[Title 42 CFR D]
[Code of Federal Regulations (annual edition) - October 1, 2008 Edition]
[Title 42 - PUBLIC HEALTH]
[Chapter I - PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN]
[Subchapter D - GRANTS]
[From the U.S. Government Printing Office]


42PUBLIC HEALTH12008-10-012008-10-01falseGRANTSDSUBCHAPTER DPUBLIC HEALTHPUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN
                           SUBCHAPTER D_GRANTS



PART 50_POLICIES OF GENERAL APPLICABILITY--Table of Contents




Subpart A [Reserved]

Subpart B_Sterilization of Persons in Federally Assisted Family Planning 
                                Projects

Sec.
50.201 Applicability.
50.202 Definitions.
50.203 Sterilization of a mentally competent individual aged 21 or 
          older.
50.204 Informed consent requirement.
50.205 Consent form requirements.
50.206 Sterilization of a mentally incompetent individual or of an 
          institutionalized individual.
50.207 Sterilization by hysterectomy.
50.208 Program or project requirements.
50.209 Use of Federal financial assistance.
50.210 Review of regulation.

Appendix to Subpart B of Part 50--Required Consent Form

 Subpart C_Abortions and Related Medical Services in Federally Assisted 
                  Programs of the Public Health Service

50.301 Applicability.
50.302 Definitions.
50.303 General rule.
50.304 Life of the mother would be endangered.
50.305 [Reserved]
50.306 Rape and incest.
50.307 Documentation needed by programs or projects.
50.308 Drugs and devices and termination of ectopic pregnancies.
50.309 Recordkeeping requirements.
50.310 Confidentiality.

         Subpart D_Public Health Service Grant Appeals Procedure

50.401 What is the purpose of this subpart?
50.402 To what program do these regulations apply?
50.403 What is the policy basis for these procedures?
50.404 What disputes are covered by these procedures?
50.405 What is the structure of review committees?
50.406 What are the steps in the process?

               Subpart E_Maximum Allowable Cost for Drugs

50.501 Applicability.
50.502 Definitions.
50.503 Policy.
50.504 Allowable cost of drugs.

  Subpart F_Responsibility of Applicants for Promoting Objectivity in 
                Research for Which PHS Funding Is Sought

50.601 Purpose.
50.602 Applicability.
50.603 Definitions.
50.604 Institutional responsibility regarding conflicting interests of 
          investigators
50.605 Management of conflicting interests.
50.606 Remedies.
50.607 Other HHS regulations that apply.

    Authority: Sec. 215, Public Health Service Act, 58 Stat. 690 (42 
U.S.C. 216); Sec. 1006, Public Health Service Act, 84 Stat. 1507 (42 
U.S.C. 300a-4), unless otherwise noted.

    Source: 43 FR 52165, Nov. 8, 1978, unless otherwise noted.

Subpart A [Reserved]



Subpart B_Sterilization of Persons in Federally Assisted Family Planning 
                                Projects



Sec. 50.201  Applicability.

    The provisions of this subpart are applicable to programs or 
projects for health services which are supported in whole or in part by 
Federal financial assistance, whether by grant or contract, administered 
by the Public Health Service.



Sec. 50.202  Definitions.

    As used in this subpart:
    Arrange for means to make arrangements (other than mere referral of 
an individual to, or the mere making of an appointment for him or her 
with, another health care provider) for the performance of a medical 
procedure on an individual by a health care provider other than the 
program or project.
    Hysterectomy means a medical procedure or operation for the purpose 
of removing the uterus.
    Institutionalized individual means an individual who is (1) 
involuntarily confined or detained, under a civil or criminal statute, 
in a correctional or rehabilitative facility, including a mental 
hospital or other facility for

[[Page 139]]

the care and treatment of mental illness, or (2) confined, under a 
voluntary commitment, in a mental hospital or other facility for the 
care and treatment of mental illness.
    Mentally incompetent individual means an individual who has been 
declared mentally incompetent by a Federal, State, or local court of 
competent jurisdiction for any purpose unless he or she has been 
declared competent for purposes which include the ability to consent to 
sterilization.
    Public Health Service means the Office of the Assistant Secretary 
for Health, Health Resources and Services Administration, National 
Institutes of Health, Centers for Disease Control, Alcohol, Drug Abuse 
and Mental Health Administration and all of their constituent agencies.
    The 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.
    Sterilization means any medical procedure, treatment, or operation 
for the purpose of rendering an individual permanently incapable of 
reproducing.

[43 FR 52165, Nov. 8, 1978, as amended at 49 FR 38109, Sept. 27, 1984]



Sec. 50.203  Sterilization of a mentally competent individual aged 21 or 

older.

    Programs or projects to which this subpart applies shall perform or 
arrange for the performance of sterilization of an individual only if 
the following requirements have been met:
    (a) The individual is at least 21 years old at the time consent is 
obtained.
    (b) The individual is not a mentally incompetent individual.
    (c) The individual has voluntarily given his or her informed consent 
in accordance with the procedures of Sec. 50.204 of this subpart.
    (d) At least 30 days but not more than 180 days have passed between 
the date of informed consent and the date of the sterilization, except 
in the case of premature delivery or emergency abdominal surgery. An 
individual may consent to be sterilized at the time of premature 
delivery or emergency abdominal surgery, if at least 72 hours have 
passed after he or she gave informed consent to sterilization. In the 
case of premature delivery, the informed consent must have been given at 
least 30 days before the expected date of delivery.



Sec. 50.204  Informed consent requirement.

    Informed consent does not exist unless a consent form is completed 
voluntarily and in accordance with all the requirements of this section 
and Sec. 50.205 of this subpart.
    (a) A person who obtains informed consent for a sterilization 
procedure must offer to answer any questions the individual to be 
sterilized may have concerning the procedure, provide a copy of the 
consent form, and provide orally all of the following information or 
advice to the individual who is to be sterilized:
    (1) Advice that the individual is free to withhold or withdraw 
consent to the procedure any time before the sterilization without 
affecting his or her right to future care or treatment and without loss 
or withdrawal of any federally funded program benefits to which the 
individual might be otherwise entitled:
    (2) A description of available alternative methods of family 
planning and birth control;
    (3) Advice that the sterilization procedure is considered to be 
irreversible;
    (4) A thorough explanation of the specific sterilization procedure 
to be performed;
    (5) A full description of the discomforts and risks that may 
accompany or follow the performing of the procedure, including an 
explanation of the type and possible effects of any anesthetic to be 
used;
    (6) A full description of the benefits or advantages that may be 
expected as a result of the sterilization; and
    (7) Advice that the sterilization will not be performed for at least 
30 days except under the circumstances specified in Sec. 50.203(d) of 
this subpart.
    (b) An interpreter must be provided to assist the individual to be 
sterilized if he or she does not understand the language used on the 
consent form or the language used by the person obtaining the consent.

[[Page 140]]

    (c) Suitable arrangements must be made to insure that the 
information specified in paragraph (a) of this section is effectively 
communicated to any individual to be sterilized who is blind, deaf or 
otherwise handicapped.
    (d) A witness chosen by the individual to be sterilized may be 
present when consent is obtained.
    (e) Informed consent may not be obtained while the individual to be 
sterilized is:
    (1) In labor or childbirth;
    (2) Seeking to obtain or obtaining an abortion; or
    (3) Under the influence of alcohol or other substances that affect 
the individual's state of awareness.
    (f) Any requirement of State and local law for obtaining consent, 
except one of spousal consent, must be followed.



Sec. 50.205  Consent form requirements.

    (a) Required consent form. The consent form appended to this subpart 
or another consent form approved by the Secretary must be used.
    (b) Required signatures. The consent form must be signed and dated 
by:
    (1) The individual to be sterilized; and
    (2) The interpreter, if one is provided; and
    (3) The person who obtains the consent; and
    (4) The physician who will perform the sterilization procedure.
    (c) Required certifications. (1) The person obtaining the consent 
must certify by signing the consent form that:
    (i) Before the individual to be sterilized signed the consent form, 
he or she advised the individual to be sterilized that no Federal 
benefits may be withdrawn because of the decision not to be sterilized,
    (ii) He or she explained orally the requirements for informed 
consent as set forth on the consent form, and
    (iii) To the best of his or her knowledge and belief, the individual 
to be sterilized appeared mentally competent and knowingly and 
voluntarily consented to be sterilized.
    (2) The physician performing the sterilization must certify by 
signing the consent form, that:
    (i) Shortly before the performance of the sterilization, he or she 
advised the individual to be sterilized that no Federal benefits may be 
withdrawn because of the decision not to be sterilized,
    (ii) He or she explained orally the requirements for informed 
consent as set forth on the consent form, and
    (iii) To the best of his or her knowledge and belief, the individual 
to be sterilized appeared mentally competent and knowingly and 
voluntarily consented to be sterilized. Except in the case of premature 
delivery or emergency abdominal surgery, the physician must further 
certify that at least 30 days have passed between the date of the 
individual's signature on the consent form and the date upon which the 
sterilization was performed. If premature delivery occurs or emergency 
abdominal surgery is required within the 30-day period, the physician 
must certify that the sterilization was performed less than 30 days but 
not less than 72 hours after the date of the individual's signature on 
the consent form because of premature delivery or emergency abdominal 
surgery, as applicable. In the case of premature delivery, the physician 
must also state the expected date of delivery. In the case of emergency 
abdominal surgery, the physician must describe the emergency.
    (3) If an interpreter is provided, the interpreter must certify that 
he or she translated the information and advice presented orally, read 
the consent form and explained its contents and to the best of the 
interpreter's knowledge and belief, the individual to be sterilized 
understood what the interpreter told him or her.



Sec. 50.206  Sterilization of a mentally incompetent individual or of an 

institutionalized individual.

    Programs or projects to which this subpart applies shall not perform 
or arrange for the performance of a sterilization of any mentally 
incompetent individual or institutionalized individual.



Sec. 50.207  Sterilization by hysterectomy.

    (a) Programs or projects to which this subpart applies shall not 
perform or arrange for the performance of any

[[Page 141]]

hysterectomy solely for the purpose of rendering an individual 
permanently incapable of reproducing or where, if there is more than one 
purpose to the procedure, the hysterectomy would not be performed but 
for the purpose of rendering the individual permanently incapable of 
reproducing.
    (b) Except as provided in paragraph (c) of this section, programs or 
projects to which this subpart applies may perform or arrange for the 
performance of a hysterectomy not covered by paragraph (a) of this 
section only if:
    (1) The person who secures the authorization to perform the 
hysterectomy has informed the individual and her representative, if any, 
orally and in writing, that the hysterectomy will make her permanently 
incapable of reproducing; and
    (2) The individual or her representative, if any, has signed a 
written acknowledgment of receipt of that information.
    (c)(1) A program or project is not required to follow the procedures 
of paragraph (b) of this section if either of the following 
circumstances exists:
    (i) The individual is already sterile at the time of the 
hysterectomy.
    (ii) The individual requires a hysterectomy because of a life-
threatening emergency in which the physician determines that prior 
acknowledgment is not possible.
    (2) If the procedures of paragraph (b) of this section are not 
followed because one or more of the circumstances of paragraph (c)(1) 
exist, the physician who performs the hysterectomy must certify in 
writing:
    (i) That the woman was already sterile, stating the cause of that 
sterility; or
    (ii) That the hysterectomy was performed under a life-threatening 
emergency situation in which he or she determined prior acknowledgment 
was not possible. He or she must also include a description of the 
nature of the emergency.

[43 FR 52165, Nov. 8, 1978, as amended at 47 FR 33701, Aug. 4, 1982]



Sec. 50.208  Program or project requirements.

    (a) A program or project must, with respect to any sterilization 
procedure or hysterectomy it performs or arranges, meet all requirements 
of this subpart.
    (b) The program or project shall maintain sufficient records and 
documentation to assure compliance with these regulations, and must 
retain such data for at least 3 years.
    (c) The program or project shall submit other reports as required 
and when requested by the Secretary.



Sec. 50.209  Use of Federal financial assistance.

    (a) Federal financial assistance adminstered by the Public Health 
Service may not be used for expenditures for sterilization procedures 
unless the consent form appended to this section or another form 
approved by the Secretary is used.
    (b) A program or project shall not use Federal financial assistance 
for any sterilization or hysterectomy without first receiving 
documentation showing that the requirements of this subpart have been 
met. Documentation includes consent forms, and as applicable, either 
acknowledgments of receipt of hysterectomy information or certification 
of an exception for hysterectomies.

[43 FR 52165, Nov. 8, 1978, as amended at 47 FR 33701, Aug. 4, 1982]



Sec. 50.210  Review of regulation.

    The Secretary will request public comment on the operation of the 
provisions of this subpart not later than 3 years after their effective 
date.



      Sec. Appendix to Subpart B of Part 50--Required Consent Form

    Notice: YOUR DECISION AT ANY TIME NOT TO BE STERILIZED WILL NOT 
RESULT IN THE WITHDRAWAL OR WITHHOLDING OF ANY BENEFITS PROVIDED BY 
PROGRAMS OR PROJECTS RECEIVING FEDERAL FUNDS.

                        Consent to Sterilization

    I have asked for and received information about sterilization from 
-------------- (doctor or clinic). When I first asked for the 
information, I was told that the decision to be sterilized is completely 
up to me. I was told that I could decide not to be sterilized. If I 
decide not to be sterilized, my decision will not affect my right to 
future care or treatment. I will not lose any help or benefits

[[Page 142]]

from programs receiving Federal funds, such as A.F.D.C. or medicaid that 
I am now getting or for which I may become eligible.
    I UNDERSTAND THAT THE STERILIZATION MUST BE CONSIDERED PERMANENT AND 
NOT REVERSIBLE. I HAVE DECIDED THAT I DO NOT WANT TO BECOME PREGNANT, 
BEAR CHILDREN OR FATHER CHILDREN.
    I was told about those temporary methods of birth control that are 
available and could be provided to me which will allow me to bear or 
father a child in the future. I have rejected these alternatives and 
chosen to be sterilized.
    I understand that I will be sterilized by an operation known as a --
------------. The discomforts, risks and benefits associated with the 
operation have been explained to me. All my questions have been answered 
to my satisfaction.
    I understand that the operation will not be done until at least 30 
days after I sign this form. I understand that I can change my mind at 
any time and that my decision at any time not to be sterilized will not 
result in the withholding of any benefits or medical services provided 
by federally funded programs.
    I am at least 21 years of age and was born on ---- (day), ---- 
(month), ---- (year).
    I, --------------, hereby consent of my own free will to be 
sterilized by -------------- by a method called --------------. My 
consent expires 180 days from the date of my signature below.
    I also consent to the release of this form and other medical records 
about the operation to:
    Representatives of the Department of Health and Human Services or
    Employees of programs or projects funded by that Department but only 
for determining if Federal laws were observed.
    I have received a copy of this form.

Signature_______________________________________________________________
Date:___________________________________________________________________
(Month, day, year)

    You are requested to supply the following information, but it is not 
required:

                     Ethnicity and Race Designation

    Ethnicity:

[squ] Hispanic or Latino
[squ] Not Hispanic or Latino

    Race (mark one or more):

[squ] American Indian or Alaska Native
[squ] Asian
[squ] Black or African American
[squ] Native Hawaiian or Other Pacific Islander
[squ] White

                         Interpreter's Statement

    If an interpreter is provided to assist the individual to be 
sterilized:
    I have translated the information and advice presented orally to the 
individual to be sterilized by the person obtaining this consent. I have 
also read him/her the consent form in -------------- language and 
explained its contents to him/her. To the best of my knowledge and 
belief he/she understood this explanation.

Interpreter_____________________________________________________________
Date____________________________________________________________________

                    State of Person Obtaining Consent

    Before -------------- (name of individual), signed the consent form, 
I explained to him/her the nature of the sterilization operation ------
--------, the fact that it is intended to be a final and irreversible 
procedure and the discomforts, risks and benefits associated with it.
    I counseled the individual to be sterilized that alternative methods 
of birth control are available which are temporary. I explained that 
sterilization is different because it is permanent.
    I informed the individual to be sterilized that his/her consent can 
be withdrawn at any time and that he/she will not lose any health 
services or any benefits provided by Federal funds.
    To the best of my knowledge and belief the individual to be 
sterilized is at least 21 years old and appears mentally competent. He/
She knowingly and voluntarily requested to be sterilized and appears to 
understand the nature and consequence of the procedure.

Signature of person obtaining consent___________________________________
Date____________________________________________________________________
Facility________________________________________________________________
Address_________________________________________________________________

                          Physician's Statement

    Shortly before I performed a sterilization operation upon ----------
---- (name of individual to be sterilized), on ---------- (date of 
sterilization), -------------- (operation), I explained to him/her the 
nature of the sterilization operation -------------- (specify type of 
operation), the fact that it is intended to be a final and irreversible 
procedure and the discomforts, risks and benefits associated with it.
    I counseled the individual to be sterilized that alternative methods 
of birth control are available which are temporary. I explained that 
sterilization is different because it is permanent.
    I informed the individual to be sterilized that his/her consent can 
be withdrawn at any time and that he/she will not lose any health 
services or benefits provided by Federal funds.

[[Page 143]]

    To the best of my knowledge and belief the individual to be 
sterilized is at least 21 years old and appears mentally competent. He/
She knowingly and voluntarily requested to be sterilized and appeared to 
understand the nature and consequences of the procedure.
    (Instructions for use of alternative final paragraphs: Use the first 
paragraph below except in the case of premature delivery or emergency 
abdominal surgery where the sterilization is performed less than 30 days 
after the date of the individual's signature on the consent form. In 
those cases, the second paragraph below must be used. Cross out the 
paragraph which is not used.)
    (1) At least 30 days have passed between the date of the 
individual's signature on this consent form and the date the 
sterilization was performed.
    (2) This sterilization was performed less than 30 days but more than 
72 hours after the date of the individual's signature on this consent 
form because of the following circumstances (check applicable box and 
fill in information requested):

[squ] Premature delivery
Individual's expected date of delivery:_________________________________
[squ] Emergency abdominal surgery:
(Describe circumstances):_______________________________________________

Physician_______________________________________________________________
Date____________________________________________________________________

                    Paperwork Reduction Act Statement

    A Federal agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
the currently valid OMB control number. Public reporting burden for this 
collection of information will vary; however, we estimate an average of 
one hour per response, including for reviewing instructions, gathering 
and maintaining the necessary data, and disclosing the information. Send 
any comment regarding the burden estimate or any other aspect of this 
collection of information to the OS Reports Clearance Officer, ASBTF/
Budget Room 503 HHH Building, 200 Independence Avenue, SW., Washington, 
DC 20201.
    Respondents should be informed that the collection of information 
requested on this form is authorized by 42 CFR part 50, subpart B, 
relating to the sterilization of persons in federally assisted public 
health programs. The purpose of requesting this information is to ensure 
that individuals requesting sterilization receive information regarding 
the risks, benefits and consequences, and to assure the voluntary and 
informed consent of all persons undergoing sterilization procedures in 
federally assisted public health programs. Although not required, 
respondents are requested to supply information on their race and 
ethnicity. Failure to provide the other information requested on this 
consent form, and to sign this consent form, may result in an inability 
to receive sterilization procedures funded through federally assisted 
public health programs.
    All information as to personal facts and circumstances obtained 
through this form will be held confidential, and not disclosed without 
the individual's consent, pursuant to any applicable confidentiality 
regulations.

[43 FR 52165, Nov. 8, 1978, as amended at 58 FR 33343, June 17, 1993; 68 
FR 12308, Mar. 14, 2003]



 Subpart C_Abortions and Related Medical Services in Federally Assisted 

                  Programs of the Public Health Service

    Authority: Sec. 118, Pub. L. 96-86, Oct. 12, 1979, unless otherwise 
noted.

    Source: 43 FR 4570, Feb. 2, 1978, unless otherwise noted.



Sec. 50.301  Applicability.

    The provisions of this subpart are applicable to programs or 
projects for health services which are supported in whole or in part by 
Federal financial assistance, whether by grant or contract, appropriated 
to the Department of Health and Human Services and administered by the 
Public Health Service.



Sec. 50.302  Definitions.

    As used in this subpart: (a) Law enforcement agency means an agency, 
or any part thereof, charged under applicable law with enforcement of 
the general penal statutes of the United States, or of any State or 
local jurisdiction.
    (b) Medical procedures performed upon a victim of rape or incest 
means any medical service, including an abortion, performed for the 
purpose of preventing or terminating a pregnancy arising out of an 
incident of rape or incest.
    (c) Physician means a doctor of medicine or osteopathy legally 
authorized to practice medicine and surgery by the State in which he or 
she practices.
    (d) Public health service means: (1) An agency of the United States 
or of a State or local government, that provides health or medical 
services; and
    (2) A rural health clinic, as defined under section 1(d)(aa)(2) of 
Pub. L. 95-

[[Page 144]]

210, 91 Stat. 1485; except that any agency or facility whose principal 
function is the performance of abortions is specifically excluded from 
this definition.



Sec. 50.303  General rule.

    Federal financial participation is not available for the performance 
of an abortion in programs or projects to which this subpart applies 
except under circumstances described in Sec. 50.304 or Sec. 50.306.

[43 FR 4570, Feb. 2, 1978, as amended at 44 FR 61598, Oct. 26, 1979]



Sec. 50.304  Life of the mother would be endangered.

    Federal financial participation is available in expenditures for an 
abortion when a physician has found, and so certified in writing to the 
program or project, that on the basis of his/her professional judgment, 
the life of the mother would be endangered if the fetus were carried to 
term. The certification must contain the name and address of the 
patient.

(Sec. 101, Pub. L. 95-205, 91 Stat. 1461, Dec. 9, 1977)

[43 FR 13868, July 21, 1978]



Sec. 50.305  [Reserved]



Sec. 50.306  Rape and incest.

    Federal financial participation is available in expenditures for 
medical procedures performed upon a victim of rape or incest if the 
program or project has received signed documentation from a law 
enforcement agency or public health service stating:
    (a) That the person upon whom the medical procedure was performed 
was reported to have been the victim of an incident of rape or incest;
    (b) The date on which the incident occurred;
    (c) The date on which the report was made, which must have been 
within 60 days of the date on which the incident occurred;
    (d) The name and address of the victim and the name and address of 
the person making the report (if different from the victim); and
    (e) That the report included the signature of the person who 
reported the incident.

Federal financial participation is also available in expenditures for 
abortions for victims of rape or incest under the circumstances 
described in Sec. 50.304 without regard to the requirements of the 
preceding sentence.

(Sec. 101, Pub. L. 95-205, 91 Stat. 1461, Dec. 9, 1977)

[43 FR 13868, July 21, 1978, as amended at 44 FR 61598, Oct. 26, 1979]



Sec. 50.307  Documentation needed by programs or projects.

    Federal financial participation is unavailable for the performance 
of abortions or other medical procedures otherwise provided for under 
Sec. Sec. 50.304 and 50.306 if the program or project has paid without 
first having received the certifications and documentation specified in 
those sections.

[43 FR 4570, Feb. 2, 1978, as amended at 44 FR 61598, Oct. 26, 1979]



Sec. 50.308  Drugs and devices and termination of ectopic pregnancies.

    Federal financial participation is available with respect to the 
cost of drugs or devices to prevent implantation of the fertilized ovum, 
and for medical procedures necessary for the termination of an ectopic 
pregnancy.



Sec. 50.309  Recordkeeping requirements.

    Programs or projects to which this subpart applies must maintain 
copies of the certifications and documentation specified in Sec. Sec. 
50.304 and 50.306 for three years pursuant to the retention and 
custodial requirements for records at 45 CFR 74.20 et seq.

[43 FR 4570, Feb. 2, 1978, as amended at 44 FR 61598, Oct. 26, 1979]



Sec. 50.310  Confidentiality.

    Information in the records or in the possession of programs or 
projects which is acquired in connection with the requirements of this 
subpart may not be disclosed in a form which permits the identification 
of an individual without the individual's consent except as may be 
necessary for the health of the individual or as may be necessary for 
the Secretary to monitor the activities of those programs or projects. 
In any event, any disclosure shall be subject to appropriate safeguards

[[Page 145]]

which will minimize the likelihood of disclosures of personal 
information in identifiable form.



         Subpart D_Public Health Service Grant Appeals Procedure

    Authority: Sec. 215, Public Health Service Act, 58 Stat. 690 (42 
U.S.C. 216); 45 CFR 16.3(c).

    Source: 54 FR 34770, Aug. 22, 1989, unless otherwise noted.



Sec. 50.401  What is the purpose of this subpart?

    This subpart establishes an informal procedure for the resolution of 
certain postaward grant and cooperative agreement disputes within the 
agencies and offices identified in Sec. 50.402.

[63 FR 66062, Dec. 1, 1998]



Sec. 50.402  To what program do these regulations apply?

    This subpart applies to all grant and cooperative agreement 
programs, except block grants, which are administered by the National 
Institutes of Health; The Centers for Disease Control and Prevention; 
the Agency for Toxic Substances and Disease Registry; the Food and Drug 
Administration; and the Office of Public Health and Science. For 
purposes of this subpart, these entities are hereinafter referred to as 
``agencies.''

[70 FR 76175, Dec. 23, 2005]



Sec. 50.403  What is the policy basis for these procedures?

    The Secretary of Health and Human Services has established a 
Departmental Appeals Board for the purpose of providing a fair and 
flexible process for the appeal of written final decisions involving 
certain grant and cooperative agreement programs administered by 
constituent agencies of the Department. The regulatory provision which 
establishes the circumstances under which the Board will accept an 
appeal (45 CFR 16.3) provides, among other things, that the appellant 
must have exhausted any preliminary appeal process required by 
regulation before a formal appeal to the Departmental Board will be 
allowed. This subpart provides such an informal preliminary procedure 
for resolution of disputes in order to preclude submission of cases to 
the Departmental Appeals Board before an agency identified in Sec. 
50.402 has had an opportunity to review decisions of its officials and 
to settle disputes with grantees.

[54 FR 34770, Aug. 22, 1989, as amended at 63 FR 66062, Dec. 1, 1998]



Sec. 50.404  What disputes are covered by these procedures?

    (a) These procedures are applicable to the following adverse 
determinations under discretionary project grants and cooperative 
agreements (both referred to in this subpart as grants) issued by the 
agencies identified at Sec. 50.402;
    (1) Termination, in whole or in part, of a grant for failure of the 
grantee to carry out its approved project in accordance with the 
applicable law and the terms and conditions of such assistance or for 
failure of the grantee otherwise to comply with any law, regulation, 
assurance, term, or condition applicable to the grant.
    (2) A determination that an expenditure not allowable under the 
grant has been charged to the grant or that the grantee has otherwise 
failed to discharge its obligation to account for grant funds.
    (3) A determination that a grant is void.
    (4) 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.
    (b) A determination subject to this subpart may not be reviewed by 
the review committee described in Sec. 50.405 unless an officer or 
employee of the agency has notified the grantee in writing of the 
adverse determination. The notification must set forth the reasons for 
the determination in sufficient detail to enable the grantee to respond 
and must inform the grantee of the opportunity for review under this 
subpart.

