department Chairman) employed by one of the State 
institutions of higher education to review a funding application or 
contract proposal from another of the named institutions within that 
State:

    The University of Alabama System and other Alabama State owned 
institutions of higher education.
    The California Community Colleges, the California State Universities 
and Colleges, and the University of California.
    The University of Colorado, Colorado State University, and other 
Colorado State owned institutions of higher education.
    The University of Connecticut, Connecticut State University, the 
Connecticut Technical Colleges, and the Connecticut Community Colleges.
    The University of Illinois, Illinois State University, Western 
Illinois University, Southern Illinois University, and the Illinois 
Community Colleges.
    The Indiana University and the other Indiana State owned 
institutions of higher education.
    The University of Iowa, and Iowa State University.
    The University of Kansas, Kansas State University, Wichita State 
University, Fort Hays State University, Pittsburg State University, and 
the Kansas Technological Institute.
    Louisiana State University, and other Louisiana State owned 
institutions of higher education.
    The University of Massachusetts, and other Massachusetts State owned 
institutions of higher education.
    The University of Michigan, Michigan State University, and Wayne 
State University.
    The University of Minnesota, the Minnesota State University System, 
and the Minnesota Community College System.
    The University of Missouri, and other Missouri State owned 
institutions of higher education.
    The University of Nebraska, and other Nebraska State owned 
institutions of higher education.
    The State University of New York System, and the City University of 
New York System.
    The University of North Carolina, North Carolina State, and other 
North Carolina State owned institutions of higher education.
    Pennsylvania State University, the University of Pittsburgh, Temple 
University, Lincoln University, and the other State owned colleges and 
universities in Pennsylvania.
    The University of Texas System, the Texas A&M System, the Texas 
State University System, the University System of South Texas, the Lamar 
University System, the University of Houston System, East Texas State 
University, Stephen F. Austin State University, West Texas State 
University, Midwestern University, North Texas State University, Texas 
Southern University, Texas Woman's University, Texas Tech University and 
Pan American University.
    The University of Utah and Utah State University.

[46 FR 7369, Jan. 23, 1981, as amended at 51 FR 15627, Apr. 25, 1986]



Sec. 73.735-1005  Salary from two sources.

    Special Government employees are not subject to 18 U.S.C. 209 which 
prohibits other employees from receiving any salary, or supplementation 
of Government salary, from a private source as a compensation for 
services to the Government. This Department will not knowingly pay per 
diem to a consultant who also receives per diem pay for the same day 
from another Government agency (in or outside the Department). Erroneous 
payments in contravention of this provision will be subject to 
collection, and any consultant who willfully collects double payments 
may be barred from further employment.



Sec. 73.735-1006  Reporting financial interests.

    (a) Consultants who will work more than 60 days in a calendar year 
are subject to the provisions of title II of the Ethics in Government 
Act of 1978 when their rate of pay is equal to or greater

[[Page 195]]

than the basic rate for GS-16, Step 1. Such consultants are covered by 
the reporting requirements of Sec. 73.735-901 of these regulations.
    (b) Consultants not subject to the Ethics in Government Act shall 
file statements of financial interests as provided by Sec. 73.735-902 
of these regulations.



Sec. 73.735-1007  Political activity.

    Consultants who serve intermittently are subject to the political 
activity restrictions of Subchapter III of Chapter 73 of Title 5 U.S.C. 
and Civil Service Rule IV only on days on which service is rendered and 
then for the entire 24 hours of such service day. Other consultants are 
subject to these restrictions at all times.



      Subpart K_Special Government Employees Other Than Consultants



Sec. 73.735-1101  General provision.

    Individuals who are designated as special Government employees 
because of the nature of their services but who are not serving as a 
consultant, expert, or advisory committee member are subject to the 
provisions of Subparts B through I of these regulations. However, the 
provisions of 18 U.S.C. 205, 206, 207, and 208 apply to them only as 
described in Subpart J. Also, the limitation in Sec. 73.735-701(f) on 
the amount of an honorarium that may be received does not apply.



                      Subpart L_Disciplinary Action



Sec. 73.735-1201  General provisions.

    (a) Violations of the regulations contained in the Part may be cause 
for disciplinary action which could be in addition to any penalty 
prescribed by law. (For a list of some offenses for which disciplinary 
action may be taken and ``The Code of Ethics for Government Service,'' 
the violation of which may also result in disciplinary action, see 
Appendixes A and B of this Part).
    (b) The type of disciplinary action to be taken must be determined 
in relation to the specific violation. Those responsible for 
recommending and for taking disciplinary action must apply judgment to 
each case, taking into account the general objectives of meeting any 
requirements of law, deterring similar offenses by the employee and 
other employees, and maintaining high standards of employee conduct and 
public confidence. Some types of disciplinary action which may be 
considered are:
    (1) Admonishment
    (2) Written reprimand
    (3) Reassignment
    (4) Suspension
    (5) Demotion
    (6) Removal
    (c) Suspension, demotion, and removal are adverse actions; and when 
such actions are taken, applicable laws, regulations, and policies must 
be followed.

[46 FR 7369, Jan. 23, 1981, as amended at 53 FR 4409, Feb. 16, 1988]



                     Subpart M_Reporting Violations



Sec. 73.735-1301  Responsibility for reporting possible criminal 
violations.

    An employee who has information which he or she reasonably believes 
indicates a possible offense against the United States by an employee of 
the Department, or any other individual working on behalf of the 
Department, shall immediately report such information to his or her 
supervisor, any management official, or directly to the Office of the 
Inspector General. Offenses covered by the preceding sentence include, 
but are not limited to, bribery, fraud, perjury, conflict of interest, 
misuse of funds, equipment, or facilities, and other conduct by a 
government officer or employee, grantee, contractor or other person 
which is prohibited by title 18 of the United States Code. Employees and 
supervisors should refer to chapter 5-10 of the Department's General 
Administration Manual for procedures regarding the reporting and 
handling of such information.



Sec. 73.735-1302  Responsibility for reporting allegations of misconduct.

    An employee who has information which he or she reasonably believes 
indicates the existence of an activity constituting (a) a possible 
violation of a rule or regulation of the Department; or (b) 
mismanagement, a gross waste of

[[Page 196]]

funds, or abuse of authority; or (c) a substantial and specific danger 
to the public health and safety, shall immediately report such 
information to his or her supervisor, any management official of the 
Department, or directly to the Office of the Inspector General. 
Employees and supervisors should refer to chapter 5-10 of the 
Department's General Administration Manual for procedures regarding the 
reporting and handling of such information. This subsection does not 
cover employee grievances, equal employment opportunity complaints, 
classification appeals, or other matters for which a formal government-
wide review system has been established by the Federal government.



Sec. 73.735-1303  Prohibition of reprisals.

    (a) Any employee who has authority to take, direct others to take, 
recommend, or approve any personnel action, shall not, with respect to 
such authority, take or threaten to take any action against any employee 
as a reprisal for making a complaint or providing any information 
pursuant to Sec. Sec. 73.735-1301 and 73.735-1302. If the complaint was 
made or the information was disclosed with the knowledge that it was 
false, or with willful disregard of its truth or falsity, any personnel 
action taken against the employee based on those reasons would not 
constitute a reprisal action.
    (b) An employee who believes that he or she has been threatened with 
a personnel action, any other action, or harassment or has been harmed 
by any action as a reprisal for having made a complaint or providing 
information pursuant to Sec. 73.735-1301 or Sec. 73.735-1302 may 
request the Office of the Inspector General to review his or her 
allegations. Whenever the Inspector General has reason to believe that 
the allegations may be true, he or she will refer the matter to the 
Assistant Secretary for Personnel Administration for appropriate action. 
The Assistant Secretary for Personnel Administration may order a stay of 
any personnel action if he or she determines that there are reasonable 
grounds to believe that the personnel action is being taken as a 
reprisal for making a complaint or providing information pursuant to 
Sec. 73.735-1301 or Sec. 73.735-1302.



Sec. 73.735-1304  Referral of matters arising under the standards of 
this part.

    (a) The Department Ethics Counselor may refer to the Inspector 
General for investigation and/or further action any matter arising under 
the standards of this part.
    (b) The Department Ethics Counselor may refer to the Office of 
Government Ethics, or the Inspector General may refer to the Department 
of Justice, suspected violations of the criminal laws regarding employee 
standards of conduct and conflicts of interest.



       Subpart N_Conduct and Responsibilities of Former Employees



Sec. 73.735-1401  Prohibitions against post-employment conflicts of 
interest.

    (a) The purpose of criminal prohibition in 18 U.S.C. 207 is to 
prevent the unfair use of inside knowledge or influence that results 
from Federal service. 18 U.S.C. 207 generally prohibits a former 
employee from acting as another person's representative to the 
Government in particular matters involving a specific party or parties 
in which the employee had been involved while in Federal service. This 
prohibition does not require a former employee to decline employment 
with any organization regardless of his or her dealings with that 
organization while employed by the Government. It applies solely to 
activities, not the mere existence of an employment arrangement.
    (b) The Office of Government Ethics, Office of Personnel Management, 
has issued Government-wide regulations covering post-employment conflict 
of interest (5 CFR Part 737). Those regulations are incorporated herein 
by reference, and they are available for review in personnel offices 
throughout the Department.

  Appendix A to Part 73--List of Some Offenses for Which Disciplinary 
                           Action May Be Taken

    Following is a list of some offenses for which disciplinary action 
may be taken under this Part. When a statute applies specifically to a 
particular offense, either wholly or in part, the statute is cited. 
Neither the

[[Page 197]]

list of offenses nor the statutory citations are all-inclusive. The 
``Code of Ethics for Government Service'' is not cited because of its 
general applicability but is published in its entirety in Appendix B.
    A. Concerning Efficiency of Operations in General. 1. Engaging in 
wasteful actions or behavior in the performance of assigned duties; 
conducting non-Government business during official work hours; or 
participating in a strike (18 U.S.C. 1918), work stoppage, slowdown, 
sickout, or other similar action.
    2. Absence without leave, failure to adhere to the rules and 
regulations for requesting and obtaining leave, or improper use of sick 
leave.
    3. Deliberate insubordination or refusal to carry out lawful orders 
or assignments given.
    4. Disruptive behavior, such as:
    a. Inflicting or threatening or attempting to inflict bodily injury 
on another (except for necessary defense of self or others) while on the 
job or on Federal premises.
    b. Discourtesy, disreputable conduct, or use of insulting, abusive 
or obscene language to or about other individuals while on the job.
    5. Sexual harassment of employees or members of the public.
    6. Failure to observe precautions for safety, such as failure to use 
safety equipment when it is provided or ignoring signs, posted rules or 
regulations, or written or verbal safety instructions.
    7. Unauthorized use, possession, or distribution of alcoholic 
beverages (5 U.S.C. 7352) or controlled substances (e.g., hallucinogens, 
such as LSD; stimulants, such as cocaine and amphetamines; sedatives, 
such as barbiturates; narcotics and other drugs or substances, such as 
hashish and other cannabis substances).
    8. Unauthorized gambling; or canvassing, soliciting, or peddling on 
Government premises.
    9. Failure to carry or show proper identification or credentials as 
required by competent authority; misuse of identification cards or 
investigative or identification credentials or badges.
    10. Failure to disclose (i.e., report) information, when such 
disclosure is not specifically prohibited by law or Executive Order, 
that involves (a) violation of law, rule, or regulation, (b) 
mismanagement or gross waste of funds or abuse of authority, or (c) 
posing a substantial and specific danger to public health or safety; 
failure to cooperate in an official Department inquiry.
    11. Failure to pay just debts, including taxes to and loans from 
governmental sources.
    12. Deceit or interference in a Civil Service examination (18 U.S.C. 
1917) or in connection with a Government personnel action.
    13. Fraud or false statements in a Government matter. (18 U.S.C. 
1001 through 1003.)
    14. Supervisory failure to initiate disciplinary or corrective 
action when the facts are known and disciplinary or corrective action is 
warranted.
    15. Employment of a member of an organization that advocates the 
overthrow of our constitutional form of government. (5 U.S.C. 7311; 50 
U.S.C. 784.)
    B. Concerning Government Funds, Property, Documents, and Records. 1. 
Actual or attempted embezzlement or theft of Government or personal 
money or property either directly or through use of Government 
documents, automated equipment, or other means; actual or attempted 
embezzlement or theft of the money or property of another person in the 
possession of an employee by reason of his or her employment. (18 U.S.C. 
641 and 654.)
    2. Failure to account for public money. (18 U.S.C. 643.)
    3. Deliberate falsifying of official time and attendance records; 
improper use of official travel or forging, counterfeiting, or otherwise 
falsifying official Government travel records or documents. (18 U.S.C. 
508.)
    4. False record entries or false reports of money or securities. (18 
U.S.C. 2073.)
    5. Loss or misuse of or damage to Government property or endangering 
persons or Government property through carelessness or by willful 
malicious conduct.
    6. Mutilating, destroying, or concealing public records. (18 U.S.C. 
2071.)
    7. Misuse of penalty (postal) privilege. (18 U.S.C. 1719.)
    8. Failure to safeguard administratively confidential, financial, 
and trade secrets information.
    9. Unauthorized use of documents presented or used to procure the 
payment of money from or by the Government. (18 U.S.C. 285.)
    10. Unauthorized use of a Government vehicle; serious or repeated 
violations of traffic regulations while driving a Government vehicle or 
a vehicle rented or leased for official Government purposes; reckless 
driving or improper operation of any Government owned, rented, or leased 
motor vehicle. (31 U.S.C. 1349[b].)
    11. Violations of the Privacy Act, including:
    a. Willful prohibited disclosure of individually identifiable 
information in violation of 5 U.S.C. 552a.
    b. Willfully maintaining a system of records without meeting the 
notice requirements of the Privacy Act as required by 5 U.S.C. 552a.
    12. Violation of regulations concerning the release of classified 
information, confidential, or security and investigative information. 
(18 U.S.C. 798 and 1905; 21 U.S.C. 331j; and 50 U.S.C. 783.)

[[Page 198]]

    C. Concerning Conflicts of Interest and Related Unethical Conduct: 
1. Violations of 18 U.S.C. Chapter 11: Bribery, Graft, and Conflicts of 
Interest, including:
    a. Having a direct or indirect financial interest (includes employee 
ownership of stocks, bonds, or partnership interests in an entity or 
employment of the employee, his or her spouse, or dependent child) that 
conflicts with one's Government duties because such entity is either 
regulated by, has or seeks to do business with the agency, or has any 
other particular matter with or pending before the agency that may give 
rise to either an actual conflict or the appearance thereof. (18 U.S.C. 
208.)
    b. Bribery of a public official; soliciting or accepting directly or 
indirectly anything of monetary value, including gifts, gratuities, 
favors, entertainment, or loans either as compensation for governmental 
services or from individuals who are seeking contractual or other 
business or financial relations with the Department, are conducting 
operations or activities that are regulated by the Department, or have 
interests that may be substantially affected by the performance or 
nonperformance of the employee's official duties; receiving salary or 
any contribution to or supplementation of salary from a private source 
as compensation for services for the Government. (18 U.S.C. 201 and 
209.)
    c. Acting as the agent of a foreign principal registered under the 
Foreign Agents Registration Act. (18 U.S.C. 219.)
    2. Engaging, directly or indirectly, in a financial transaction as a 
result of or primarily relying on information that is obtained through 
one's official duties and would not be available were the employee not 
an employee of the Federal Government.
    3. Soliciting a contribution from another employee for a gift to an 
official superior, making a donation as a gift to an official superior, 
or accepting a gift from an employee receiving less pay than oneself. (5 
U.S.C. 7351.)
    4. Engaging, without required permission, in outside activities that 
result in or create the appearance of a conflict of interest.
    5. Teaching, lecturing, or writing that depends on specific 
information obtained as a result of one's Government employment when 
that information is not otherwise available to the public.
    6. Failure to obtain required clearance of an official speech or 
article.
    7. Lobbying with appropriated funds. (18 U.S.C. 1913.)
    8. Representation before a Federal agency (other than in the proper 
discharge of one's official duties) as an agent or attorney in a claim 
against the United States (or receiving any gratuity or share in any 
such claim in considertion for assistance given) or as an agent or 
attorney for anyone before any department, agency, court, or otherwise 
in connection with any proceeding, application, request for a ruling, or 
claim on any other particular matter in which the United States is a 
party or has a direct and substantial interest. (18 U.S.C. 205.) (Note: 
This section notwithstanding, an employee may, if not inconsistent with 
the performance of his or her official duties, act without compensation 
as an agent or attorney for another person who is the subject of any 
disciplinary or other administrative proceeding or as an agent or 
attorney for one's parent, spouse, child, or any person or estate for 
whom or which he or she serves as personal fiduciary except in those 
matters in which the employee has participated personally and 
substantially.)
    D. Concerning Prohibited Political and Election Activities. 1. 
Activities prohibited by 5 U.S.C. Chapter 73, Subchapter III, including:
    a. Section 7323, ``Political contributions; prohibition.''
    b. Section 7324, ``Influencing elections; taking part in political 
campaigns; prohibitions; exceptions.''
    2. Activities prohibited by 18 U.S.C. Chapter 29, including:
    a. Section 594, ``Intimidation of voters.''
    b. Section 597, ``Expenditures to influence voting.''
    c. Section 598, ``Coercion by means of relief appropriations.''
    d. Section 600, ``Promise of employment or other benefit for 
political activity.''
    e. Section 601, ``Deprivation of employment or other benefit for 
political contribution.''
    f. Section 602, ``Solicitation of political contributions.''
    g. Section 604, ``Solicitation from persons on relief.''
    h. Section 606, ``Intimidation to secure political contributions.''
    E. Concerning Prohibited Personnel Practices. 1. Commission of a 
prohibited personnel practice (as defined in 5 U.S.C. 2302[b] [1-11]); 
that is, any employee who has authority to take, direct others to take, 
recommend, or approve any personnel action, shall not, with respect to 
such authority, commit any of the following practices:
    a. Discriminate for or against any employee or applicant for 
employment on the basis of race, color, religion, sex, national origin, 
age, handicapping condition, marital status, or political affiliation.
    b. Solicit or consider any recommendation or statement, oral or 
written, with respect to any individual who requests or is under 
consideration for any personnel action unless such recommendation or 
statement is based on the personal knowledge or records of the person 
furnishing it and consists of (1) an evaluation of the work performance 
ability, aptitude, or general qualifications of such individual or (2) 
an evaluation of the character, loyalty, or suitability of such 
individual.