[54 FR 34770, Aug. 22, 1989, as amended at 63 FR 66062, Dec. 1, 1998]

[[Page 146]]



Sec. 50.405  What is the structure of review committees?

    The head of the agency, or his or her designee, shall appoint review 
committees to review adverse determinations made by officials for 
programs under their jurisdiction. A minimum of three employees shall be 
appointed (one of whom shall be designated as chairperson) either on an 
ad hoc, case-by-case basis, or as regular members of review committees 
for such terms as may be designated. None of the members of the review 
committee reviewing any given appeal may be from the office of the 
responsible official whose adverse determination is being appealed 
(e.g., project officer, grants specialist, program manager, grants 
management officer).

[54 FR 34770, Aug. 22, 1989, as amended at 63 FR 66062, Dec. 1, 1998]



Sec. 50.406  What are the steps in the process?

    (a) A grantee with respect to whom an adverse determination 
described in Sec. 50.404(a) above has been made and who desires a 
review of that determination must submit a request for such review to 
the head of the appropriate agency or his or her designee no later than 
30 days after the written notification of the determination is received, 
except that if the grantee shows good cause why an extension of time 
should be granted, the head of the appropriate agency or his or her 
designee may grant an extension of time.
    (b) The request for review must include a copy of the adverse 
determination, must identify the issue(s) in dispute, and must contain a 
full statement of the grantee's position with respect to such issue(s) 
and the pertinent facts and reasons in support of the grantee's 
position. In addition to the required written statement, the grantee 
shall provide copies of any documents supporting its claim.
    (c) When a request for review has been filed under this subpart with 
respect to an adverse determination, no action may be taken by the 
awarding agency pursuant to such determination until the request has 
been disposed of, except that the filing of the request shall not affect 
any authority which the agency may have to suspend assistance or 
otherwise to withhold or defer payments under the grant during 
proceedings under this subpart. This paragraph does not require the 
awarding agency to provide continuation funding during the appeal 
process to a grantee whose noncompeting continuation award has been 
denied.
    (d) Upon receipt of a request for review, the head of the agency or 
his or her designee will make a decision as to whether the dispute is 
reviewable under this subpart and will promptly notify the grantee and 
the office responsible for the adverse determination of this decision. 
If the head of the agency or his or her designee determines that the 
dispute is reviewable, he or she will forward the matter to the review 
committee appointed under Sec. 50.405.
    (e) The agency involved will provide the review committee appointed 
under Sec. 50.405 with copies of all relevant background materials 
(including applications(s), award(s), summary statement(s), and 
correspondence) and any additional pertinent information available. 
These materials must be tabbed and organized chronologically and 
accompanied by an indexed list identifying each document.
    (f) The grantee shall be given an opportunity to provide the review 
committee with additional statements and documentation not provided in 
the request for review described in paragraph (b) of this section. This 
additional submission, which must be organized and indexed as indicated 
under paragraph (e) of this section, should provide only material that 
is relevant to the review committee's deliberation of the issues in the 
case.
    (g) The review committee may, at its discretion, invite the grantee 
and/or the agency staff to discuss the pertinent issues with the 
committee and to submit such additional information as the committee 
deems appropriate.
    (h) Based on its review, the review committee will prepare a written 
decision to be signed by the chairperson and each of the other committee 
members. The review committee shall send the written decision with a 
transmittal letter to the grantee and shall send a copy of both to the 
official responsible for the adverse determination. If the

[[Page 147]]

decision is adverse to the grantee's position, the transmittal letter 
must state the grantee's right to appeal to the Departmental Appeals 
Board under 45 CFR part 16.

[54 FR 34770, Aug. 22, 1989, as amended at 63 FR 66063, Dec. 1, 1998]



               Subpart E_Maximum Allowable Cost for Drugs

    Authority: Sec. 215, Public Health Service Act, 58 Stat. 690 (42 
U.S.C. 216).

    Source: 40 FR 34514, Aug. 15, 1975, unless otherwise noted.



Sec. 50.501  Applicability.

    This subpart is applicable to programs or projects for health 
services which are supported in whole or in part by Federal financial 
assistance, whether by grant or contract, administered by the Public 
Health Service. It applies to Federal funds and to non-Federal funds 
which are required to be expended as a condition to receiving Federal 
funds under such programs or projects.



Sec. 50.502  Definitions.

    As used in this subpart:
    (a) Public Health Service means the Office of the Assistant 
Secretary for Health, Health Resources and Services Administration, 
National Institutes of Health, Centers for Disease Control, Alcohol, 
Drug Abuse and Mental Health Administration, Food and Drug 
Administration, and all of their constituent agencies.
    (b) 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.
    (c) Program funds means (1) Federal funds provided through grant or 
contract to support a program or project covered by Sec. 50.501, and 
(2) any non-Federal funds that are required as a condition of such grant 
or contract to be expended to carry out such program or project.
    (d) Provider means one who furnishes medical or pharmaceutical 
services or supplies for which program funds may be expended under any 
of the programs or projects described in Sec. 50.501.
    (e) Acquisition cost means the price generally and currently paid by 
providers for a drug marketed or sold by a particular formulator or 
labeler in the package size of drug most frequently purchased by 
providers, as determined by the Secretary on the basis of drug price 
information furnished by the Department.

[40 FR 34514, Aug. 15, 1975, as amended at 49 FR 38109, Sept. 27, 1984]



Sec. 50.503  Policy.

    It is the policy of the Secretary that program funds which are 
utilized for the acquisition of drugs be expended in the most economical 
manner feasible. In furtherance of this policy, the Secretary has 
established, in 45 CFR part 19, a procedure for determining the Maximum 
Allowable Cost for drugs which are purchased with program funds.



Sec. 50.504  Allowable cost of drugs.

    (a) The maximum amount which may be expended from program funds for 
the acquisition of any drug shall be the lowest of
    (1) The maximum allowable cost (MAC) of the drug, if any, 
established in accordance with 45 CFR part 19, plus a dispensing fee 
determined by the Secretary in accordance with paragraph (b) of this 
section, to be reasonable;
    (2) The acquisition cost of the drug plus a dispensing fee 
determined by the Secretary, in accordance with paragraph (b) of this 
section, to be reasonable; or
    (3) The provider's usual and customary charge to the public for the 
drug; Provided, That the MAC established for any drug shall not apply to 
a brand of that drug prescribed for a patient which the prescriber has 
certified, in accordance with paragraph (c) of this section, is 
medically necessary for that patient; And Provided further, That where 
compensation for drug dispensing is included in other costs allowable 
under the applicable program statute and regulations, the terms and 
conditions of the grant or contract, and the applicable cost principles 
prescribed in 45 CFR part 74, no separate dispensing fee will be 
recognized.

[[Page 148]]

    (b) In determining whether a dispensing fee is reasonable, the 
Secretary will take into account:
    (1) Cost components such as overhead, professional services, and 
profits,
    (2) Payment practices of third-party payment organizations, 
including other Federal programs such as titles XVIII and XIX of the 
Social Security Act; and
    (3) Any surveys by States, universities or others of costs of 
pharmacy operations and the fees charged in the particular area.
    (c) A certification by a prescriber, pursuant to paragraph (a) of 
this section, that a brand of drug is medically necessary for a 
particular patient shall be in the prescriber's own handwriting, in such 
form and manner as the Secretary may prescribe. An example of an 
acceptable certification is the notation ``brand necessary''. A 
procedure for checking a box on a form will not constitute an acceptable 
certification.



  Subpart F_Responsibility of Applicants for Promoting Objectivity in 

                Research for Which PHS Funding Is Sought

    Authority: 42 U.S.C. 216, 289b-1, 299c-3.

    Source: 60 FR 35815, July 11, 1995; 60 FR 39076, July 31, 1995, 
unless otherwise noted.



Sec. 50.601  Purpose.

    This subpart promotes objectivity in research by establishing 
standards to ensure there is no reasonable expectation that the design, 
conduct, or reporting of research funded under PHS grants or cooperative 
agreements will be biased by any conflicting financial interest of an 
Investigator.



Sec. 50.602  Applicability.

    This subpart is applicable to each Institution that applies for PHS 
grants or cooperative agreements for research and, through the 
implementation of this subpart by each Institution, to each Investigator 
participating in such research (see Sec. 50.604(a)); provided, that 
this subpart does not apply to SBIR Program Phase I applications. In 
those few cases where an individual, rather than an institution, is an 
applicant for PHS grants or cooperative agreements for research, PHS 
Awarding Components will make case-by-case determinations on the steps 
to be taken to ensure that the design, conduct, and reporting of the 
research will not be biased by any conflicting financial interest of the 
individual.



Sec. 50.603  Definitions.

    As used in this subpart:
    HHS means the United States Department of Health and Human Services, 
and any components of the Department to which the authority involved may 
be delegated.
    Institution means any domestic or foreign, public or private, entity 
or organization (excluding a Federal agency).
    Investigator means the principal investigator and any other person 
who is responsible for the design, conduct, or reporting of research 
funded by PHS, or proposed for such funding. For purposes of the 
requirements of this subpart relating to financial interests, 
``Investigator'' includes the Investigator's spouse and dependent 
children.
    PHS means the Public Health Service, an operating division of the 
U.S. Department of Health and Human Services, and any components of the 
PHS to which the authority involved may be delegated.
    PHS Awarding Component means the organizational unit of the PHS that 
funds the research that is subject to this subpart.
    Public Health Service Act or PHS Act means the statute codified at 
42 U.S.C. 201 et seq.
    Research means a systematic investigation designed to develop or 
contribute to generalizable knowledge relating broadly to public health, 
including behavioral and social-sciences research. The term encompasses 
basic and applied research and product development. As used in this 
subpart, the term includes any such activity for which research funding 
is available from a PHS Awarding Component through a grant or 
cooperative agreement, whether authorized under the PHS Act or other 
statutory authority.
    Significant Financial Interest means anything of monetary value, 
including but not limited to, salary or other payments for services 
(e.g., consulting fees

[[Page 149]]

or honoraria); equity interests (e.g., stocks, stock options or other 
ownership interests); and intellectual property rights (e.g., patents, 
copyrights and royalties from such rights). The term does not include:
    (1) Salary, royalties, or other remuneration from the applicant 
institution;
    (2) Any ownership interests in the institution, if the institution 
is an applicant under the SBIR Program;
    (3) Income from seminars, lectures, or teaching engagements 
sponsored by public or nonprofit entities;
    (4) Income from service on advisory committees or review panels for 
public or nonprofit entities;
    (5) An equity interest that when aggregated for the Investigator and 
the Investigator's spouse and dependent children, meets both of the 
following tests: Does not exceed $10,000 in value as determined through 
reference to public prices or other reasonable measures of fair market 
value, and does not represent more than a five percent ownership 
interest in any single entity; or
    (6) Salary, royalties or other payments that when aggregated for the 
Investigator and the Investigator's spouse and dependent children over 
the next twelve months, are not expected to exceed $10,000.
    Small Business Innovation Research (SBIR) Program means the 
extramural research program for small business that is established by 
the Awarding Components of the Public Health Service and certain other 
Federal agencies under Pub. L. 97-219, the Small Business Innovation 
Development Act, as amended. For purposes of this subpart, the term SBIR 
Program includes the Small Business Technology Transfer (STTR) Program, 
which was established by Pub. L. 102-564.



Sec. 50.604  Institutional responsibility regarding conflicting interests of 

investigators.

    Each Institution must:
    (a) Maintain an appropriate written, enforced policy on conflict of 
interest that complies with this subpart and inform each Investigator of 
that policy, the Investigator's reporting responsibilities, and of these 
regulations. If the Institution carries out the PHS-funded research 
through subgrantees, contractors, or collaborators, the Institution must 
take reasonable steps to ensure that Investigators working for such 
entities comply with this subpart, either by requiring those 
Investigators to comply with the Institution's policy or by requiring 
the entities to provide assurances to the Institution that will enable 
the Institution to comply with this subpart.
    (b) Designate an institutional official(s) to solicit and review 
financial disclosure statements from each Investigator who is planning 
to participate in PHS-funded research.
    (c)(1) Require that by the time an application is submitted to PHS 
each Investigator who is planning to participate in the PHS-funded 
research has submitted to the designated official(s) a listing of his/
her known Significant Financial Interests (and those of his/her spouse 
and dependent children):
    (i) That would reasonably appear to be affected by the research for 
which PHS funding is sought; and
    (ii) In entities whose financial interests would reasonably appear 
to be affected by the research.
    (2) All financial disclosures must be updated during the period of 
the award, either on an annual basis or as new reportable Significant 
Financial Interests are obtained.
    (d) Provide guidelines consistent with this subpart for the 
designated official(s) to identify conflicting interests and take such 
actions as necessary to ensure that such conflicting interests will be 
managed, reduced, or eliminated.
    (e) Maintain records of all financial disclosures and all actions 
taken by the Institution with respect to each conflicting interest for 
at least three years from the date of submission of the final 
expenditures report or, where applicable, from other dates specified in 
45 CFR 74.53(b) for different situations.
    (f) Establish adequate enforcement mechanisms and provide for 
sanctions where appropriate.
    (g) Certify, in each application for the funding to which this 
subpart applies, that:

[[Page 150]]

    (1) There is an effect at that Institution a written and enforced 
administrative process to identify and manage, reduce or eliminate 
conflicting interests with respect to all research projects for which 
funding is sought from the PHS,
    (2) Prior to the Institution's expenditure of any funds under the 
award, the Institution will report to the PHS Awarding Component the 
existence of a conflicting interest (but not the nature of the interest 
or other details) found by the institution and assure that the interest 
has been managed, reduced or eliminated in accordance with this subpart; 
and, for any interest that the Institution identifies as conflicting 
subsequent to the Institution's initial report under the award, the 
report will be made and the conflicting interest managed, reduced, or 
eliminated, at least on an interim basis, within sixty days of that 
identification;
    (3) The Institution agrees to make information available, upon 
request, to the HHS regarding all conflicting interests identified by 
the Institution and how those interests have been managed, reduced, or 
eliminated to protect the research from bias; and
    (4) The Institution will otherwise comply with this subpart.



Sec. 50.605  Management of conflicting interests.

    (a) The designated official(s) must: Review all financial 
disclosures; and determine whether a conflict of interest exists and, if 
so, determine what actions should be taken by the institution to manage, 
reduce or eliminate such conflict of interest. A conflict of interest 
exists when the designated official(s) reasonably determines that a 
Significant Financial Interest could directly and significantly affect 
the design, conduct, or reporting of the PHS-funded research. Examples 
of conditions or restrictions that might be imposed to manage conflicts 
of interest include, but are not limited to:
    (1) Public disclosure of significant financial interests;
    (2) Monitoring of research by independent reviewers;
    (3) Modification of the research plan;
    (4) Disqualification from participation in all or a portion of the 
research funded by the PHS;
    (5) Divestiture of significant financial interests; or
    (6) Severance of relationships that create actual or potential 
conflicts.
    (b) In addition to the types of conflicting financial interests 
described in this paragraph that must be managed, reduced, or 
eliminated, an Institution may require the management of other 
conflicting financial interests, as the Institution deems appropriate.



Sec. 50.606  Remedies.

    (a) If the failure of an Investigator to comply with the conflict of 
interest policy of the Institution has biased the design, conduct, or 
reporting of the PHS-funded research, the Institution must promptly 
notify the PHS Awarding Component of the corrective action taken or to 
be taken. The PHS Awarding Component will consider the situation and, as 
necessary, take appropriate action, or refer the matter to the 
Institution for further action, which may include directions to the 
Institution on how to maintain appropriate objectivity in the funded 
project.
    (b) The HHS may at any time inquire into the Institutional 
procedures and actions regarding conflicting financial interests in PHS-
funded research, including a requirement for submission of, or review on 
site, all records pertinent to compliance with this subpart. To the 
extent permitted by law, HHS will maintain the confidentiality of all 
records of financial interests. On the basis of its review of records 
and/or other information that may be available, the PHS Awarding 
Component may decide that a particular conflict of interest will bias 
the objectivity of the PHS-funded research to such an extent that 
further corrective action is needed or that the Institution has not 
managed, reduced, or eliminated the conflict of interest in accordance 
with this subpart. The PHS Awarding Component may determine that 
suspension of funding under 45 CFR 74.62 is necessary until the matter 
is resolved.
    (c) In any case in which the HHS determines that a PHS-funded 
project of clinical research whose purpose is to evaluate the safety or 
effectiveness of a drug, medical device, or treatment

[[Page 151]]

has been designed, conducted, or reported by an Investigator with a 
conflicting interest that was not disclosed or managed as required by 
this subpart, the Institution must require the Investigator(s) involved 
to disclose the conflicting interest in each public presentation of the 
results of the research.



Sec. 50.607  Other HHS regulations that apply.

    Several other regulations and policies apply to this subpart.
    They include, but are not necessarily limited to:

42 CFR part 50, subpart D--Public Health Service grant appeals procedure
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 74--Uniform Administrative Requirements for Awards and 
Subawards to Institutions of Higher Education, Hospitals, Other Non-
Profit Organizations, and Commercial Organizations; and Certain Grants 
and Agreements with States, Local Governments and Indian Tribal 
Governments
45 CFR part 76--Government-wide debarment and suspension (non-
procurement)
45 CFR part 79--Program Fraud Civil Remedies
45 CFR part 92--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments



PART 51_REQUIREMENTS APPLICABLE TO THE PROTECTION AND ADVOCACY FOR INDIVIDUALS 

WITH MENTAL ILLNESS PROGRAM--Table of Contents




Sec.
51.1 Scope.
51.2 Defintitions.

                      Subpart A_Basic Requirements

51.3 Formula for determining allotments.
51.4 Grants administration requirements.
51.5 Eligibility for allotment.
51.6 Use of allotments.
51.7 Eligibility for protection and advocacy services.
51.8 Annual reports.
51.9 [Reserved]
51.10 Remedial actions.
51.11-51.20 [Reserved]

             Subpart B_Program Administration and Priorities

51.21 Contracts for program operations.
51.22 Governing authority.
51.23 Advisory council.
51.24 Program priorities.
51.25 Grievance procedure.
51.26 Conflicts of interest.
51.27 Training.
51.28-51.30 [Reserved]

               Subpart C_Protection and Advocacy Services

51.31 Conduct of protection and advocacy activities.
51.32 Resolving disputes.
51.33-51.40 [Reserved]

         Subpart D_Access to Records, Facilities and Individuals

51.41 Access to records.
51.42 Access to facilities and residents.
51.43 Denial of delay or access.
51.44 [Reserved]
51.45 Confidentiality of protection and advocacy system records.
51.46 Disclosing information obtained from a provider of mental health 
          services.

    Authority: 42 U.S.C. 10801, et seq.

    Source: 63 FR 53564, Oct. 15, 1997, unless otherwise noted.



Sec. 51.1  Scope.

    The provisions of this part apply to recipients of Federal 
assistance under the Protection and Advocacy for Mentally Ill 
Individuals Act of 1986, as amended.



Sec. 51.2  Definitions.

    In addition to the definitions in section 102 of the Act, as 
amended, the following definitions apply:
    Abuse means any act or failure to act by an employee of a facility 
rendering care or treatment which was performed, or which was failed to 
be performed, knowingly, recklessly, or intentionally, and which caused, 
or may have caused, injury or death to an individual with mental 
illness, and includes but is not limited to acts such as: rape or sexual 
assault; striking; the use of excessive force when placing an individual 
with mental illness in bodily restrains; the use of bodily or chemical 
restraints which is not in compliance with Federal and State laws and 
regulations; verbal, nonverbal, mental and emotional harassment; and any 
other practice which is likely to cause immediate physical or 
psychological harm or

[[Page 152]]

result in long-term harm if such practices continue.
    Act means the Protection and Advocacy for Mentally Ill Individuals 
Act of 1986, as amended, also referred to as Protection and Advocacy for 
Individuals with Mental Illness Act.
    ADD means the Administration on Developmental Disabilities within 
the Administration for Children and Families, Department of Health and 
Human Services.
    Care or Treatment means services provided to prevent, identify, 
reduce or stabilize mental illness or emotional impairment such as 
mental health screening, evaluation, counseling, biomedical, behavioral 
and psychotherapies, supportive or other adjunctive therapies, 
medication supervision, special education and rehabilitation, even if 
only ``as needed'' or under a contractual arrangement.
    Center or CMHS means the Center for Mental Health Services, a 
component of the Substance Abuse and Mental Health Services 
Administration.
    Complaint includes, but is not limited to any report or 
communication, whether formal or informal, written or oral, received by 
the P&A system, including media accounts, newspaper articles, telephone 
calls (including anonymous calls) from any source alleging abuse or 
neglect of an individual with mental illness.
    Department or HHS means the U.S. Department of Health and Human 
Services.
    Designated Official is the State official or public or private 
entity empowered by the Governor or State legislature to be accountable 
for the proper use of funds by the P&A system.
    Director means the Director of the Center for Mental Health 
Services, Substance Abuse and Mental Health Services Administration, or 
his or her designee.
    Facility includes any public or private residential setting that 
provides overnight care accompanied by treatment services. Facilities 
include, but are not limited to the following: general and psychiatric 
hospitals, nursing homes, board and care homes, community housing, 
juvenile detention facilities, homeless shelters, and jails and prisons, 
including all general areas as well as special mental health or forensic 
units.
    Fiscal Year or FY means the Federal fiscal year (October 1-September 
30) unless otherwise specified.
    Full Investigation is based upon a complaint or a determination of 
probable cause and means the access to facilities, clients and records 
authorized under this part that is necessary for a P&A system to make a 
determination about whether an allegation of abuse or neglect is taking 
place or has taken place. Full investigations may be conducted 
independently or in cooperation with other agencies authorized to 
conduct similar investigations.
    Governor means the chief executive officer of the State, Territory 
or the District of Columbia, or his or her designee, who has been 
formally designated to act for the Governor in carrying out the 
requirements of the Act and this part.
    Individual with Mental Illness means an individual who has a 
significant mental illness or emotional impairment, as determined by a 
mental health professional qualified under the laws and regulations of 
the State and
    (1) Who is an inpatient or resident in a facility rendering care or 
treatment, even if the whereabouts of such impatient or resident is 
unknown;
    (2) Who is in the process of being admitted to a facility rendering 
care or treatment, including persons being transported to such a 
facility, or
    (3) Who is involuntarily confined in a detention facility, jail or 
prison.
    Legal Guardian, Conservator, and Legal Representative all mean an 
individual whose appointment is made and regularly reviewed by a State 
court or agency empowered under State law to appoint and review such 
officers, and having authority to consent to health/mental health care 
or treatment of an individual with mental illness. It does not include 
persons acting only as a representative payee, persons acting only to 
handle financial payments, attorneys or persons acting on behalf of an 
individual with mental illness only in individual legal matters, or 
officials responsible for the provision of health or mental health 
services to an individual with mental illness, or their designees.

[[Page 153]]

    Neglect means a negligent act or omission by an individual 
responsible for providing services in a facility rendering care or 
treatment which caused or may have caused injury or death to an 
individual with mental illness or which placed an individual with mental 
illness at risk of injury or death, and includes, but is not limited to, 
acts or omissions such as failure to: establish or carry out an 
appropriate individual program or treatment plan (including a discharge 
plan); provide adequate nutrition, clothing, or health care; and the 
failure to provide a safe environment which also includes failure to 
maintain adequate numbers of appropriately trained staff.
    Private Entity means a nonprofit or for-profit corporation, 
partnership or other nongovernmental organization.
    Probable cause means reasonable grounds for belief that an 
individual with mental illness has been, or may be at significant risk 
of being subject to abuse or neglect. The individual making such 
determination may base the decision on reasonable inferences drawn from 
his or her experience or training regarding similar incidents, 
conditions or problems that are usually associated with abuse or 
neglect.
    Program means activities carried out by the P&A system and operating 
as part of a P&A system to meet the requirements of the Act.
    Public Entity means an organizational unit of a State or local 
government or a quasi-governmental entity with one or more governmental 
powers.
    System means the organization or agency designated in a State to 
administer and operate a protection and advocacy program under Part C of 
the Developmental Disabilities Assistance and Bill of Rights Act (42 
U.S.C. 6041, 6042) and thereby eligible to administer a program for 
individuals with mental illness.



                      Subpart A_Basic Requirements



Sec. 51.3  Formula for determining allotments.

    The Secretary shall make allotments to eligible Systems from amounts 
apportioned each year under the Act on the basis of a formula prescribed 
by the Secretary in accordance with the requirements of sections 112 and 
113 of the Act (42 U.S.C. 10822 and 10823).



Sec. 51.4  Grants administration requirements.

    The following parts of titles 42 and 45 CFR apply to grants funded 
under this part.

42 CFR Part 50, Subpart D.
45 CFR Part 16--Procedures of the Departmental Grant Appeal Board.
45 CFR Part 74--Administration of Grants.
45 CFR Part 75--Informal Grant Appeals Procedures.
45 CFR Part 76--Government-wide Debarment and Suspension 
(Nonprocurement) and Government-wide Requirements for Drug-Free 
Workplace.
45 CFR Part 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.
45 CFR Part 81--Practice and Procedure for Hearings under Part 80 of 
This Title.
45 CFR Part 84--Nondiscrimination on the Basis of Handicap in Programs 
and Activities Receiving or Benefiting from Federal Financial 
Assistance.
45 CFR Part 86--Nondiscrimination on the Basis of Sex in Education 
Programs and Activities Receiving Federal Financial Assistance.
45 CFR Part 91--Nondiscrimination on the Basis of Age in Education 
Programs and Activities Receiving Federal Financial Assistance from HHS.
45 CFR Part 92--Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and Local Governments.
45 CFR Part 93--New Restrictions on Lobbying.
45 CFR Part 1386, subpart A.



Sec. 51.5  Eligibility for allotment.