[[Page 199]]

    c. Coerce the political activity of any person (including the 
providing of any political contribution or service) or take any action 
against any employee or applicant for employment as a reprisal for the 
refusal of any person to engage in such political activity.
    d. Deceive or willfully obstruct any person with respect to such 
person's right to compete for employment.
    e. Influence any person to withdraw from competition for any 
position for the purpose of improving or injuring the prospects of any 
other person for employment.
    f. Grant any preference or advantage not authorized by law, rule, or 
regulation to any employee or applicant for employment (including 
defining the scope or manner of competition or the requirements for any 
position) for the purpose of improving or injuring the prospects of any 
particular person for employment.
    g. Appoint, employ, promote, advance, or advocate for appointment, 
employment, promotion, or advancement, in or to a civilian position any 
individual who is a relative (as defined in 5 U.S.C. 3110) when the 
civilian position is in the Department or under his or her jurisdiction 
or control.
    h. Take or fail to take a personnel action with respect to any 
employee or applicant for employment as a reprisal for the lawful 
disclosure of information.
    i. Take or fail to take any personnel action against an employee or 
applicant for employment as a reprisal for the exercise of any appeal 
right granted by any law, rule, or regulation (including HHS 
Instructions and issuances).
    j. Discriminate for or against any employee or applicant for 
employment on the basis of conduct that does not adversely affect the 
performance of the employee or applicant or the performance of others 
(except criminal conviction in determining suitability or fitness).
    k. Take or fail to take any personnel action when the taking of or 
failure to take such action violates any law, rule, or regulation 
implementing, or directly concerning the merit system principles (as set 
forth in 5 U.S.C. 2301).

[53 FR 4410, Feb. 16, 1988]

      Appendix B to Part 73--Code of Ethics for Government Service

    Any person in Government service should:
    I. Put loyalty to the highest moral principles and to country above 
loyalty to persons, party, or Government department.
    II. Uphold the Constitution, laws, and regulations of the United 
States and all governments therein and never be a party to their 
evasion.
    III. Give a full day's labor for a full day's pay, giving earnest 
effort and best thought to the performance of duties.
    IV. Seek to find and employ more efficient and economical ways of 
getting tasks accomplished.
    V. Never discriminate unfairly by the dispensing of special favors 
or privileges to anyone, whether for remuneration or not; and never 
accept, for himself or herself or family members, favors or benefits 
under circumstances which might be construed by reasonable persons as 
influencing the performance of governmental duties.
    VI. 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.
    VII. Engage in no business with the Government, either directly or 
indirectly, which is inconsistent with the conscientious performance of 
governmental duties.
    VIII. Never use any information gained confidentially in the 
performance of governmental duties as a means of making private profit.
    IX. Expose corruption wherever discovered.
    X. Uphold these principles, ever conscious that public office is a 
public trust.

[53 FR 4410, Feb. 16, 1988]



PART 73a_STANDARDS OF CONDUCT: FOOD AND DRUG ADMINISTRATION 
SUPPLEMENT--Table of Contents




                      Subpart A_General Provisions

Sec.
73a.735-101 Principles and purpose.
73a.735-103 Responsibilities.
73a.735-104 Advice and guidance.

                   Subpart B_Miscellaneous Provisions

73a.735-201 Control activity employees formerly associated with 
          organizations subject to FDA regulation.

Subpart C [Reserved]

                      Subpart D_Outside Employment

73a.735-401 General provisions.

                      Subpart E_Financial Interests

73a.735-501 General provisions.
73a.735-502 Employees in regulatory activities.
73a.735-504 Exceptions.

Subparts F-I [Reserved]

[[Page 200]]

       Subpart J_Statements of Employment and Financial Interests

73a.735-1004 Submission and review of statements.

    Authority: 45 CFR 73.735-105.

    Source: 43 FR 7619, Feb. 24, 1978, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 73a.735-101  Principles and purpose.

    (a) To assure that the business of the Food and Drug Administration 
(FDA) is conducted effectively, objectively, and without improper 
influence or appearance thereof, all employees must be persons of 
integrity and observe the highest standards of conduct. Because of FDA's 
special regulatory responsibilities to the consumer and industry, its 
employees must be especially alert to avoid any real or appearance of 
conflict of their private interests with their public duties. Their 
actions must be unquestionable and free from suspicion of partiality, 
favoritism, or any hint of conflicting interests. This supplement 
recognizes FDA's public obligation to set reasonable and fair safeguards 
for the prevention of employee conflicts of interest. It is necessary to 
meet FDA's regulatory responsibilities and to otherwise assure full 
protection of the public confidence in the integrity of its employees.
    (b) Since FDA is a unique consumer protection and regulatory agency 
within the Department, the DHHS Standards of Conduct need further 
supplementation to reflect this role. Therefore, for purposes of 
implementing the DHHS Standards of Conduct regulations within the FDA, 
this supplement provides interpretive definitions and additional 
requirements. As further guidance to its employees and supervisory 
officials, FDA will issue internal procedural instructions in accordance 
with this supplement.



Sec. 73a.735-103  Responsibilities.

    (a) A ``control activity'' employee shall be personally responsible 
for assuring that he does not hold an interest in any organization whose 
FDA-regulated activities constitute more than an insignificant part of 
its business as defined in Sec. 73a.735-502(b)(2). The Associate 
Commissioner for Administration (or his designee) is available to assist 
such employees in obtaining corporate data necessary to make such a 
determination.
    (b) Other employees are similarly responsible for observing the 
financial interest retention requirements in Sec. Sec. 73a.735-501(b) 
and 73a.735-502(a)(2).



Sec. 73a.735-104  Advice and guidance.

    (a) The Associate Commissioner for Administration (or his designee) 
shall provide day-to-day guidance and assistance to employees and 
supervisors on matters covered by regulations in Part 73 and this part 
of this chapter.
    (b) The FDA Conflict of Interest Review Board shall review and make 
recommendations to the Commissioner on requests for exceptions to 
conflict of interest policies and procedures in regulations in this part 
and Part 73 of this chapter.



                   Subpart B_Miscellaneous Provisions



Sec. 73a.735-201  Control activity employees formerly associated with 
organizations subject to FDA regulation.

    (a) For a period of 1 year after FDA appointment, or appointment to 
the Food and Drug Division, Office of the General Counsel, a control 
activity employee who was employed in a regulated organization within 1 
year before FDA employment shall not participate in any regulatory 
action before FDA that involves the former employer organization. 
Exceptions may be authorized only under paragraph (e) of this section.
    (b) A control activity employee who was previously employed in a 
regulated organization shall not participate in any regulatory action 
before FDA in which the employee had participated personally and 
substantially in behalf of the former employer organization, e.g., drug 
investigations/applications, food additive petitions, matters dealing 
with compliance in areas of radiation-producing products or medical 
devices. Exceptions may be authorized only under paragraph (e) of this 
section.

[[Page 201]]

    (c) Employment in a regulated organization includes contractual 
relationships, e.g., attorneys who may have represented an FDA-regulated 
firm or industry or an association of such firms and individuals who may 
have served a firm, industry or association in a consultant capacity.
    (d) Within 30 days after assignment to a control activity position, 
an employee shall submit to his supervisor detailed information 
concerning former industry employers, and dates and substance of 
involvement in such regulatory matters as may be subject to the 
prohibition in paragraph (b) of this action.
    (e) The Commissioner may grant individual exceptions to paragraphs 
(a) and (b) of this section whenever he determines that strict 
application would not be in the best interests of the United States. A 
memorandum of any exception granted shall be filed for public inspection 
in the Public Records and Documents Center, Food and Drug 
Administration, Room 4-68, 5600 Fishers Lane, Rockville, Md. 20857, 
within 10 days after the Commissioner's decision. The memorandum shall 
include the employee's name, title, grade, summary of official duties, 
prior pertinent industry involvement, a brief description of the 
specific regulatory action in which the employee has been permitted to 
participate, and a statement explaining why such strict application of 
the subpart would not be in the best interests of the United States.

Subpart C [Reserved]



                      Subpart D_Outside Employment



Sec. 73a.735-401  General provisions.

    (a) Employees of the Food and Drug Administration shall obtain 
advance approval for all outside employment, whether paid or unpaid. 
Employment, as used in this section, does not include:
    (1) Memberships in charitable, religious, social, fraternal, 
recreational, public service, civic, or similar nonbusiness 
organizations.
    (2) Memberships in professional organizations. (Officeholding, 
however, requires advance approval.)
    (3) Performance of duties in the Armed Forces Reserve or National 
Guard.
    (b) Control activity employees (defined in Sec. 73a.735-502) will 
not generally be granted approval to:
    (1) Manage or direct an organization whose activities are subject to 
FDA regulation, or
    (2) Be employed in an organization whose business activities are 
subject to FDA regulation unless:
    (i) The regulated activities of the organization are an 
insignificant part of its total operations, i.e., the regulated products 
of the organization constitute no more than 10 percent of its annual 
gross sales, and
    (ii) The outside employment is in nonregulated activities of the 
organization.
    (c) All other employees will generally be granted approval to engage 
in outside employment which is compatible with the full performance of 
their FDA duties and responsibilities and which will not give rise to a 
real or apparent conflict of interest. Permissible employment includes 
but is not limited to:
    (1) Employment where the sale of FDA-regulated products is 
incidential to the purpose of the establishment, e.g., hotels, theaters, 
bowling alleys, and sports arenas.
    (2) Sales and clerical occupations relating to regulated products, 
e.g., supermarkets, drugstores, department stores, liquor stores.
    (3) Trade, industrial, and service occupations relating to regulated 
products, e.g., gasoline service station attendant, line production or 
assembly work, cook, waiter, waitress, hospital attendant, snack bar 
vendor, warehouseman.
    (d) All employees will generally be granted approval to engage in 
paid or unpaid outside employment which contributes to their technical 
or professional development, e.g.,
    (1) Medical, dental, and veterinary practices.
    (2) Pharmacy practice after meeting the following conditions which 
will serve to protect against possible conflicts or apparent conflicts 
of interest and to avoid other problems resulting

[[Page 202]]

in embarrassment to the employee or FDA:
    (i) The primary purpose of the part-time employment is to contribute 
to the overall professional development of the employee and generally 
enhance his capability to better perform his current FDA duties.
    (ii) The part-time duties will be confined generally to dispensing 
Rx drugs and related professional pharmacy duties.
    (iii) The employee will avoid unrelated nonprofessional duties such 
as supervision or management of store operations, contractual or 
purchasing responsibilities (except normal ``out-of-stock'' 
requisitioning) and repacking and relabeling of bulk items.
    (iv) The employee will demonstrate a high degree of discretion and 
judgment in his contacts with customers and representatives of regulated 
industry and competitor firms so as to avoid giving the impression that:
    (a) His part-time actions, recommendations, opinions, or remarks are 
official points of view;
    (b) He is using his FDA position for private gain by oral 
misrepresentations and false claims of the company's products;
    (c) He is making a Government decision outside official channels, 
e.g., to customers, prescribing physicians, buyers, distributors;
    (d) He or other FDA representatives will give preferential treatment 
to any regulated organization or representatives of such organizations, 
or that FDA employees have not exercised complete independence or 
impartiality in carrying out their regulatory and consumer protection 
responsibilities; or
    (e) His part-time work is creating an adverse effect on the image of 
FDA or discrediting the integrity of official FDA regulatory decisions.



                      Subpart E_Financial Interests



Sec. 73a.735-501  General provisions.

    (a) No restrictions are placed on ownership of diversified mutual 
funds.
    (b) An FDA employee, other than a control activity employee (defined 
in Sec. 73a.735-502), may have financial interests:
    (1) In an organization whose FDA-regulated activities are an 
insignificant part of its total operations, i.e., no more than 10 
percent of the organization's annual gross sales are in products 
regulated by FDA; or
    (2) In an organization whose FDA-regulated business activities are a 
significant part of its total business operations: Provided, That:
    (i) The holding is less than $5,000 (value or cost at time of 
initial reporting),
    (ii) The holding represents less than 1 percent of the total 
outstanding stock shares of that organization, and
    (iii) No more than 50 percent of the employee's total investment 
value is concentrated in organizations whose FDA-regulated business 
activities are a significant part of their business operations.
    (c) Notwithstanding the provisions of this part permitting employees 
to hold financial interests in organizations subject to FDA regulation, 
an employee holding such an interest shall not participate in an 
official matter whose outcome would have a direct and predictable effect 
on his financial interest. However, this prohibition is not applicable 
to:
    (1) Diversified mutual funds, which are exempted from 18 U.S.C. 208 
by Sec. 73.735-501(a) of this chapter.
    (2) Financial interests for which the Commissioner has in advance 
granted a written exception on the ground that the public interest would 
be served if a particular employee is allowed to participate in an 
official matter whose outcome may have a direct and predictable effect 
on the employee's financial interest. Such exemptions will be granted 
only in exceptional circumstances. Any determination to authorize such 
exceptions shall be made in accordance with 18 U.S.C. 208(b)(1) and 
documented for public inspection in accordance with Sec. 73a.735-504.



Sec. 73a.735-502  Employees in regulatory activities.

    (a) An employee in regulatory activities (``control activity'' 
employee) may hold financial interests in an FDA-regulated organization 
only if either of the following conditions are met:

[[Page 203]]

    (1) The regulated activities of the organization are an 
``insignificant'' part of its total business operations, or
    (2) Written approval for an individual exception is granted by the 
Commissioner in accordance with Sec. 73a.735-504; however, such 
approval will not be considered unless all of the following conditions 
are met:
    (i) Retention of the financial interest does not give rise to an 
actual conflict of interest;
    (ii) Acquisition of the financial interest occurred by marriage or 
inheritance, or the interest was held prior to an FDA reorganization, 
change in regulations, or similar circumstances beyond the control of 
the employee that resulted in the interest becoming prohibited;
    (iii) No direct relationship exists between the employee's official 
duties and the regulated activities of the organization in which the 
financial interest is held;
    (iv) The employee occupies a position below that of Bureau/Deputy 
Bureau Director (or Assistant/Deputy General Counsel, Food and Drug 
Division, Office of the General Counsel); and
    (v) The employee agrees to refrain from engaging, either directly or 
indirectly, in transactions that are designed to increase the value of 
his ``excepted'' financial interest.
    (b) To administer provisions within this part, the following 
interpretations apply:
    (1) A ``control activity'' employee (``control activity'' positions 
are identified in Appendix C to Part 73 of this chapter), means one who:
    (i) Occupies an FDA position classified at GS-11 or above, or PHS 
Commissioned Officer 0-3 or above, or equivalent;
    (ii) Occupies an FDA position below GS-11 with duties of a nature 
that the employee could in the discharge of his official duties and 
responsibilities cause an economic advantage for or impose a handicap on 
a non-Federal enterprise (includes investigators, inspectors, regulatory 
analysts);
    (iii) Occupies a position at GS-11 or above in the Office of the 
Assistant General Counsel, Food and Drug Division.
    (2) ``Insignificant'' (part of an organization's total business 
operations) means that the FDA-regulated products constitute no more 
than 10 percent of the organization's annual gross sales.



Sec. 73a.735-504  Exceptions.