    (a) Federal financial assistance for protection and advocacy 
activities for individuals with mental illness will be given only to a 
System that has been established under Part C of the Developmental 
Disabilities Assistance and Bill of Rights Act (42 U.S.C. 6041, et seq.) 
and designated in accordance with 45 CFR part 1386, subpart B.
    (b) The P&A system must meet the requirements of sections 105 and 
111 of the Act (42 U.S.C. 10805 and 10821) and that P&A system must be 
operational. Each system shall submit an application at the beginning of 
each PAIMI authorization period. This application

[[Page 154]]

shall contain at a minimum the program priorities and budget for the 
first year of the authorization period and the required assurances and 
certifications. Thereafter, the system shall submit yearly updates of 
the budget and program priorities for the upcoming fiscal year through 
its annual report.
    (c) Written assurances of compliance with sections 105 and 111 of 
the Act (42 U.S.C. 10805 and 10821) and other requirements of the Act 
and this part shall be submitted by the P&A system in the format 
designated by the Director. These assurances will remain in effect for 
the period specified in the application for funds unless changes occur 
within the State which affect the functioning of the P&A system, in 
which case an amendment will be required 30 days prior to the effective 
date of the change. The P&A system shall also provide the Department the 
name of the designated official.
    (d) The Governor's written assurance that the allotments made 
available under the Act will be used to supplement and not to supplant 
the level of non-Federal funds available in the State to protect and 
advocate the rights of individuals with mental illness shall be 
submitted by the P&A system. The Governor may provide this assurance 
along with the assurances provided to ADD under 45 CFR part 1386, as 
long as it can reasonably be construed as applying to the PAIMI program. 
Any future ``supplement and not supplant'' assurance shall explicitly 
refer to the PAIMI program.



Sec. 51.6  Use of allotments.

    (a) Allotments must be used to supplement and not to supplant the 
level of non-Federal funds available in the State to protect and 
advocate the rights of individuals with mental illness.
    (b) Allotments may not be used to support lobbying activities to 
influence proposed or pending Federal legislation or appropriations. 
This restriction does not affect the right of any P&A system, 
organization or individual to petition Congress or any other government 
body or official using other resources.
    (c) Allotments may not be used to produce or distribute written, 
audio or visual materials or publicity intended or designed to support 
or defeat any candidate for public office.
    (d) If an eligible P&A system is a public entity, that P&A system 
shall not be required by the State to obligate more than five percent of 
its annual allotment for State oversight administrative expenses under 
this grant such as costs of internal or external evaluations, monitoring 
or auditing. This restriction does not include:
    (1) Salaries, wages and benefits of program staff;
    (2) Costs associated with attending governing board or advisory 
council meetings; or
    (3) Expenses associated with the provision of training or technical 
assistance for staff, contractors, members of the governing board or 
advisory council.
    (e) No more than ten percent of each annual allotment may be used 
for providing technical assistance and training, including travel 
expenses for staff, contractors, or members of the governing board or 
advisory council as defined in Sec. 51.27.
    (f) Allotments may be used to pay the otherwise allowable costs 
incurred by a P&A system in bringing lawsuits in its own right to 
redress incidents of abuse or neglect, discrimination, and other rights 
violations impacting on individuals with mental illness and when it 
appears on behalf of named plaintiffs or a class of plaintiffs for such 
purposes.



Sec. 51.7  Eligibility for protection and advocacy services.

    In accordance with section 105(a)(1)(C) of the Act (42 U.S.C. 
10805(a)(1)(C)) and the priorities established by the P&A system 
governing authority, together with the advisory council, pursuant to 
section 105(c)(2)(B) of the Act (42 U.S.C. 10805(c)(2)(B)), allotments 
may be used:
    (a) To provide protection and advocacy services for:
    (1) Individuals with mental illness as defined in 42 U.S.C. 10802(4) 
and 10805(a), including persons who report matters which occurred while 
they were individuals with mental illness;
    (2) Persons who were individuals with mental illness who are 
residents of the

[[Page 155]]

State, but only with respect to matters which occur within 90 days after 
the date of the discharge of such individuals from a facility providing 
care or treatment; and
    (3) Individuals with mental illness in Federal facilities rendering 
care or treatment who request representation by the eligible P&A system. 
Representation may be requested by an individual with mental illness, or 
by a legal guardian, conservator or legal representative.
    (b) To provide representation of clients in civil commitment 
proceedings if the P&A system is acting on behalf of an eligible 
individual to obtain judicial review of his or her commitment in order 
to appeal or otherwise challenge acts or omissions which have subjected 
the individual to abuse or neglect or otherwise violated his or her 
rights. This restriction does not prevent a P&A system from representing 
clients in commitment or recommitment proceedings using other resources 
so long as this representation does not conflict with responsibilities 
under the Act.



Sec. 51.8  Annual reports.

    By January 1 of each year, a report shall be submitted, pursuant to 
section 105(a)(7) of the Act (42 U.S.C. 10805(a)(7)), to the Secretary 
which is in the format designated by the Secretary.

    Effective Date Note: At 62 FR 53564, Oct. 15, 1997, Sec. 51.8 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



Sec. 51.9  [Reserved]



Sec. 51.10  Remedial actions.

    Failure to submit an annual report in the designated format on time 
or to submit requested information and documentation, corrective action 
plans and ongoing implementation status reports in response to Federal 
review and monitoring activities or to satisfy any other requirement of 
the Act, this part, or other requirements, may be considered a breach of 
the terms and conditions of the grant award and may required remedial 
action, such as the suspension or termination of an active grant, 
withholding of payments or converting to a reimbursement method of 
payment. Any remedial actions shall be taken consistent with 45 CFR Part 
74 and 42 CFR Part 50, as appropriate.

    Effective Date Note: At 62 FR 53564, Oct. 15, 1997, Sec. 51.10 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



Sec. Sec. 51.11-51.20  [Reserved]



             Subpart B_Program Administration and Priorities



Sec. 51.21  Contracts for program operations.

    (a) An eligible P&A system should work cooperatively with existing 
advocacy agencies and groups and, where appropriate, consider entering 
into contracts for protection and advocacy services with organizations 
already working on behalf of individuals with metal illness. Special 
consideration should be given to contracting for the services of groups 
run by individuals who have received or are receiving mental health 
services or by family members of such individuals.
    (b) An eligible P&A system may contract for the operation of all or 
part of its program with another public or private nonprofit 
organization with demonstrated experience in working with individuals 
with mental illness provided that:
    (1) Any organization that will operate the full program meets the 
requirements of section 104(a)(1), 105 and 111 of the Act (42 U.S.C. 
10804(a)(1), 10805 and 10821) and has the capacity to perform protection 
and advocacy activities throughout the State;
    (2) The eligible P&A system institutes oversight and monitoring 
procedures which ensure that this system will be able to meet all 
applicable terms, conditions and obligations of the Federal grant;
    (3) The eligible P&A system and the contractor organization enter 
into a written agreement that includes at least the following:
    (i) A description of the protection and advocacy services to be 
provided;

[[Page 156]]

    (ii) The type of personnel, their qualifications and training;
    (iii) The methods to be used;
    (iv) A timetable for performance;
    (v) A budget;
    (vi) Assurances that the contractor will meet all applicable terms 
and conditions of the grant;
    (vii) Assurances that the contractor has adequate management and 
fiscal systems in place, including insurance coverage, if appropriate:
    (viii) Assurances that the contractor's staff is trained to provide 
advocacy services to and conduct full investigations on behalf of 
individuals with mental illness; and
    (ix) Assurances that the contractor staff is trained to work with 
family members of clients served by the P&A system where the clients 
are:
    (A) Minors;
    (B) Legally competent and choose to involve the family member; or,
    (C) Legally incompetent and the legal guardians, conservators or 
other legal representatives are family members.



Sec. 51.22  Governing authority.

    (a) Each P&A system shall have a governing authority responsible for 
its planning, designing, implementing and functioning. It shall, jointly 
with the advisory council, annually establish program priorities and 
policies.
    (b) If the P&A system is organized with a multi-member governing 
board:
    (1) Each P&A system shall establish policies and procedures for the 
selection of its governing board members and for the board evaluation of 
the P&A system director. The terms of board members shall be staggered 
and for 4 years except that any member appointed to fill a vacancy for 
an unexpired term shall serve for the remainder of such term. A member 
who has been appointed for a term of 4 years may not be reappointed to 
the governing board during the 2-year period beginning on the date on 
which such 4-year term expired.
    (2) The board shall be composed of members who broadly represent or 
are knowledgeable about the needs of the clients served by the P&A 
system and shall include a significant representation of individuals 
with mental illness who are, or have been eligible for services, or have 
received or are receiving mental health services, and family members, 
guardians, advocates, or authorized representatives of such individuals.
    (3) If the governing authority is organized as a private nonprofit 
entity, the chairperson of the advisory council shall be a member of the 
governing board.
    (c) Continuing efforts shall be made to include members of racial 
and ethnic minority groups as board members.
    (d) Any member of the advisory council may also serve on the 
governing board.



Sec. 51.23  Advisory council.

    (a) Each P&A system shall establish an advisory council to:
    (1) Provide independent advice and recommendations to the system.
    (2) Work jointly with the governing authority in the development of 
policies and priorities.
    (3) Submit a section of the system's annual report as required under 
Sec. 51.8.
    (b) Members of the council shall include attorneys, mental health 
professionals, individuals from the public who are knowledgeable about 
mental illness, the advocacy needs of persons with mental illness and 
have demonstrated a substantial commitment to improving mental health 
services, a provider of mental health services, individuals who have 
received or are receiving mental health services and family members of 
such individuals. Continuing efforts shall be made to include members of 
racial and ethnic minority groups on the advisory council.
    (1) At least 60 percent of the membership of the advisory council 
shall be comprised of individuals who have received or are receiving 
mental health services or who are family members of such individuals. At 
least one family member shall be a primary care giver for an individual 
who is currently a minor child or youth who is receiving or has received 
mental health services;
    (2) The council shall be chaired by an individual who has received 
or is receiving mental health services or who is a family member of such 
an individual;

[[Page 157]]

    (3) The advisory council shall meet no less than three times 
annually. The terms of council members shall be staggered and for 4 
years except that any member appointed to fill a vacancy for an 
unexpired term shall serve for the remainder of such term. A member who 
has been appointed for a term of 4 years may not be reappointed to the 
council during the 2-year period beginning on the date on which such 4-
year term expired.
    (c) Each P&A system shall provide its advisory council with reports, 
materials and fiscal data to enable review of existing program policies, 
priorities and performance outcomes. Such submissions shall be made at 
least annually and shall report expenditures for the past two fiscal 
years, as well as projected expenses for the next fiscal year, 
identified by budget category (e.g., salary and wages, contract for 
services, administrative expenses) including the amount allotted for 
training of each the advisory council, governing board and staff.
    (d) Reimbursement of expenses. (1) Allotments may be used to pay for 
all or a part of the expenses incurred by members of the advisory 
council in order to participate in its activities. Expenses may include 
transportation costs, parking, meals, hotel costs, per diem expenses, 
stipends or subsistence allowances, and the cost of day care or child 
care (or its equivalent for the child's travel and subsistence expenses) 
for their dependents with mental illness or developmental disabilities.
    (2) Each P&A system shall establish its own policies and procedures 
for reimbursement of expenses of council members, taking into account 
the needs of individual council members, available resources, and 
applicable restrictions on use of grant funds, including the 
restrictions in Sec. Sec. 51.31(e) and 51.6(e).

    Effective Date Note: At 62 FR 53564, Oct. 15, 1997, Sec. 51.23 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



Sec. 51.24  Program priorities.

    (a) Program priorities and policies shall be established annually by 
the governing authority, jointly with the advisory council. Priorities 
shall specify short-term program goals and objectives, with measurable 
outcomes, to implement the established priorities. In developing 
priorities, consideration shall be given to, at a minimum, case 
selection criteria, the availability of staff and monetary resources, 
and special problems and cultural barriers faced by individuals with 
mental illness who are multiply handicapped or who are members of racial 
or ethnic minorities in obtaining protection of their rights. Systemic 
and legislative activities shall also be addressed in the development 
and implementation of program priorities.
    (b) Members of the public shall be given an opportunity, on an 
annual basis, to comment on the priorities established by, and the 
activities of, the P&A system. Procedures for public comment must 
provide for notice in a format accessible to individuals with mental 
illness, including such individuals who are in residential facilities, 
to family members and representatives of such individuals and to other 
individuals with disabilities. Procedures for public comment must 
provide for receipt of comments in writing or in person.



Sec. 51.25  Grievance procedure.

    (a) The P&A system shall establish procedures to address grievances 
from:
    (1) Clients or prospective clients of the P&A system to assure that 
individuals with mental illness have full access to the services of the 
program; and
    (2) Individuals who have received or are receiving mental health 
services in the State, family members of such individuals, or 
representatives of such individuals or family members to assure that the 
eligible P&A system is operating in compliance with the Act.
    (b) At a minimum, the grievance procedures shall provide for:
    (1) An appeal to the governing authority from any final staff review 
and/or determination; in cases where the governing authority is the 
director of the P&A system, the final review and/or determination shall 
be made by a superior of the governing authority, e.g., a supervisor, or 
by an independent

[[Page 158]]

entity, e.g., an appointed board or committee.
    (2) Reports, at least annually, to the governing authority and the 
advisory council describing the grievances received and processed and 
their resolution;
    (3) Identification of individuals responsible for review;
    (4) A timetable to ensure prompt notification concerning the 
grievance procedure to clients, prospective clients or persons denied 
representation, and to ensure prompt resolution;
    (5) A written response to the grievant; and
    (6) Protection of client confidentiality.

    Effective Date Note: At 62 FR 53564, Oct. 15, 1997, Sec. 51.25 was 
added. This section contains information collection and recordkeeping 
requirements and will not become effective until approval has been given 
by the Office of Management and Budget.



Sec. 51.26  Conflicts of interest.

    The P&A system must develop appropriate policies and procedures to 
avoid actual or apparent conflict of interest involving clients, 
employees, contractors and subcontractors, and members of the governing 
authority and advisory council, particularly with respect to matters 
affecting client services, particular contracts and subcontracts, 
grievance review procedures, reimbursements and expenses, and the 
employment or termination of staff.



Sec. 51.27  Training.

    A P&A system shall provide training for program staff, and may also 
provide training for contractors, governing board and advisory council 
members to enhance the development and implementation of effective 
protection and advocacy services for individuals with mental illness, 
including at a minimum:
    (a)(1) Training of program staff to work with family members of 
clients served by the program where the individual with mental illness 
is:
    (i) A minor,
    (ii) Legally competent and chooses to involve the family member; or
    (iii) Legally incompetent and the legal guardian, conservator or 
other legal representative is a family member.
    (2) This training may be provided by individuals who have received 
or are receiving mental health services and family members of such 
individuals.
    (b) Training to enhance sensitivity to and understanding of 
individuals with mental illness who are members of racial or ethnic 
minorities and to develop strategies for outreach to those populations.
    (c) Training to conduct full investigations of abuse or neglect.



Sec. Sec. 51.28-51.30  [Reserved]



               Subpart C_Protection and Advocacy Services



Sec. 51.31  Conduct of protection and advocacy activities.

    (a) Consistent with State and Federal law and the canons of 
professional ethics, a P&A system may use any appropriate technique and 
pursue administrative, legal or other appropriate remedies to protect 
and advocate on behalf of individuals with mental illness to address 
abuse, neglect or other violations of rights.
    (b) A P&A system shall establish policies and procedures to guide 
and coordinate advocacy activities. The P&A system shall not implement a 
policy or practice restricting the remedies which may be sought on 
behalf of individuals with mental illness or compromising the authority 
of the P&A system to pursue such remedies through litigation, legal 
action or other forms of advocacy. However, this requirement does not 
prevent the P&A system from placing limitations on case or client 
acceptance criteria developed as part of the annual priorities. 
Prospective clients must be informed of any such limitations at the time 
they request service.
    (c) Wherever possible, the program should establish an ongoing 
presence in residential mental health care or treatment facilities, and 
relevant hospital units.
    (d) Program activities should be carried out in a manner which 
allows program staff to:

[[Page 159]]

    (1) Interact regularly with those individuals who are current or 
potential recipients of protection and advocacy services;
    (2) Interact regularly with staff providing care or treatment;
    (3) Obtain information and review records; and
    (4) Communicate with family members, social and community service 
workers and others involved in providing care or treatment.
    (e) A P&A system may support or provide training, including related 
travel expenses, for individuals with mental illness, family members of 
such individuals, and other persons who are not program staff, 
contractors, or board or council members, to increase knowledge about 
protection and advocacy issues, to enhance leadership capabilities, or 
to promote Federal-State and intra-State cooperation on matter related 
to mental health system improvement. Decisions concerning the selection 
of individuals to receive such training shall be made in accordance with 
established policies, procedures and priorities of the P&A system.
    (f) A P&A system may monitor, evaluate and comment on the 
development and implementation of Federal, State and local laws, 
regulations, plans, budgets, levies, projects, policies and hearings 
affecting individuals with mental illness as a part of federally funded 
advocacy activities. A P&A system shall carry out systemic advocacy--
those efforts to implement changes in policies and practices of systems 
that impact persons with mental illness.
    (g) Determination of ``probable cause'' may result from P&A system 
monitoring or other activities, including observation by P&A system 
personnel, and reviews of monitoring and other reports prepared by 
others whether pertaining to individuals with mental illness or to 
general conditions affecting their health or safety.
    (h) A P&A which is a public P&A system shall be free from hiring 
freezes, reductions in force, prohibitions on staff travel, or other 
policies imposed by the State to the extend that such policies would 
impact program staff or activities funded with Federal dollars and would 
prevent the P&A system from carrying out its mandates under the Act.
    (i) A P&A system may exercise its authority under State law where 
the authority exceeds the authority required by the Act. However, State 
law must not diminish the required authority of the Act.



Sec. 51.32  Resolving disputes.

    (a) Each P&A system is encouraged to develop and employ techniques 
such as those involving negotiation, conciliation and mediation to 
resolve disputes early in the protection and advocacy process.
    (b) Disputes should be resolved whenever possible through 
nonadversarial process involving negotiation, mediation and 
conciliation. Consistent with State and Federal laws and canons of 
professional responsibility, family members should be involved in this 
process, as appropriate, where the individual with mental illness is:
    (1) A minor,
    (2) Legally competent and chooses to involve the family member, or
    (3) Legally incompetent and the legal guardian, conservator or other 
legal representative is a family member or the legal guardian, 
conservator or other legal representative chose to involve the family 
member.
    (c) A P&A system must exhaust in a timely manner all administrative 
remedies, where appropriate, prior to initiating legal action in a 
Federal or State court.
    (d) Paragraph (c) of this section does not apply to any legal action 
instituted to prevent or eliminate imminent serious harm to an 
individual with mental illness nor does it apply in circumstances where 
administrative procedures do not exist. If in pursing administrative 
remedies, the P&A system determines that any matter with respect to an 
individual with mental illness with mental illness with not be resolved 
within a reasonable time, the P&A system may pursue alternative 
remedies, including initiating legal action.
    (e) A P&A system shall be held to the standard of exhaustion of 
remedies provided under State and Federal law. The Act imposes no 
additional burden respecting exhaustion of remedies.

[[Page 160]]



Sec. Sec. 51.33-51.40  [Reserved]



         Subpart D_Access to Records, Facilities and Individuals



Sec. 51.41  Access to records.

    (a) Access to records shall be extended promptly to all authorized 
agents of a P&A system.
    (b) A P&A system shall have access to the records of any of the 
following individuals with mental illness:
    (1) An individual who is a client of the P&A system if authorized by 
that individual or the legal guardian, conservator or other legal 
representative.
    (2) An individual, including an individual who has died or whose 
whereabouts is unknown to whom all of the following conditions apply:
    (i) The individual, due to his or her mental or physical condition, 
is unable to authorize the P&A system to have access.
    (ii) The individual does not have a legal guardian, conservator or 
other legal representative, or the individual's guardian is the State or 
one of its political subdivisions; and
    (iii) A complaint or report has been received and the P&A system has 
determined that there is probable cause to believe that the individual 
has been or may be subject to abuse or neglect.
    (3) An individual who has a legal guardian, conservator, or other 
legal representative, with respect to whom a complaint or report has 
been received by the P&A system and with respect to whom the P&A system 
has determined that there is probable cause to believe that the health 
or safety of the individual is in serious and immediate jeopardy, 
whenever all of the following conditions exists:
    (i) The P&A system has made a good faith effort to contact the 
representative upon prompt receipt of the representative's name and 
address;
    (ii) The P&A system has made a good faith effort to offer assistance 
to the representative to resolve the situation; and
    (iii) The representative has failed or refused to act on behalf of 
the individual.

(c) Information and individual records, whether written or in another 
medium, draft or final, including handwritten notes, electronic files, 
photographs or video or audio tape records, which shall be available to 
the P&A system under the Act shall include, but not be limited to:
    (1) Information and individual records, obtained in the course of 
providing intake, assessment, evaluation, supportive and other services, 
including medical records, financial records, and reports prepared or 
received by a member of the staff of a facility or program rendering 
care or treatment. This includes records stored or maintained in 
locations other than the facility or program as long as the system has 
obtained appropriate consent consistent with section 105(a)(4) of the 
Act. The system shall request of facilities that in requesting records 
from service providers or other facilities on residents that they 
indicate in the release form the records may be subject to review by a 
system.
    (2) Reports prepared by an agency charged with investigating abuse 
neglect, or injury occurring at a facility rendering care or treatment, 
or by or for the facility itself, that describe any or all of the 
following:
    (i) Abuse, neglect, or injury occurring at the facility;
    (ii) The steps taken to investigate the incidents;
    (iii) Reports and records, including personnel records, prepared or 
maintained by the facility, in connection with such reports of 
incidents; or
    (iv) Supporting information that was relied upon in creating a 
report, including all information and records used or reviewed in 
preparing reports of abuse, neglect or injury such as records which 
describe persons who were interviewed, physical and documentary evidence 
that was reviewed, and the related investigative findings.
    (3) Discharge planning records.
    (4) Reports prepared by individuals and entities performing 
certification or licensure reviews, or by professional accreditation 
organizations, as well as related assessments prepared for the facility 
by its staff, contractors or related entities, except that nothing in 
this section is intended to preempt State law protecting records 
produced by medical care evaluation or peer review committees.

[[Page 161]]

    (5) Professional, performance, building or other safety standards, 
demographic and statistical information relating to the facility.
    (d) A P&A system shall have reasonable access and authority to 
interview and examine all relevant records of any facility service 
recipient (consistent with the provisions of section 105(a)(4) of the 
Act) or employee.
    (e) A P&A system shall be permitted to inspect and copy records, 
subject to a reasonable charge to offset duplicating costs.



Sec. 51.42  Access to facilities and residents.

    (a) Access to facilities and residents shall be extended to all 
authorized agents of a P&A system.
    (b) A P&A system shall have reasonable unaccompanied access to 
public and private facilities and programs in the State which render 
care or treatment for individuals with mental illness, and to all areas 
of the facility which are used by residents or are accessible to 
residents. The P&A system shall have reasonable unaccompanied access to 
residents at all times necessary to conduct a full investigation of an 
incident of abuse or neglect. This authority shall include the 
opportunity to interview any facility service recipient, employee, or 
other persons, including the person thought to be the victim of such 
abuse, who might be reasonably believed by the system to have knowledge 
of the incident under investigation. Such access shall be afforded, upon 
request, by the P&A system when:
    (1) An incident is reported or a complaint is made to the P&A 
system;
    (2) The P&A system determines there is probable cause to believe 
that an incident has or may have occurred; or
    (3) The P&A system determines that there is or may be imminent 
danger of serious abuse or neglect of an individual with mental illness.
    (c) In addition to access as prescribed in paragraph (b) of this 
section, a P&A system shall have reasonable unaccompanied access to 
facilities including all area which are used by residents, are 
accessible to residents, and to programs and their residents at 
reasonable times, which at a minimum shall include normal working hours 
and visiting hours. Residents include adults or minors who have legal 
guardians or conservators. P&A activities shall be conducted so as to 
minimize interference with facility programs, respect residents' privacy 
interests, and honor a resident's request to terminate an interview. 
This access is for the purpose of:
    (1) Providing information and training on, and referral to programs 
addressing the needs of individuals with mental illness, and information 
and training about individual rights and the protection and advocacy 
services available from the P&A system, including the name, address, and 
telephone number of the P&A system.
    (2) Monitoring compliance with respect to the rights and safety of 
residents; and
    (3) Inspecting, viewing and photographing all areas of the facility 
which are used by residents or are accessible to residents.
    (d) Unaccompanied access to residents shall include the opportunity 
to meet and communicate privately with individuals regularly, both 
formally and informally, by telephone, mail and in person. Residents 
include minors or adults who have legal guardians or conservators.
    (e) The right of access specified in paragraph (c) of this section 
shall apply despite the existence of any State or local laws or 
regulations which restrict informal access to minors and adults with 
legal guardians or conservators. The system shall make very effort to 
ensure that the parents of minors or guardians of individuals in the 
care of a facility are informed that the system will be monitoring 
activities at the facility and may in the course of such monitoring have 
access to the minor or adult with a legal guardian. The system shall 
take no formal action on behalf of individuals with legal guardians or 
conservators, or initiate a formal attorney/client or advocate/client 
relationship without appropriate consent, except in emergency situations 
as described in Sec. 51.41(b)(3).
    (f) A P&A system providing representation to individuals with mental 
illness in Federal facilities shall have all

[[Page 162]]

the rights and authority accorded other representatives of residents of 
such facilities pursuant to State and Federal laws.



Sec. 51.43  Denial or delay of access.

    If a P&A system's access to facilities, programs, residents or 
records covered by the Act or this part is delayed or denied, the P&A 
system shall be provided promptly with a written statement of reasons, 
including, in the case of a denial for alleged lack of authorization, 
the name, address and telephone number of the legal guardian, 
conservator, or other legal representative of an individual with mental 
illness. Access to facilities, records or residents shall not be delayed 
or denied without the prompt provision of written statements of the 
reasons for the denial.



Sec. 51.44  [Reserved]



Sec. 51.45  Confidentiality of protection and advocacy system records.

    (a) Records maintained by the P&A system are the property of the P&A 
system which must protect them from loss, damage, tampering or use by 
unauthorized individuals. The P&A system must:
    (1) Except as provided elsewhere in this section, keep confidential 
all records and information, including information contained in any 
automated electronic database pertaining to:
    (i) Clients to the same extent as is required under Federal or State 
laws for a provider of mental health services;
    (ii) Individuals who have been provided general information or 
technical assistance on a particular matter;
    (iii) Identity of individuals who report incidents of abuse or 
neglect or furnish information that forms the basis for a determination 
that probable cause exists; and
    (iv) Names of individuals who are residents and provide information 
for the record.
    (2) Have written policies governing access to, storage of, 
duplication and release of information from client records; and
    (3) Obtain written consent from the client, if competent, or from 
his or her legal representative, from individuals who have been provided 
general information or technical assistance on a particular matter and 
from individuals who furnish reports or information that forms the basis 
for a determination of probable cause, before releasing information to 
individuals not otherwise authorized to receive it.
    (b) Nothing in this subpart shall prevent the P&A system from. (1) 
Issuing a public report of the results of an investigation which 
maintains the confidentiality of the individuals listed in paragraph 
(a)(1) of this section or,
    (2) Reporting the results of an investigation which maintains the 
confidentiality of individual service recipients to responsible 
investigative or enforcement agencies should an investigation reveal 
information concerning the facility, its staff, or employees warranting 
possible sanctions or corrective action. this information may be 
reported to agencies responsible for facility licensing or 
accreditation, employee discipline, employee licensing or certification, 
or criminal prosecution.
    (c) For purposes of any periodic audit, report, or evaluation of the 
performance of the P&A system, the Secretary shall not require the P&A 
system to disclose the identity, or any other personally identifiable 
information, of any individual requesting assistance under a program. 
This requirement does not restrict access by the Department or other 
authorized Federal or State officials to client records or other records 
of the P&A system when deemed necessary for audit purposes and for 
monitoring P&A system compliance with applicable Federal or State laws 
and regulations. The purpose of obtaining such information is solely to 
determine that P&A systems are spending their grant funds awarded under 
the Act on serving individuals with mental illness. Officials that have 
access to such information must keep it confidential to the maximum 
extent permitted by law and regulations. If photostatic copies of 
materials are provided, then the destruction of such evidence is 
required once such reviews have been completed.
    (d) Subject to the restrictions and procedures set out in this 
section, implementing section 106 (a) and (b) of the Act (42 U.S.C. 
10806 (a) and (b)), this

[[Page 163]]

part does not limit access by a legal guardian, conservator, or other 
legal representative of an individual with mental illness, unless 
prohibited by State or Federal law, court order or the attorney-client 
privilege.



Sec. 51.46  Disclosing information obtained from a provider of mental health 

services.

    (a) Except as provided in paragraph (b) of this section, if a P&A 
system has access to records pursuant to section 105(a)(4) of the Act 
(42 U.S.C. 10805(a)(4)) which, under Federal or State law, are required 
to be maintained in a confidential manner by a provider of mental health 
services, it may not disclose information from such records to the 
individual who is the subject of the information if the mental health 
professional responsible for supervising the provision of mental health 
services to that individual has given the P&A system a written 
determination that disclosure of such information to the individual 
would be detrimental to the individual's health. The provider shall be 
responsible for giving any such written determination to the P&A system 
at the same time as access to the records containing the information is 
granted.
    (b)(1) If the disclosure of information has been denied under 
paragraph (a) of this section to an individual, the following 
individuals or the P&A system may select another mental health 
professional to review the information and to determine if disclosure of 
the information would be detrimental to the individual's health:
    (i) Such individual;
    (ii) The legal guardian, conservator or other legal representative 
of the individual; or
    (iii) An eligible P&A system, acting on behalf of an individual:
    (A) Whose legal guardian is the State; or
    (B) Whose legal guardian, conservator, or other legal representative 
has not, within a reasonable time after the denial of access to 
information under paragraph (a), selected a mental health professional 
to review the information.
    (2) If such mental health professional determines, based on 
professional judgment, that disclosure of the information would not be 
detrimental to the health of the individual, the P&A system may disclose 
such information to the individual.
    (c) The restriction in paragraph (b) of this section does not affect 
the P&A system's access to the records.



PART 51a_PROJECT GRANTS FOR MATERNAL AND CHILD HEALTH--Table of Contents




Sec.
51a.1 To which programs does this regulation apply?
51a.2 Definitions.
51a.3 Who is eligible to apply for Federal funding?
51a.4 How is application made for Federal funding?
51a.5 What criteria will DHHS use to decide which projects to fund?
51a.6 What confidentiality requirements must be met?
51a.7 What other DHHS regulations apply?
51a.8 What other conditions apply to these grants?

    Authority: Sec. 1102 of the Social Security Act, 49 Stat. 647 (42 
U.S.C. 1302); sec. 502(a), 502(b)(1)(A), and 506(a)(3) of the Social 
Security Act, 95 Stat. 819-20 (42 U.S.C. 702(a), 702(b)(1)(A) and 
706(a)(3)).

    Source: 51 FR 7727, Mar. 5, 1986, unless otherwise noted.



Sec. 51a.1  To which programs does this regulation apply?

    The regulation in this part applies to grants, contracts, and other 
arrangements under section 502(a) and 502(b)(1)(A) of the Social 
Security Act, as amended (42 U.S.C. 702(a) and 702(b)(1)(A)), the 
Maternal and Child Health (MCH) Federal Set-Aside project grant 
programs. Section 502(a) authorizes funding for special projects of 
regional and national significance (SPRANS), research and training 
projects with respect to maternal and child health and children with 
special health care needs (including early intervention training and 
services development); genetic disease testing, counseling and 
information programs; comprehensive hemophilia diagnostic and treatment 
centers; projects for screening and follow-up of newborns for sickle 
cell anemia and other genetic disorders; and special maternal and child 
health improvement projects. Section 502(b)(1)(A) authorizes funding

[[Page 164]]

for projects termed community integrated service system (CISS) projects 
for the development and expansion of: maternal and infant health home 
visiting; projects to increase the participation of obstetricians and 
pediatricians in title V and title XIX programs; integrated maternal and 
child health service systems; maternal and child health centers 
operating under the direction of not-for-profit hospitals; rural 
maternal and child health programs; and outpatient and community-based 
services programs for children with special health care needs.

[59 FR 36706, July 19, 1994]



Sec. 51a.2  Definitions.

    Act means the Social Security Act, as amended.
    Genetic diseases means inherited disorders caused by the 
transmission of certain aberrant genes from one generation to another.
    Hemophilia means a genetically transmitted bleeding disorder 
resulting from a deficiency of a plasma clotting factor.
    Institution of higher learning means any college or university 
accredited by a regionalized body or bodies approved for such purpose by 
the Secretary of Education, and any teaching hospital which has higher 
learning among its purposes and functions and which has a formal 
affiliation with an accredited school of medicine and a full-time 
academic medical staff holding faculty status in such school of 
medicine.
    Secretary means the Secretary of Health and Human Services or his or 
her designee.



Sec. 51a.3  Who is eligible to apply for Federal funding?

    (a) With the exception of training and research, as described in 
paragraph (b) of this section, any public or private entity, including 
an Indian tribe or tribal organization (as those terms are defined at 25 
U.S.C. 450b) is eligible to apply for federal funding under this Part.
    (b) Only public or nonprofit private institutions of higher learning 
may apply for training grants. Only public or nonprofit institutions of 
higher learning and public or private nonprofit agencies engaged in 
research or in programs relating to maternal and child health and/or 
services for children with special health care needs may apply for 
grants contracts or cooperative agreements for research in maternal and 
child health services or in services for children with special health 
care needs.

[59 FR 36706, July 19, 1994]



Sec. 51a.4  How is application made for Federal funding?

    An application for funding under the MCH Federal Set-Aside project 
grant programs must be submitted to the Secretary at such time and in 
such manner as the Secretary may prescribe. It must include a budget and 
narrative plan of the manner in which the project will meet each of the 
requirements prescribed by the Secretary. The plan must describe the 
project in sufficient detail to identify clearly the nature, need, and 
specific objectives of, and methodology for carrying out, the project.

(Approved by the Office of Management and Budget under control number 
0915-0050)

[59 FR 36706, July 19, 1994]



Sec. 51a.5  What criteria will DHHS use to decide which projects to fund?

    (a) The Secretary will determine the allocation of funds available 
under sections 502(a) and 502(b)(1)(A) of the Act for each of the 
activities described in Sec. 51a.1.
    (b) Within the limit of funds determined by the Secretary to be 
available for each of the activities described in Sec. 51a.1, the 
Secretary may award Federal funding for projects under this part to 
applicants which will, in his or her judgment, best promote the purpose 
of title V of the Social Security Act and address achievement of Healthy 
Children 2000 objectives, \1\ taking, the following factors into 
account:
---------------------------------------------------------------------------

    \1\ Healthy Children 2000: National Health Promotion and Disease 
Prevention Objectives Related to Mothers, Infants, Children, 
Adolescents, and Youth is a special compendium of health status goals 
and national health objectives affecting mothers, infants, children, 
adolescents, and youth originally published in Healthy People 2000 in 
September 1990. Potential applicants may obtain a copy of Healthy People 
2000 (Full Report: Stock No. 017-001-00474-0 or Healthy People 2000 
(Summary Report; Stock No. 017-001-00473-1) through the Superintendent 
of Documents, Government Printing Office Washington, DC 20402-9325, 
(telephone: 202 512-1800).

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

[[Page 165]]

    (1) The extent to which the project will contribute to the 
advancement of maternal and child health and/or improvement of the 
health of children with special health care needs;
    (2) The extent to which the project is responsive to policy concerns 
applicable to MCH grants and to program objectives, requirements, 
priorities and/or review criteria for specific project categories, as 
published in program announcements or guidance materials.
    (3) The extent to which the estimated cost to the Government of the 
project is reasonable, considering the anticipated results;
    (4) The extent to which the project personnel are well qualified by 
training and/or experience for their roles in the project and the 
applicant organization has adequate facilities and personnel; and
    (5) The extent to which, insofar as practicable, the proposed 
activities, if well executed, are capable of attaining project 
objectives.
    (c) For the following types of CISS projects, preference for funding 
will be given to qualified applicants in areas with a high infant 
mortality rate (relative to the latest average infant mortality rate in 
the United States or in the State in which the area is located):
    (1) Projects for the development and expansion of maternal and 
infant health home visiting;
    (2) Projects to increase the participation of obstetricians and 
pediatricians in title V and title XIX programs;
    (3) Integrated maternal and child health service systems;
    (4) Maternal and child health centers operating under the direction 
of not-for-profit hospitals;
    (5) Rural maternal and child health programs; and
    (6) Outpatient and community based services for children with 
special health care needs.

[59 FR 36706, July 19, 1994]



Sec. 51a.6  What confidentiality requirements must be met?

    All information as to personal facts and circumstances obtained by 
the project's staff about recipients of services shall be held 
confidential, and shall not be disclosed without the individual's 
consent except as may be otherwise required by applicable law or as may 
be necessary to provide for medical audits by the Secretary with 
appropriate safeguards for confidentiality of patient records. 
Otherwise, information may be disclosed only in summary, statistical, or 
other form which does not identify particular individuals.



Sec. 51a.7  What other DHHS regulations apply?

    (a) Several other DHHS regulations apply to awards under this part. 
These include, but are not limited to:

42 CFR part 50--Policies of general applicability:
    subpart B--Sterilization of persons in federally assisted family 
planning projects.
    subpart C--Abortions and related medical services in federally 
assisted programs of the Public Health Service.
    subpart E--Maximum allowable cost for drugs.

45 CFR part 76--Governmentwide debarment and suspension (nonprocurement) 
and governmentwide requirements for drug-free workplace (grants).
45 CFR part 80--Nondiscrimination under programs receiving Federal 
assistance through the Department of Health and Human Service--
Effectuation of title VI of the Civil Rights Act of 1964.
45 CFR part 81--Practice and procedure for hearings under Part 80 of 
this title.
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial 
assistance.
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance.
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance.
45 CFR part 93--New restrictions on lobbying.

    (b) In addition to the above regulations, the following apply to 
projects funded through grants:

42 CFR part 50--Policies of general applicability:

[[Page 166]]

    subpart D--Public Health Service grant appeals procedure.
45 CFR part 16--Procedures of the Departmental Grant Appeals Board.
45 CFR part 74--Administration of grants to nonprofit organizations.
45 CFR part 75--Informal grant appeals procedures.
45 CFR part 92--Administration of grants to State and local governments.

[59 FR 36707, July 19, 1994]



Sec. 51a.8  What other conditions apply to these grants?

    (a) Recipients of project grants will be required to submit such 
additional information to the Secretary on an annual basis as the 
Secretary determines, including:
    (1) the number of individuals served or trained, as appropriate 
under the project;
    (2) a copy of any evaluation conducted by the recipient; and
    (3) a list of Healthy Children 2000 objectives addressed by the 
project and data on how the project contributed toward meeting the 
objectives.
    (b) The Secretary may at the time of award of project grants under 
this Part impose additional conditions, including conditions governing 
the use of information or consent forms, when, in the Secretary's 
judgment, they are necessary to advance the approved program, the 
interest of public health, or the conservation of grant funds.
    (c) Grant recipients of Healthy Tomorrows Partnership for Children 
Program, a Community Integrated Service System-funded initiative, must 
contribute non-Federal matching funds in years 2 through 5 of the 
project period equal to two times the amount of the Federal Grant Award 
or such lesser amount determined by the Secretary for good cause shown. 
Reimbursement for services provided to an individual under a State plan 
under Title XIX will not be deemed ``non-Federal matching funds'' for 
the purposes of this provision.

[59 FR 36707, July 19, 1994, as amended at 72 FR 3080, Jan. 24, 2007]



PART 51b_PROJECT GRANTS FOR PREVENTIVE HEALTH SERVICES--Table of Contents




                      Subpart A_General Provisions

Sec.
51b.101 To which programs do these regulations apply?
51b.102 Definitions.
51b.103 What are the general application requirements?
51b.104 Can personnel, supplies, and related items be provided in lieu 
          of cash?
51b.105 Which other HHS regulations apply to these grants?
51b.106 What other conditions apply to these grants?
51b.107 Is participation in preventive health service programs required 
          by these regulations?

          Subpart B_Grants for Childhood Immunization Programs

51b.201 To which programs does this subpart apply?
51b.202 Definitions.
51b.203 Who is eligible for a grant under this subpart?
51b.204 What information is required in the application?
51b.205 How will grant applications be evaluated and the grants awarded?
51b.206 How can grant funds be used?

Subpart C [Reserved]

         Subpart D_Grants for Venereal Disease Control Programs

51b.401 To which programs does this subpart apply?
51b.402 Definitions.
51b.403 Who is eligible for a grant under this subpart?
51b.404 What are the confidentiality requirements?
51b.405 What information is required in the application?
51b.406 How will grant applications be evaluated and the grants awarded?
51b.407 How can grant funds be used?

Subpart E [Reserved]

 Subpart F_Grants for Research, Demonstrations, and Public Information 
    and Education for the Prevention and Control of Venereal Disease

51b.601 To which programs does this subpart apply?
51b.602 Who is eligible for a grant under this subpart?
51b.603 What are the confidentiality requirements?

[[Page 167]]

51b.604 What information is required in the application?
51b.605 How will grant applications be evaluated and the grants awarded?
51b.606 How can grant funds be used?

    Authority: Secs. 317 and 318, Public Health Service Act, 92 Stat. 
3574 and 3582 (42 U.S.C. 247b, 247c); sec. 1743 Pub. L. 97-35, 95 Stat. 
763 (31 U.S.C. 1243 note).



                      Subpart A_General Provisions

    Source: 48 FR 4473, Feb. 1, 1983, unless otherwise noted.



Sec. 51b.101  To which programs do these regulations apply?

    The regulations in this part apply to grants for preventive health 
service programs authorized under section 317 (42 U.S.C. 247b) and for 
venereal disease prevention and control programs authorized under 
section 318 (42 U.S.C. 247c) of the Act.



Sec. 51b.102  Definitions.

    As used in these regulations:
    Act means the Public Health Service Act, as amended.
    Secretary means the Secretary of Health and Human Services (HHS) or 
any other officer or employee of that Department to whom the authority 
involved has been delegated.
    State means one of the 50 States, the District of Columbia, Guam, 
the Commonwealth of Puerto Rico, the Northern Mariana Islands, the 
Virgin Islands, American Samoa, and the Trust Territory of the Pacific 
Islands.



Sec. 51b.103  What are the general application requirements?

    (a) The project application shall contain a full description of the 
program objectives, plans, and activities. With respect to programs 
authorized by section 317 of the Act only, the application shall also 
provide, as the Secretary may require:
    (1) The amount of Federal, State, and other funds obligated by the 
applicant in its latest annual accounting period for the provision of 
such program.
    (2) A description of the services provided by the applicant for this 
accounting period covered under paragraph (a)(1) of this section.
    (3) The amount of Federal funds needed by the applicant to continue 
providing these services.
    (4) A description of any proposed changes in the provision of the 
services, reasons and priorities, and the amount of Federal funds needed 
by the applicant to make the changes.
    (b) The application shall contain evidence satisfactory to the 
Secretary that it has been submitted, as appropriate, for action to the 
planning agency designated by the Secretary under title XV of the Act 
(42 CFR parts 122 and 123). These grants are subject to the 
intergovernmental review of Federal programs of Executive Order 12372.
    (c) The application shall contain assurances that no one will be 
denied services because of inability to pay, and that the services are 
provided in a manner which preserves human dignity and maximizes 
acceptance.



Sec. 51b.104  Can personnel, supplies, and related items be provided in lieu 

of cash?

    The Secretary may reduce a grant by the amount of the fair market 
value of any supplies (including vaccines and other preventive agents) 
or equipment furnished a grant recipient when furnished at the request 
of the recipient. The Secretary also may reduce a grant by the amount of 
the pay, allowances, travel expenses, and any other costs in connection 
with the detail of any officer or employee of the Government to the 
recipient when the detail is at the request of the recipient. The amount 
the grant is reduced shall be available for payment by the Secretary of 
the costs incurred in furnishing the supplies or equipment or in 
detailing personnel and shall be deemed to have been paid to the 
recipient.



Sec. 51b.105  Which other HHS regulations apply to these grants?

    Several other HHS regulations apply to grants under this part. These 
include, but are not limited to:

42 CFR part 50, subpart D--Public Health Service grant appeals procedure
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 46--Protection of human subjects
45 CFR part 74--Administration of grants

[[Page 168]]

45 CFR part 75--Informal grant appeals procedures
45 CFR part 76--Debarment and suspension from eligibility for financial 
assistance
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance

[49 FR 38109, Sept. 27, 1984]



Sec. 51b.106  What other conditions apply to these grants?

    (a) The notice of grant award specifies how long HHS intends to 
support the project without requiring the project to recompete for 
funds. This period, called the project period, will usually be for 2 to 
5 years.
    (b) For budgetary and funding purposes, the project period is 
generally divided into 12-month intervals called budget periods. A 
grantee must submit a separate application to have the support continued 
for each subsequent budget period after the initial award. Decisions 
regarding continuation awards and the funding level of such awards will 
be made after consideration of such factors as the grantee's progress 
and management practices and the availability of funds. In all cases, 
continuation awards require a determination by HHS that continued 
funding is in the best interest of the government.
    (c) Neither the approval of any application nor the award of any 
grant commits or obligates the United States in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.
    (d) Any funds granted pursuant to this subpart shall be expended 
solely for the purposes for which the funds were granted in accordance 
with the approved application and budget, the regulations of this part, 
the terms and conditions of the award, and the applicable cost 
principles prescribed in subpart Q of 45 CFR part 74.
    (e) The Secretary may, at the time of award, impose additional 
conditions, including conditions governing the use of information or 
consent forms, when, in the Secretary's judgment, they are necessary to 
advance the approved program, the interest of the public health, or the 
conservation of grant funds.



Sec. 51b.107  Is participation in preventive health service programs required 

by these regulations?

    Nothing in these regulations shall be construed to require any State 
or political subdivision to have a preventive health service program 
which would require any person who objects to treatment to be treated 
under the program.



          Subpart B_Grants for Childhood Immunization Programs

    Source: 44 FR 40501, July 11, 1979, unless otherwise noted.



Sec. 51b.201  To which programs does this subpart apply?

    The regulations in this subpart apply to the award of grants under 
section 317 of the Act for programs to immunize children against vaccine 
preventable diseases.



Sec. 51b.202  Definitions.

    As used in this subpart:
    Childhood immunization program means a preventive health service 
program to immunize children against vaccine preventable diseases 
including poliomyelitis, measles, mumps, rubella, diphtheria, pertussis, 
and tetanus.



Sec. 51b.203  Who is eligible for a grant under this subpart?

    An applicant must be a State agency or an agency of a political 
subdivision of a State which has legal responsibility for disease 
control under the laws of a State.

[[Page 169]]



Sec. 51b.204  What information is required in the application?

    (a) The initial application must cover the project period, and must 
include a description of the following:
    (1) The need for grant support.
    (2) The immediate (1 year budget period) and long-range (2-5 year 
project period) objectives of the project in specific and measurable 
terms.
    (3) Current immunization programs and the additional or intensified 
activities to be carried out to meet the objectives and priorities.
    (4) The following program elements should be included and described:
    (i) A plan to assure that children begin and complete their 
immunizations on schedule, including the use of a standard immunization 
record card, a provider-based tickler system (public and private) for 
the recall of children, and a hospital-based immunization education 
program for new mothers.
    (ii) Assessment of immunization status of school enterers, children 
attending licensed day-care centers, and children under 2 years of age 
and new enrollees under age 5 served in public clinics.
    (iii) A plan for surveillance of vaccine-preventable diseases that 
includes morbidity and mortality reporting as well as field and 
laboratory investigations.
    (iv) Procedures for prompt review of the data collected from the 
morbidity surveillance system to allow for immediate response to all 
occurrence of suspected diphtheria and polio cases upon notification and 
response to suspected measles cases within 48 hours.
    (v) A system for monitoring vaccine-associated reactions including a 
mechanism for responding to persons with vaccine-related complaints.
    (vi) A plan to systematically immunize susceptible children at 
school entry through vigorous enforcement of school immunization laws.
    (5) The manner in which the applicant intends to evaluate the 
project.
    (b) An application for a continuation grant must be submitted for 
each funding period. This continuation application must include the 
following:
    (1) A budget and justification for the grant funds requested.
    (2) A summary of the progress achieved during the previous budget 
period.
    (3) A description of any changes in the information shown in the 
project application.

[48 FR 4474, Feb. 1, 1983]



Sec. 51b.205  How will grant applications be evaluated and the grants awarded?

    (a) Within the limits of funds available, the Secretary may award a 
grant to assist in meeting part of the cost of a childhood immunization 
program. Grants will be awarded to those applicants whose projects he 
determines will best promote the purposes of section 317 of the Act. 
Before awarding a grant to a local public entity of a State, the 
Secretary will consult with the State health authority.
    (b) Priorities for funding will be based on the following factors:
    (1) The relative extent of the problems which are caused by one or 
more of the vaccine preventable diseases in the area served by the 
applicant.
    (2) The extent to which the proposed program is designed to 
eliminate or reduce the problems.
    (3) The extent to which the proposed program will increase the 
immunization rates in population groups identified as having the lowest 
immunity levels.
    (4) The extent to which the grantee will cooperate with and use 
public and nonprofit private entities and volunteers.
    (5) The extent to which a strong commitment to the objectives of the 
program is reflected in the commitment of grantee resources to the 
program.

[44 FR 40501, July 11, 1979, as amended at 48 FR 4475, Feb. 1, 1983]



Sec. 51b.206  How can grant funds be used?

    Grant funds awarded under this subpart may be used to purchase 
supplies, materials, and equipment for childhood immunization programs. 
Grant funds also may be used to pay for salaries or wages and related 
expenses for personnel directly involved in the planning, organization, 
promotion, epidemiology, surveillance, and other program activities.

[[Page 170]]

Subpart C [Reserved]



         Subpart D_Grants for Venereal Disease Control Programs

    Source: 48 FR 4475, Feb. 1, 1983, unless otherwise noted.



Sec. 51b.401  To which programs does this subpart apply?

    The regulations in this subpart apply to the award of project grants 
under section 318(c) of the Act for venereal disease prevention and 
control programs, and under section 318(b) of the Act with respect to 
public information and education activities which are integral to a 
balanced, comprehensive venereal disease control program.



Sec. 51b.402  Definitions.

    As used in this subpart:
    Venereal disease means gonorrhea, syphilis, or any other disease 
which can be sexually transmitted and which the Secretary determines is 
or may be amenable to control with assistance provided under this 
authority and which is of national significance.
    Venereal disease control program means a program designed to carry 
out activities or to provide services to systematically detect and 
prevent venereal disease as distinguished from those activities or 
services which are designed to diagnose or treat venereal disease 
patients or suspects.



Sec. 51b.403  Who is eligible for a grant under this subpart?

    An applicant must be a State agency or a political subdivision of a 
State which has legal responsibility for disease control under the laws 
of the State.



Sec. 51b.404  What are the confidentiality requirements?

    All information obtained by program personnel in connection with the 
examination, care, and treatment of an individual in this program shall 
be held confidential. It shall not be disclosed without the individual's 
consent except as may be required by the law of a State or political 
subdivision of a State or as may be necessary to provide services to the 
individual. Information may be disclosed in summary, statistical, or 
other form, or for clinical or research purposes, but only if the 
disclosure does not identify particular individuals.



Sec. 51b.405  What information is required in the application?

    (a) The initial application must include a description of the 
following:
    (1) The nature and extent of the venereal disease problem in the 
area.
    (2) The need for project grant support.
    (3) The immediate (1-year budget period) and long-range (2-5 year 
project period) objectives of the project in specific and measurable 
terms.
    (4) The activities to be carried out to meet the objectives. The 
following program elements must be included and described:
    (i) Venereal disease surveillance.
    (ii) Casefinding and case followup.
    (iii) Interstate epidemiologic referral and followup.
    (iv) Public venereal disease information and education.
    (v) Professional (including appropriate allied health personnel) 
venereal disease education, training, and clinical skills improvement 
activities, including efforts to assure high quality clinical services 
in public venereal disease clinics.
    (5) At the option of the applicant, special studies or 
demonstrations to evaluate or test venereal disease prevention and 
control strategies and activities.
    (6) The manner in which the applicant intends to conduct and 
evaluate the project, including a system for analysis of morbidity data 
so that control activities can be efficiently evaluated and targeted.
    (7) The diagnostic and treatment services that will be provided.
    (8) A budget and justification for the grant funds requested. Since 
public information and education activities are authorized separately 
from other control program activities, funds requested for this purpose 
must be itemized and justified separately in the narrative part of the 
application.

[[Page 171]]

    (b) An application for a continuation grant must be submitted for 
each funding period. This continuation application must include the 
following:
    (1) A budget and justification for the grant funds requested.
    (2) A summary of the progress achieved during the previous budget 
period.
    (3) A description of any changes in the information shown in the 
project application.



Sec. 51b.406  How will grant applications be evaluated and the grants awarded?