    (a) A control activity employee who can satisfy all of the 
conditions specified in Sec. 73a.735-502(a)(2) may submit a request to 
retain a prohibited financial interest. Any such request must be 
submitted no later than 30 days after the event that results in the 
employee holding the prohibited financial interest. Such requests for 
exception should be forwarded in writing through supervisory channels to 
the Associate Commissioner for Administration for review by the FDA 
Conflict of Interest Review Board and subsequent recommendation to the 
Commissioner. All decisions on requests for exceptions shall be in 
writing and a copy furnished to the employee involved.
    (b) A memorandum of each approved exception shall be filed in the 
Public Records and Documents Center for public inspection. Such public 
disclosure shall be made within 10 days after the Commissioner's 
decision. The following is an example of the format of such memorandum 
(in a hypothetical employee situation):
    (1) Employee: Joe Doe.
    (2) Title: Research Chemist.
    (3) Grade/Salary: GS-14.
    (4) Organization: Bureau of Biologics, Food and Drug Administration, 
Bethesda, Md.
    (5) Date of employee's request for exception: ------.
    (6) Date of Commissioner's approval: ------.
    (7) Basis for exception: Employee owns financial interest in the ABC 
Foods Corporation, and permanent retention is normally prohibited under 
FDA/HHS conflict of interest regulations for such an employee. The 
employee, however, acquired this financial interest prior to his 
reassignment to FDA on ------, which was part of a major Department 
reorganization transferring certain functions from NIH to the FDA (i.e., 
FDA's Bureau of Biologics). At the time of acquisition

[[Page 204]]

and immediately prior to the reorganization, the employee's financial 
interest was allowable under Department regulations. The employee's 
official duties are fully confined to the matters under the jurisdiction 
of the Bureau of Biologics, and his official duties do not involve any 
contact with the food industry. The Commissioner has determined that an 
exception is warranted under the following criteria:
    (i) Acquisition occurred prior to Department reorganization;
    (ii) Financial interest retention will not give rise to an actual 
conflict of interest situation;
    (iii) There is no direct relationship between the employee's 
official duties and the regulated activities of ABC Foods;
    (iv) The employee occupies a position below that of Bureau or Deputy 
Bureau Director (or equivalent position in the Office of the 
Commissioner); and
    (v) The employee agrees to refrain from engaging in any direct or 
indirect transactions that are designed to increase the value/shares of 
the ``excepted'' ABC Foods interests.

This exception is considered equitable to the employee involved, and 
retention of the ABC Foods interest will not in any way impair the 
interests of the Government or of the public.
    (c) In interpreting the requirement of Sec. 73a.735-502(a)(2)(v), 
events not involving employee discretion (e.g., accepting dividends in 
the form of cash or additional shares) do not constitute transactions 
designed to increase the value/shares of an ``excepted'' financial 
interest. A transaction involving discretion, e.g., exercise of stock 
options, may be made only if proposed to the Associate Commissioner for 
Administration and approved by the Conflict of Interest Review Board as 
an amendment to the original exception. A memorandum recording such 
approval shall be made public in accordance with paragraph (b) of this 
section.
    (d) An employee may temporarily retain a prohibited financial 
interest pending review of a written request for an exception submitted 
in accordance with this section.
    (e) Except as provided in Sec. 73a.735-501(c), no employee may 
participate in an official matter whose outcome will have a direct and 
predictable effect on a financial interest held by him. This prohibition 
applies to official matters handled before and after approval of an 
exception under this section.

Subparts F-I [Reserved]



       Subpart J_Statements of Employment and Financial Interests



Sec. 73a.735-1004  Submission and review of statements.

    (a) Employees occupying control activity positions shall file Form 
HHS-473 ``Confidential Statement of Employment and Financial Interests'' 
with the Associate Commissioner for Administration within 30 days after 
entrance in this category and annually thereafter as of June 30, or such 
other dates as the Secretary, with the concurrence of the Civil Service 
Commission, may approve. Prior to the due date, the Associate 
Commissioner for Administration shall advise ``control activity'' 
employees of the annual filing requirement through normal administrative 
channels. The annual reporting requirement shall commence as of June 30, 
1977.
    (b) The Associate Commissioner for Administration (or his designee) 
shall serve as the principal reviewing official for Outside Activity 
Forms, HHS-520 and 521, and shall make final determinations on matters 
arising from activities reported on Form HHS-473.



PART 73b_DEBARMENT OR SUSPENSION OF FORMER EMPLOYEES--Table of Contents




Sec.
73b.1 Scope.
73b.2 Rules and regulations.
73b.3 Reports of violations.
73b.4 Proceedings.
73b.5 Hearings.

    Authority: 18 U.S.C. 207(j).

    Source: 47 FR 17505, Apr. 23, 1982, unless otherwised noted.



Sec. 73b.1  Scope.

    This part contains rules governing debarment or disqualification 
action against a former officer or employee of the Department, including 
former and

[[Page 205]]

retired officers of the commissioned corps of the Public Health Service, 
because of violation of the post-employment restrictions of the conflict 
of interest laws and regulations.



Sec. 73b.2  Rules and regulations.

    This part will be applied in conformance with the standards 
established by the Office of Government Ethics in its regulations, 5 CFR 
Part 737, and interpretations thereof. Former officers and employees of 
the Department may request advice and assistance in compliance with 
those regulations from the Assistant General Counsel, Business and 
Administrative Law Division, Department of Health and Human Services.



Sec. 73b.3  Reports of violations.

    (a) If an officer or employee of the Department has reason to 
believe that a former officer or employee of the Department has violated 
any provision of 18 U.S.C. 207 (a), (b) or (c) or if any such officer or 
employee receives information to that effect, he/she shall promptly make 
a written report thereof which shall be forwarded to the Inspector 
General. If any other person has information of such violations, he/she 
may make a report thereof to the Inspector General or to any officer or 
employee of the Department.
    (b) The Inspector General shall coordinate proceedings under this 
part with the Department of Justice in cases where it appears criminal 
prosecution is warranted.



Sec. 73b.4  Proceedings.

    (a) Upon a determination by the Assistant General Counsel, Business 
and Administrative Law Division, or his/her designee, after 
investigation by the Inspector General, that there is reasonable cause 
to believe that a former officer or employee, including a former special 
Government employee, of the Department of Health and Human Services 
(former departmental employee) has violated 18 US.C. 207 (a), (b) or 
(c), the Assistant General Counsel, or his/her designee, shall cause a 
copy of written charges of the violation(s) to be served upon such 
individual, either personally or by registered mail. The charges shall 
be accompanied by a notice to the former departmental employee to show 
cause within a specified time of not less than 30 days after receipt of 
the notice why he/she should not be prohibited from engaging in 
representational activities in relation to matters pending in the 
Department, as authorized by 18 U.S.C. 207(j), or subjected to other 
appropriate debarment or disqualification action under that statute. The 
notice to show cause shall include:
    (1) A statement of allegations, and their bases, sufficiently 
detailed to enable the former departmental employee to prepare an 
adequate defense;
    (2) Notification of the right to a hearing, and that failure to 
answer shall constitute a waiver of defense; and
    (3) An explanation of the method by which a hearing may be 
requested.
    (b) If a former departmental employee who submits an answer to the 
notice to show cause does not request a hearing or if the Assistant 
General Counsel does not receive an answer within the time prescribed by 
the notice, the Assistant General Counsel shall forward the record, 
including the report(s) of investigation, to the Assistant Secretary for 
Personnel Administration (Assistant Secretary). In the case of a failure 
to answer, such failure shall constitute a waiver of defense.
    (c) Upon receipt of a former departmental employee's request for a 
hearing, the Assistant General Counsel shall notify him/her of the time 
and place thereof, giving due regard both to such person's need for an 
adequate period to prepare a suitable defense and an expeditious 
resolution of allegations that may be damaging to his or her reputation.
    (d) The presiding officer at the hearing and any related proceedings 
shall be a federal administrative law judge. He/she shall insure that 
the former departmental employee has the following rights:
    (1) To self-representation or representation by counsel,
    (2) To introduce and examine witnesses and submit physical evidence,
    (3) To confront and cross-examine adverse witnesses,
    (4) To present oral argument, and
    (5) To a transcript or recording of the proceedings, upon request.

[[Page 206]]

    (e) The Assistant General Counsel shall designate one or more 
officers or employees of the Department to present the evidence against 
the former departmental employee and perform other functions incident to 
the proceedings.
    (f) A decision adverse to the former departmental employee must be 
sustained by substantial evidence that he/she violated 18 U.S.C. 207 
(a), (b) or (c). If a judgment of conviction has been entered by a 
Federal district court against the former departmental employee for 
violation of 18 U.S.C. 207 (a), (b) or (c), regardless of whether the 
judgment is based upon a verdict or a plea of guilty, such judgment of 
conviction shall be conclusive evidence of a violation of 18 U.S.C. 207 
(a), (b) or (c), unless and until the judgment is vacated or reversed on 
appeal.
    (g) The administrative law judge shall issue an initial decision 
based exclusively on the transcript of testimony and exhibits, together 
with all papers and requests filed in the proceeding, and shall set 
forth in the decision findings and conclusions, supported by reasons, on 
the material issues of fact and law presented on the record.
    (h) Within 30 days after issuance of the initial decision, either 
party may appeal in writing to the Assistant Secretary who in that event 
shall issue the final decision based on the record of the proceedings or 
those portions thereof cited by the parties to limit the issues. If the 
final decision modifies or reverses the initial decision, the Assistant 
Secretary shall specify the findings of fact and conclusions of law that 
vary from those of the presiding officer.
    (i) If a former departmental employee fails to appeal from an 
adverse initial decision within the prescribed period of time, the 
administrative law judge shall forward the record of the proceedings to 
the Assistant Secretary.
    (j) In the case of a former departmental employee who filed an 
answer to the notice to show cause but did not request a hearing, the 
Assistant Secretary shall make the final decision on the record 
submitted to him by the Assistant General Counsel pursuant to paragraph 
(b) of this section.
    (k) In a case where:
    (1) The defense has been waived,
    (2) The former departmental employee has failed to appeal from an 
adverse initial decision, or
    (3) The Assistant Secretary has issued a final decision that the 
former departmental employee violated 18 U.S.C. 207 (a), (b) or (c),

The Assistant Secretary may issue an order:
    (i) Prohibiting the former departmental employee from making, on 
behalf of any other person (except the United States), any informal or 
formal appearance before, or, with the intent to influence, any oral or 
written communication to, the Department on a pending matter of business 
for a period not to exceed five years, or
    (ii) Prescribing other appropriate debarment or disqualification 
action, such as limiting the action to a particular organization or 
organizations within the Department.
    (l) An order issued under either paragraph (k)(i) or (k)(ii) of this 
section shall be supplemented by a directive to officers and employees 
of the Department not to engage in conduct in relation to the former 
departmental employee that would contravene such order.



Sec. 73b.5  Hearings.

    (a) Hearings shall be stenographically recorded and transcribed and 
the testimony of witnesses shall be taken under oath or affirmation. 
Hearings will be closed unless an open hearing is requested by the 
respondent, except that if classified information or protected 
information of third parties is likely to be adduced at the hearing, it 
will remain closed. If either party to the proceeding fails to appear at 
the hearing, after due notice thereof has been sent to him/her, he/she 
shall be deemed to have waived the right to a hearing and the 
administrative law judge may make a decision on the basis of the record 
before him/her at that time.
    (b) The rules of evidence prevailing in courts of law and equity are 
not controlling in hearings under this part. However, the administrative 
law judge

[[Page 207]]

shall exclude evidence which is irrelevant, immaterial, or unduly 
repetitious.
    (c) Depositions for use at a hearing may, with the consent of the 
parties in writing or the written approval of the administrative law 
judge be taken by either the Assistant General Counsel or the respondent 
or their duly authorized representatives. Depositions may be taken upon 
oral or written interrogatories. There shall be at least 10 days written 
notice to the other party. The requirement of a 10-day written notice 
may be waived by the parties in writing. When a deposition is taken upon 
written interrogatories, any cross-examination shall be upon written 
interrogatories. Copies of such written interrogatories shall be served 
upon the other party with the notice, and copies of any written cross-
interrogation shall be mailed or delivered to the opposing party at 
least 5 days before the date of taking the depositions, unless the 
parties mutually agree otherwise. Expenses in the reporting of 
depositions shall be borne by the party at whose instance the deposition 
is taken.



    PART 74_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND SUBAWARDS TO 
INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NONPROFIT ORGANIZATIONS, 
AND COMMERCIAL ORGANIZATIONS--Table of Contents




                            Subpart A_General

Sec.
74.1 Purpose and applicability.
74.2 Definitions.
74.3 Effect on other issuances.
74.4 Deviations.
74.5 Subawards.

                    Subpart B_Pre-Award Requirements

74.10 Purpose.
74.11 Pre-award policies.
74.12 Forms for applying for HHS financial assistance.
74.13 Debarment and suspension.
74.14 Special award conditions.
74.15 Metric system of measurement.
74.16 Resource Conservation and Recovery Act (RCRA, Section 6002 of Pub. 
          L. No. 94-580 (Codified at 42 U.S.C. 6962)).
74.17 Certifications and representations.
74.18 Participation by faith-based organizations.

                    Subpart C_Post-Award Requirements

                    Financial and Program Management

74.20 Purpose of financial and program management.
74.21 Standards for financial management systems.
74.22 Payment.
74.23 Cost sharing or matching.
74.24 Program income.
74.25 Revision of budget and program plans.
74.26 Non-Federal audits.
74.27 Allowable costs.
74.28 Period of availability of funds.

                           Property Standards

74.30 Purpose of property standards.
74.31 Insurance coverage.
74.32 Real property.
74.33 Federally-owned and exempt property.
74.34 Equipment.
74.35 Supplies.
74.36 Intangible property.
74.37 Property trust relationship.

                          Procurement Standards

74.40 Purpose of procurement standards.
74.41 Recipient responsibilities.
74.42 Codes of conduct.
74.43 Competition.
74.44 Procurement procedures.
74.45 Cost and price analysis.
74.46 Procurement records.
74.47 Contract administration.
74.48 Contract provisions.

                           Reports and Records

74.50 Purpose of reports and records.
74.51 Monitoring and reporting program performance.
74.52 Financial reporting.
74.53 Retention and access requirements for records.

                       Termination and Enforcement

74.60 Purpose of termination and enforcement.
74.61 Termination.
74.62 Enforcement.

                 Subpart D_After-the-Award Requirements

74.70 Purpose.
74.71 Closeout procedures.
74.72 Subsequent adjustments and continuing responsibilities.
74.73 Collection of amounts due.

   Subpart E_Special Provisions for Awards to Commercial Organizations

74.80 Scope of subpart.
74.81 Prohibition against profit.

[[Page 208]]

74.82 Program income.
74.83 Effect on intangible property.

                           Subpart F_Disputes

74.90 Final decisions in disputes.
74.91 Alternative dispute resolution.

Appendix A to Part 74--Contract Provisions
Appendixes B-D to Part 74 [Reserved]
Appendix E to Part 74--Principles for Determining Costs Applicable to 
          Research and Development Under Grants and Contracts With 
          Hospitals
Appendixes F-H to Part 74 [Reserved]

    Authority: 5 U.S.C. 301.



                            Subpart A_General

    Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.



Sec. 74.1  Purpose and applicability.

    (a) Unless inconsistent with statutory requirements, this part 
establishes uniform administrative requirements governing:
    (1) Department of Health and Human Services' (HHS) grants and 
agreements awarded to institutions of higher education, hospitals, other 
nonprofit organizations and only to commercial organizations in 
instances other than those involving procedures to make data available 
under the Freedom of Information Act provision set forth in Sec. 
74.36(d)(1).
    (2) Subgrants or other subawards awarded by recipients of HHS grants 
and agreements to institutions of higher education, hospitals, other 
nonprofit organizations and commercial organizations, including 
subgrants or other subawards awarded under HHS grants and agreements 
administered by State, local and Indian Tribal governments; and
    (b) Nonprofit organizations that implement HHS programs for the 
States are also subject to state requirements.
    (c) HHS shall not impose additional or inconsistent requirements 
except as provided in Sec. Sec. 74.4 and 74.14, or unless specifically 
required by Federal statute or executive order.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, 11747, Mar. 22, 
1996; 65 FR 14418, Mar. 16, 2000; 68 FR 52844, Sept. 8, 2003]



Sec. 74.2  Definitions.

    Accrued expenditures mean 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.
    Accrued income means the sum of: (1) Earnings during a given period 
from (i) services performed by the recipient, and (ii) 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.
    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.
    Advance means a payment made by Treasury check or other appropriate 
payment mechanism to a recipient upon its request either before 
outlaysare made by the recipient or through the use of predetermined 
payment schedules.
    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 Federal procurement laws and regulations.
    Cash contributions mean the recipient's cash outlay, including the 
outlay

[[Page 209]]

of money contributed to the recipient by third parties.
    Closeout means the process by which the HHS awarding agency 
determines that all applicable administrative actions and all required 
work of the award have been completed by the recipient and HHS.
    Contract means a procurement contract under an award or subaward, 
and a procurement subcontract under a recipient's or subrecipient's 
contract.
    Cost sharing or matching means that portion of project or program 
costs not borne by the Federal Government.
    Current accounting period means, with respect to Sec. 74.27(b), the 
period of time the recipient chooses for purposes of financial 
statements and audits.
    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 HHS awarding agency sponsorship ends.
    Departmental Appeals Board means the independent office established 
in the Office of the Secretary with delegated authority from the 
Secretary to review and decide certain disputes between recipients of 
HHS funds and HHS awarding agencies under 45 CFR part 16 and to perform 
other review, adjudication and mediation services as assigned.
    Disallowed costs mean those charges to an award that the HHS 
awarding agency determines to be unallowable, in accordance with the 
applicable Federal cost principles or other terms and conditions 
contained in the award.
    Discretionary award means an award made by an HHS awarding agency in 
keeping with specific statutory authority which enables the agency to 
exercise judgment (``discretion'') in selecting the applicant/recipient 
organization through a competitive award process.
    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.
    Excess property means property under the control of any HHS awarding 
agency that, as determined by the head of the awarding agency or his/her 
delegate, is no longer required for the agency's needs or the discharge 
of its responsibilities.
    Exempt property means tangible personal property acquired in whole 
or in part with Federal funds, where the HHS awarding agency 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 nonprofit institution of higher education 
or nonprofit organization whose principal purpose is conducting 
scientific research.
    Federal funds authorized mean the total amount of Federal funds 
obligated by the HHS awarding agency for use by the recipient. This 
amount may include any authorized carryover of unobligated funds from 
prior funding periods when permitted by the HHS awarding agency's 
implementing instructions or authorized by the terms and conditions of 
the award.
    Federal share of real property, equipment, or supplies means that 
percentage of the property's or supplies' acquisition costs and any 
improvement expenditures paid with Federal funds. This will be the same 
percentage as the Federal share of the total costs under the award for 
the funding period in which the property was acquired (excluding the 
value of third party in-kind contributions).
    Federally recognized Indian Tribal government means the governing 
body 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 certified by the Secretary of the 
Interior as eligible for the special programs and services provided by 
him through the Bureau of Indian Affairs.
    Funding period means the period of time when Federal funding is 
available for obligation by the recipient.
    Government means a State or local government or a federally 
recognized Indian tribal government.

[[Page 210]]

    HHS means the U.S. Department of Health and Human Services.
    HHS awarding agency means any organization component of HHS that is 
authorized to make and administer awards.
    Intangible property and debt instruments mean, but are not limited 
to, trademarks, copyrights, patents and 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.
    Local government means a local unit of government, including 
specifically a county, municipality, city, town, township, local public 
authority, school district, special district, intra-state district, 
council of governments (whether or not incorporated as a nonprofit 
corporation under State law), any other regional or interstate entity, 
or any agency or instrumentality of local government.
    Obligations mean 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.
    OGAM means the Office of Grants and Acquisition Management, which is 
an organizational component within the Office of the Secretary, HHS, and 
reports to the Assistant Secretary for Management and Budget.
    OMB means the U.S. Office of Management and Budget.
    Outlays or 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 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.
    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.
    Prior approval means written approval by an authorized HHS official 
evidencing prior consent.
    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. 74.24 (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 
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. Furthermore, program income does not 
include taxes, special assessments, levies, and fines raised by 
governmental recipients.
    Project costs means all allowable costs, as set forth in the 
applicable Federal cost principles (see Sec. 74.27), 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.
    Project period means the period established in the award document 
during which HHS awarding agency sponsorship begins and ends.
    Property means, unless otherwise stated, real property, equipment, 
intangible property and debt instruments.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes movable machinery and equipment.

[[Page 211]]

    Recipient means an organization receiving financial assistance 
directly from an HHS awarding agency to carry out a project or program. 
The term includes public and private institutions of higher education, 
public and private hospitals, commercial organizations, and other quasi-
public and private nonprofit organizations such as, but not limited to, 
community action agencies, research institutes, educational 
associations, and health centers. The term may include 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 HHS awarding 
agency. 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. 
For entitlement programs listed at 45 CFR 92.4(a)(3), (a)(7), and (a)(8) 
``recipient'' means the government to which an HHS awarding agency 
awards funds and which is accountable for the use of the funds provided. 
The recipient in this case is the entire legal entity even if only a 
particular component of the entity is designated in the award document.
    Research and development means all research activities, both basic 
and applied, and all development activities that are supported at 
universities, colleges, hospitals, other nonprofit institutions, and 
commercial organizations. ``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.
    Small awards means a grant or cooperative agreement not exceeding 
the simplified acquisition threshold fixed at 41 U.S.C. 403(11) 
(currently $100,000).
    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.
    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 this section.
    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 HHS awarding 
agency.
    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 Business Firms Under Government 
Grants, Contracts, and Cooperative Agreements.''
    Suspension means an action by the HHS awarding agency that 
temporarily withdraws the agency's financial assistance sponsorship 
under an award, pending corrective action by the recipient or pending a 
decision to terminate the award.
    Suspension of an award is a separate action from suspension under 
HHS regulations (45 CFR part 76) implementing E.O.s 12549 and 12689, 
``Debarment and Suspension.''

[[Page 212]]

    Termination means the cancellation of HHS awarding agency 
sponsorship, in whole or in part, under an agreement at any time prior 
to the date of completion. For the entitlement programs listed at 45 CFR 
92.4 (a)(3), (a)(7), and (a)(8), ``termination'' shall have that meaning 
assigned at 45 CFR 92.3.
    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.
    Unliquidated obligations, for financial reports prepared on a cash 
basis, mean the amount of obligations incurred by the recipient that has 
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.
    Unobligated balance means the portion of the funds authorized by the 
HHS awarding agency that has not been obligated by the recipient and is 
determined by deducting the cumulative obligations from the cumulative 
funds authorized.
    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.
    Working capital advance means a procedure whereby funds are advanced 
to the recipient to cover its estimated disbursement needs for a given 
initial period.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996; 
62 FR 41878, Aug. 4, 1997]



Sec. 74.3  Effect on other issuances.

    This part supersedes all administrative requirements of codified 
program regulations, program manuals, handbooks and other nonregulatory 
materials which are inconsistent with the requirements of this part, 
except to the extent they are required by Federal statute, or authorized 
in accordance with the deviations provision in Sec. 74.4.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



Sec. 74.4  Deviations.

    (a) After consultation with OMB, the HHS OGAM may grant exceptions 
to HHS awarding agencies for classes of awards 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. HHS awarding agencies may apply more restrictive 
requirements to a class of awards or recipients when approved by the 
OGAM, after consultation with the OMB. HHS awarding agencies may apply 
less restrictive requirements without approval by the OGAM when making 
small awards except for those requirements which are statutory. 
Exceptions on a case-by-case basis may also be made by HHS awarding 
agencies without seeking prior approval from the OGAM. OGAM will 
maintain a record of all requests for exceptions from the provisions of 
this part that have been approved for classes of awards or recipients.
    (b) As a matter of Departmental policy, requests for individual case 
deviations will be considered favorably by HHS and its awarding agencies 
whenever the deviation will facilitate comprehensive or integrated 
service delivery, or multiple-source consolidated awards, unless the 
deviation would impair the integrity of the program.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



Sec. 74.5  Subawards.

    (a) Unless inconsistent with statutory requirements, this part 
(except for Sec. 74.12 and the forms prescribed in Sec. 74.22) shall 
apply to--
    (1) Except for subawards under block grants (45 CFR part 96), all 
subawards received by institutions of higher education, hospitals, other 
nonprofit organizations, and commercial organizations from any recipient 
of an HHS award, including any subawards received from States, local 
governments,

[[Page 213]]

and Indian tribal governments covered by 45 CFR part 92; and
    (2) All subawards received from States by any entity, including a 
government entity, under the entitlement programs identified at 45 CFR 
part 92, Sec. 92.4 (a), (a)(7), and (a)(8), except that Sec. Sec. 
74.12 and 74.25 of this part shall not apply.
    (b) Except as provided in paragraph (a)(2) of this section, when 
State, local, and Indian Tribal government recipients of HHS awards make 
subawards to a government entity, they shall apply the regulations at 45 
CFR part 92, ``Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments,'' or State rules, 
whichever apply, to such awards.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



                    Subpart B_Pre-Award Requirements

    Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.



Sec. 74.10  Purpose.

    Sections 74.11 through 74.17 prescribe forms and instructions and 
other pre-award matters to be used in applying for HHS awards.



Sec. 74.11  Pre-award policies.

    (a) Use of Grants and Cooperative Agreements, and Contracts. 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 HHS awarding agency.
    (b) HHS awarding agencies shall notify the public of funding 
priorities for discretionary grant programs, unless funding priorities 
are established by Federal statute.



Sec. 74.12  Forms for applying for HHS financial assistance.

    (a) HHS awarding agencies 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 in place of or as 
a supplement to the Standard Form 424 (SF-424) series. However, HHS 
awarding agencies should use the SF-424 series and its program narrative 
whenever possible.
    (b) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by the HHS awarding agency. Applicants shall 
submit the original and two copies of any applications unless additional 
copies are required pursuant to 5 CFR part 1320.
    (c) For Federal programs covered by E.O. 12372, as amended by E.O. 
12416, ``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 HHS awarding 
agency 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. (See also 45 CFR part 100.)
    (d) HHS awarding agencies that do not use the SF-424 form will 
indicate on the application form they prescribe whether the application 
is subject to review by the State under E.O. 12372.
    (e) This section does not apply to applications for subawards.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



Sec. 74.13  Debarment and suspension.

    Recipients are subject to the nonprocurement debarment and 
suspension common rule implementing E.O.s 12549 and 12689, ``Debarment 
and Suspension,'' 45 CFR part 76. This common

[[Page 214]]

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. 74.14  Special award conditions.

    (a) The HHS awarding agency may impose additional requirements as 
needed, without regard to Sec. 74.4, above, if an applicant or 
recipient:
    (1) Has a history of poor performance;
    (2) Is not financially stable;
    (3) Has a management system that does not meet the standards 
prescribed in this part;
    (4) Has not conformed to the terms and conditions of a previous 
award; or
    (5) Is not otherwise responsible.
    (b) When it imposes any additional requirements, the HHS awarding 
agency must notify the recipient in writing as to the following:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the corrective actions needed;
    (4) The time allowed for completing the corrective actions; and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (c) The HHS awarding agency will promptly remove any additional 
requirements once the conditions that prompted them have been corrected.



Sec. 74.15  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. HHS awarding agencies will follow the provisions of E.O. 
12770, ``Metric Usage in Federal Government Programs.''



Sec. 74.16  Resource Conservation and Recovery Act (RCRA, Section 6002 
of Pub. L. No. 94-580 (Codified at 42 U.S.C. 6962)).

    Under the Act, any State agency or agency of a political subdivision 
of a State which is using appropriated Federal funds must comply with 
section 6002 of the RCRA. This section 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, and other nonprofit organizations that receive direct HHS 
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. 74.17  Certifications and representations.

    Unless prohibited by statute or codified regulation, each HHS 
awarding agency is authorized and encouraged to allow recipients to 
submit certifications and representations required by statute, executive 
order, or regulation on an annual basis, if the recipients have ongoing 
and continuing relationships with the HHS awarding agency. Annual 
certifications and representations shall be signed by the responsible 
official(s) with the authority to ensure recipients' compliance with the 
pertinent requirements.
    (a) The funds provided under this part shall be administered in 
compliance with the standards set forth in part 87 (Equal Treatment for 
Faith-based Organizations) of this chapter.
    (b) [Reserved]

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996; 
69 FR 42592, July 16, 2004]



Sec. 74.18  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 87

[[Page 215]]

(Equal Treatment for Faith-based Organizations) of this chapter.

[69 FR 42592, July 16, 2004]



                    Subpart C_Post-Award Requirements

    Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.

                    Financial and Program Management



Sec. 74.20  Purpose of financial and program management.

    Sections 74.21 through 74.28 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, making audits, determining 
allowability of cost, and establishing fund availability.



Sec. 74.21  Standards for financial management systems.

    (a) Recipients shall relate financial data to performance data and 
develop unit cost information whenever practical. For awards that 
support research, unit cost information is usually not appropriate.
    (b) Recipients' financial management systems shall provide for the 
following:
    (1) Accurate, current and complete disclosure of the financial 
results of each HHS-sponsored project or program in accordance with the 
reporting requirements set forth in Sec. 74.52. If the HHS awarding 
agency 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 their reports on the basis 
of an analysis of the documentation on hand.
    (2) Records that identify adequately the source and application of 
funds for HHS-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. (Unit cost data are usually not 
appropriate for awards that support research.)
    (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) and its 
implementing regulations, ``Rules and Procedures for Funds Transfers,'' 
(31 CFR part 205) apply, 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 205.9(f).
    (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 Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the HHS awarding agency, at its 
discretion, 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 HHS awarding agency may require adequate fidelity bond 
coverage where the recipient lacks sufficient coverage to protect the 
Federal Government's interest.
    (e) Where bonds are required in the situations described in Sec. 
74.21 (c) and (d), 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.''

[[Page 216]]



Sec. 74.22  Payment.

    (a) Unless inconsistent with statutory program purposes, payment 
methods shall minimize the time elapsing between the transfer of funds 
from the U.S. 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 the CMIA default procedures codified 
at 31 CFR 205.9, to the extent that either applies.
    (b)(1) Recipients will be paid in advance, provided they maintain or 
demonstrate the willingness to maintain:
    (i) Written procedures that minimize the time elapsing between the 
transfer of funds and disbursement by the recipient; and
    (ii) Financial management systems that meet the standards for fund 
control and accountability as established in Sec. 74.21.
    (2) Unless inconsistent with statutory program purposes, cash 
advances 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 cash advances 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 will be consolidated to cover 
anticipated cash needs for all awards made by all HHS awarding agencies 
to the recipient.
    (1) Advance payment mechanisms include electronic funds transfer, 
with Treasury checks available on an exception basis.
    (2) Advance payment mechanisms are subject to 31 CFR part 205.
    (3) Recipients may submit requests for advances and reimbursements 
at least monthly when electronic fund transfers are not used.
    (d) Requests for Treasury check advance payment shall be submitted 
on PMS-270, ``Request for Advance or Reimbursement,'' or other forms as 
may be authorized by HHS. This form is not to be used when Treasury 
check advance payments are made to the recipient automatically through 
the use of a predetermined payment schedule or if precluded by special 
HHS-wide instructions for electronic funds transfer.
    (e) Reimbursement is the preferred method when the requirements in 
paragraph (b) of this section cannot be met. The HHS awarding agency 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 HHS assistance constitutes a 
minor portion of the project.
    (1) When the reimbursement method is used, HHS will make payment 
within 30 days after receipt of the billing, unless the billing is 
improper.
    (2) Recipients may submit a 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 HHS awarding agency has determined that reimbursement is not 
feasible because the recipient lacks sufficient working capital, HHS may 
provide cash on a working capital advance basis. Under this procedure, 
HHS advances cash to the recipient to cover its estimated disbursement 
needs for an initial period generally geared to the recipient's 
disbursing cycle. Thereafter, HHS reimburses the recipient for its 
actual cash disbursements. The working capital advance method of payment 
will not be used for recipients unwilling or unable to provide timely 
advances to their subrecipient to meet the subrecipient's actual cash 
disbursements.
    (g) Unless inconsistent with statutory program purposes, to the 
extent available, recipients shall disburse funds available from 
repayments to and interest earned on a revolving fund, program income, 
rebates, refunds, contract settlements, audit recoveries and interest 
earned on such funds before requesting additional cash payments.
    (h) Unless otherwise required by statute, the HHS awarding agency 
will not

[[Page 217]]

withhold payments for proper charges made by recipients at any time 
during the project period unless paragraph (h) (1) or (2) of this 
section applies:
    (1) A recipient has failed to comply with the project objectives, 
the terms and conditions of the award, or HHS awarding agency reporting 
requirements.
    (2) The recipient or subrecipient is delinquent in a debt to the 
United States. Under such conditions, the HHS awarding agency 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. 
(See 45 CFR part 30).
    (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, HHS will 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 are 
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 one of the following conditions 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 (see 31 CFR part 205), interest earned on Federal advances 
deposited in interest bearing accounts shall be remitted annually to the 
Department of Health and Human Services, Payment Management System, P.O. 
Box 6021, Rockville, MD 20852. Recipients with Electronic Funds Transfer 
capability should use an electronic medium such as the FEDWIRE Deposit 
System. 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 HHS awarding agency, it 
waives its right to recover the interest under CMIA. (See Sec. 
74.25(d)).
    (m) PMS-270, Request for Advance or Reimbursement. Recipients shall 
use the PMS-270 to request advances or reimbursement for all programs 
when electronic funds transfer or predetermined advance methods are not 
used. HHS shall not require recipients to submit more than an original 
and two copies.
    (n) Recipients and subrecipients are not required to use forms PMS-
270 and 272 in connection with subaward payments.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



Sec. 74.23  Cost sharing or matching.

    (a) To be accepted, all cost sharing or matching contributions, 
including cash and third party in-kind, shall 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; and

[[Page 218]]

    (7) Conform to other provisions of this part, as applicable.
    (b) Unrecovered indirect costs may be included as part of cost 
sharing or matching.
    (c) Values for recipient contributions of services and property 
shall be established in accordance with the applicable cost principles. 
If the HHS awarding agency 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:
    (1) The certified value of the remaining life of the property 
recorded in the recipient's accounting records at the time of donation; 
or
    (2) The current fair market value. However, when there is sufficient 
justification, the HHS awarding agency 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's 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, fringe benefits consistent with those paid 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 property, 
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 HHS awarding 
agency 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.
    (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.
    (i) The following requirements pertain to the recipient's supporting 
records for in-kind contributions from third parties.

[[Page 219]]

    (1) Volunteer services shall be documented and, to the extent 
feasible, supported by the same methods used by the recipient for its 
own employees, including time records.
    (2) The basis for determining the valuation for personal service, 
material, equipment, buildings and land shall be documented.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



Sec. 74.24  Program income.