    (a) Within the limits of funds available, the Secretary may award a 
grant to assist in meeting the cost of a venereal disease control 
program. Before awarding a grant to a political subdivision of a State, 
the Secretary will consult with the State health authority.
    (b) Priorities for funding will be based on the following factors:
    (1) The relative extent of the venereal disease problem in the area 
served by the applicant.
    (2) The design of the venereal disease prevention and control 
program.
    (3) The general quality of the applicant's plan of operation and 
objectives in accordance with the requirements in these regulations. 
Emphasis will be placed on determining the extent to which services are 
coordinated among health care providers in the area served and 
integrated into a cohesive plan for delivery of service to groups having 
the highest incidence of venereal disease.
    (4) The capacity of the applicant to make effective use of Federal 
funds.
    (5) The commitment of the applicant to the control of venereal 
disease as reflected in the commitment of applicant resources to the 
program.



Sec. 51b.407  How can grant funds be used?

    Grant funds awarded under this subpart may be used only for programs 
approved under section 318(c), and with respect to public information 
and education, those programs approved under section 318(b) of the Act. 
Unless specifically approved, grant funds shall not be used for 
performing diagnostic tests (other than gonorrhea screening tests), 
maintaining central registries, purchasing data processing equipment, or 
providing diagnostic and treatment facilities and services. The 
applicant must provide assurances, however, that these services will be 
available as needed as an adjunct to control program activities 
supported with grant funds. To obtain special approval for grant support 
of such activities, the grantee shall justify the exception to the 
satisfaction of the Secretary that funds for this purpose are necessary 
for the proper conduct of the program and are otherwise unavailable. 
Support of these services will generally be approved only in the 
following situations:
    (a) Special studies or demonstrations, (b) the support of 
developmental or start-up activity, or (c) the support of an essential 
service which will result in a savings to a detection or prevention 
activity supported by the grant. Unless otherwise approved, exceptions 
based on paragraphs (b) and (c) of this section are only allowed during 
one funding period. The grantee is expected to support these activities 
in subsequent funding periods.

Subpart E [Reserved]



 Subpart F_Grants for Research, Demonstrations, and Public Information 

    and Education for the Prevention and Control of Venereal Disease

    Source: 48 FR 4476, Feb. 1, 1983, unless otherwise noted.



Sec. 51b.601  To which programs does this subpart apply?

    The regulations in this subpart apply to the award of venereal 
disease control project grants for research, demonstrations, public 
information, and education activities which can be applied to achieve 
improvements in venereal disease prevention and control under section 
318(b) of the Act.



Sec. 51b.602  Who is eligible for a grant under this subpart?

    An applicant must be a State, political subdivision of any State, or 
any other public or nonprofit private entity.

[[Page 172]]



Sec. 51b.603  What are the confidentiality requirements?

    All information obtained by program personnel in connection with the 
examination, care, and treatment of an individual in this program shall 
be held confidential. It shall not be disclosed without the individual's 
consent except as may be required by the law of a State, or political 
subdivision of a State, or as may be necessary to provide services to 
the individual. Information may be disclosed in summary, statistical, or 
other form, or for clinical or research purposes, but only if the 
disclosure does not identify particular individuals.



Sec. 51b.604  What information is required in the application?

    (a) The initial application must include a description of the 
following:
    (1) The setting and circumstances for which project grant support is 
being requested, including:
    (i) The immediate and long-range objectives of the project in 
specific and measurable terms.
    (ii) The activities which will be undertaken to accomplish the 
objectives, including the timing of these activities.
    (iii) The anticipated application of findings to the national 
venereal disease control effort.
    (iv) Any other information which will support the request for grant 
assistance.
    (2) The relationship between the planned activities and the project 
objectives. The application must describe in detail how the applicant 
intends to proceed, particularly if the project is unusually complex and 
several activities are interdependent or unprecedented.
    (3) A comprehensive and realistic plan which the applicant will use 
to evaluate the project. The plan must include periodic assessment of 
any possible impact, both positive and negative, that the proposed 
project might have upon the established venereal disease control program 
in the locality or localities in which the project will be undertaken.
    (b) An application for a continuation grant must be submitted for 
each funding period. This continuation application must include the 
following:
    (1) A budget and justification for the grant funds requested.
    (2) A summary of the progress achieved during the previous budget 
period.
    (3) A description of any changes in the information shown in the 
project application.



Sec. 51b.605  How will grant applications be evaluated and the grants awarded?

    (a) Within the limits of funds available, the Secretary may award a 
grant to assist in meeting the costs of special activities authorized 
under section 318(b) of the Act.
    (b) Grant applications will be reviewed and evaluated according to 
the following criteria:
    (1) Is there adequate evidence that the proposed project is needed 
and that the outcome has potential to directly benefit the national 
venereal disease control effort?
    (2) Are the project objectives specific, measurable, realistic, time 
phased, and related to promoting the purposes of section 318?
    (3) Is the method of operation logical and clearly related to 
project objectives, and does it describe how the applicant intends to 
proceed particularly with activities which are complex, interrelated, or 
unprecedented?
    (4) Does the method of operation include an assessment of any 
possible impact, both positive and negative, that the conduct of the 
proposed initiative might have upon the established venereal disease 
control program in the locality or localities in which the project will 
be undertaken?
    (5) Does the proposal include a comprehensive and realistic plan for 
the evaluation of the project, and specify the measures and instruments 
of measurement to be used?
    (6) Is the budget request reasonable and consistent with the 
intended use of grant funds?
    (7) If the applicant intends only to evaluate an existing disease 
prevention and control approach, are the objectives substantially 
different from those which could be met by routine program evaluation?

[[Page 173]]



Sec. 51b.606  How can grant funds be used?

    (a) Grant funds may be used for the costs associated with planning, 
organizing, and conducting applied research, demonstrations, and public 
information and education programs.
    (b) Grant funds may also be used to reimburse individuals who agree 
to be participants in the applied research projects. This reimbursement, 
however, must be justified as necessary and reasonable. A schedule of 
reimbursements must be submitted with the application and approved as 
part of the program plan.
    (c) Grant funds may not be used to supplant funds supporting 
existing venereal disease control services provided by a State or 
locality.



PART 51c_GRANTS FOR COMMUNITY HEALTH SERVICES--Table of Contents




                      Subpart A_General Provisions

Sec.
51c.101 Applicability.
51c.102 Definitions.
51c.103 Eligibility.
51c.104 Application.
51c.105 Accord with health planning.
51c.106 Amount of grant.
51c.107 Use of project funds.
51c.108 Grant payments.
51c.109 Nondiscrimination.
51c.110 Confidentiality.
51c.111 Publications and copyright.
51c.112 Grantee accountability.
51c.113 Applicability of 45 CFR part 74.

  Subpart B_Grants for Planning and Developing Community Health Centers

51c.201 Applicability.
51c.202 Application.
51c.203 Project elements.
51c.204 Grant evaluation and award.

         Subpart C_Grants for Operating Community Health Centers

51c.301 Applicability.
51c.302 Application.
51c.303 Project elements.
51c.304 Governing board.
51c.305 Grant evaluation and award.

        Subpart D_Grants for Operating Community Health Projects

51c.401 Applicability.
51c.402 Application.
51c.403 Project elements.
51c.404 Grant evaluation and award.

      Subpart E_Acquisition and Modernization of Existing Buildings

51c.501 Applicability.
51c.502 Definitions.
51c.503 Application.
51c.504 Project elements.
51c.505 Determination of cost.
51c.506 Use of grant funds.
51c.507 Facility which has previously received Federal grant.

    Authority: Sec. 330, Public Health Service Act, 89 Stat. 342, (42 
U.S.C. 254c); sec. 215, Public Health Service Act, 58 Stat. 690, (42 
U.S.C. 216).

    Source: 41 FR 53205, Dec. 3, 1976, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 51c.101  Applicability.

    The regulations of this subpart are applicable to all project grants 
authorized by section 330 of the Public Health Service Act (42 U.S.C. 
254c).



Sec. 51c.102  Definitions.

    As used in this part:
    (a) Act means the Public Health Service Act.
    (b) Catchment area means the area served by a project funded under 
section 330 of the Act.
    (c)(1) Community health center or center means an entity which, 
through its staff and supporting resources or through contracts or 
cooperative arrangements with other public or private entities, provides 
for all residents of its catchment area:
    (i) Primary health services;
    (ii) As determined by the Secretary to be appropriate for particular 
centers, supplemental health services necessary for the adequate support 
of primary health services;
    (iii) Referral to providers of supplemental health services and 
payment, as determined by the Secretary to be appropriate and feasible, 
for their provision of such services;
    (iv) Environmental health services, as determined by the Secretary 
to be appropriate for particular centers; and
    (v) Information on the availability and proper use of health 
services.
    (2) For purposes of paragraph (c)(1) of this section, the provision 
of a given

[[Page 174]]

service by a center will be determined by the Secretary to be 
appropriate where:
    (i) There is a need, as determined by the Secretary, for the 
provision of such service in the catchment area; and
    (ii) The provision of such service by the center is feasible, taking 
into consideration the center's projected revenues, other resources, and 
grant support under this part.
    (d) Environmental health services means the detection and 
alleviation of unhealthful conditions of the environment of the 
catchment area, such as problems associated with water supply, sewage 
treatment, solid waste disposal, rodent and parasite infestation, and 
housing conditions. For the purposes of this part, the detection and 
alleviation of unhealthful conditions of the environment includes the 
notification of and making of arrangements with appropriate Federal, 
State, or local authorities responsible for correcting such conditions.
    (e) Medically underserved population means the population of an 
urban or rural area designated by the Secretary as an area with a 
shortage of personal health services or a population group designated by 
the Secretary as having a shortage of such services. Medically 
underserved areas will be designated by the Secretary and a list of 
those designated will be published in the Federal Register from time to 
time, taking into consideration the following factors, among others:
    (1) Available health resources in relation to size of the area and 
its population, including appropriate ratios of primary care physicians 
in general or family practice, internal medicine, pediatrics, or 
obstetrics and gynecology to population;
    (2) Health indices for the population of the area, such as infant 
mortality rate;
    (3) Economic factors affecting the population's access to health 
services, such as percentage of the population with incomes below the 
poverty level; and
    (4) Demographic factors affecting the population's need and demand 
for health services, such as percentage of the population age 65 and 
over.
    (f) Nonprofit, as applied to any private agency, institution, or 
organization, means one which is a corporation or association, or is 
owned and operated by one or more corporations or associations, no part 
of the net earnings of which inures, or may lawfully inure, to the 
benefit of any private shareholder or individual.
    (g) Physician means a licensed doctor of medicine or doctor of 
osteopathy.
    (h) Primary health services means:
    (1) Diagnostic, treatment, consultative, referral, and other 
services rendered by physicians, and, where feasible, by physician's 
extenders, such as physicians' assistants, nurse clinicians, and nurse 
practitioners;
    (2) Diagnostic laboratory services and diagnostic radiologic 
services;
    (3) Preventive health services, including medical social services, 
nutritional assessment and referral, preventive health education, 
children's eye and ear examinations, prenatal and post-partum care, 
prenatal services, well child care (including periodic screening), 
immunizations, and voluntary family planning services;
    (4) Emergency medical services, including provision, through clearly 
defined arrangements, for access of users of the center to health care 
for medical emergencies during and after the center's regularly 
scheduled hours;
    (5) Transportation services as needed for adequate patient care, 
sufficient so that residents of the catchment area served by the center 
with special difficulties of access to services provided by the center 
receive such services; and
    (6) Preventive dental services provided by a licensed dentist or 
other qualified personnel, including (i) oral hygiene instruction; (ii) 
oral prophylaxis, as necessary; and (iii) topical application of 
fluorides, and the prescription of fluorides for systemic use when not 
available in the community water supply.
    (i) 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.
    (j) Supplemental health services means health services which are not 
included

[[Page 175]]

as primary health services and which are:
    (1) Inpatient and outpatient hospital services;
    (2) Home health services;
    (3) Extended care facility services;
    (4) Rehabilitative services (including physical and occupational 
therapy) and long-term physical medicine;
    (5) Mental health services, including services of psychiatrists, 
psychologists, and other appropriate mental health professionals;
    (6) Dental services other than those provided as primary health 
services;
    (7) Vision services, including routine eye and vision examinations 
and provision of eyeglasses, as appropriate and feasible;
    (8) Allied health services;
    (9) Pharmaceutical services, including the provision of prescription 
drugs;
    (10) Therapeutic radiologic services;
    (11) Public health services (including nutrition education and 
social services);
    (12) Ambulatory surgical services;
    (13) Health education services; and
    (14) Services, including the services of outreach workers, which 
promote and facilitate optimal use of primary health services and 
services referred to in the preceding subparagraphs of this paragraph 
and, if a substantial number of individuals in the population served by 
the center are of limited English-speaking ability, the services of 
outreach workers and other personnel fluent in the language or languages 
spoken by such individuals.



Sec. 51c.103  Eligibility.

    Any public or nonprofit private entity is eligible to apply for a 
grant under this part.



Sec. 51c.104  Application.

    (a) An application for a grant under this part shall be submitted to 
the Secretary at such time and in such form and manner as the Secretary 
may prescribe.
    (b) The application shall contain a budget and narrative plan of the 
manner in which the applicant intends to conduct the project and carry 
out the requirements of this part. The application must describe how and 
the extent to which the project has met, or plans to meet, each of the 
requirements in subpart B (relating to grants for planning and 
developing community health centers), subpart C (relating to grants for 
the operation of community health centers), or subpart D (relating to 
grants for the operation of community health projects), as applicable. 
In addition, applications must include:
    (1) A statement of specific, measurable objectives and the methods 
to be used to assess the achievement of the objectives in specified time 
periods and at least on an annual basis.
    (2) The precise boundaries of the catchment area to be served by the 
applicant, including an identification of the medically underserved 
population or populations within the catchment area. In addition, the 
application shall include information sufficient to enable the Secretary 
to determine that the applicant's catchment area meets the following 
criteria:
    (i) The size of such area is such that the services to be provided 
by the applicant are available and accessible to the residents of the 
area promptly and as appropriate;
    (ii) The boundaries of such area conform, to the extent practicable, 
to relevant boundaries of political subdivisions, school districts, and 
areas served by Federal and State health and social service programs; 
and
    (iii) The boundaries of such area eliminate, to the extent possible, 
barriers resulting from the area's physical characteristics, its 
residential patterns, its economic and social groupings, and available 
transportation.
    (3) The results of an assessment of the need that the population 
served or proposed to be served has for the services to be provided by 
the project (or in the case of applications for planning and development 
projects, the methods to be used in assessing such need), utilizing, but 
not limited to, the factors set forth in Sec. 51c.102(e)(1)-(4).
    (4) Position descriptions for key personnel who will be utilized in 
carrying out the activities of the project and a statement indicating 
the need for the positions to be supported with grant funds to 
accomplish the objectives of the project.

[[Page 176]]

    (5) Letters and other forms of evidence showing that efforts have 
been made to secure financial and professional assistance and support 
for the project within the proposed catchment area and the continuing 
involvement of the community in the development and operation of the 
project.
    (6) An assurance that an independent certified public accountant, or 
a public accountant licensed before December 31, 1970, will be engaged 
to certify that the system for the management and control of its 
financial assets will be in accord with sound financial management 
practices, including applicable Federal requirements.
    (7) A list of all services proposed to be provided by the project.
    (8) A list of services which are to be provided directly by the 
project through its own staff and resources and a description of any 
contractual or other arrangements (including copies of documents, where 
available) entered into, or planned for the provision of services.
    (9) The schedule of fees and/or payments and schedule of discounts 
for services provided by the project.
    (10) Evidence that all applicable requirements for review and/or 
approval of the application under title XV of the Act have been met.
    (11) An assurance that the project will be conducted in accordance 
with the applicable requirements of this part.
    (c) The application must be executed by an individual authorized to 
act for the applicant and to assume on behalf of the applicant the 
obligations imposed by the statute, the applicable regulations of this 
part, and any additional conditions of the grant.

(Sec. 330, Public Health Service Act, 89 Stat. 342, (42 U.S.C. 254c); 
sec. 215, Public Health Service Act, 58 Stat. 690, 67 Stat. 63 (42 
U.S.C. 216))

[41 FR 53205, Dec. 3, 1976, as amended at 48 FR 29201, June 24, 1983; 48 
FR 45558, Oct. 6, 1983]



Sec. 51c.105  Accord with health planning.

    A grant may be made under this part only if the applicable 
requirements of title XV of the Act relating to review and approval by 
the appropriate health planning agencies have been met.



Sec. 51c.106  Amount of grant.

    (a) The amount of any award under this part will be determined by 
the Secretary on the basis of his estimate of the sum necessary for a 
designated portion of direct project costs plus an additional amount for 
indirect costs, if any, which will be calculated by the Secretary 
either:
    (1) On the basis of the estimate of the actual indirect costs 
reasonably related to the project; or
    (2) On the basis of a percentage of all, or a portion of, the 
estimated direct costs of the project when there are reasonable 
assurances that the use of such percentage will not exceed the 
approximate actual indirect costs. Such award may include an estimated 
provisional amount for indirect costs or for designated direct costs 
(such as fringe benefit rates) subject to upward (within the limits of 
available funds) as well as downward adjustments to actual costs when 
the amount properly expended by the grantee for provisional items has 
been determined by the Secretary: Provided, however, That no grant shall 
be made for an amount in excess of the total cost found necessary by the 
Secretary to carry out the project.
    (i) In determining the percentage of project costs to be borne by 
the grantee, factors which the Secretary will take into consideration 
will include the following:
    (A) The ability of the grantee to finance its share of project costs 
from non-Federal sources;
    (B) The need in the area served by the project for the services to 
be provided; and
    (C) The extent to which the project will provide services in an 
innovative manner which the Secretary desires to stimulate in the 
interest of developing more effective health service delivery systems on 
a regional or national basis.
    (ii) At any time after approval of an application under this part, 
the Secretary may retroactively agree to a percentage of project costs 
to be borne by the grantee lower than that determined pursuant to 
paragraph (a)(2)(i) of this section where he finds that changed 
circumstances justify a smaller contribution.

[[Page 177]]

    (iii) In determining the grantee's share of project costs, costs 
borne by Federal grant funds, or costs used to match other Federal 
grants, may not be included except as otherwise provided by law or 
regulations.
    (b) All grant awards shall be in writing, and shall set forth the 
amount of funds granted and the period for which support is recommended.
    (c) Neither the approval of any project nor any grant award shall 
commit or obligate the United States in any way to make any additional, 
supplemental, continuation, or other award with respect to any approved 
project or portion thereof. For continuation support, grantees must make 
separate application.



Sec. 51c.107  Use of project funds.

    (a) Any funds granted pursuant to this part, as well as other funds 
to be used in performance of the approved project, may be expended 
solely for carrying out the approved project in accordance with section 
330 of the Act, the applicable regulations of this part, the terms and 
conditions of the award, and the applicable cost principles prescribed 
in subpart Q of 45 CFR part 74.
    (b) Project funds awarded under this part may be used for, but need 
not be limited to, the following:
    (1) The costs of acquiring and modernizing existing buildings 
(including the costs of amortizing the principal of, and paying interest 
on, loans), but only in accordance with subpart E of this part and as 
approved in the grant award;
    (2) The costs of obtaining technical assistance to develop and 
improve the management capability of the project, but only as approved 
by the Secretary;
    (3) The reimbursement of members of the grantee's governing board, 
if any, for reasonable expenses actually incurred by reason of their 
participation in board activities;
    (4) The reimbursement of governing board members for wages lost by 
reason of participation in the activities of such board if the member is 
from a family with an annual family income below $10,000 or if the 
member is a single person with an annual income below $7,000;
    (5) The cost of delivering health services, including services 
rendered on a prepaid capitation basis, to residents of the project's 
catchment area within the following limitations: grant funds may be used 
to pay the full cost of project services to individuals and families 
with annual incomes at or below those set forth in the most recent ``CSA 
Income Poverty Guidelines'' (45 CFR 1060.2) issued by the Community 
Services Administration; and to pay the portion of the cost of services 
provided in accordance with the schedule of discounts which, under such 
schedule, is uncompensated; Provided, That (i) charges will be made to 
such individuals and families in accordance with Sec. 51c.303(f) of 
subpart C; (ii) reasonable effort shall be made to collect such charges 
under a billing and collections system; and (iii) the charge to grant 
funds shall exclude any amounts collected pursuant to paragraph 
(b)(5)(ii) of this section;
    (6) The cost of insurance for medical emergency and out-of-area 
coverage;
    (7) The cost of providing to the staff of the project training 
related to the provision of health services provided or to be provided 
by the project, and, to the staff and governing board, if any, training 
related to the management of an ambulatory care facility, consistent 
with the applicable requirements of 45 CFR part 74; and
    (8) The cost of developing and maintaining a reserve fund where 
required by State law for prepaid health care plans.
    (c) Prior approval by the Secretary of revisions of the budget and 
project plan is required whenever there is to be a significant change in 
the scope or nature of project activities.



Sec. 51c.108  Grant payments.

    The Secretary shall from time to time make payments to a grantee of 
all or a portion of any grant award, either in advance or by way of 
reimbursement for expenses incurred or to be incurred, to the extent he 
determines such payments necessary to promote prompt initiation and 
advancement of the approved project.

[[Page 178]]



Sec. 51c.109  Nondiscrimination.

    (a) Attention is called to the requirements of title VI of the Civil 
Rights Act of 1964 (78 Stat. 252, (42 U.S.C. 2000d et seq.)) and in 
particular section 601 of such Act which provides that no person in the 
United States shall on the grounds of race, color, or national origin be 
excluded from participation, in be denied the benefits of, or be 
subjected to discrimination under any program or activity receiving 
Federal Financial assistance. A regulation implementing such title VI, 
which applies to grants made under this part, has been issued by the 
Secretary of Health and Human Services with the approval of the 
President (45 CFR part 80). In addition, no person shall, on the grounds 
of age, sex, creed, or marital status (unless otherwise medically 
indicated), be excluded from participation in, be denied the benefits 
of, or be subjected to discrimination under any program or activity so 
receiving Federal financial assistance.
    (b) Attention is called to the requirements of section 504 of the 
Rehabilitation Act of 1973, as amended, which provides that no otherwise 
qualified handicapped individual in the United States shall, solely by 
reason of his handicap, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity receiving Federal financial assistance.



Sec. 51c.110  Confidentiality.

    All information as to personal facts and circumstances obtained by 
the project staff about recipients of services shall be held 
confidential, and shall not be divulged without the individual's consent 
except as may be required by law or as may be necessary to provide 
service to the individual or to provide for medical audits by the 
Secretary or his designee with appropriate safeguards for 
confidentiality of patient records. Otherwise, information may be 
disclosed only in summary, statistical, or other form which does not 
identify particular individuals.



Sec. 51c.111  Publications and copyright.

    Except as may otherwise be provided under the terms and conditions 
of the award, the grantee may copyright without prior approval any 
publications, films, or similar materials developed or resulting from a 
project supported by a grant under this part, subject, however, to a 
royalty-free, nonexclusive, and irrevocable license or right in the 
Government to reproduce, translate, publish, use, disseminate, and 
dispose of such materials and to authorize others to do so.



Sec. 51c.112  Grantee accountability.

    (a) Accounting for grant award payments. All payments made by the 
Secretary shall be recorded by the grantee in accounting records 
separate from the records of all other funds, including funds derived 
from other grant awards. With respect to each approved project, the 
grantee shall account for the sum total of all amounts paid as well as 
other funds and in-kind contributions by presenting or otherwise making 
available evidence satisfactory to the Secretary of expenditure for 
direct and indirect costs meeting the requirements of this part: 
Provided, however, That when the amount awarded for indirect costs was 
based on a predetermined fixed-percentage of estimated direct costs, the 
amount allowed for indirect costs shall be computed on the basis of such 
predetermined fixed-percentage rates applied to the total, or a selected 
element thereof, of the reimbursable direct costs incurred.
    (b) Accounting for interest earned on grant funds. Pursuant to 
section 203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 
4213), a State will not be held accountable for interest earned on grant 
funds, pending their disbursement for grant purposes. A State, as 
defined in section 102 of the Intergovernmental Cooperation Act, means 
any one of the several States, the District of Columbia, Puerto Rico, 
any territory or possession of the United States, or any agency or 
instrumentality of a State, but does not include the government of the 
political subdivisions of the State. All grantees other than a State, as 
defined, must return all interest earned on grant funds to the Federal 
Government.
    (c) Grant closeout--(1) Date of final accounting. A grantee shall 
render, with respect to each approved project, a full

[[Page 179]]

account, as provided herein, as of the date of the termination of grant 
support. The Secretary may require other special and periodic 
accounting.
    (2) Final settlement. There shall be payable to the Federal 
Government as final settlement with respect to each approved project the 
total sum of:
    (i) Any amount not accounted for pursuant to paragraph (a) of this 
section;
    (ii) Any credits for earned interest pursuant to paragraph (b) of 
this section;
    (iii) Any other amounts due pursuant to subparts F, M, and O of 45 
CFR part 74.



Sec. 51c.113  Applicability of 45 CFR part 74.

    The provisions of 45 CFR part 74, establishing uniform 
administrative requirements and cost principles, shall apply to all 
grants under this part to State and local governments as those terms are 
defined in subpart A of that part 74. The relevant provisions of the 
following subparts of part 74 shall also apply to grants to all other 
grantee organizations under this part:

                             45 CFR Part 74

Subpart
A General.
B Cash depositories.
C Bonding and insurance.
D Retention and custodial requirements for records.
F Grant-related income.
G Matching and cost sharing.
K Grant payment requirements.
L Budget revision procedures.
M Grant closeout, suspension, and termination.
O Property.
Q Cost principles.



  Subpart B_Grants for Planning and Developing Community Health Centers



Sec. 51c.201  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part, are applicable to grants awarded pursuant to 
section 330(c) of the Act for projects for planning and developing 
community health centers which will serve medically underserved 
populations.



Sec. 51c.202  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
51c.104 of subpart A, contain information sufficient to enable the 
Secretary to determine that the project for which the grant is sought 
will meet the requirements of Sec. 51c.203.



Sec. 51c.203  Project elements.

    A project for the planning and developing of a community health 
center supported under this subpart must:
    (a) Prepare an assessment of the need of the population proposed to 
be served by the community health center for the services set forth in 
Sec. 51c.102(c)(1) of subpart A, with special attention to the need of 
the medically underserved population for such services. Such assessment 
of need shall, at a minimum, consider the factors listed in Sec. 
51c.102(e)(1)-(4).
    (b) Design a community health center program for such population, 
based on such assessment, which indicates in detail how the proposed 
community health center will fulfill the needs identified in the 
assessment prepared pursuant to paragraph (a) of this section and how it 
will meet the requirements contained in subpart C of this part.
    (c) Develop a plan for the implementation of the program designed 
pursuant to paragraph (b) of this section. Such implementation plan 
shall provide for the time-phased recruitment and training of the 
personnel essential for the operation of a community health center and 
the gradual assumption of operational status of the project so that the 
project will, in the judgment of the Secretary, meet the requirements 
contained in subpart C of this part as of the end of the project period.
    (d) Implement the plan developed pursuant to paragraph (c) of this 
section in accordance with such paragraph.
    (e) Make efforts to secure, within the proposed catchment area of 
such center to the extent possible, financial and professional 
assistance and support for the project.

[[Page 180]]

    (f) Initiate and encourage continuing community involvement in the 
development and operation of the project.
    (g) Establish standards and qualifications for personnel (including 
the project director).
    (h) Utilize, to the maximum extent feasible, other Federal, State, 
local, and private resources available for support of the project, prior 
to use of project funds under this subpart.



Sec. 51c.204  Grant evaluation and award.

    (a) Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which will, in his judgment, best promote 
the purposes of section 330(c) of the Act and the applicable regulations 
of this part, taking into account:
    (1) The degree to which the proposed project satisfactorily provides 
for the elements set forth in Sec. 51c.203;
    (2) The relative need of the population to be served for the 
services to be provided;
    (3) The administrative and management capability of the applicant;
    (4) The potential of the project for development of new and 
effective methods for health services delivery and management;
    (5) The soundness of the fiscal plan for assuring effective 
utilization of grant funds and maximizing non-grant revenue;
    (6) The extent to which community resources will be utilized in the 
project;
    (7) The extent to which grants approved under this part will provide 
for an appropriate distribution of resources throughout the country, 
taking into consideration the following factors;
    (i) The urban-rural area to be served;
    (ii) The nature of the organization applying; and
    (iii) The organizational structure for delivery of services;
    (8) Whether the project's catchment area is exclusive of the area 
served by a community health center;
    (9) The degree to which the applicant intends to integrate services 
supported by a grant under this subpart with health services provided 
under other Federally assisted health services or reimbursement programs 
or projects.
    (b) The Secretary may:
    (1) Make no more than two grants under this subpart for the same 
project.
    (2) Make a grant under this subpart to an entity which has been 
awarded one or more grants under section 330(d)(1)(A) and/or section 
330(d)(1)(B) of the Act only if the grant under this subpart is for a 
new project.



         Subpart C_Grants for Operating Community Health Centers



Sec. 51c.301  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A, are applicable to grants awarded pursuant to section 
330(d)(1)(A) of the Act for the costs of operation of community health 
centers which serve medically underserved populations.



Sec. 51c.302  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
51c.104 of subpart A,
    (a) Be submitted by an entity which may be a co-applicant which the 
Secretary determines is a community health center, and
    (b) Contain information sufficient to enable the Secretary to 
determine that the center will meet the requirements of Sec. 51c.103.

[41 FR 53205, Dec. 3, 1976, as amended at 42 FR 60418, Nov. 25, 1977]



Sec. 51c.303  Project elements.

    A community health center supported under this subpart must:
    (a) Provide the health services of the center so that such services 
are available and accessible promptly, as appropriate, and in a manner 
which will assure continuity of service to the residents of the center's 
catchment area.
    (b) Implement a system for maintaining the confidentiality of 
patient records in accordance with the requirements of Sec. 51c.110 of 
subpart A.
    (c) Have an ongoing quality assurance program which provides for the 
following:

[[Page 181]]

    (1) Organizational arrangements, including a focus of 
responsibility, to support the quality assurance program and the 
provision of high quality patient care;
    (2) Periodic assessment of the appropriateness of the utilization of 
services and the quality of services provided or proposed to be provided 
to individuals served by the center. Such assessments shall:
    (i) Be conducted by physicians or by other licensed health 
professionals under the supervision of physicians;
    (ii) Be based on the systematic collection and evaluation of patient 
records; and
    (iii) Identify and document the necessity for change in the 
provision of services by the center and result in the institution of 
such change, where indicated.
    (d) Develop management and control systems which are in accordance 
with sound financial management procedures, including the provision for 
an audit on an annual basis (unless waived for cause by the Secretary) 
by an independent certified public accountant or a public accountant 
licensed prior to December 31, 1970, to determine, at a minimum, the 
fiscal integrity of grant financial transactions and reports, and 
compliance with the regulations of this part and the terms and 
conditions of the grant.
    (e) Where the cost of care and services furnished by or through the 
project is to be reimbursed under title XIX or title XX of the Social 
Security Act, obtain or make every reasonable effort to obtain a written 
agreement with the title XIX or title XX State agency for such 
reimbursement.
    (f) Have prepared a schedule of fees or payments for the provision 
of its services designed to cover its reasonable costs of operation and 
a corresponding schedule of discounts adjusted on the basis of the 
patient's ability to pay. Provided, That such schedule of discounts 
shall provide for a full discount to individuals and families with 
annual incomes at or below those set forth in the most recent CSA 
Proverty Income Guidelines (45 CFR 1060.2) and for no discount to 
individuals and families with annual incomes greater than twice those 
set forth in such Guidelines, except that nominal fees for services may 
be collected from individuals with annual incomes at or below such 
levels where imposition of such fees is consistent with project goals.
    (g) Make every reasonable effort, including the establishment of 
systems for eligibility determination, billing, and collection, to:
    (1) Collect reimbursement for its costs in providing health services 
to persons who are entitled to insurance benefits under title XVIII of 
the Social Security Act, to medical assistance under a State plan 
approved under title XIX of such Act, to social services and family 
planning under title XX of such Act, or to assistance for medical 
expenses under any other public assistance program, grant program, or 
private health insurance or benefit program on the basis of the schedule 
of fees prepared pursuant to paragraph (f) of this section without 
application of any discounts, and
    (2) Secure from patients payments for services in accordance with 
the schedule of fees and discounts required by paragraph (f) of this 
section.
    (h) Have a governing board which meets the requirements of Sec. 
51c.304.
    (i) Have developed an overall plan and budget for the center that:
    (1) Provides for an annual operating budget and a three-year 
financial management plan which include all anticipated income and 
expenses related to items which would, under generally accepted 
accounting principles, be considered income and expense items;
    (2) Provides for a capital expenditures plan for at least a three-
year period (including the year to which the operating budget described 
in paragraph (i)(1) of this section is applicable) which includes and 
identifies in detail the anticipated sources of financing for, and the 
objective of, each anticipated expenditure in excess of $100,000 related 
to the acquisition of land, the improvement of land, buildings, and 
equipment and the replacement, modernization and expansion of buildings 
and equipment which would, under generally accepted accounting 
principles, be considered capital items;
    (3) Provides for plan review and updating at least annually; and

[[Page 182]]

    (4) Is prepared under the direction of the governing board, by a 
committee consisting of representatives of the governing board, and 
administrative staff, and the medical staff, if any, of the center.
    (j) Establish basic statistical data, cost accounting, management 
information, and reporting or monitoring systems which shall enable the 
center to provide such statistics and other information as the Secretary 
may reasonably require relating to the center's costs of operation, 
patterns of utilization of services, and the availability, 
accessibility, and acceptability of its services and to make such 
reports to the Secretary in a timely manner with such frequency as the 
Secretary may reasonably require.
    (k) Review its catchment area annually to insure that the criteria 
set out in Sec. 51c.104(b)(2) of subpart A are met and, where such 
criteria are not met, revise its catchment area, with the approval of 
the Secretary, to conform to such criteria to the extent feasible.
    (l) In the case of a center which serves a population including a 
substantial proportion of individuals of limited English-speaking 
ability, have developed a plan and made arrangements responsive to the 
needs of such populations for providing services to the extent 
practicable in the language and cultural context most appropriate to 
such individuals, and have identified an individual on its staff who is 
fluent in both that language and in English and whose responsibilities 
include providing guidance to such individuals and to appropriate staff 
members with respect to cultural sensitivities and bridging linguistic 
and cultural differences. If more than one non-English language is 
spoken by such group or groups, an individual or individuals fluent in 
those languages and English shall be so identified.
    (m) Be operated in a manner calculated to preserve human dignity and 
to maximize acceptability and effective utilization of services.
    (n) To the extent possible, coordinate and integrate project 
activities with the activities of other Federally funded, as well as 
State and local, health services delivery projects and programs serving 
the same population.
    (o) Establish means for evaluating progress toward the achievement 
of the specific objectives of the project.
    (p) Provide sufficient staff, qualified by training and experience, 
to carry out the activities of the center.
    (q) Assure that facilities utilized in the performance of the 
project meet applicable fire and life safety codes.
    (r) Utilize, to the maximum extent feasible, other Federal, State, 
and local, and private resources available for support of the project, 
prior to use of project funds under this part.
    (s) Provide for community participation through, for example, 
contributions of cash or services, loans of full-or part-time staff, 
equipment, space, materials, or facilities.
    (t) Where the center will provide services through contract or other 
cooperative arrangements with other providers of services, establish 
rates and methods of payment for health care. Such payments must be made 
pursuant to agreements, with a schedule of rates and payment procedures 
maintained by the project. The project must be prepared to substantiate 
that such rates are reasonable and necessary.
    (u) Operate in a manner such that no person shall be denied service 
by reason of his inability to pay therefor: Provided, however, That a 
charge for the provision of services will be made to the extent that a 
third party (including a Government agency) is authorized or is under 
legal obligation to pay such charges.
    (v) In addition to the above, projects which are supported with 
grant funds for the operation of a prepaid health care plan also must 
provide:
    (1) A marketing and enrollment plan, including market analysis, 
marketing strategy, and enrollment growth projections.
    (2) A plan that provides for funding on a capitation basis of such 
portion of the residents of the catchment area of the center, as the 
Secretary shall determine.
    (3) An assurance that services shall be available to all residents 
of the catchment area without regard to method of payment or health 
status.

[[Page 183]]



Sec. 51c.304  Governing board.

    A governing board for the center shall be established by an 
applicant as follows:
    (a) Size. The board shall consist of at least 9 but not more than 25 
members, except that this requirement may be waived by the Secretary for 
good cause shown.
    (b) Composition. (1) A majority of the board members shall be 
individuals who are or will be served by the center and who, as a group, 
represent the individuals being or to be served in terms of demographic 
factors, such as race, ethnicity, sex.
    (2) No more than one-half of the remaining members of the board may 
be individuals who derive more than 10 percent of their annual income 
from the health care industry.
    (3) The remaining members of the board shall be representative of 
the community in which the center's catchment area is located and shall 
be selected for their expertise in community affairs, local government, 
finance and banking, legal affairs, trade unions, and other commercial 
and industrial concerns, or social service agencies within the 
community.
    (4) No member of the board shall be an employee of the center, or 
spouse or child, parent, brother or sister by blood or marriage of such 
an employee. The project director may be a non-voting, ex-officio member 
of the board.
    (c) Selection of members. The method of selection of all governing 
board members shall be prescribed in the by-laws or other internal 
governing rules of the center. Such by-laws or other rules must specify 
a process of selection of individuals on the governing board who 
represent the population served or to be served by the center so that 
such individuals, as a group, are representative of such population. 
Such process of selection in the by-laws or other rules is subject to 
approval by the Secretary.
    (d) Functions and responsibilities. (1) The governing board for the 
center shall have authority for the establishment of policy in the 
conduct of the center.
    (2) The governing board shall hold regularly scheduled meetings, at 
least once each month, for which minutes shall be kept.
    (3) The governing board shall have specific responsibility for:
    (i) Approval for the selection and dismissal of a project director 
or chief executive officer of the center;
    (ii) Establishing personnel policies and procedures, including 
selection and dismissal procedures, salary and benefit scales, employee 
grievance procedures, and equal opportunity practices;
    (iii) Adopting policy for financial management practices, including 
a system to assure accountability for center resources, approval of the 
annual project budget, center priorities, eligibility for services 
including criteria for partial payment schedules, and long-range 
financial planning;
    (iv) Evaluating center activities including services utilization 
patterns, productivity of the center, patient satisfaction, achievement 
of project objectives, and development of a process for hearing and 
resolving patient grievances;
    (v) Assuring that the center is operated in compliance with 
applicable Federal, State, and local laws and regulations; and
    (vi) Adopting health care policies including scope and availability 
of services, location and hours of services, and quality-of-care audit 
procedures.



Sec. 51c.305  Grant evaluation and award.

    Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which will, in his judgment, best promote 
the purposes of section 330(d)(1)(A) of the Act and the applicable 
regulations of this part, taking into consideration;
    (a) The extent to which the project would provide for the elements 
set forth in Sec. 51c.303;
    (b) The relative need of the population to be served for the 
services to be provided;
    (c) The potential of the center for the development of new and 
effective methods for health services delivery and management;
    (d) The soundness of the fiscal plan for assuring effective 
utilization of

[[Page 184]]

grant funds and maximizing non-grant revenue;
    (e) The administrative and management capability of the applicant;
    (f) The extent to which grants approved under this part will provide 
for an appropriate distribution of resources throughout the country, 
taking into consideration the following factors:
    (1) The urban-rural area to be served;
    (2) The nature of the organization applying;
    (3) The organizational structure for delivery of services;
    (g) The number of users of the center and the level of utilization 
of services in previous operational periods, if any;
    (h) Whether the center's catchment area is exclusive of the area 
served by another center;
    (i) The degree to which the applicant intends to integrate services 
supported by a grant under this subpart with health services provided 
under other Federally assisted health services or reimbursement programs 
or projects;
    (j) The extent to which community resources will be utilized by the 
project;
    (k) The extent to which the center will provide preventive health 
services so as to maintain and improve the health status of the 
population served; and
    (l) The extent to which center operations will emphasize direct 
health services, efficiency of operations and sound financial 
management.



        Subpart D_Grants for Operating Community Health Projects



Sec. 51c.401  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A are applicable to grants awarded pursuant to section 
330(d)(1)(B) of the Act for the costs of operation of projects which 
provide health services to medically underserved populations.



Sec. 51c.402  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
51c.104 of subpart A, contain information sufficient to enable the 
Secretary to determine that the project for which the grant is sought 
will meet the requirements of Sec. 51c.403 of this subpart.



Sec. 51c.403  Project elements.

    A project for the operation of a community health project supported 
under this subpart must:
    (a) Meet all of the requirements of Sec. 51c.303 of this part 
except for paragraph (h).
    (b) Provide those services enumerated in Sec. 51c.102(c)(1) of this 
part which the Secretary determines to be feasible and desirable and 
which are specified in the grant award.
    (c) Establish a governing board meeting the requirements of Sec. 
51c.304 by the end of the period of support under section 330(d)(1)(B) 
of the Act and this subpart.



Sec. 51c.404  Grant evaluation and award.

    (a) Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which will, in his judgment, best promote 
the purposes of section 330(d)(1)(B) of the Act and the applicable 
regulations of this part,
    (1) Where the project meets the requirements of Sec. 51c.403(a); 
and
    (2) Taking into consideration the following:
    (i) The degree to which the project would provide the services 
enumerated in Sec. 51c.102(c)(1) and the feasibility of its providing 
all of such enumerated services by the end of the period of support 
under section 330(d)(1)(B) of the Act and this subpart;
    (ii) Whether the project will have a governing board meeting the 
requirements of Sec. 51c.304 by the end of the period of support under 
section 330(d)(1)(B) of the Act and this subpart;
    (iii) The degree to which the applicant intends to integrate 
services supported by a grant under this subpart with health services 
provided under other Federally assisted health service or reimbursement 
programs or projects;
    (iv) The need of the population to be served for the services to be 
provided;
    (v) The potential of the project for the development of new and 
effective

[[Page 185]]

methods for health services delivery and management;
    (vi) The soundness of the fiscal plan for assuring effective 
utilization of grant funds and maximizing non-grant revenue;
    (vii) The administrative and management capacity of the applicant; 
and
    (viii) The extent to which community resources will be utilized in 
the project.
    (b) The Secretary may:
    (1) Make no more than two grants for the same entity under section 
330(d)(1)(B) of the Act;
    (2) Not make any grant under section 330(d)(1)(B) to an entity 
which, for the same project, has been awarded more than one grant under 
section 330(c) of the Act;
    (3) Not make a grant under section 330(d)(1)(B) to an entity which 
has been awarded a grant under section 330(d)(1)(A) of the Act.



      Subpart E_Acquisition and Modernization of Existing Buildings



Sec. 51c.501  Applicability.

    The regulations of this subpart, in addition to the regulations of 
the other applicable subparts of this part, are applicable to grants 
under section 330 of the Act for project costs which include the cost of 
acquisition and/or modernization of existing buildings (including the 
cost of amortizing the principal of, and paying the interest on, loans), 
except that, these regulations are not applicable to grants for project 
costs which include the costs of modernization of existing buildings if 
those costs can otherwise be supported under subparts B, C, or D of this 
part.

[43 FR 5352, Feb. 7, 1978]



Sec. 51c.502  Definitions.

    (a) Equipment means nonexpendable personal property as defined in 45 
CFR 74.132.
    (b) Existing building means a completed or substantially completed 
structure, and may include the realty on which it is or is to be 
located.
    (c) Modernization means the alteration, repair, remodeling and/or 
renovation of a building (including the initial equipment thereof and 
improvements to the building's site) which, when completed, will render 
the building suitable for use by the project for which the grant is 
made.

[43 FR 5352, Feb. 7, 1978]



Sec. 51c.503  Application.

    (a) General requirements. An application for a grant under this part 
for a project under subparts B, C, or D which includes the acquisition 
and/or modernization of an existing building must include the following:
    (1) A legal description of the site and a drawing showing the 
location of the building;
    (2) A description of the architectural, structural, and other 
pertinent characteristics of the building sufficient to show that it is 
or that it will be, after alteration and renovation or after 
modernization, suitable for use by the project;
    (3) A detailed estimate of the cost of the proposed acquisition and/
or modernization;
    (4) A description of, and copies of any relevant documents 
concerning, any existing or proposed financing arrangements for the 
acquisition and/or modernization;
    (5) The proposed schedule for acquisition and/or modernization and 
occupancy;
    (6) An assessment of the environmental impact of the proposed 
acquisition and/or modernization as called for by section 102(2)(c) of 
the National Environmental Policy Act of 1969 (42 U.S.C. 4332(c)) and 
such information as may be necessary to comply with the National 
Historic Preservation Act of 1966 (16 U.S.C. 470(f));
    (7) Reasonable assurances that--
    (i) The applicant has or will obtain a fee simple or such other 
estate or interest in the site, including necessary easements and 
rights-of-way, sufficient to assure for a period of not less than 20 
years (in the case of interim facilities, for the period constituting 
the estimated useful life of such facilities) undisturbed use and 
possession for the purpose of the operation of the project;
    (ii) The building will be used for the purposes for which the grant 
is made;

[[Page 186]]

    (iii) The building complies, or after alteration and renovation or 
after modernization will comply, with applicable State and local codes 
and with:
    (A) ``American National Standard Specifications for Making Buildings 
and Facilities Accessible to, and Usable by, the Physically 
Handicapped'' Number ANSI A117.1-1961 (R 1971), as modified by other 
standards prescribed by the Secretary or the Administrator of the 
General Services Administration. The applicant shall be responsible for 
conducting inspections to insure compliance with the specifications;
    (B) The applicable standards set forth in Life Safety Code 1973, 
NFPA No. 101, which is hereby incorporated by reference and made a part 
hereof. Copies of such document are available for examination at the 
Department's and Regional Offices' Information Centers listed in 45 CFR 
5.31 and may also be obtained from the National Fire Protection 
Association, 470 Atlantic Avenue, Boston, MA 02210 for $3.00 per copy.
    (iv) In the case of a public applicant with an approved project 
which involves the displacement of persons or businesses on or after 
January 2, 1971, whose real property has or will be taken, the applicant 
will comply with the provisions of the Uniform Relocation Assistance and 
Real Property Acquisition Policies Act of 1970 (Pub. L. 91-646) and the 
applicable regulations issued thereunder (45 CFR part 15);
    (v) Sufficient funds will be available to meet any portion of the 
cost of acquiring and/or modernizing the building not borne by the grant 
under this part;
    (vi) Sufficient funds will be available after acquisition and/or 
modernization of the building for effective use of the building for the 
purposes of the project;
    (vii) The applicable requirements of the Flood Disaster Protection 
Act of 1973 have been met;
    (8) Such other information as the Secretary may reasonably require.
    (b) Requirement for acquisition grants. Except for a grant solely 
for amortization of principal and payment of interest on an existing 
loan, an application for a grant for a project which includes the 
acquisition of an existing building must include, in addition to the 
requirements of paragraph (a) of this section, evidence satisfactory to 
the Secretary that the applicant has explored other alternatives to the 
proposed acquisition (such as leasing facilities or acquiring other 
facilities in the project's catchment area) and that the proposed 
acquisition constitutes the soundest alternative from a financial and 
program standpoint.
    (c) Requirements for modernization grants. In addition to the 
requirements of paragraph (a) of this section, an application for a 
grant for a project which includes modernization of an existing building 
must include the following:
    (1) Plans and specifications for the proposed modernization which 
conform to the standards specified in Sec. 51c.503(a)(7)(iii);
    (2) Reasonable assurance that any laborer or mechanic employed by 
any contractor or subcontractor in the performance of work on the 
modernization project will be paid wages at rates not less than those 
prevailing on similar work in the locality as determined by the 
Secretary of Labor under the Davis-Bacon Act (40 U.S.C. 276a et seq.) 
and will receive compensation at a rate not less than one and one-half 
times his basic rate of pay for all hours worked in any workweek in 
excess of 8 hours in any calendar day; and
    (3) Copies of any construction and materials contracts already 
entered into for the proposed modernization.

[41 FR 57000, Dec. 30, 1976, as amended at 43 FR 5352, Feb. 7, 1978]



Sec. 51c.504  Project elements.

    (a) General requirements. A grantee which has received a grant under 
section 330 of the Act for a project which includes the acquisition and/
or modernization of an existing building must:
    (1) Assurances. Comply with the assurances provided pursuant to this 
subpart.
    (2) Approval of estimated cost. Not enter into any contract for the 
acquisition and/or modernization funded under this subpart where the 
cost of such acquisition and/or modernization exceeds the estimates in 
the application, without the prior approval of the Secretary.

[[Page 187]]

    (3) Non-default. Make every effort to prevent any default on any 
loan secured by the building and, in the event of a default, promptly 
notify the Secretary of the default and make every effort on a timely 
basis to cure the default.
    (b) Requirements for acquisition grants. In addition to the 
requirements of paragraph (a) of this section, a grantee which has 
received a grant under section 330 of the Act for a project which 
includes the acquisition of an existing building must:
    (1) Bona-fide sale. Acquire or, in the case of a grant solely for 
amortization of principal and payment of interest on an existing loan, 
have acquired the existing building pursuant to a bona-fide sale 
involving an actual cost to the applicant and resulting in additional or 
improved facilities for the purposes of the project.
    (2) Standards of construction and equipment. Except in the case of a 
grant solely for amortization of principal and payment of interest on an 
existing loan, obtain a determination by the Secretary that the facility 
conforms (or upon completion of any necessary alteration and renovation 
or modernization will conform) to the standards set forth in Sec. 
51c.503(a)(7)(iii) of this subpart before entering into a final or 
unconditional contract for the acquisition. Where the Secretary finds 
that exceptions to or modifications of any such standards would be 
consistent with the purposes of the Act and of the program, he may 
authorize such exceptions or modifications.
    (3) Financing. Where the grantee will obtain a loan secured by the 
building in order to acquire the building, obtain such financing at the 
lowest current rate prevailing in the area for comparable loans on 
comparable facilities.
    (c) Requirements for modernization grants. In addition to the 
requirements of paragraph (a) of this section, a grantee which has 
received a grant under section 330 of the Act for a project which 
includes the modernization of an existing building must:
    (1) Costs in excess of approved costs. Finance all costs in excess 
of the estimated costs approved in the application and submit to the 
Secretary for prior approval any changes that substantially alter the 
scope of the function, utilities, or safety of the facility.
    (2) Competitive bids. (i) Obtain the approval of the Secretary 
before the project is advertised or placed on the market for bidding; 
such approval must include a determination by the Secretary that the 
final plans and specifications conform to the standards set forth in 
Sec. 51c.503(a)(7)(iii) of these regulations.
    (ii) Except as otherwise provided by State or local law, contract 
for construction (including the purchase and installation of built-in 
equipment) on a lump sum fixed-price basis, and award contracts on the 
basis of competitive bidding obtained by public advertising with award 
of the contracts to the lowest responsive and responsible bidders. The 
provision for exceptions based on State and local law shall not be 
invoked to give local contractors or suppliers a percentage preference 
over non-local contractors bidding for the same contract. Such practices 
are precluded by this paragraph.
    (3) Construction contracts. (i) Include the following conditions and 
provisions in all construction contracts for the modernization project:
    (A) The provisions set forth in ``DHHS Requirements for Federally 
Assisted Construction Contracts Regarding Labor Standards and Equal 
Employment Opportunities,'' Form DHHS 514 (rev. 7/76) (issued by the 
Office of Grants Administration Policy, U.S. Department of Health and 
Human Services) pertaining to the Davis-Bacon Act, the Contract Work 
Hours Standards Act, and the Copeland Act (Anti-Kickback) Regulations, 
except in the case of contracts in the amount of $2,000 or less; and 
pertaining to Executive Order 11246, 30 FR 12319 (September 24, 1965), 
as amended, relating to nondiscrimination in construction contract 
employment, except in the case of contracts in the amount of $10,000 or 
less;
    (B) That the contractor shall furnish performance and payment bonds 
each of which shall be in the full amount of the contract price, and 
shall maintain, during the life of the contract, adequate fire, 
workmen's compensation, public liability, and property damage insurance: 
Provided, however, That in

[[Page 188]]

the case of a State or local unit of government which enters into a 
construction contract of less than $100,000, State or local provisions 
with respect to performance and payment bonds shall be deemed to meet 
the requirements of this paragraph; and
    (C) That the Secretary shall have access at all reasonable times to 
work wherever it is in preparation or progress, and the contractor shall 
provide proper facilities for such access and inspection.
    (ii) Executive Order 11246. Comply with the applicable requirements 
of Executive Order 11246, 30 FR 12319 (September 24, 1965) as amended, 
relating to nondiscrimination in construction contract employment, and 
the applicable rules, regulations, and procedures prescribed pursuant 
thereto.
    (4) Modernization supervision. Provide and maintain competent and 
adequate architectural or engineering supervision and inspection at the 
modernization site to insure that the completed work conforms with the 
plans and specifications.
    (5) Completion responsibility. Complete the modernization in 
accordance with the grant application and the approved plans and 
specifications.
    (6) Progress reports. Furnish progress reports and such other 
information concerning the modernization as the Secretary may require.
    (d) The Secretary may at any time approve exceptions to the 
provisions of this section where he finds that such exceptions are not 
inconsistent with section 330 of the Act, other requirements of law, or 
the purposes of the program.