    (a) The standards set forth in this section shall be used to account 
for program income related to projects financed in whole or in part with 
Federal funds.
    (b) Except as provided below in paragraph (h) of this section, 
program income earned during the project period shall be retained by the 
recipient and, in accordance with the terms and conditions of the award, 
shall be used in one or more of the following ways:
    (1) Added to funds committed to the project or program, and used to 
further eligible project or program objectives;
    (2) Used to finance the non-Federal share of the project or program; 
or
    (3) Deducted from the total project or program allowable cost in 
determining the net allowable costs on which the Federal share of costs 
is based.
    (c) When the HHS awarding 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 HHS awarding agency does not specify in 
the terms and conditions of the award how program income is to be used, 
paragraph (b)(3) of this section shall apply automatically to all 
projects or programs except research. For awards that support 
performance of research work, paragraph (b)(1) of this section shall 
apply automatically unless:
    (1) The HHS awarding agency indicates in the terms and conditions of 
the award another alternative; or
    (2) The recipient is subject to special award conditions under Sec. 
74.14; or
    (3) The recipient is a commercial organization (see Sec. 74.82).
    (e) Unless 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 
Sec. Sec. 74.30 through 74.37, below).
    (h) The Patent and Trademark Laws Amendments, 35 U.S.C. section 200-
212, apply to inventions made under an award for performance of 
experimental, developmental, or research work. Unless the terms and 
conditions for the award provide otherwise, recipients shall have no 
obligation to HHS with respect to program income earned from license 
fees and royalties for copyrighted material, patents, patent 
applications, trademarks, and inventions made under an award. However, 
no scholarship, fellowship, training grant, or other funding agreement 
made primarily to a recipient for educational purposes will contain any 
provision giving the Federal agency rights to inventions made by the 
recipient.



Sec. 74.25  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 
sum of the Federal and non-Federal shares, or only the Federal share, 
depending upon HHS awarding agency 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. Except as provided at 
Sec. Sec. 74.4, 74.14, and this section, HHS awarding agencies may not 
impose other prior approval requirements for specific items.
    (c) For nonconstruction awards, recipients shall obtain prior 
approvals from the HHS awarding agency for one

[[Page 220]]

or more of the following program or budget related reasons.
    (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 the project director or principal investigator or 
other key persons 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 inclusion, unless waived by the HHS awarding agency, 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 Nonprofit Organizations;'' or appendix E of this 
part, ``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.
    (6) The transfer of funds allotted for training allowances (direct 
payment to trainees) to other categories of expense.
    (7) Unless described in the application and funded in the approved 
award, 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.
    (8) The inclusion of research patient care costs in research awards 
made for the performance of research work.
    (d) Except for requirements listed in paragraphs (c)(1) and (c)(4) 
of this section, the HHS awarding agency is authorized, at its option, 
to waive cost-related and administrative prior written approvals 
required by this part and its appendixes. Additional waivers may be 
granted authorizing recipients to do any one or more of the following:
    (1) Incur pre-award costs up to 90 calendar days prior to award, or 
more than 90 calendar days with the prior approval of the HHS awarding 
agency. However, all pre-award costs are incurred at the recipient's 
risk: the HHS awarding agency is under no obligation to reimburse such 
costs if for any reason the applicant does not receive an award or if 
the award to the recipient 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 conditions identified 
at paragraphs (d)(2)(i), (ii), and (iii) of this section apply. For one-
time extensions, the recipient must notify the HHS awarding agency in 
writing, with the supporting reasons and revised expiration date, at 
least 10 days before the date specified in the award. This one-time 
extension may not be exercised either by recipients or HHS awarding 
agencies merely for the purpose of using unobligated balances. Such 
extensions are not permitted where:
    (i) The terms and conditions of award prohibit the extension; or
    (ii) The extension requires additional Federal funds; or
    (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 performance of research work, unless the 
HHS awarding agency provides otherwise in the award, or the award is 
subject to Sec. 74.14 or subpart E of this Part, the prior approval 
requirements described in paragraphs (d) (1)-(3) of this section are 
automatically waived (i.e., recipients need not obtain such prior 
approvals). However, extension of award expiration dates must be 
approved by the HHS awarding agency if one of the conditions in 
paragraph (d)(2) of this section applies.
    (e) The HHS awarding agencies may not permit any budget changes in a 
recipient's award that would cause any Federal appropriation to be used 
for purposes other then those consistent with the original purpose of 
the authorization and appropriation under which the award was funded.
    (f) For construction awards, recipients shall obtain prior written 
approval promptly from the HHS awarding agency for budget revisions 
whenever:

[[Page 221]]

    (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; or
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements apply in keeping with the applicable 
cost principles listed in Sec. 74.27.
    (g) When an HHS awarding agency makes an award that provides support 
for both construction and nonconstruction work, it may require the 
recipient to obtain prior approval before making any fund or budget 
transfers between the two types of work supported.
    (h) For both construction and nonconstruction awards, recipients 
shall notify the HHS awarding agency 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.
    (i) Within 30 calendar days from the date of receipt of the request 
for budget revisions, HHS awarding agencies shall notify the recipient 
whether its requested budget revisions have been approved. If the 
requested revision is still under consideration at the end of 30 
calendar days, the HHS awarding agency must inform the recipient in 
writing of the date when the recipient may expect a decision.
    (j) When requesting approval for budget changes, recipients shall 
make their requests in writing.
    (k) All approvals granted in keeping with the provisions of this 
section shall not be valid unless they are in writing, and signed by at 
least one of the following HHS officials:
    (1) The Head of the HHS Operating or Staff Division that made the 
award or subordinate official with proper delegated authority from the 
Head, including the Head of the Regional Office of the HHS Operating or 
Staff Division that made the award; or
    (2) The responsible Grants Officer of the HHS Operating or Staff 
Division that made the award or an individual duly authorized by the 
Grants Officer.
    (l) No other prior approval requirements for specific items may be 
imposed unless a class deviation has been approved by OMB.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]



Sec. 74.26  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 of 
the Federal awarding agencies.
    (d)(1) Recipients and subrecipients that are commercial 
organizations (including for-profit hospitals) have two options 
regarding audits:
    (i) A financial related audit (as defined in the Government Auditing 
Standards, GPO Stock 020-000-00-265-4) of a particular award in 
accordance with Government Auditing Standards, in those cases where the 
recipient receives awards under only one HHS program; or, if awards are 
received under multiple HHS programs, a financial related audit of all 
HHS awards in accordance with Government Auditing Standards; or
    (ii) An audit that meets the requirements contained in OMB Circular 
A-133.
    (2) Commercial organizations that receive annual HHS awards totaling 
less than OMB Circular A-133's audit requirement threshold are exempt 
from requirements for a non-Federal audit for that year, but records 
must be

[[Page 222]]

available for review by appropriate officials of Federal agencies.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996; 
61 FR 15564, Apr. 8, 1996; 62 FR 41878, Aug. 4, 1997; 62 FR 45939, 
45945, Aug. 29, 1997]



Sec. 74.27  Allowable costs.

    (a) For each kind of recipient, there is a particular set of Federal 
principles that applies in 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 and Local Governments.'' The 
allowability of costs incurred by nonprofit organizations (except for 
those listed in Attachment C of Circular A-122) is determined in 
accordance with the provisions of OMB Circular A-122, ``Cost Principles 
for Nonprofit Organizations'' and paragraph (b) of this section. 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 this part, ``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 nonprofit 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, except that 
independent research and development costs are unallowable.
    (b) OMB Circular A-122 does not cover the treatment of bid and 
proposal costs or independent research and development costs. The 
following rules apply to these costs for nonprofit organizations subject 
to that Circular.
    (1) Bid and proposal costs. Bid and proposal costs are the immediate 
costs of preparing bids, proposals, and applications for Federal and 
non-Federal awards, contracts, and other agreements, including the 
development of scientific, cost, and other data needed to support the 
bids, proposals, and applications. Bid and proposal costs of the current 
accounting period are allowable as indirect costs. Bid and proposal 
costs of past accounting periods are unallowable in the current period. 
However, if the recipient's established practice is to treat these costs 
by some other method, they may be accepted if they are found to be 
reasonable and equitable. Bid and proposal costs do not include 
independent research and development costs covered by paragraph (b)(2) 
of this section, or pre-award costs covered by OMB Circular A-122, 
Attachment B, paragraph 33 and Sec. 74.25(d)(1).
    (2) Independent Research and Development costs. Independent research 
and development is research and development which is conducted by an 
organization, and which is not sponsored by Federal or non-Federal 
awards, contracts, or other agreements. Independent research and 
development shall be allocated its proportionate share of indirect costs 
on the same basis as the allocation of indirect costs to sponsored 
research and development. The cost of independent research and 
development, including their proportionate share of indirect costs, are 
unallowable.



Sec. 74.28  Period of availability of funds.

    Where a funding period is specified, a recipient may charge to the 
award only allowable costs resulting from obligations incurred during 
the funding period and any pre-award costs authorized by the HHS 
awarding agency pursuant to Sec. 74.25(d)(1).

                           Property Standards



Sec. 74.30  Purpose of property standards.

    Sections 74.31 through 74.37 set forth uniform standards governing 
management and disposition of property furnished by HHS or whose cost 
was charged directly to a project supported by an HHS award. The HHS 
awarding agency may not impose additional requirements, unless 
specifically required to do so by Federal statute. The recipient may use 
its own property management standards and procedures

[[Page 223]]

provided they meet the provisions of Sec. Sec. 74.31 through 74.37.



Sec. 74.31  Insurance coverage.

    Recipients shall, at a minimum, provide the equivalent insurance 
coverage for real property and equipment acquired with HHS funds as 
provided to other property owned by the recipient.



Sec. 74.32  Real property.

    (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 and shall not 
encumber the property without approval of the HHS awarding agency.
    (b) The recipient shall obtain written approval from the HHS 
awarding agency 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 HHS awarding agency.
    (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 HHS awarding agency or its successor. 
The HHS awarding agency must provide 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 share in the project.
    (2) The recipient may be directed to sell the property under 
guidelines provided by the HHS awarding agency and pay the Federal 
Government for that percentage of the current fair market value of the 
property attributable to the Federal share in the project (after 
deducting actual and reasonable selling and fix-up expenses, if any, 
from the 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. 74.33  Federally-owned and exempt property.

    (a)(1) Title of 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 HHS awarding 
agency. Upon completion of the award or when the property is no longer 
needed, the recipient shall report the property to the HHS awarding 
agency for further agency utilization.
    (2) If the HHS awarding agency has no further need for the property, 
it shall be declared excess and reported to the General Services 
Administration, unless the HHS awarding agency 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 nonprofit 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 HHS awarding 
agency.
    (b) For research awards to certain types of recipients, 31 U.S.C. 
6306 authorizes HHS to vest title to property acquired with Federal 
funds in the recipient without further obligation to the Federal 
government and under conditions that HHS considers appropriate. Such 
property is ``exempt property''. Exempt property shall not be subject to 
the requirements of Sec. 74.34, except that it shall be subject to 
paragraphs (h)(1), (2), and (4) of that section

[[Page 224]]

concerning the HHS awarding agency's right to require transfer.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996]



Sec. 74.34  Equipment.

    (a) Title to equipment acquired by a recipient with HHS funds shall 
vest in the recipient, subject to the conditions of this section.
    (b)(1) The recipient shall not use equipment acquired with HHS funds 
to provide services to non-Federal organizations for a fee that is less 
than private companies charge for equivalent services, unless 
specifically authorized by Federal statute, for so long as the Federal 
Government retains an interest in the equipment.
    (2) 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 HHS awarding agency.
    (3) User charges shall be treated as program income, in keeping with 
the provisions of Sec. 74.24.
    (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 HHS awarding agency. When 
no longer needed for the original project or program, the recipient 
shall use the equipment in connection with its other federally-sponsored 
activities, if any, in the following order of priority:
    (1) Programs, projects, or activities sponsored by the HHS awarding 
agency;
    (2) Programs, projects, or activities sponsored by other HHS 
awarding agencies; then
    (3) Programs, project, or activities sponsored by other Federal 
agencies.
    (d) During the time that equipment is used on the program, project, 
or activity 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 program, project, or activity for 
which the equipment was originally acquired. First preference for such 
other use shall be given to other programs, projects, or activities 
sponsored by the HHS awarding agency. Second preference shall be given 
to programs, projects, or activities sponsored by other HHS awarding 
agencies. Third preference shall be given to programs, projects, or 
activities sponsored by other Federal agencies.
    (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 HHS awarding agency.
    (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 
HHS's share 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; and
    (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 HHS awarding agency for its share.
    (2) Equipment owned by the Federal Government shall be identified to 
indicate Federal ownership.
    (3) The recipient shall take a physical inventory of equipment 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

[[Page 225]]

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) recipient shall maintain a control system 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 HHS awarding agency.
    (5) The recipient shall implement adequate maintenance procedures 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, it may use the 
equipment for other activities in accordance with the following 
standards. 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 original HHS awarding agency 
or its successor. The amount of compensation shall be computed by 
applying the percentage of HHS's share 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 HHS awarding agency; such instructions 
must be issued 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 equipment and reimburse the HHS awarding agency an amount 
computed by applying to the sales proceeds the percentage of HHS share 
in the cost of the original project or program. However, the recipient 
shall be permitted to deduct and retain from the HHS 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 HHS awarding agency by an 
amount which is computed by applying the percentage of the recipient's 
share 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 will be reimbursed by the HHS awarding agency 
for such costs incurred in its disposition.
    (4) If the recipient's project or program for which or under which 
the equipment was acquired is still receiving support from the same HHS 
program, and if the HHS awarding agency approves, the net amount due may 
be used for allowable costs of that project or program. Otherwise the 
net amount must be remitted to the HHS awarding agency by check.
    (h) The HHS awarding agency reserves the right to order the transfer 
of title to the Federal Government or to a third party named by the 
awarding agency 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 HHS awarding agency may require submission of a final 
inventory that lists all equipment acquired with HHS funds and 
federally-owned equipment.
    (3) If the HHS awarding agency fails to issue disposition 
instructions within 120 calendar days after receipt of the inventory, 
the recipient shall apply the standards of paragraph (g)(1) of this 
section as appropriate.
    (4) When the HHS awarding agency exercises its right to order the 
transfer of title to the Federal Government, the equipment shall be 
subject to the rules for federally-owned equipment. (See Sec. 
74.34(g)).

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996]

[[Page 226]]



Sec. 74.35  Supplies.

    (a) Title to supplies shall vest in the recipient upon acquisition. 
If there is a residual inventory of unused 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-federally 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. (See Sec. 74.34(g)).
    (b)(1) The recipient shall not use supplies acquired with Federal 
funds to provide services to non-Federal 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.
    (2) If the supplies are owned by the Federal Government, use on 
other activities not sponsored by the Federal Government shall be 
permissible if authorized by the HHS awarding agency.
    (3) User charges shall be treated as program income, in keeping with 
the provisions of Sec. 74.24.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996]



Sec. 74.36  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 HHS awarding agency 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 Department of Commerce at 37 CFR part 401, ``Rights to Inventions 
Made by Nonprofit Organizations and Small Business Firms Under 
Government Grants, Contracts and Cooperative Agreements.''
    (c) 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)(1) In addition, in response to a Freedom of Information Act 
(FOIA) request for research data relating to published research findings 
produced under an award that were used by the Federal Government in 
developing an agency action that has the force and effect of law, the 
HHS Awarding Agency shall request, and the recipient shall provide, 
within a reasonable time, the research data so that they can be made 
available to the public through the procedures established under the 
FOIA. If the HHS Awarding Agency obtains the research data solely in 
response to a FOIA request, the agency may charge the requester a 
reasonable fee equaling the full incremental cost of obtaining the 
research data. This fee should reflect costs incurred by the agency, the 
recipient, and applicable subrecipients. This fee is in addition to any 
fees the agency may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
    (2) The following definitions apply for purposes of this paragraph 
(d):
    (i) Research data is defined as the recorded factual material 
commonly accepted in the scientific community as necessary to validate 
research findings, but not any of the following: preliminary analyses, 
drafts of scientific papers, plans for future research, peer reviews, or 
communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:
    (A) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (B) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.

[[Page 227]]

    (ii) Published is defined as either when:
    (A) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (B) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law.
    (iii) Used by the Federal Government in developing an agency action 
that has the force and effect of law is defined as when an agency 
publicly and officially cites the research findings in support of an 
agency action that has the force and effect of law.
    (3) The requirements set forth in paragraph (d)(1) of this section 
do not apply to commercial organizations.
    (e) Title to intangible property and debt instruments purchased or 
otherwise 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 approval of the HHS awarding agency. When no longer 
needed for the originally authorized purpose, disposition of the 
intangible property shall occur in accordance with the provisions of 
Sec. 74.34 (g) and (h).

[59 FR 43760, Aug. 25, 1994, as amended at 65 FR 14407, 14418, Mar. 16, 
2000]



Sec. 74.37  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 recipients as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved, and shall not 
be encumbered without the approval of the HHS awarding agency. 
Recipients shall record liens or other appropriate notices of record to 
indicate that real property has been acquired or constructed or, where 
applicable, improved with Federal funds, and that use and disposition 
conditions apply to the property.

                          Procurement Standards



Sec. 74.40  Purpose of procurement standards.

    Sections 74.41 through 74.48 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 established 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. The standards apply where the cost of the procurement 
is treated as a direct cost of an award.