[41 FR 57000, Dec. 30, 1976, as amended at 43 FR 5352, Feb. 7, 1978]



Sec. 51c.505  Determination of cost.

    The cost of acquisition and/or modernization of existing buildings 
for which funds may be granted under this part will be determined by the 
Secretary, utilizing such documentation submitted by the applicant as 
the Secretary may prescribe (including the reports of such real estate 
appraisers as the Secretary may approve) and other relevant factors, 
taking into consideration only that portion of the existing building 
necessary for the operation of the approved project.

[41 FR 5700, Dec. 30, 1976]



Sec. 51c.506  Use of grant funds.

    Grant funds may be used to amortize the principal of or pay interest 
on a loan or mortgage on an existing building acquired under this part, 
including a building purchased by a grantee prior to the promulgation of 
this part, but only if the building is being used for the purposes of 
section 330 and complies with the applicable provisions of this subpart 
and only to the extent the Secretary finds such principal amounts and 
interest rates to be reasonable.

[41 FR 5700, Dec. 30, 1976]



Sec. 51c.507  Facility which has previously received Federal grant.

    No grant for the acquisition of a facility which has previously 
received a Federal grant for construction, acquisition, or equipment 
shall serve either to reduce or restrict the liability of the applicant 
or any other transferor or transferee from any obligation of 
accountability imposed by the Federal Government by reason of such prior 
grant.

[41 FR 5700, Dec. 30, 1976]



PART 51d_MENTAL HEALTH AND SUBSTANCE ABUSE EMERGENCY RESPONSE PROCEDURES--

Table of Contents




Sec.
51d.1 To what does this subpart apply?
51d.2 Definitions.
51d.3 Who is eligible for an award under this subpart?
51d.4 What information is required in the application?
51d.5 How is an emergency determined to exist?
51d.6 How will applications be evaluated and awarded?
51d.7 What are the limitations on how award funds may be used?
51d.8 Which other HHS regulations apply to these awards?
51d.9 What other conditions apply to these awards?
51d.10 What are the reporting requirements?

    Authority: 42 U.S.C. 290aa(m).

    Source: 66 FR 51877, Oct. 11, 2001, unless otherwise noted.

[[Page 189]]



Sec. 51d.1  To what does this subpart apply?

    The regulations in this subpart apply to grants that enable public 
entities to respond to needs in local communities created by mental 
health or substance abuse emergencies, as authorized under section 
501(m) of the Public Health Service Act (42 U.S.C. 290aa(m)).



Sec. 51d.2  Definitions.

    As used in this part:
    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, or established 
pursuant to, the Alaska Native Claims Settlement Act (43 U.S.C. 1601 et 
seq.), which is recognized as eligible for the special programs and 
services provided by the United States to Indians because of their 
status as Indians;
    Immediate award means a short term award of up to $50,000, or such 
greater amount as determined by the Secretary on a case-by-case basis, 
to address the immediate needs resulting from a mental health or 
substance abuse emergency. Such funding may be provided for a period of 
up to 90 days.
    Intermediate award means an award intended to meet the more ongoing 
needs resulting from a mental health or substance abuse emergency than 
is possible under an Immediate award. Intermediate awards may fund up to 
one year of services, although in some exceptional circumstances, and to 
the extent that funding is available, such funding may be continued for 
an additional period of up to one year.
    Public entity means any State, any political subdivision of a State, 
any Federally recognized Indian tribal government or tribal 
organization.
    Secretary means the Secretary of Health and Human Services (HHS) or 
any other officer or employee of that Department to whom the authority 
involved has been delegated.
    State means one of the 50 States, the District of Columbia, Guam, 
the Commonwealth of Puerto Rico, the Northern Mariana Islands, the 
Virgin Islands, American Samoa, and the Trust Territory of the Pacific 
Islands.
    Tribal organization means the recognized governing body of any 
Indian tribe; any legally established organization of Indians which is 
controlled, sanctioned, or chartered by such governing body or which is 
democratically elected by the adult members of the Indian community to 
be served by such organization and which includes the maximum 
participation of Indians in all phases of its activities.

[66 FR 51877, Oct. 11, 2001, as amended at 67 FR 56931, Sept. 6, 2002]



Sec. 51d.3  Who is eligible for an award under this subpart?

    An applicant must be a public entity as defined by this subpart. 
Applicants are eligible for either or both Immediate and Intermediate 
awards.



Sec. 51d.4  What information is required in the application?

    (a) Application for Immediate awards: The application is to contain 
the following information:
    (1) A certification by the State's chief executive officer, or, for 
the purposes of a Federally recognized Indian tribal government, the 
principal elected official, or such officer's or official's designee, 
that a mental health or substance abuse emergency exists, as well as a 
written statement setting out the basis for the certification;
    (2) A brief program plan describing needs;
    (3) An estimate of the number of people to be served and the 
geographical area to be served;
    (4) A description of the types of services to be provided;
    (5) A budget justifying the amount of the request;
    (6) Required certifications; and
    (7) Such other pertinent information as the Secretary may require.
    (b) Application for Intermediate awards: The application is to be 
submitted on an OMB-approved application form and contain the following:
    (1) If the applicant has not applied previously for an Immediate 
award, a certification by the State's chief executive officer, or, for 
the purposes of a Federally recognized Indian tribal government, the 
principal elected official, or such officer's or official's designee, 
that a mental health or substance

[[Page 190]]

abuse emergency exists, as well as a written statement setting out the 
basis for the certification;
    (2) An application submission date within three months of the date 
of the event that precipitated the mental health or substance abuse 
emergency, as certified in accordance with 51d.4(a)(1) or (b)(1), except 
that upon the request of a State, the Secretary may provide a waiver of 
this application submission deadline if the Secretary determines there 
is good cause to justify the waiver;
    (3) A detailed and comprehensive assessment of need;
    (4) Demographics specific to the estimated number of people to be 
served;
    (5) A description of the services that were provided up to the date 
of the submission of the Intermediate award application;
    (6) The geographical area to be served;
    (7) A detailed implementation program plan and related time line, 
including a description of outreach to special population groups 
affected by the crisis;
    (8) A budget justifying the amount of the request for personnel, 
equipment, supplies, travel, training, data collection and any technical 
assistance required; the budget shall include an identification of the 
resources the applicant is able to commit to the project, if any, 
including any in-kind contributions;
    (9) Any information that has changed since an Immediate application 
was submitted, if one was submitted; and
    (10) such other pertinent information as the Secretary may require.
    (c) Signature on Award Applications. The application must be signed 
by an individual authorized to act for the applicant and to assume on 
behalf of the applicant the obligations imposed by the statute, all 
applicable regulations, and any additional conditions of the grant.



Sec. 51d.5  How is an emergency determined to exist?

    (a) In making a decision as to whether a mental health or substance 
abuse emergency exists for purposes of section 501(m) of the PHS Act, 
the Secretary, using discretion, will consider all relevant factors, but 
at a minimum the following must exist:
    (1) Existing State, Tribal and local systems for mental health and/
or substance abuse services are overwhelmed or unable to meet the 
existing mental health or substance abuse needs of the local community 
at issue; and
    (2) This inability to meet the mental health and/or substance abuse 
service needs of a local community is the direct consequence of a clear 
precipitating event. This precipitating event must:
    (i) Have a sudden, rapid onset and a definite conclusion, such as:
    (A) A natural disaster (including, but not limited to, a hurricane, 
tornado, storm, flood, earthquake, fire, drought, or other natural 
catastrophe); or
    (B) A technological disaster (including, but not limited to, a 
chemical spill, a major industrial accident, or a transportation 
accident); or
    (C) A criminal act with significant casualties (including, but not 
limited to, a domestic act of terrorism, a hostage situation, or an 
incident of mass violence including school shootings and riots); and
    (ii) Result in significant:
    (A) Death,
    (B) Injury,
    (C) Exposure to life-threatening circumstances,
    (D) Hardship,
    (E) Suffering,
    (F) Loss of property, or
    (G) Loss of community infrastructure (e.g., loss of treatment 
facilities, staff, public transportation and/or utilities, or isolation 
from services); and
    (3) No other local, State, Tribal or Federal funding is available to 
adequately address the specific level of need resulting from the 
precipitating event and resulting emergency mental health and/or 
substance abuse service needs of the impacted community.
    (b) In making a determination that a mental health or substance 
abuse emergency exists, the Secretary will consider the certification 
and written statements provided in accordance with Sec. 51d.4(a)(1) or 
(b)(1), and other information independently available to the Secretary.
    (c) Once the Secretary determines that a mental health or substance

[[Page 191]]

abuse emergency exists, the Secretary may exercise discretion to make 
awards to enable public entities to respond to the emergency, within the 
limits of funds available.



Sec. 51d.6  How will applications be evaluated and awarded?

    (a) In assessing applications for funding, the Secretary will 
utilize the following criteria.
    (1) Documentation of Need. Applicant has demonstrated mental health 
and/or substance abuse needs directly resulting from the precipitating 
event. The precipitating event is clearly identified along with 
information regarding its impact. Applicant has identified any high risk 
groups or populations with special concerns that may impact the delivery 
of services (e.g., children, adolescents, older adults, ethnic and 
cultural groups, lower income populations). This documentation of need 
shall include the extent of physical, psychological and social problems 
observed, and a description of how the estimate of the number of people 
to be served was made. Applicant has clearly documented that no other 
local, State, Tribal or Federal funding sources are available to address 
the need.
    (2) Plan of Services. Applicant has a clear plan of services to 
address documented needs within a defined geographic area and in a 
specified time period. The plan of services is appropriate to the type 
of grant requested (e.g., Immediate or Intermediate) and specifically 
addresses the needs of any high risk groups or populations with special 
concerns identified in the assessment of need. The plan of services 
clearly identifies the following:
    (a) The types of services to be provided (e.g., outreach, crisis 
counseling, public education on stress management and crisis mental 
health, public education on substance abuse prevention, information and 
referral services, short term substance abuse or mental health 
prevention and/or treatment services);
    (b) Strategies for targeting those identified as needing services, 
including high risk groups or populations with special concerns 
identified in the needs assessment;
    (c) Appropriate training to be provided to staff to assure that 
services are appropriate to the crisis situation and the plans for 
community recovery;
    (d) Quality control methods in place to assure appropriate services 
to the target population;
    (e) Staff support mechanisms that are available;
    (f) Plans for coordination of services with key local, State, Tribal 
and Federal partners involved in addressing the precipitating event 
(e.g., emergency management agencies, law enforcement, education 
agencies, public health agencies, and other agencies active in crisis 
response); and
    (g) An estimate of the length of time for which said services 
requiring Federal funding will be needed, and the manner in which long-
term cases will be referred for continued assistance after Federal funds 
have ended.
    (3) Organizational Capability. Applicant is a public entity with 
demonstrated organizational capacity to deliver services as described in 
the plan of services. The applicant should also have a demonstrated 
history of service delivery to the target population within the defined 
service area for the program. The budget submitted shall provide 
sufficient justification and demonstrate that it is consistent with the 
documentation of need and plan of services. This shall include a 
description of the facilities to be utilized, including plans for 
securing office space if necessary to the project.
    (b) In determining the appropriateness and necessity of funding, the 
Secretary may consult with other Federal agencies responsible for 
responding to crisis incidents, including the Readiness, Response and 
Recovery Directorate within the Federal Emergency Management Agency 
(FEMA), the Safe and Drug Free Schools Program within the U.S. 
Department of Education, the Office for Victims of Crime (OVC) within 
the U.S. Department of Justice, the National Transportation Safety Board 
(NTSB) within the U.S. Department of Transportation, the Emergency 
Response Program within the Environmental Protection Agency (EPA), the 
Bureau of Indian Affairs (BIA) within the U.S. Department of the 
Interior, the Animal and Plant Health Inspection Service within the U.S. 
Department of Agriculture, the Indian Health

[[Page 192]]

Service (IHS) within the U.S. Department of Health and Human Services, 
and other Federal agencies with jurisdiction over specific types of 
crisis response.



Sec. 51d.7  What are the limitations on how award funds may be used?

    Unallowable Expenses: The following expenses will not be reimbursed 
under section 501(m) of the PHS Act:
    (1) Major construction costs;
    (2) Childcare services, unless provided by the institution or entity 
providing mental health or substance abuse treatment and integral to the 
treatment program;
    (3) Services outside of the geographic area specified in the 
application, except to the extent that the precipitating event requires 
physical relocation of either affected parties or facilities;
    (4) Any mental health or substance abuse services not directly 
related to the mental health or substance abuse emergency;
    (5) Any expenses that supplant ongoing local, State, Tribal or 
Federal expenditures; and
    (6) Any other costs unallowable by Federal law or regulation.



Sec. 51d.8  Which other HHS regulations apply to these awards?

    Several other HHS regulations apply to grants under this part. These 
include, but are not limited to:

45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76--Debarment and suspension from eligibility for financial 
assistance
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefitting from Federal financial 
assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefitting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to state and local governments

[66 FR 51877, Oct. 11, 2001, as amended at 67 FR 56931, Sept. 6, 2002]



Sec. 51d.9  What other conditions apply to these awards?

    Award funding made under this authority is to be supplemental in 
nature. Consistent with the criteria in Sec. 51d.5 and the 
certification in Sec. 51d.4(a)(1), such funds will only be made 
available if no other local, State, Tribal or Federal source is 
available to adequately address the emergency mental health and/or 
substance abuse service needs of the impacted community.



Sec. 51d.10  What are the reporting requirements?

    (a) For immediate awards:
    (1) A mid-program report only if an Intermediate award application 
is being prepared and submitted. This report shall be included as part 
of the Intermediate award application,
    (2) Quarterly financial status reports of expenditures to date, due 
30 days following the end of the reporting period, as permitted by 45 
CFR 92.41(b),
    (3) A final program report, a financial status report, and a final 
voucher 90 days after the last day of Immediate award services, in 
accordance with 45 CFR 92.50(b).
    (b) For intermediate awards:
    (1) Quarterly progress reports, due 30 days following the end of the 
reporting period, as permitted by 45 CFR 92.40(b),
    (2) Quarterly financial status reports of expenditures to date, due 
30 days following the end of the reporting period, as permitted by 45 
CFR 92.41(b),
    (3) A final program report, to be submitted within 90 days after the 
end of

[[Page 193]]

the program services period, in accordance with 45 CFR 92.50(b),
    (4) A financial status report, to be submitted within 90 days after 
the end of the program services period, in accordance with 45 CFR 
92.50(b),
    (5) Such additional reports as the Secretary may require.
    (c) The following shall be specifically addressed in final program 
reports:
    (1) Description of services provided,
    (2) Number of individuals assisted,
    (3) Amount of funding expended and for what purposes,
    (4) Personnel costs,
    (5) Training costs,
    (6) Technical consultation costs,
    (7) Equipment costs,
    (8) Travel and transportation costs, and
    (9) A narrative describing lessons learned and exemplary practices, 
and a description of the transition plan, for how services will be 
funded or provided when Federal funds have been exhausted.

                        PARTS 51e-51g [RESERVED]



PART 52_GRANTS FOR RESEARCH PROJECTS--Table of Contents




Sec.
52.1 To which programs do these regulations apply?
52.2 Definitions.
52.3 Who is eligible to apply for a grant?
52.4 How to apply for a grant.
52.5 Evaluation and disposition of applications.
52.6 Grant awards.
52.7 Use of funds; changes.
52.8 Other HHS policies and regulations that apply.
52.9 Additional conditions.

    Authority: 42 U.S.C. 216.



Sec. 52.1  To which programs do these regulations apply?

    (a) General. The regulations of this party apply to all health-
related research project grants administered by the PHS or its 
components, except for grants for health services research, 
demonstration, and evaluation projects administered by the Agency for 
Health Care Policy and Research. These regulations do not apply to 
research grants that are not for the support of an identified research 
project (sometimes referred to as general research support grants), 
grants for the construction or operation of research facilities, grants 
for prevention or educational programs, demonstration grants, 
traineeships, training grants, or to the support of research training 
under the National Research Service Awards program.
    (b) Specific programs covered. From time to time the Secretary will 
publish a list of the research project grant programs covered by this 
part. The list is for informational purposes only and is not intended to 
restrict the statement of applicability in paragraph (a) of this 
section. In addition, information on particular research project grant 
programs, including applications and instructions, may be obtained from 
the component of the PHS that administers the program.

[61 FR 55105, Oct. 24, 1996.]



Sec. 52.2  Definitions.

    As used in this part:
    Act means the Public Health Service Act, as amended (42 U.S.C. 201 
et seq.).
    Grantee means the institution, organization, individual or other 
person designated in the grant award document as the responsible legal 
entity to whom a grant is awarded under this part. The term shall also 
mean the recipient of a cooperative agreement awarded under this part.
    HHS means the Department of Health and Human Services.
    Principal investigator means a single individual designated by the 
grantee in the grant application and approved by the Secretary, who is 
responsible for the scientific and technical direction of the project.
    Project means the particular activity for which funding is sought 
under this part as described in the application for grant award.
    Public Health Service and PHS means the operating division of the 
Department that consists of the Agency for Health Care Policy and 
Research, the Centers for Disease Control and Prevention, the Food and 
Drug Administration, the Health Resources and Services Administration, 
the Indian Health Service, the National Institutes of Health, the Office 
of the Assistant Secretary for Health, the Substance

[[Page 194]]

Abuse and Mental Health Administration, and the Agency for Toxic 
Substances and Disease Registry.
    Research means a systematic investigation, study or experiment 
designed to contribute to general knowledge relating broadly to public 
health by establishing, discovering, developing, elucidating or 
confirming information about, or the underlying mechanisms relating to, 
the biological functions, diseases, or related matters to be studied.
    Secretary means the Secretary of HHS and any other officer or 
employee of the HHS to whom the authority involved may be delegated.

[61 FR 55105, Oct. 24, 1996]



Sec. 52.3  Who is eligible to apply for a grant?

    (a) Persons eligible. Any individual, corporation, public or private 
institution or agency, or other legal entity shall be eligible for a 
grant award, except:
    (1) An individual or entity which is otherwise ineligible for an 
award under applicable law or regulation;
    (2) Federal agencies or institutions, unless specifically authorized 
by law to receive the grant; or
    (3) Individuals, corporations, institutions, agencies, and other 
entities during the period they are debarred or suspended from 
eligibility for Federal financial assistance (see 45 CFR part 76).
    (b) Permissible activities within research projects. Any project 
found by the Secretary to be a research project within the meaning of 
this part shall be eligible for a grant award. Eligible projects may 
consist of laboratory, clinical, population, field, statistical, basic, 
applied or other types of investigations, studies or experiments, or 
combinations thereof, and may either be limited to one, or a particular 
aspect of a problem or subject, or may consist of two or more related 
problems or subjects for concurrent or consecutive investigation and 
involving multiple disciplines, facilities and resources.
    (c) Preferences. In the award of grants for international research 
relating to the development and evaluation of vaccines and treatments 
for AIDS under section 2315 of the Act, preference shall be given to:
    (1) Activities conducted by, or in cooperation with, the World 
Health Organization, and
    (2) With respect to activities in the Western Hemisphere, activities 
conducted by, or in cooperation with, the Pan American Health 
Organization or the World Health Organization.

[61 FR 55105, Oct. 24, 1996]



Sec. 52.4  How to apply for a grant.

    Each institution interested in applying for a grant under this part 
must submit an application at such time and in such form and manner as 
the Secretary may prescribe.

[61 FR 55105, Oct. 24, 1996]



Sec. 52.5  Evaluation and disposition of applications.

    (a) Evaluation. All applications filed in accordance with Sec. 52.4 
shall be evaluated by the Secretary through such officers and employees 
and such experts or consultants engaged for this purpose as the 
Secretary determines are specially qualified in the areas of research 
involved in the project, including review by an appropriate National 
Advisory Council or other body as may be required by law. The 
Secretary's evaluation shall take into account among other pertinent 
factors the scientific merit and significance of the project, the 
competency of the proposed staff in relation to the type of research 
involved, the feasibility of the project, the likelihood of its 
producing meaningful results, the proposed project period, and the 
adequacy of the applicant's resources available for the project and the 
amount of grant funds necessary for completion, and in the case of 
applications for support of research in emergency medical services, 
special consideration shall be given to applications for grants for 
research relating to the delivery of emergency medical services in rural 
areas.
    (b) Disposition. On the basis of the Secretary's evaluation of an 
application in accordance with paragraph (a) of this section and subject 
to approvals, recommendations or consultations by the appropriate 
National Advisory Council or other body as may be required by law, the 
Secretary will (1) approve, (2) defer because of either lack

[[Page 195]]

of funds or a need for further evaluation, or (3) disapprove support of 
the proposed project in whole or in part. With respect to approved 
projects, the Secretary will determine the project period (subject to 
extension as provided in Sec. 52.7(c)) during which the project may be 
supported. Any deferral and disapproval of an application will not 
preclude its reconsideration or a reapplication.

[45 FR 12240, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980]



Sec. 52.6  Grant awards.

    (a) Within the limits of funds available for that purpose, the 
Secretary will award a grant to those applicants whose approved projects 
will in the Secretary's judgment best promote the purposes of the 
statute authorizing the grant and the regulations of this part. The date 
specified by the Secretary as the beginning of the project period shall 
be no later than 9 months following the date of any initial or new award 
statement unless the Secretary finds that because of the nature of a 
project or the grantee's particular circumstances earlier assurance of 
grant support is required to initiate the project. Any funds granted 
under this part shall be expended solely for the purposes for which the 
funds were granted in accordance with the approved application and 
budget, the regulations of this part, the terms and conditions of the 
award and the applicable cost principles prescribed in subpart Q of 45 
CFR part 74.
    (b) Evaluation of unapproved drug treatments for AIDS. Grants under 
section 2314 of the Act to support research relating to the evaluation 
of drug treatments for AIDS not approved by the Commissioner of Food and 
Drugs, shall be subject to appropriate scientific and ethical guidelines 
established by the Secretary for each project, pursuant to section 
2314(c) of the Act. In order to receive a grant, the applicant must 
agree to comply with those guidelines.
    (c) Notice of grant award. (1) The notice of grant award specifies 
how long HHS intends to support the project without requiring the 
project to recompete for funds. This period, called the project period, 
will usually be for 1-5 years.
    (2) Generally, the grant will initially be for one year and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit an application at the time and in the form and 
manner as the Secretary may prescribe to have support continued for each 
subsequent year.
    (3) Neither the approval of any application nor the award of any 
grant commits or obligates the United States in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.
    (d) Multiple or concurrent awards. Whenever a research project 
involves a number of different but related problems, activities or 
disciplines which require evaluation by different groups, or whenever 
support for a project could be more effectively administered by separate 
handling of separate aspects of the project, the Secretary may evaluate, 
approve and make awards pursuant to two or more concurrent applications, 
each dealing with one or more specified aspects of the project.
    (e) Unobligated balances. The Secretary may permit unobligated grant 
funds remaining in the grant account at the close of a budget period to 
be carried forward for obligation during a subsequent budget period, 
provided a continuation award is made for that period and the 
Secretary's written approval is obtained.
    (f) Award for continuation of project under new grantee. The 
Secretary, upon application in accordance with the provisions of Sec. 
52.4 and without further action by a Council or other body, may make a 
grant to any institution or other person eligible under Sec. 52.3 for 
continuation of a currently supported project for which a grant was 
previously made to another institution or person, provided the Secretary 
finds that the change in the conduct of the project is consonant with 
the previous evaluation and approval of the project under Sec. 52.5.

[45 FR 12240, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980; 61 FR 55105, 
Oct. 24, 1996]

[[Page 196]]



Sec. 52.7  Use of funds; changes.

    (a) Delegation of fiscal responsibility. The grantee may not in 
whole or in part delegate or transfer to another person responsibility 
for the use or expenditure of grant funds.
    (b) Changes in project. The permissible changes by the principal 
investigator in the approved project shall be limited to changes in 
methodology, approach or other aspects of the project to expedite 
achievement of the project's research objectives, including changes that 
grow out of the approved project and serve the best scientific strategy. 
If the grantee and the principal investigator are uncertain whether a 
change complies with this provision, the question must be referred to 
the Secretary for a final determination.
    (c) Changes in project period. The project period determined 
pursuant to Sec. 52.5(b) may be extended by the Secretary, with or 
without additional grant support, for such an additional period as the 
Secretary determines may be required to complete, or fulfill the 
purposes of, the approved project.

[45 FR 12240, Feb. 25, 1980]



Sec. 52.8  Other HHS regulations and policies that apply.

    Several other HHS policies and regulations apply to grants under 
this part. These include, but are not necessarily limited to:

37 CFR part 401--Rights to inventions made by nonprofit organizations 
and small business firms under government grants, contracts, and 
cooperative agreements
42 CFR part 50, subpart A--Responsibility of PHS awardee and applicant 
institutions for dealing with and reporting possible misconduct in 
science
42 CFR part 50, subpart D--Public Health Service grant appeals procedure
42 CFR part 50, subpart F--Responsibility of applicants for promoting 
objectively in research for which PHS funding is sought
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 46--Protection of human subjects
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76--Governmentwide debarment and suspension (nonprocurement) 
and governmentwide requirements for drug-free workplace (grants)
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to State and local governments
45 CFR part 93--New restrictions on lobbying
59 FR 14508 (March 28, 1994)--NIH Guidelines on the Inclusion of Women 
and Minorities as Subjects in Clinical Research.

    Note: This policy is subject to changes, and interested persons 
should contact the Office of Research on Women's Health, NIH, Room 201, 
Building 1, MSC 0161, BETHESDA, MD 20892-0161 (301-402-1770; not a toll-
free number) to obtain references to the current version and any 
amendments.]

59 FR 34496 (July 5, 1994)--NIH Guidelines for Research Involving 
Recombinant DNA Molecules.

    Note: This policy is subject to changes, and interested persons 
should contact the Office of Recombinant DNA Activities, NIH, Suite 323, 
6000 Executive Boulevard, MSC 7010, Bethesda, MD 20892-7010 (301-496-
9838; not a toll-free number) to obtain references to the current 
version and any amendments.]

``PHS Grants Policy Statement,'' DHHS Publication No. (OASH) 94-50,000 
(Rev.) April 1, 1994.

    Note: This policy is subject to changes, and interested persons 
should contact the Grants Policy Branch, OASH, Room 17A45, Parklawn 
Building, 5600 Fishers Lane, Rockville, MD 20857 (301-443-1874; not a 
toll-free number) to obtain references to the current version and any 
amendments.]