Sec. 74.41  Recipient responsibilities.

    The standards contained in this section do not relieve the 
recipients of the contractual responsibilities arising under its 
contract(s). The recipient is the responsible authority, without 
recourse to the HHS awarding agency, 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. 74.42  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, or 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

[[Page 228]]

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, 
employers, or agents of the recipients.



Sec. 74.43  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 grant applications, or 
contract 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 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. 74.44  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 recipient and 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 HHS 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

[[Page 229]]

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 Department of 
Commerce'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.'' (See 45 CFR part 76.)
    (e) Recipients shall, on request, make available for the HHS 
awarding agency, pre-award review, procurement documents such as 
requests 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 simplified acquisition 
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 simplified 
acquisition threshold specifies a ``brand name'' product.
    (4) The proposed award over the simplified acquisition 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 
simplified acquisition threshold.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996; 
62 FR 41878, Aug. 4, 1997; 62 FR 51377, Oct. 1, 1997]



Sec. 74.45  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. 74.46  Procurement records.

    Procurement records and files for purchases in excess of the 
simplified acquisition 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.

[59 FR 43760, Aug. 25, 1994, as amended at 62 FR 41878, Aug. 4, 1997]



Sec. 74.47  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. 74.48  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

[[Page 230]]

provisions shall also be applied to subcontracts:
    (a) Contracts in excess of the simplified acquisition 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 simplified acquisition threshold 
(currently $100,000) 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 HHS awarding 
agency may accept the bonding policy and requirements of the recipient, 
provided the HHS awarding agency 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 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 herein, 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 
simplified acquisition threshold) awarded by recipients shall include a 
provision to the effect that the recipient, the HHS awarding agency, the 
U.S. Comptroller General, 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.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996; 
62 FR 41878, Aug. 4, 1997]

                           Reports and Records



Sec. 74.50  Purpose of reports and records.

    Sections 74.51 through 74.53 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. 74.51  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 that

[[Page 231]]

subrecipients have met the audit requirements as set forth in Sec. 
74.26.
    (b) The HHS awarding agency will prescribe the frequency with which 
the performance reports shall be submitted. Except as provided in 
paragraph (f) of this section, performance reports will not be required 
more frequently than quarterly or, less frequently than annually. Annual 
reports shall be due 90 calendar days after the award year; quarterly or 
semi-annual reports shall be due 30 days after the reporting period. The 
HHS awarding agency 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 will 
not be required after completion of the project.
    (d) 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 submit the original and two copies of 
performance reports.
    (f) Recipients shall immediately notify the HHS awarding agency of 
developments that have a significant impact 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) HHS may make site visits, as needed.
    (h) The HHS awarding agency complies with the applicable report 
clearance requirements of 5 CFR part 1320, ``Controlling Paperwork 
Burdens on the Public,'' when requesting performance data from 
recipients.



Sec. 74.52  Financial reporting.

    (a) The following forms are used for obtaining financial information 
from recipients:
    (1) SF-269 or SF-269A, Financial Status Report.
    (i) The HHS awarding agency will require recipients to use either 
the SF-269 (long form) or SF-269A to report the status of funds for all 
nonconstruction projects or programs. The SF-269 shall always be used if 
income has been earned. The awarding agency may, however, waive the SF-
269 or SF-269A requirement when the PMS-270, Request for Advance or 
Reimbursement, or PMS-272, Report of Federal Cash Transactions, will 
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 PMS-270 is used only for advances.
    (ii) If the HHS awarding agency 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 HHS awarding agency will 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 will not be required more frequently than quarterly or less 
frequently than annually except under Sec. 74.14. A final report shall 
be required at the completion of the agreement.
    (iv) Recipients shall submit the SF-269 and SF-269A (an original and 
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 HHS

[[Page 232]]

awarding agency upon request of the recipient.
    (2) PMS-272, Report of Federal Cash Transactions.
    (i) When funds are advanced to recipients, the HHS awarding agency 
requires each recipient to submit the PMS-272 and, when necessary, its 
continuation sheet, PMS-272A through G. The HHS awarding agency uses 
this report to monitor cash advanced to recipients and to obtain 
disbursement information for each agreement with the recipients.
    (ii) The HHS awarding agency may require forecasts of Federal cash 
requirements in the ``Remarks'' section of the report.
    (iii) Recipients shall submit the original and two copies of the 
PMS-272 15 calendar days following the end of each quarter. The HHS 
awarding agency may require a monthly report from those recipients 
receiving advances totaling $1 million or more per year.
    (iv) The HHS awarding agency may waive the requirement for 
submission of the PMS-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 HHS' 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 HHS awarding agency needs additional information or 
more frequent reports, the following shall be observed.
    (1) When additional information is needed to comply with legislative 
requirements, the HHS awarding agency will issue instructions to require 
recipients to submit that information under the ``Remarks'' section of 
the reports.
    (2) When HHS determines that a recipient's accounting system does 
not meet the standards in Sec. 74.21, additional pertinent information 
to further monitor awards may be obtained, without regard to Sec. 74.4, 
upon written notice to the recipient until such time as the system is 
brought up to standard. In obtaining this information, the HHS awarding 
agencies comply with report clearance requirements of 5 CFR part 1320, 
``Controlling Paperwork Burdens on the Public.''
    (3) The HHS awarding agency may accept the identical information 
from a recipient in machine readable format or computer printouts or 
electronic outputs in lieu of prescribed formats.
    (4) The HHS awarding agency may provide computer or electronic 
outputs to recipients when such action expedites or contributes to the 
accuracy of reporting.



Sec. 74.53  Retention and access requirements for records.

    (a) This section sets forth requirements for record retention and 
access to records for awards to 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. The only exceptions are the following:
    (1) If any litigation, claim, financial management review, 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 HHS 
awarding agency, the 3-year retention requirement is not applicable to 
the recipient.
    (4) Indirect cost rate proposals, cost allocations plans, etc., as 
specified in Sec. 74.53(g).
    (c) Copies of original records may be substituted for the original 
records if authorized by the HHS awarding agency.
    (d) The HHS awarding agency will 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, the HHS awarding agency may make

[[Page 233]]

arrangements for recipients to retain any records that are continuously 
needed for joint use.
    (e) HHS awarding agencies, the HHS Inspector General, the U.S. 
Comptroller General, 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, the HHS awarding agency will not 
place restrictions on recipients that limit public access to the records 
of recipients that are pertinent to an award, except when the HHS 
awarding agency 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 HHS awarding agency.
    (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 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 Government 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 Federal 
Government 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. 74.60  Purpose of termination and enforcement.

    Sections 74.61 and 74.62 set forth uniform suspension, termination 
and enforcement procedures.



Sec. 74.61  Termination.

    (a) Awards may be terminated in whole or in part only if paragraph 
(a) (1), (2), or (3) of this section applies.
    (1) By the HHS awarding agency, if a recipient materially fails to 
comply with the terms and conditions of an award.
    (2) By the HHS awarding agency 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 HHS awarding agency 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 HHS awarding agency determines in the 
case of partial termination that the reduced or modified portion of the 
award will not accomplish the purposes for which the award was made, it 
may terminate the award in its entirety.
    (b) If costs are allowed under an award, the responsibilities of the 
recipient referred to in Sec. 74.71(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. 74.62  Enforcement.

    (a) If a recipient materially fails to comply with the terms and 
conditions of an award, whether stated in a Federal statute or 
regulation, an assurance, an application, or a notice of award, the HHS 
awarding agency may,

[[Page 234]]

in addition to imposing any of the special conditions outlined in Sec. 
74.14, 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 recipient or more severe enforcement action by the HHS 
awarding agency.
    (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 any other remedies that may be legally available.
    (b) In taking an enforcement action, the HHS awarding agency will 
provide the recipient or subrecipient an opportunity for such hearing, 
appeal, or other administrative proceeding to which the recipient or 
subrecipient is entitled under any statute or regulation applicable to 
the action. (See also 45 CFR parts 16 and 95.)
    (c) Costs to a recipient resulting from obligations incurred by the 
recipient during a suspension or after termination of an award are not 
allowable unless the HHS awarding agency expressly authorizes them in 
the notice of suspension or termination or subsequently. Other recipient 
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 recipient 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) 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 
HHS implementing regulations at Sec. 74.13 of this part and 45 CFR part 
76.

[59 FR 43760, Aug. 25, 1994, as amended at 62FR 38218, July 17, 1997]



                 Subpart D_After-the-Award Requirements

    Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.



Sec. 74.70  Purpose.

    Sections 74.71 through 74.73 contain closeout procedures and other 
procedures for subsequent disallowances and adjustments.



Sec. 74.71  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 HHS 
awarding agency may approve extensions when requested by the recipient.
    (b) Unless the HHS awarding agency 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) HHS will 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 
cash that HHS has advanced or paid and that is not authorized to be 
retained by the recipient for use in other projects. 45 CFR part 30 
governs unreturned amounts that become delinquent debts.
    (e) When authorized by the terms and conditions of the award, HHS 
will 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 HHS funds or received from the Federal Government in 
accordance with Sec. Sec. 74.31 through 74.37.

[[Page 235]]

    (g) In the event a final audit has not been performed prior to the 
closeout of an award, HHS retains the right to recover an appropriate 
amount after fully considering the recommendations on disallowed costs 
resulting from the final audit.



Sec. 74.72  Subsequent adjustments and continuing responsibilities.

    (a) The closeout of an award does not affect any of the following:
    (1) The right of the HHS awarding agency 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. 74.26.
    (4) Property management requirements in Sec. Sec. 74.31 through 
74.37.
    (5) Records retention requirements in Sec. 74.53.
    (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 HHS awarding agency and the recipient, provided the responsibilities 
of the recipient referred to in Sec. 74.72(a), including those for 
property management as applicable, are considered and provisions made 
for continuing responsibilities of the recipient, as appropriate.



Sec. 74.73  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 
HHS awarding agency may reduce the debt by paragraph (a) (1), (2), or 
(3) of this section:
    (1) Making an administrative offset against other requests for 
reimbursements.
    (2) Withholding advance payments otherwise due the recipient.
    (3) Taking other action permitted by statute.
    (b) Except as otherwise provided by law, HHS awarding agencies will 
charge interest on an overdue debt in accordance with 4 CFR ch. II, 
``Federal Claims Collection Standards.'' (See 45 CFR part 30.)



   Subpart E_Special Provisions for Awards to Commercial Organizations

    Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.



Sec. 74.80  Scope of subpart.

    This subpart contains provisions that apply to awards to commercial 
organizations. These provisions are in addition to other applicable 
provisions of this part, or they make exceptions from other provisions 
of this part for awards to commercial organizations.



Sec. 74.81  Prohibition against profit.

    Except for awards under the Small Business Innovation Research 
(SBIR) and Small Business Technology Transfer Research (STTR) programs 
(15 U.S.C. 638), no HHS funds may be paid as profit to any recipient 
even if the recipient is a commercial organization. Profit is any amount 
in excess of allowable direct and indirect costs.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996]



Sec. 74.82  Program income.

    The additional costs alternative described in Sec. 74.24(b)(1) may 
not be applied to program income earned by a commercial organization 
except in the SBIR and STTR programs.



Sec. 74.83  Effect on intangible property.

    Data sharing (FOIA) requirements as set forth in Sec. 74.36(d)(1) 
do not apply to commercial organizations.

[65 FR 14418, Mar. 16, 2000]



                           Subpart F_Disputes

    Source: 59 FR 43760, Aug. 25, 1994, unless otherwise noted.



Sec. 74.90  Final decisions in disputes.

    (a) HHS attempts to promptly issue final decisions in disputes and 
in other matters affecting the interests of recipients. However, final 
decisions adverse to the recipient are not issued until it is clear that 
the matter cannot

[[Page 236]]

be resolved through further exchange of information and views.
    (b) Under various HHS statutes or regulations, recipients have the 
right to appeal from, or to have a hearing on, certain final decisions 
by HHS awarding agencies. (See, for example, subpart D of 42 CFR part 
50, and 45 CFR part 16). Paragraphs (c) and (d) of this section set 
forth the standards HHS expects its member agencies to meet in issuing a 
final decision covered by any of the statutes or regulations.
    (c) The decision may be brief but must contain:
    (1) A complete statement of the background and basis of the awarding 
agency's decision, including reference to the pertinent statutes, 
regulations, or other governing documents; and
    (2) Enough information to enable the recipient to understand the 
issues and the position of the HHS awarding agency.
    (d) The following or similar language (consistent with the 
terminology of the applicable statutes or regulations) should appear at 
the end of the decision: ``This is the final decision of the (title of 
grants officer or other official responsible for the decision). It shall 
be the final decision of the Department unless, within 30 days after 
receiving this decision, you deliver or mail (you should use registered 
or certified mail to establish the date) a written notice of appeal to 
(name and address of appropriate contact, e.g., the office responsible 
for awarding agency preliminary appeal process or, where none, the 
Departmental Appeals Board, Department of Health and Human Services, 
Washington, DC 20201). You shall attach to the notice a copy of this 
decision, note that you intend an appeal, state the amount in dispute, 
and briefly state why you think that this decision is wrong. You will be 
notified of further procedures.''

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996; 
62 FR 38218, July 17, 1997]



Sec. 74.91  Alternative dispute resolution.

    HHS encourages its awarding agencies and recipients to try to 
resolve disputes by using alternative dispute resolution (ADR) 
techniques. ADR often is effective in reducing the cost, delay and 
contentiousness involved in appeals and other traditional ways of 
handling disputes. ADR techniques include mediation, neutral evaluation 
and other consensual methods. Information about ADR is available from 
the HHS Dispute Resolution Specialist at the Departmental Appeals Board, 
U.S. Department of Health and Human Services, Washington, DC 20201.

               Appendix A to Part 74--Contract Provisions

    All contracts awarded by a recipient, including small purchases, 
shall contain the following provisions as applicable where the cost of 
the contract is treated as a direct cost of an award:
    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 $2,000 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 Federal 
awarding agency.
    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

[[Page 237]]

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 HHS awarding agency.
    4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
333)-- Where applicable, all contracts awarded by recipients in excess 
of $100,000 for construction contracts and 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 further 
implementing regulations issued by HHS.
    6. 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.)-- Contracts 
and subgrants of amounts in excess of $100,000 shall contain a provision 
that requires the recipient to agree to comply with 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 HHS 
and the appropriate Regional Office of the Environmental Protection 
Agency.
    7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)-- Contractors who 
apply or bid for an award of more than $100,000 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 Federal 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. (See also 45 CFR part 93).
    8. Debarment and Suspension (E.O.s 12549 and 12689)-- Certain 
contracts shall not be made to parties listed on the nonprocurement 
portion of the General Services Administration's ``Lists of Parties 
Excluded from Federal Procurement or Nonprocurement Programs'' in 
accordance with E.O.s 12549 and 12689, ``Debarment and Suspension.'' 
(See 45 CFR part 76.) This list contains the names of parties debarred, 
suspended, or otherwise excluded by agencies, and contractors declared 
ineligible under statutory authority other than E.O. 12549. Contractors 
with awards that exceed the simplified acquisition threshold shall 
provide the required certification regarding their exclusion status and 
that of their principals prior to award.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11747, Mar. 22, 1996; 
62 FR 41878, Aug. 4, 1997]

                  Appendixes B-D to Part 74 [Reserved]

 Appendix E to Part 74--Principles for Determining Costs Applicable to 
   Research and Development Under Grants and Contracts With Hospitals

                          i. purpose and scope

    A. Objectives. This appendix provides principles for determining the 
costs applicable to research and development work performed by hospitals 
under grants and contracts with the Department of Health and Human 
Services. These principles are confined to the subject of cost 
determination and make no attempt to identify the circumstances or 
dictate the extent of hospital participation in the financing of a 
particular research or development project. The principles are designed 
to provide recognition of the full allocated costs of such research work 
under generally accepted accounting principles. These principles will be 
applicable to both proprietary and non-profit hospitals. No provision 
for profit or other increment above cost is provided for in these 
principles. However, this is not to be interpreted as precluding a

[[Page 238]]

negotiated fee between contracting parties when a fee is appropriate.
    B. Policy guides. The successful application of these principles 
requires development of mutual understanding between representatives of 
hospitals and of the Department of Health and Human Services as to their 
scope, applicability and interpretation. It is recognized that:
    1. The arrangements for hospital participation in the financing of a 
research and development project are properly subject to negotiation 
between the agency and the hospital concerned in accordance with such 
Government-wide criteria as may be applicable.
    2. Each hospital, possessing its own unique combination of staff, 
facilities and experience, should be encouraged to conduct research in a 
manner consonant with its own institutional philosophies and objectives.
    3. Each hospital in the fulfillment of its contractual obligations 
should be expected to employ sound management practices.
    4. The application of the principles established herein shall be in 
conformance with the generally accepted accounting practices of 
hospitals.
    5. Hospitals receive reimbursements from the Federal Government for 
differing types of services under various programs such as support of 
Research and Development (including discrete clinical centers) Health 
Services Projects, Medicare, etc. It is essential that consistent 
procedures for determining reimbursable costs for similar services be 
employed without regard to program differences. Therefore, both the 
direct and indirect costs of research programs must be identified as a 
cost center(s) for the cost finding and step-down requirements of the 
Medicare program, or in its absence the Medicaid program.
    C. Application. All operating agencies within the Department of 
Health and Human Services that sponsor research and development work in 
hospitals will apply these principles and related policy guides in 
determining the costs incurred for such work under grants and cost-
reimbursement type contracts and subcontracts. These principles will 
also be used as a guide in the pricing of fixed-price contracts and 
subcontracts.

                        ii. definitions of terms

    A. Organized research means all research activities of a hospital 
that may be identified whether the support for such research is from a 
federal, non-federal or internal source.
    B. Departmental research means research activities that are not 
separately budgeted and accounted for. Such work, which includes all 
research activities not encompassed under the term organized research, 
is regarded for purposes of this document as a part of the patient care 
activities of the hospital.
    C. Research agreement means any valid arrangement to perform 
federally-sponsored research or development including grants, cost-
reimbursement type contracts, cost-reimbursement type subcontracts, and 
fixed-price contracts and subcontracts.
    D. Instruction and training means the formal or informal programs of 
educating and training technical and professional health services 
personnel, primarily medical and nursing training. This activity, if 
separately budgeted or identifiable with specific costs, should be 
considered as a cost objective for purposes of indirect cost allocations 
and the development of patient care costs.
    E. Other hospital activities means all organized activities of a 
hospital not immediately related to the patient care, research, and 
instructional and training functions which produce identifiable revenue 
from the performance of these activities. If a non-related activity does 
not produce identifiable revenue, it may be necessary to allocate this 
expense using an appropriate basis. In such a case, the activity may be 
included as an allocable cost (See paragraph III D below.) Also included 
under this definition is any category of cost treated as 
``Unallowable,'' provided such category of cost identifies a function or 
activity to which a portion of the institution's indirect cost (as 
defined in paragraph V. A.) are properly allocable.
    F. Patient care means those departments or cost centers which render 
routine or ancillary services to in-patients and/or out-patients. As 
used in paragraph IX B.23, it means the cost of these services 
applicable to patients involved in research programs.
    G. Allocation means the process by which the indirect costs are 
assigned as between:
    1. Organized research,
    2. Patient care including departmental research.
    3. Instruction and training, and
    4. Other hospital activities.
    H. Cost center means an identifiable department or area (including 
research) within the hospital which has been assigned an account number 
in the hospital accounting system for the purpose of accumulating 
expense by department or area.
    I. Cost finding is the process of recasting the data derived from 
the accounts ordinarily kept by a hospital to ascertain costs of the 
various types of services rendered. It is the determination of direct 
costs by specific identification and the proration of indirect costs by 
allocation.
    J. Step down is a cost finding method that recognizes that services 
rendered by certain nonrevenue-producing departments or centers are 
utilized by certain other nonrevenue producing centers as well as by the 
revenue-producing centers. All costs of nonrevenue-producing centers are 
allocated to all centers which they serve, regardless of whether

[[Page 239]]

or not these centers produce revenue. Following the apportionment of the 
cost of the nonrevenue-producing center, that center will be considered 
closed and no further costs are apportioned to that center.
    K. Scatter bed is a bed assigned to a research patient based on 
availability. Research patients occupying these beds are not physically 
segregated from nonresearch patients occupying beds. Scatter beds are 
geographically dispersed among all the beds available for use in the 
hospital. There are no special features attendant to a scatter bed that 
distinguishes it from others that could just as well have been occupied.
    L. Discrete bed is a bed or beds that have been set aside for 
occupancy by research patients and are physically segregated from other 
hospital beds in an environment that permits an easily ascertainable 
allocation of costs associated with the space they occupy and the 
services they generate.

                        iii. basic considerations

    A. Composition of total costs. The cost of a research agreement is 
comprised of the allowable direct costs incident to its performance plus 
the allocable portion of the allowable indirect costs of the hospital 
less applicable credits. (See paragraph III-E.)
    B. Factors affecting allowability of costs. The tests of 
allowability of costs under these principles are:
    1. They must be reasonable.
    2. They must be assigned to research agreements under the standards 
and methods provided herein.
    3. They must be accorded consistent treatment through application of 
those generally accepted accounting principles appropriate to the 
circumstances (See paragraph I-E.5.) and
    4. They must conform to any limitations or exclusions set forth in 
these principles or in the research agreement as to types or amounts of 
cost items.
    C. Reasonable costs. A cost may be considered reasonable if the 
nature of the goods or services acquired or applied, and the amount 
involved therefor reflect the action that a prudent person would have 
taken under the circumstances prevailing at the time the decision to 
incur the cost was made. Major considerations involved in the 
determination of the reasonableness of a cost are:
    1. Whether or not the cost is of a type generally recognized as 
necessary for the operation of the hospital or the performance of the 
research agreement,
    2. The restraints or requirements imposed by such factors as arm's 
length bargaining, federal and state laws and regulations, and research 
agreement terms and conditions,
    3. Whether or not the individuals concerned acted with due prudence 
in the circumstances, considering their responsibilities to the 
hospital, its patients, its employees, its students, the Government, and 
the public at large, and
    4. The extent to which the actions taken with respect to the 
incurrence of the cost are consistent with established hospital policies 
and practices applicable to the work of the hospital generally, 
including Government research.
    D. Allocable costs. 1. A cost is allocable to a particular cost 
center (i.e., a specific function, project, research agreement, 
department, or the like) if the goods or services involved are 
chargeable or assignable to such cost center in accordance with relative 
benefits received or other equitable relationship. Subject to the 
foregoing, a cost is allocable to a research agreement if it is incurred 
solely to advance the work under the research agreement; or it benefits 
both the research agreement and other work of the hospital in 
proportions that can be approximated through use of reasonable methods; 
or it is necessary to the overall operation of the hospital and, in 
light of the standards provided in this chapter, is deemed to be 
assignable in part to organized research. Where the purchase of 
equipment or other capital items are specifically authorized under a 
research agreement, the amounts thus authorized for such purchases are 
allocable to the research agreement regardless of the use that may 
subsequently be made of the equipment or other capital items involved.
    2. Any costs allocable to a particular research agreement under the 
standards provided in these principles may not be shifted to other 
research agreements in order to meet deficiencies caused by overruns or 
other fund considerations, to avoid restrictions imposed by law or by 
terms of the research agreement, or for other reasons of convenience.
    E. Applicable credits. 1. The term applicable credits refers to 
those receipts or negative expenditure types of transactions which 
operate to offset or reduce expense items that are allocable to research 
agreements as direct or indirect costs as outlined in paragraph V-A. 
Typical examples of such transactions are: purchase discounts, rebates, 
or allowances; recoveries or indemnities on losses; sales of scrap or 
incidental services; tuition; adjustments of overpayments or erroneous 
charges; and services rendered to patients admitted to federally funded 
clinical research centers, primarily for care though also participating 
in research protocols.
    2. In some instances, the amounts received from the Federal 
Government to finance hospital activities or service operations should 
be treated as applicable credits. Specifically, the concept of netting 
such credit items against related expenditures should be applied by the 
hospital in determining the rates or amounts to be charged to government 
research for services rendered whenever the facilities or other 
resources used in

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providing such services have been financed directly, in whole or in 
part, by federal funds. Thus, where such items are provided for or 
benefit a particular hospital activity, i.e., patient care, research, 
instruction and training, or other, they should be treated as an offset 
to the indirect costs apportioned to that activity. Where the benefits 
are common to all hospital activities they should be treated as a credit 
to the total indirect cost pool before allocation to the various cost 
objectives.

                            iv. direct costs

    A. General. Direct costs are those that can be identified 
specifically with a particular cost center. For this purpose, the term 
cost center refers not only to the ultimate centers against which costs 
are finally lodged such as research agreements, but also to other 
established cost centers such as the individual accounts for recording 
particular objects or items of expense, and the separate account 
groupings designed to record the expenses incurred by individual 
organizational units, functions, projects and the like. In general, the 
administrative functions and service activities described in paragraph 
VI are identifiable as separate cost centers, and the expenses 
associated with such centers become eligible in due course for 
distribution as indirect costs of research agreements and other ultimate 
cost centers.
    B. Application to research agreements. Identifiable benefit to the 
research work rather than the nature of the goods and services involved 
is the determining factor in distinguishing direct from indirect costs 
of research agreements. Typical of transactions chargeable to a research 
agreement as direct costs are the compensation of employees for the time 
or effort devoted to the performance of work under the research 
agreement, including related staff benefit and pension plan costs to the 
extent that such items are consistently accorded to all employees and 
treated by the hospital as direct rather than indirect costs (see 
paragraph V. B4b); the costs of materials consumed or expended in the 
performance of such work; and other items of expense incurred for the 
research agreement, such as extraordinary utility consumption. The cost 
of materials supplied from stock or services rendered by specialized 
facilities or other institutional service operations may be included as 
direct costs of research agreements provided such items are consistently 
treated by the institution as direct rather than indirect costs and are 
charged under a recognized method of costing or pricing designed to 
recover only the actual direct and indirect costs of such material or 
service and conforming to generally accepted cost accounting practices 
consistently followed by the institution.

                            v. indirect costs

    A. General. Indirect costs are those that have been incurred for 
common or joint objectives, and thus are not readily subject to 
treatment as direct costs of research agreements or other ultimate or 
revenue producing cost centers. In hospitals such costs normally are 
classified but not necessarily restricted to the following functional 
categories: Depreciation; Administrative and General (including fringe 
benefits if not charged directly); Operation of Plant; Maintenance of 
Plant; Laundry and Linen Service; Housekeeping; Dietary; Maintenance of 
Personnel; and Medical Records and Library.
    B. Criteria for distribution--1. Base period. A base period for 
distribution of indirect costs is the period during which such costs are 
incurred and accumulated for distribution to work performed within that 
period. The base period normally should coincide with the fiscal year 
established by the hospital, but in any event the base period should be 
so selected as to avoid inequities in the distribution of costs.
    2. Need for cost groupings. The overall objective of the allocation 
process is to distribute the indirect costs described in paragraph VI to 
organized research, patient care, instruction and training, and other 
hospital activities in reasonable proportions consistent with the nature 
and extent of the use of the hospital's resources by research personnel, 
medical staff, patients, students, and other personnel or organizations. 
In order to achieve this objective with reasonable precision, it may be 
necessary to provide for selective distribution by establishing separate 
groupings of cost within one or more of the functional categories of 
indirect costs referred to in paragraph V-A. In general, the cost 
groupings established within a functional category should constitute, in 
each case, a pool of those items of expense that are considered to be of 
like character in terms of their relative contribution to (or degree of 
remoteness from) the particular cost centers to which distribution is 
appropriate. Each such pool or cost grouping should then be distributed 
individually to the related cost centers, using the distribution base or 
method most appropriate in the light of the guides set out in B3 below. 
While this paragraph places primary emphasis on a step-down method of 
indirect cost computation, paragraph VIII provides an alternate method 
which may be used under certain conditions.
    3. Selection of distribution method. Actual conditions must be taken 
into account in selecting the method or base to be used in distributing 
to related cost centers the expenses assembled under each of the 
individual cost groups established as indicated under B2 above. Where a 
distribution can be

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made by assignment of a cost grouping directly to the area benefited, 
the distribution should be made in that manner. Care should be given, 
however, to eliminate similar or duplicative costs from any other 
distribution made to this area. Where the expenses under a cost grouping 
are more general in nature, the distribution to related cost centers 
should be made through use of a selected base which will produce results 
which are equitable to both the Government and the hospital. In general, 
any cost element or cost-related factor associated with the hospital's 
work is potentially adaptable for use as a distribution base provided:
    a. It can readily be expressed in terms of dollars or other 
quantitative measure (total direct expenditures, direct salaries, 
manhours applied, square feet utilized, hours of usage, number of 
documents processed, population served, and the like); and
    b. It is common to the related cost centers during the base period. 
The essential consideration in selection of the distribution base in 
each instance is that it be the one best suited for assigning the pool 
of costs to related cost centers in accord with the relative benefits 
derived; the traceable cause and effect relationship; or logic and 
reason, where neither benefit nor cause and effect relationship is 
determinable.
    4. General consideration on cost groupings. The extent to which 
separate cost groupings and selective distribution would be appropriate 
at a hospital is a matter of judgment to be determined on a case-by-case 
basis. Typical situations which may warrant the establishment of two or 
more separate cost groups (based on account classification or analysis) 
within a functional category include but are not limited to the 
following:
    a. Where certain items or categories of expense relate solely to one 
of the major divisions of the hospital (patient care, sponsored 
research, instruction and training, or other hospital activities) or to 
any two but not all, such expenses should be set aside as a separate 
cost grouping for direct assignment or selective distribution in 
accordance with the guides provided in B2 and B3 above.
    b. Where any types of expense ordinary treated as indirect cost as 
outlined in paragraph V-A are charged to research agreements as direct 
costs, the similar type expenses applicable to other activities of the 
institution must through separate cost grouping be excluded from the 
indirect costs allocable to research agreements.
    c. Where it is determined that certain expenses are for the support 
of a service unit or facility whose output is susceptible of measurement 
on a workload or other quantitative basis, such expenses should be set 
aside as a separate cost grouping for distribution on such basis to 
organized research and other hospital activities.
    d. Where organized activities (including identifiable segments of 
organized research as well as the activities cited in paragraph II-E) 
provide their own purchasing, personnel administration, building 
maintenance, or housekeeping or similar service, the distribution of 
such elements of indirect cost to such activities should be accomplished 
through cost grouping which includes only that portion of central 
indirect costs (such as for overall management) which are properly 
allocable to such activities.
    e. Where the hospital elects to treat as indirect charges the costs 
of pension plans and other staff benefits, such costs should be set 
aside as a separate cost grouping for selective distribution to related 
cost centers, including organized research.
    f. Where the hospital is affiliated with a medical school or some 
other institution which performs organized research on the hospital's 
premises, every effort should be made to establish separate cost 
groupings in the Administrative and General or other applicable category 
which will reasonably reflect the use of services and facilities by such 
research. (See also paragraph VII-A.3)
    5. Materiality. Where it is determined that the use of separate cost 
groupings and selective distribution are necessary to produce equitable 
results, the number of such separate cost groupings within a functional 
category should be held within practical limits, after taking into 
consideration the materiality of the amounts involved and the degree of 
precision attainable through less selective methods of distribution.
    C. Administration of limitations on allowances for indirect costs. 
1. Research grants may be subject to laws and/or administrative 
regulations that limit the allowance for indirect costs under each such 
grant to a stated percentage of the direct costs allowed. Agencies that 
sponsor such grants will establish procedures which will assure that:
    a. The terms and amount authorized in each case conform with the 
provisions of paragraphs III, V and IX of these principles as they apply 
to matters involving the consistent treatment and allowability of 
individual items of cost; and
    b. The amount actually allowed for indirect costs under each such 
research grant does not exceed the maximum allowable under the 
limitation or the amount otherwise allowable under these principles, 
whichever is the smaller.
    2. Where the actual allowance for indirect costs on any research 
grant must be restricted to the smaller of the two alternative amounts 
referred to in C1 above, such alternative amounts should be determined 
in accordance with the following guides:
    a. The maximum allowable under the limitation should be established 
by applying the stated percentage to a direct cost base which

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shall include all items of expenditure authorized by the sponsoring 
agency for inclusion as part of the total cost for the direct benefit of 
the work under the grant; and
    b. The amount otherwise allowable under these principles should be 
established by applying the current institutional indirect cost rate to 
those elements of direct cost which were included in the base on which 
the rate was computed.
    3. When the maximum amount allowable under a statutory limitation or 
the terms of a research agreement is less than the amount otherwise 
allocable as indirect costs under these principles, the amount not 
recoverable as indirect costs under the research agreement involved may 
not be shifted to other research agreements.

           vi. identification and assignment of indirect costs

    A. Depreciation or use charge. 1. The expenses under this heading 
should include depreciation (as defined in paragraph IX-B.9a) on 
buildings, fixed equipment, and movable equipment, except to the extent 
purchased through federal funds. Where adequate records for the 
recording of depreciation are not available, a use charge may be 
substituted for depreciation (See paragraph IX-B.)
    2. The expenses included in this category should be allocated to 
applicable cost centers in a manner consistent with the guides set forth 
in paragraph V-B, on a basis that gives primary emphasis to (a) space 
utilization with respect to depreciation on buildings and fixed 
equipment; and (b) specific identification of assets and their use with 
respect to movable equipment as it relates to patient care, organized 
research, instruction and training, and other hospital activities. Where 
such records are not sufficient for the purpose of the foregoing, 
reasonable estimates will suffice as a means for effecting distribution 
of the amounts involved.
    B. Administration and general expenses. 1. The expenses under this 
heading are those that have been incurred for the administrative offices 
of the hospital including accounting, personnel, purchasing, information 
centers, telephone expense, and the like which do not relate solely to 
any major division of the institution, i.e., solely to patient care, 
organized research, instruction and training, or other hospital 
activities.
    2. The expenses included in this category may be allocated on the 
basis of total expenditures exclusive of capital expenditures, or 
salaries and wages in situations where the results of the distribution 
made on this basis are deemed to be equitable both to the Government and 
the hospital; otherwise the distribution of Administration and General 
expenses should be made through use of selected bases, applied to 
separate cost groupings established within this category of expenses in 
accordance with the guides set out in paragraph V-B.
    C. Operation of plant. 1. The expenses under this heading are those 
that have been incurred by a central service organization or at the 
departmental level for the administration, supervision, and provision of 
utilities (exclusive of telephone expense) and protective services to 
the physical plant. They include expenses incurred for such items as 
power plant operations, general utility costs, elevator operations, 
protection services, and general parking lots.
    2. The expenses included in this category should be allocated to 
applicable cost centers in a manner consistent with the guides provided 
in paragraph V-B, on a basis that gives primary emphasis to space 
utilization. The allocations should be developed as follows:
    a. Where actual space and related cost records are available or can 
readily be developed and maintained without significant change in the 
accounting practices, the amount distributed should be based on such 
records;
    b. Where the space and related cost records maintained are not 
sufficient for purposes of the foregoing, a reasonable estimate of the 
proportion of total space assigned to the various costs centers normally 
will suffice as a means for effecting distribution of the amounts 
involved; or
    c. Where it can be demonstrated that an area or volume or space 
basis of allocation is impractical or inequitable, other bases may be 
used provided consideration is given to the use of facilities by 
research personnel and others, including patients.
    D. Maintenance of plant. 1. The expenses under this heading should 
include:
    a. All salaries and wages pertaining to ordinary repair and 
maintenance work performed by employees on the payroll of the hospital;
    b. All supplies and parts used in the ordinary repairing and 
maintaining of buildings and general equipment; and
    c. Amounts paid to outside concerns for the ordinary repairing and 
maintaining of buildings and general equipment.
    2. The expenses included in this category should be allocated to 
applicable cost centers in a manner consistent with the guides provided 
in paragraph V-B. on a basis that gives primary emphasis to space 
utilization. The allocations and apportionments should be developed as 
follows:
    a. Where actual space and related cost records are available and can 
readily be developed and maintained without significant change in the 
accounting practices, the amount distributed should be based on such 
records;
    b. Where the space and related cost records maintained are not 
sufficient for purposes of the foregoing, a reasonable estimate of the

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proportion of total space assigned to the various cost centers normally 
will suffice as a means for effecting distribution of the amounts 
involved; or
    c. Where it can be demonstrated that an area or volume of space 
basis of allocation is impractical or inequitable, other basis may be 
used provided consideration is given to the use of facilities by 
research personnel and others, including patients.
    E. Laundry and linen. 1. The expenses under this heading should 
include:
    a. Salaries and wages of laundry department employees, seamstresses, 
clean linen handlers, linen delivery men, etc.;
    b. Supplies used in connection with the laundry operation and all 
linens purchased; and
    c. Amounts paid to outside concerns for purchased laundry and/or 
linen service.
    2. The expense included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph V-B. on a basis that gives primary emphasis to actual pounds 
of linen used. The allocations should be developed as follows:
    a. Where actual poundage and related cost records are available or 
can readily be developed and maintained without significant change in 
the accounting practices, the amount distributed should be based on such 
records;
    b. Where it can be demonstrated that a poundage basis of allocation 
is impractical or inequitable other bases may be used provided 
consideration is given to the use of linen by research personnel and 
others, including patients.
    F. Housekeeping. 1. The expenses under this heading should include:
    a. All salaries and wages of the department head, foreman, maids, 
porters, janitors, wall washers, and other housekeeping employees;
    b. All supplies used in carrying out the housekeeping functions; and
    c. Amounts paid to outside concerns for purchased services such as 
window washing, insect extermination, etc.
    2. The expenses included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph V-B. on a basis that gives primary emphasis to space actually 
serviced by the housekeeping department. The allocations and 
apportionments should be developed as follows:
    a. Where actual space serviced and related cost records are 
available or can readily be developed and maintained without significant 
change in the accounting practices, the amount distributed should be 
based on such records;
    b. Where the space serviced and related cost records maintained are 
not sufficient for purposes of the foregoing, a reasonable estimate of 
the proportion of total space assigned to the various cost centers 
normally will suffice as a means for effecting distribution of the 
amounts of housekeeping expenses involved; or
    c. Where it can be demonstrated that the space serviced basis of 
allocation is impractical or inequitable, other bases may be used 
provided consideration is given to the use of housekeeping services by 
research personnel and others, including patients.
    G. Dietary. 1. These expenses, as used herein, shall mean only the 
subsidy provided by the hospital to its employees including research 
personnel through its cafeteria operation. The hospital must be able to 
demonstrate through the use of proper cost accounting techniques that 
the cafeteria operates at a loss to the benefit of employees.
    2. The reasonable operating loss of a subsidized cafeteria operation 
should be allocated to related cost centers in a manner consistent with 
the guides provided in paragraph V-B. on a basis that gives primary 
emphasis to number of employees.
    H. Maintenance (housing) of personnel. 1. The expenses under this 
heading should include:
    a. The salaries and wages of matrons, clerks, and other employees 
engaged in work in nurses' residences and other employees' quarters;
    b. All supplies used in connection with the operation of such 
dormitories; and
    c. Payments to outside agencies for the rental of houses, 
apartments, or rooms used by hospital personnel.
    2. The expenses included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph V-B. on a basis that gives primary emphasis to employee 
utilization of housing facilities. The allocation should be developed as 
follows:
    a. Appropriate credit should be given for all payments received from 
employees or otherwise to reduce the expense to be allocated;
    b. A net cost per housed employee may then be computed; and
    c. Allocation should be made on a departmental basis based on the 
number of housed employees in each respective department.
    I. Medical records and library. 1. The expenses under this heading 
should include:
    a. The salaries and wages of the records librarian, medical 
librarian, clerks, stenographers, etc.; and
    b. All supplies such as medical record forms, chart covers, filing 
supplies, stationery, medical library books, periodicals, etc.
    2. The expenses included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph V-B. on a basis that gives primary emphasis to a special time 
survey of medical records personnel. If this appears to

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be impractical or inequitable, other bases may be used provided 
consideration is given to the use of these facilities by research 
personnel and others, including patients.

    vii. determination and application of indirect cost rate or rates

    A. Indirect cost pools. 1. Subject to (2) below, indirect costs 
allocated to organized research should be treated as a common pool, and 
the costs in such common pool should be distributed to individual 
research agreements benefiting therefrom on a single rate basis.
    2. In some instances a single rate basis for use on all government 
research at a hospital may not be appropriate since it would not take 
into account those different environmental factors which may affect 
substantially the indirect costs applicable to a particular segment of 
government research at the institution. For this purpose, a particular 
segment of government research may be that performed under a single 
research agreement or it may consist of research under a group of 
research agreements performed in a common environment. The environmental 
factors are not limited to the physical location of the work. Other 
important factors are the level of the administrative support required, 
the nature of the facilities or other resources employed, the scientific 
disciplines or technical skills involved, the organizational 
arrangements used, or any combination thereof. Where a particular 
segment of government research is performed within an environment which 
appears to generate a significantly different level of indirect costs, 
provision should be made for a separate indirect cost pool applicable to 
such work. An example of this differential may be in the development of 
a separate indirect cost pool for a clinical research center grant. The 
separate indirect cost pool should be developed during the course of the 
regular distribution process, and the separate indirect cost rate 
resulting therefrom should be utilized provided it is determined that:
    a. Such indirect cost rate differs significantly from that which 
would have obtained under (1) above; and
    b. The volume of research work to which such rate would apply is 
material in relation to other government research at the institution.
    3. It is a common practice for grants or contracts awarded to other 
institutions, typically University Schools of Medicine, to be performed 
on hospital premises. In these cases the hospital should develop a 
separate indirect cost pool applicable to the work under such grants or 
contracts. This pool should be developed by a selective distribution of 
only those indirect cost categories which benefit the work performed by 
the other institution, within the practical limits dictated by available 
data and the materiality of the amounts involved. Hospital costs 
determined to be allocable to grants or contracts awarded to another 
institution may not be recovered as a cost of grants or contracts 
awarded directly to the hospital.
    B. The distribution base. Preferably, indirect costs allocated to 
organized research should be distributed to applicable research 
agreements on the basis of direct salaries and wages. However, where the 
use of salaries and wages results in an inequitable allocation of costs 
to the research agreements, total direct costs or a variation thereof, 
may be used in lieu of salaries and wages. Regardless of the base used, 
an indirect cost rate should be determined for each of the separate 
indirect cost pools developed pursuant to paragraph VII-A. The rate in 
each case should be stated as the percentage which the amount of the 
particular indirect cost pool is of the total direct salaries and wages 
(or other base selected) for all research agreements identified with 
such a pool.
    C. Negotiated lump sum for overhead. A negotiated fixed amount in 
lieu of indirect costs may be appropriate for self-contained or off-
campus research activities where the benefits derived from a hospital's 
indirect services cannot be readily determined. Such amount negotiated 
in lieu of indirect costs will be treated as an offset to the 
appropriate indirect cost pool after allocation to patient care, 
organized research, instruction and training, and other hospital 
activities. The base on which such remaining expenses are allocated 
should be appropriately adjusted.
    D. Predetermined overhead rates. The utilization of predetermined 
fixed overhead rates may offer potential advantages in the 
administration of research agreements by facilitating the preparation of 
research budgets and permitting more expeditious close out of the 
agreements when the work is completed. Therefore, to the extent allowed 
by law, consideration may be given to the negotiation of predetermined 
fixed rates in those situations where the cost experience and other 
pertinent factors available are deemed sufficient to enable the 
Government and the hospital to reach a reasonable conclusion as to the 
probable level of the indirect cost rate for the ensuing accounting 
period.

             viii. simplified method for small institutions

    A. General. 1. Where the total direct cost of all government-
sponsored research and development work at a hospital in a year is 
minimal, the use of the abbreviated procedure described in paragraph 
VIII-B below may be acceptable in the determination of allowable 
indirect costs. This method may also be used to initially determine a 
provisional indirect cost rate for hospitals that have not previously 
established a rate. Under

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this abbreviated procedure, data taken directly from the institution's 
most recent annual financial report and immediately available supporting 
information will be utilized as a basis for determining the indirect 
cost rate applicable to research agreements at the institution.
    2. The rigid formula approach provided under the abbreviated 
procedure has limitations which may preclude its use at some hospitals 
either because the minimum data required for this purpose are not 
readily available or because the application of the abbreviated 
procedure to the available data produces results which appear 
inequitable to the Government or the hospital. In any such case, 
indirect costs should be determined through use of the regular procedure 
rather than the abbreviated procedure.
    3. In certain instances where the total direct cost of all 
government-sponsored research and development work at the hospital is 
more than minimal, the abbreviated procedure may be used if prior 
permission is obtained. This alternative will be granted only in those 
cases where it can be demonstrated that the step-down technique cannot 
be followed.
    B. Abbreviated procedure. 1. Total expenditures as taken from the 
most recent annual financial report will be adjusted by eliminating from 
further consideration expenditures for capital items as defined in 
paragraph IX-B.4 and unallowable costs as defined under various headings 
in paragraph IX and paragraph III-E.
    2. Total expenditures as adjusted under the foregoing will then be 
distributed among (a) expenditures applicable to administrative and 
general overhead functions, (b) expenditures applicable to all other 
overhead functions, and (c) expenditures for all other purposes. The 
first group shall include amounts associated with the functional 
categories, Administration and General, and Dietary, as defined in 
paragraph VI. The second group shall include Depreciation, Operation of 
Plant, Maintenance of Plant, and Housekeeping. The third group--
expenditures for all other purposes--shall include the amounts 
applicable to all other activities, namely, patient care, organized 
research, instruction and training, and other hospital activities as 
defined under paragraph II-E. For the purposes of this section, the 
functional categories of Laundry and Linen, Maintenance of Personnel, 
and Medical Records and Library as defined in paragraph VI shall be 
considered as expenditures for all other purposes.
    3. The expenditures distributed to the first two groups in paragraph 
VIII-B.2 should then be adjusted by those receipts or negative 
expenditure types of transactions which tend to reduce expense items 
allocable to research agreements as indirect costs. Examples of such 
receipts or negative expenditures are itemized in paragraph III-E.1.
    4. In applying the procedures in paragraphs VIII-B.1 and B.2, the 
cost of unallowable activities such as Gift Shop, Investment Property 
Management, Fund Raising, and Public Relations, when they benefit from 
the hospital's indirect cost services, should be treated as expenditures 
for all other purposes. Such activities are presumed to benefit from the 
hospital's indirect cost services when they include salaries of 
personnel working in the hospital. When they do not include such 
salaries, they should be eliminated from the indirect cost rate 
computation.
    5. The indirect cost rate will then be computed in two stages. The 
first stage requires the computation of an Administrative and General 
rate component. This is done by applying a ratio of research direct 
costs over total direct costs to the Administrative and General pool 
developed under paragraphs VIII-B.2 and B.3 above. The resultant 
amount--that which is allocable to research--is divided by the direct 
research cost base. The second stage requires the computation of an All 
Other Indirect Cost rate component. This is done by applying a ratio of 
research direct space over total direct space to All Other Indirect Cost 
pool developed under paragraphs VIII-B.2 and B.3 above. The resultant 
amount--that which is allocable to research--is divided by the direct 
research cost base.
    The total of the two rate components will be the institution's 
indirect cost rate. For the purposes of this section, the research 
direct cost or space and total direct cost or space will be that cost or 
space identified with the functional categories classified under 
Expenditures for all other purposes under paragraph VIII-B.2.

            ix. general standards for selected items of cost

    A. General. This section provides standards to be applied in 
establishing the allowability of certain items involved in determining 
cost. These standards should apply irrespective of whether a particular 
item of cost is properly treated as direct cost or indirect cost. 
Failure to mention a particular item of cost in the standards is not 
intended to imply that it is either allowable or unallowable; rather, 
determination as to allowability in each case should be based on the 
treatment or standards provided for similar or related items of cost. In 
case of discrepancy between the provisions of a specific research 
agreement and the applicable standards provided, the provisions of the 
research agreement should govern. However, in some cases advance 
understandings should be reached on particular cost items in order that 
the full costs of research be supported. The extent of allowability of 
the selected items of cost covered in this section has been

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stated to apply broadly to many accounting systems in varying 
environmental situations. Thus, as to any given research agreement, the 
reasonableness and allocability of certain items of costs may be 
difficult to determine, particularly in connection with hospitals which 
have medical school or other affiliations. In order to avoid possible 
subsequent disallowance or dispute based on unreasonableness or 
nonallocability, it is important that prospective recipients of federal 
funds particularly those whose work is predominantly or substantially 
with the Government, seek agreement with the Government in advance of 
the incurrence of special or unusual costs in categories where 
reasonableness or allocability are difficult to determine. Such 
agreement may also be initiated by the Government. Any such agreement 
should be incorporated in the research agreement itself. However, the 
absence of such an advance agreement on any element of cost will not in 
itself serve to make that element either allowable or unallowable. 
Examples of costs on which advance agreements may be particularly 
important are:
    1. Facilities costs, such as;
    a. Depreciation
    b. Rental
    c. Use charges for fully depreciated assets
    d. Idle facilities and idle capacity
    e. Plant reconversion
    f. Extraordinary or deferred maintenance and repair
    g. Acquisition of automatic data processing equipment.
    2. Preaward costs
    3. Non-hospital professional activities
    4. Self-insurance
    5. Support services charged directly (computer services, printing 
and duplicating services, etc.)
    6. Employee compensation, travel, and other personnel costs, 
including;
    a. Compensation for personal service, including wages and salaries, 
bonuses and incentives, premium payments, pay for time not worked, and 
supplementary compensation and benefits, such as pension and retirement, 
group insurance, severance pay plans, and other forms of compensation
    b. Morale, health, welfare, and food service and dormitory costs
    c. Training and education costs
    d. Relocation costs, including special or mass personnel movement
    B. Selected items--1. Advertising costs. The term advertising costs 
means the costs of advertising media and corollary administrative costs. 
Advertising media include magazines, newspapers, radio and television 
programs, direct mail, exhibits, and the like. The only advertising 
costs allowable are those which are solely for;
    a. The recruitment of persons required for the performance by the 
institution of obligations arising under the research agreement, when 
considered in conjunction with all other recruitment costs as set forth 
in paragraph IX-B.34.
    b. The procurement of scarce items for the performance of the 
research agreement; or
    c. The disposal of scrap or surplus materials acquired in the 
performance of the research agreement.

Costs of this nature, if incurred for more than one research agreement 
or for both research agreement work and other work of the institution, 
are allowable to the extent that the principles in paragraphs IV and V 
are observed.
    2. Bad debts. Losses arising from uncollectible accounts and other 
claims and related collection and legal costs are unallowable except 
that a bad debt may be included as a direct cost of the research 
agreement to the extent that it is caused by a research patient and 
approved by the awarding agency. This inclusion is only intended to 
cover the situation of the patient admitted for research purposes who 
subsequently or in conjunction with the research receives clinical care 
for which a charge is made to the patient. If, after exhausting all 
means of collecting these charges, a bad debt results, it may be 
considered an appropriate charge to the research agreement.
    3. Bonding costs. a. Bonding costs arise when the Government 
requires assurance against financial loss to itself or others by reason 
of the act or default of the hospital. They arise also in instances 
where the hospital requires similar assurance.
    Included are such types as bid, performance, payment, advance