``Public Health Service Policy on Humane Care and Use of Laboratory 
Animals,'' Office for Protection from Research Risks, NIH (Revised 
September 1986).

    Note: This policy is subject to changes, and interested persons 
should contact the Office for Protection from Research Risks, NIH, Suite 
3B01, 6100 Executive Boulevard, MSC 7507, Rockville, MD 20852-7507 (301-
496-

[[Page 197]]

7005; not a toll-free number) to obtain references to the current 
version and any amendments.]

[61 FR 55106 Oct. 24, 1996]



Sec. 52.9  Additional conditions.

    The Secretary may with respect to any grant award or class of awards 
impose additional conditions prior to or at the time of any award when 
in the Secretary's judgment such conditions are necessary to assure or 
protect advancement of the approved project, the interests of the public 
health, or the conservation of grant funds.

[45 FR 12240, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980]



PART 52a_NATIONAL INSTITUTES OF HEALTH CENTER GRANTS--Table of Contents




Sec.
52a.1 To which programs do these regulations apply?
52a.2 Definitions.
52a.3 Who is eligible to apply?
52a.4 What information must each application contain?
52a.5 How will NIH evaluate applications?
52a.6 Information about grant awards.
52a.7 For what purposes may a grantee spend grant funds?
52a.8 Other HHS regulations and policies that apply.
52a.9 Additional conditions.

    Authority: 42 U.S.C. 216, 284g, 285a-6(c)(1)(E), 285a-7(c)(1)(G), 
285b-4, 285c-5, 285c-8, 285d-6, 285e-2, 285e-3, 285e-10a, 285f-1, 285g-
5, 285g-7, 285g-9, 285m-3, 285o-2, 286a-7(c)(1)(G), 287c-32(c), 300cc-
16.

    Source: 57 FR 61006, Dec. 23, 1992, unless otherwise noted.



Sec. 52a.1  To which programs do these regulations apply?

    (a) The regulations of this part apply to grants by the National 
Institutes of Health and its organizational components to support the 
planning, establishment, expansion, and operation of research and 
demonstration and/or multipurpose centers in health fields described in 
this paragraph. Specifically, these regulations apply to:
    (1) National Institute of Mental Health centers of excellence with 
respect to research on autism, as authorized by section 409C of the Act 
(42 U.S.C. 284g);
    (2) National cancer research and demonstration centers (including 
payments for construction), as authorized by section 414 of the Act (42 
U.S.C. 285a-3);
    (3) National cancer research and demonstration centers with respect 
to breast cancer, as authorized by section 417 of the Act (42 U.S.C. 
285a-6);
    (4) National cancer and demonstration centers with respect to 
prostate cancer, as authorized by section 417A of the Act (42 U.S.C. 
285a-7);
    (5) National research and demonstration centers for heart, blood 
vessel, lung, and blood diseases, sickle cell anemia, blood resources, 
and pediatric cardiovascular diseases (including payments for 
construction), as authorized by section 422 of the Act (42 U.S.C. 485b-
4);
    (6) Research and training centers (including diabetes mellitus, and 
digestive, endocrine, metabolic, kidney and urologic diseases), as 
authorized by section 431 of the Act (42 U.S.C. 285c-5);
    (7) Research and training centers regarding nutritional disorders, 
as authorized by section 434 of the Act (42 U.S.C. 285c-8);
    (8) Multipurpose arthritis and musculoskeletal diseases centers 
(including payments for alteration, but not construction), as authorized 
by section 441 of the Act (42 U.S.C. 285d-6);
    (9) Alzheimer's disease centers, as authorized by section 445 of the 
Act (42 U.S.C. 285e-2);
    (10) Claude D. Peppers Older Americans Independence Centers, as 
authorized by section 445A of the Act (42 U.S.C. 285e-3);
    (11) Centers of excellence in Alzheimer's disease research and 
treatment, as authorized by section 445I of the Act (42 U.S.C. 285e-
10a);
    (12) Research centers regarding chronic fatigue syndrome, as 
authorized by section 447 of the Act (42 U.S.C. 285f-1);
    (13) Research centers with respect to contraception and infertility, 
as authorized by section 452A of the Act (42 U.S.C. 285g-5);
    (14) Child health research centers, as authorized by section 452C of 
the Act (42 U.S.C. 285g-7);
    (15) Fragile X research centers, as authorized by 452E of the Act 
(42 U.S.C. 285g-9);

[[Page 198]]

    (16) Multipurpose deafness and other communication disorders 
centers, as authorized by section 464C of the Act (42 U.S.C. 285m-3);
    (17) National drug abuse research centers, as authorized by section 
464N of the Act (42 U.S.C. 285o-2);
    (18) Centers of excellence in biomedical and behavioral research 
training for individuals who are members of minority health disparity 
populations or other health disparity populations, as authorized by 
section 485F of the Act (42 U.S.C. 287c-32); and
    (19) Centers for acquired immunodeficiency syndrome (AIDS) research, 
as authorized by section 2316 of the Act (42 U.S.C. 300cc-16).
    (b) This part does not apply to:
    (1) Grants for construction (see 42 CFR part 52b), except as noted 
in paragraph (a) of this section;
    (2) Grants covered by 42 CFR part 52 (grants for research projects); 
or
    (3) Grants for general research support under section 301(a)(3) of 
the Act (42 U.S.C. 241(a)(3)).
    (c) This part also applies to cooperative agreements made to support 
the centers specified in paragraph (a) of this section. When a reference 
is made in this part to ``grants,'' the reference shall include 
``cooperative agreements.''

[61 FR 55108, Oct. 24, 1996, as amended at 68 FR 69621, Dec. 15, 2003]



Sec. 52a.2  Definitions.

    As used in this part:
    Act means the Public Health Services Act, as amended (42 U.S.C. 201 
et seq.).
    Center means:
    (a) For purposes of grants authorized by section 409C of the Act, a 
public or nonprofit private entity which provides for planning and 
conducting basic and clinical research into the cause, diagnosis, early 
detection, prevention, control, and treatment of autism, including the 
fields of developmental neurobiology, genetics, and psychopharmacology;
    (b) For purposes of grants authorized by section 414 of the Act, an 
agency or institution which provides for planning and conducting basic 
and clinical research into, training in, and demonstration of advanced 
diagnostic, control, prevention and treatment methods for cancer;
    (c) For purposes of grants authorized by section 417 of the Act, an 
agency or institution which provides for planning and conducting basic, 
clinical, epidemiological, psychological, prevention and treatment 
research and related activities on breast cancer;
    (d) For purposes of grants authorized by section 417A of the Act, an 
agency or institution which provides for planning and conducting basic, 
clinical, and epidemiological, psychosocial, prevention and control, 
treatment, research, and related activities on prostate cancer;
    (e) For purposes of grants authorized by section 422 of the Act, an 
agency or institution which provides for planning and basic and clinical 
research into, training in, and demonstration of, management of blood 
resources and advanced diagnostic, prevention, and treatment methods 
(including emergency services) for heart, blood vessel, lung, or blood 
diseases including sickle cell anemia;
    (f) For purposes of grants authorized by section 431 of the Act, a 
single institution or a consortium of cooperating institutions, which 
conducts research, training, information programs, epidemiological 
studies, data collection activities and development of model programs in 
diabetes mellitus and related endocrine and metabolic diseases;
    (g) For purposes of grants authorized by section 434 of the Act, a 
single institution or a consortium of cooperating institutions which 
conducts basic and clinical research, training, and information programs 
in nutritional disorders, including obesity;
    (h) For purposes of grants authorized by section 441 of the Act, a 
facility which conducts basic and clinical research into arthritis and 
musculosketal diseases; and orthopedic procedures, training, and 
information programs for the health community and the general public;
    (i) For purposes of grants authorized by section 445 of the Act, a 
public or private nonprofit entity (including university medical 
centers) which conducts basic and clinical research (including 
multidisciplinary research) into, training in, and demonstration of

[[Page 199]]

advanced diagnostic, prevention, and treatment methods for Alzheimer's 
disease;
    (j) For purposes of grants authorized by section 445A of the Act, a 
single public or private nonprofit institution or entity or a consortium 
of cooperating institutions or entities which conducts research into the 
aging processes and into the diagnosis and treatment of diseases, 
disorders, and complications related to aging, including menopause, 
which research includes research on such treatments, and on medical 
devices and other medical interventions regarding such diseases, 
disorders, and complications, that can assist individuals in avoiding 
institutionalization and prolonged hospitalization and in otherwise 
increasing the independence of the individuals.
    (k) For the purposes of section 445I of the Act, a single 
institution or consortium of cooperating institutions which conducts 
basic and clinical research on Alzheimer's disease.
    (l) For purposes of grants authorized by section 447 of the Act, a 
single institution or consortium of cooperating institutions which 
conducts basic and clinical research on chronic fatigue syndrome;
    (m) For purposes of grants authorized by section 452A of the Act, a 
single institution or consortium of cooperating institutions which 
conducts clinical and other applied research, training programs, 
continuing education programs, and information programs with respect to 
methods of contraception, and infertility;
    (n) For purposes of grants authorized by section 452C of the Act, an 
agency or institution which conducts research with respect to child 
health, and gives priority to the expeditious transfer of advances from 
basic science to clinical applications and improving the care of infants 
and children;
    (o) For purposes of grants authorized by section 452E of the Act, a 
single institution or a consortium of cooperating institutions which 
conducts research for the purposes of improving the diagnosis and 
treatment of, and finding the cure for, fragile X;
    (p) For purposes of grants authorized by section 464C of the Act, a 
single institution or a consortium of cooperating institutions which 
conducts basic and clinical research into, training in, information and 
continuing education programs for the health community and the general 
public about, and demonstration of, advanced diagnostic, prevention, and 
treatment methods for disorders of hearing and other communication 
processes and complications resulting from these disorders;
    (q) For purposes of grants authorized by section 464N of the Act, 
institutions designated as National Drug Abuse Research Centers for 
interdisciplinary research relating to drug abuse and other biomedical, 
behavioral, and social issues related to drug abuse;
    (r) For purposes of grants authorized by section 485F of the Act, a 
biomedical or behavioral research institution or consortia that:
    (1) Have a significant number of members of minority health 
disparity populations or other health disparity populations enrolled as 
students in the institution (including individuals accepted for 
enrollment in the institution);
    (2) Have been effective in assisting such students of the 
institution to complete the program of education or training and receive 
the degree involved;
    (3) Have made significant efforts to recruit minority students to 
enroll in and graduate from the institution, which may include providing 
means-tested scholarships and other financial assistance as appropriate; 
and
    (4) Have made significant recruitment efforts to increase the number 
of minority or other members of health disparity populations serving in 
faculty or administrative positions at the institution; or
    (s) For the purposes of grants authorized in section 2316 of the 
Act, an entity for basic and clinical research into, and training in, 
advanced diagnostic, prevention, and treatment methods for acquired 
immunodeficiency syndrome (AIDS).
    Director means the Director of NIH or the organizational component 
authorized to award grants to support centers under this part.
    Grant(s) means, unless the context otherwise requires, an award of 
funds

[[Page 200]]

to support a center authorized under Sec. 52a.1. The term includes 
cooperative agreement(s).
    NIH means the National Institutes of Health and its organizational 
components that award grants.
    Nonprofit as applied to any agency or institution means an agency or 
institution which is a corporation or an association, no part of the net 
earnings of which inures or may lawfully inure to the benefit of any 
private shareholder or individual.
    Project period means the period of time, from one to five years, 
specified in the notice of grant award that the NIH or the awarding 
component intends to support a proposed center without requiring the 
center to recompete for funds.

[57 FR 61006, Dec. 23, 1992, as amended at 61 FR 55108, Oct. 24, 1996; 
68 FR 69621, Dec. 15, 2003]



Sec. 52a.3  Who is eligible to apply?

    (a) Any public or private nonprofit agency, institution, or 
consortium of agencies is eligible to apply for a grant under sections 
409C, 414, 417, 417A, 422, 445, 445A, 445I, 447, 452A, and 2316 of the 
Act.
    (b) Any public or private nonprofit or for-profit agency, 
institution, or consortium of agencies is eligible to apply for a grant 
under sections 428, 431, 434, 441, 452C, 452E, 464C, 464J, 464N, and 
485F of the Act.
    (c) Any applicant under this part must be located in a State, the 
District of Columbia, Puerto Rico, the Virgin Islands, the Canal Zone, 
Guam, American Samoa, or the successor States of the Trust Territory of 
the Pacific Islands (the Federated States of Micronesia, the Republic of 
the Marshall Islands, and the Republic of Palau).

[57 FR 61006, Dec. 23, 1992, as amended at 61 FR 55109, Oct. 24, 1996; 
68 FR 69622, Dec. 15, 2003]



Sec. 52a.4  What information must each application contain?

    Each application under this part must include detailed information 
as to the following:
    (a) The personnel, facilities, and other resources available to the 
applicant with which to initiate and maintain the proposed center grants 
program;
    (b) Any research, training, demonstration, or information 
dissemination activities in which the applicant is currently engaged; 
the sources of funding for these activities; and the relevance of these 
activities to the proposed center grants program;
    (c) Proposed research, training, demonstration, and information 
dissemination activities;
    (d) The proposed organizational structure of the center and the 
relationship of the proposed center to the applicant organization(s);
    (e) The names and qualifications of the center director and key 
staff members who would be responsible for conducting the proposed 
activities;
    (f) Proposed methods for monitoring and evaluating individual 
activities and the overall center program;
    (g) Proposed methods for coordinating the center's activities, where 
appropriate, with similar efforts by other public and private 
organizations;
    (h) The availability of any community resources necessary to carry 
out proposed activities; and
    (i) Efforts to be made to generate and collect income from sources 
other than NIH to be used to further the purposes of the center program. 
NIH encourages these efforts. Income may include, but is not limited to, 
that generated from the sale or rental of products or services produced 
by grant-supported activities, such as laboratory tests, computer time, 
and payments received from patients or third parties, where appropriate 
(the disposition of grant-related income is governed by 45 CFR 74.40 
through 74.47 and 45 CFR 92.25);
    (j) The proposed budget for the center and a justification for the 
amount of the grant funds requested; and
    (k) Any other information that the Director of the awarding 
institute may request.

(Approved under OMB Control Number 0925-0001)



Sec. 52a.5  How will NIH evaluate applications?

    (a) NIH considers the following in evaluating Center grant 
applications:
    (1) The scientific and technical merit of the proposed program;

[[Page 201]]

    (2) The qualifications and experience of the center director and 
other key personnel;
    (3) The statutory and program purposes to be accomplished;
    (4) The extent to which the various components of the proposed 
program would be coordinated into one multi-disciplinary effort within 
the center;
    (5) The extent to which the center's activities would be coordinated 
with similar efforts by other organizations;
    (6) The administrative and managerial capability of the applicant;
    (7) The reasonableness of the proposed budget in relation to the 
proposed program; and
    (8) Other factors which the awarding institute, center, or division 
considers appropriate in light of its particular statutory mission.
    (b) Where required by statute or NIH policy, applications are 
reviewed by appropriate national advisory councils or boards before 
awards are made. NIH grants may be awarded generally only after approval 
recommendations from both appropriate scientific peer review groups and 
national advisory councils or boards.



Sec. 52a.6  Information about grant awards.

    (a) The notice of grant award specifies how long NIH intends to 
support the project without requiring the project to recompete for 
funds. This period, called the project period, will usually be for 1-5 
years.
    (b) Generally, the grant will initially be for one year, and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit a separate application to have the support continued 
for each subsequent year. Decisions regarding continuation awards and 
the funding level of such awards will be made after consideration of 
such factors as the grantee's progress and management practices, and the 
availability of funds. In all cases, continuation awards require a 
determination by the NIH that continued funding is in the best interest 
of the Federal Government.
    (c) Neither the approval of any application, nor the award of any 
grant commits or obligates the Federal Government in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.

[Approved under OMB Control Number 0925-0001]



Sec. 52a.7  For what purposes may a grantee spend grant funds?

    A grantee shall spend funds it receives under this part solely in 
accordance with the approved application and budget, the authorizing 
legislation, the regulations of this part, the terms and conditions of 
the award, and the applicable cost principles prescribed in 45 CFR 
74.27.

[61 FR 55109, Oct. 24, 1996]



Sec. 52a.8  Other HHS regulations and policies that apply.

    Several other regulations and policies apply to this part. These 
include, but are not necessarily limited to:

42 CFR part 50, Subpart A--Responsibilities of PHS awardee and applicant 
institutions for dealing with and reporting possible misconduct in 
science
42 CFR part 50, Subpart D--Public Health Service grant appeals 
procedures
42 CFR part 50, subpart F--Responsibility of applicants for promoting 
objectivity in research for which PHS funding is sought
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 46--Protection of human subjects
45 CFR part 74--Uniform administrative requirements for awards and 
subawards to institutions of higher education, hospitals, other 
nonprofit organizations, and commercial organizations; and certain 
grants and agreements with states, local governments and Indian tribal 
governments
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76--Governmentwide debarment and suspension (nonprocurement) 
and governmentwide requirements for drug-free workplace (grants)
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance

[[Page 202]]

45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to State and local governments
45 CFR part 93--New restrictions on lobbying
59 FR 14508 (March 28, 1994)--NIH Guidelines on the Inclusion of Women 
and Minorities as Subjects in Clinical Research.

    [Note: This policy is subject to change, and interested persons 
should contact the Office of Research on Women's Health, NIH, Room 201, 
MSC 0161, BETHESDA, MD 20892-0601 (301-402-1770; not a toll-free number) 
to obtain references to the current version and any amendments.]

59 FR 34496 (July 5, 1994)--NIH Guidelines for Research Involving 
Recombinant DNA Molecules.

    [Note: This policy is subject to change, and interested persons 
should contact the Office of Recombinant DNA Activities, NIH, Suite 323, 
6000 Executive Boulevard, MSA 7010, BETHESDA, MD 20892-7010 (301-496-
9838; not a toll-free number) to obtain references to the current 
version and any amendments.]

Public Health Service Policy on Humane Care and Use of Laboratory 
Animals, Office of Laboratory Animal Welfare, Office of Extramural 
Research, NIH (Revised September 1986).

    Note: This policy is subject to change, and interested persons 
should contact the Office of Laboratory Animal Welfare, Office of 
Extramural Research, NIH, Rockledge 1, 6705 Rockledge Drive, Bethesda, 
Maryland 20817, telephone 301-594-2382 (not a toll-free number) to 
obtain references to the current version and any amendments.

[57 FR 61006, Dec. 23, 1992, as amended at 61 FR 55109, Oct. 24, 1996; 
68 FR 69622, Dec. 15, 2003]



Sec. 52a.9  Additional conditions.

    The Director may, with respect to any grant award, impose additional 
conditions prior to or at the time of any award when in the Director's 
judgment the conditions are necessary to assure the carrying out of the 
purposes of the award, the interests of the public health, or the 
conservation of grant funds.

[61 FR 55110, Oct. 24, 1996]



PART 52b_NATIONAL INSTITUTES OF HEALTH CONSTRUCTION GRANTS--Table of Contents




Sec.
52b.1 To what programs do these regulations apply?
52b.2 Definitions.
52b.3 Who is eligible to apply?
52b.4 How to apply.
52b.5 How will NIH evaluate applications?
52b.6 What is the rate of federal financial participation?
52b.7 How is the grantee obligated to use the facility?
52b.8 How will NIH monitor the use of facilities constructed with 
          federal funds?
52b.9 What is the right of the United States to recover federal funds 
          when facilities are not used for research or are transferred?
52b.10 What are the terms and conditions of awards?
52b.11 What are the requirements for acquisition and modernization of 
          existing facilities?
52b.12 What are the minimum requirements of construction and equipment?
52b.13 Additional conditions.
52b.14 Other federal laws, regulations, executive orders, and policies 
          that apply.

    Authority: 42 U.S.C. 216, 285a-2, 285a-3, 285b-3, 285b-4, 285d-6, 
285i, 285m-3, 285o-4, 287a-2, 287a-3, 300cc-41.

    Source: 64 FR 63722, Nov. 22, 1999, unless otherwise noted.



Sec. 52b.1  To what programs do these regulations apply?

    (a) General. Except as provided in paragraph (c) of this section, 
this part applies to all grants awarded by NIH and its components for 
construction of new buildings and the alteration, renovation, 
remodeling, improvement, expansion, and repair of existing buildings, 
including the provision of equipment necessary to make the building (or 
applicable part of the building) suitable for the purpose for which it 
was constructed.
    (b) Specific programs covered. From time to time the Director may 
publish a list of the construction grant programs covered by this part. 
The list is for informational purposes only and is not intended to 
restrict the statement of applicability in paragraph (a) of this 
section. In addition, information on

[[Page 203]]

particular construction grant programs, including applications and 
instructions, may be obtained from the component of NIH that administers 
the program.
    (c) Specific programs excluded. The regulations of this part do not 
apply to minor alterations, renovations, or repairs funded under a 
research project grant (see part 52 of this chapter) or alterations or 
renovations funded under an NIH center grant (see part 52a of this 
chapter).



Sec. 52b.2  Definitions.

    As used in this part:
    Act means the Public Health Service Act, as amended (42 U.S.C. 201 
et seq.).
    Construction means the construction of new buildings or the 
modernization of, or the completion of shell space in, existing 
buildings (including the installation of fixed equipment), but excluding 
the cost of land acquisition and off-site improvements.
    Construction grant means funds awarded for construction in 
accordance with the applicable provisions of the Act and this part.
    Director means the Director of NIH or the director of an NIH 
national research institute, center, or other component of NIH, 
authorized to award grants for construction under the applicable 
provisions of the Act, and any official to whom the authority involved 
is delegated.
    Federal share with respect to any construction project means the 
proportion, expressed as a percentage, of the cost of a project to be 
paid by a grant award under the Act.
    HHS, DHHS, and Department mean the Department of Health and Human 
Services.
    Institute means any national research institute, center, or other 
agency of the National Institutes of Health.
    Modernization means the alteration, renovation, remodeling, 
improvement, expansion, and/or repair of existing buildings and the 
provision of equipment necessary to make the building suitable for use 
for the purposes of the particular program.
    NIH means the National Institutes of Health and its organizational 
components that award construction grants.
    Nonprofit as applied to any agency or institution means an agency or 
institution which is a corporation or an association, no part of the net 
earnings of which inures or may lawfully inure to the benefit of any 
private shareholder or individual.
    Project means the particular construction activity which is 
supported by a grant under this part.
    Secretary means the Secretary of Health and Human Services and any 
official to whom the authority involved is delegated.



Sec. 52b.3  Who is eligible to apply?

    In order to be eligible for a construction grant under this part, 
the applicant must:
    (a) Be a public or private nonprofit agency or institution;
    (b) Be located in a state, the District of Columbia, Puerto Rico, 
the Virgin Islands, the Canal Zone, Guam, American Samoa, or the 
successor states of the Trust Territory of the Pacific Islands (the 
Federated States of Micronesia, the Republic of the Marshall Islands, 
and the Republic of Palau); and
    (c) Meet any additional eligibility criteria specified in the 
applicable provisions of the Act.



Sec. 52b.4  How to apply.

    Applications for construction grants under this part shall be made 
at the times and in the form and manner as the Secretary may prescribe.



Sec. 52b.5  How will NIH evaluate applications?

    (a) In evaluating and approving applications for construction grants 
under this part, the Director shall take into account, among other 
pertinent factors, the following:
    (1) The priority score assigned to the application by an NIH peer 
review group as described in paragraph (b) of this section;
    (2) The relevance of the project for which construction is proposed 
to the objectives and priorities of the particular program authorized by 
the Act;
    (3) The scientific merit of the research activities that will be 
carried out in the proposed facility;
    (4) The scientific or professional standing or reputation of the 
applicant

[[Page 204]]

and of its existing or proposed officers and research staff;
    (5) The availability, by affiliation or other association, of other 
scientific or health personnel and facilities to the extent necessary to 
carry out effectively the program proposed for the facility, including 
the adequacy of an acceptable biohazard control and containment program 
when warranted;
    (6) The need for the facility and its total effects on similar or 
related facilities in the locale, and the need for appropriate 
geographic distribution of similar facilities; and
    (7) The financial need of the applicant.
    (b) The priority score of the application shall be based, among 
other pertinent factors, on the following criteria:
    (1) The scientific merit of the total program and its component 
parts to be carried out in the facility;
    (2) The administrative and leadership capabilities of the 
applicant's officers and staff;
    (3) The organization of the applicant's research program and its 
relationship with the applicant's overall research programs;
    (4) The anticipated effect of the project on other relevant research 
programs and facilities in the geographic area, and nationwide;
    (5) The need for the project or additional space; and
    (6) The project cost and design.



Sec. 52b.6  What is the rate of federal financial participation?

    (a) Unless otherwise specified by statute, the rate of federal 
financial participation in a construction project supported by a grant 
under this part shall not be more than 50 percent of the necessary 
allowable costs of construction as determined by the Director, except 
that when the Director finds good cause for waiving this limitation, the 
amount of the construction grant may be more than 50 percent of the 
necessary allowable costs of construction.
    (b) Subject to paragraph (a) of this section, the Director shall set 
the actual rate of federal financial participation in the necessary 
allowable costs of construction, taking into consideration the most 
effective use of available federal funds to further the purposes of the 
applicable provisions of the Act.



Sec. 52b.7  How is the grantee obligated to use the facility?

    (a) The grantee shall use the facility (or that portion of the 
facility supported by a grant under this part) for its originally 
authorized purpose so long as needed for that purpose, or other period 
prescribed by statute, unless the grantee obtains advance approval from 
the Director, in the form and manner as the Director may prescribe, to 
use the facility for another purpose. Use for other purposes shall be 
limited as prescribed in Sec. 52b.9(c)(2).
    (b) The Director, in determining whether to approve an alternative 
use of the facility, shall take into consideration the extent to which:
    (1) The facility will be used by the grantee or other owner for a 
purpose described in Sec. 52b.9(c)(2); or
    (2) There are reasonable assurances that alternative facilities not 
previously used for NIH supported research will be utilized to carry out 
the original purpose as prescribed in Sec. 52b.9(c)(1).
    (c) Sale or transfer. In the form and manner as the Director may 
prescribe, the grantee may request the Director's approval to sell the 
facility or transfer title to a third party eligible under Sec. 52b.3 
for continued use of the facility for an authorized purpose in 
accordance with paragraphs (a) and (b) of this section. If approval is 
permissible under the Act or other federal statute and is granted, the 
terms of the transfer shall provide that the transferee shall assume all 
the rights and obligations of the transferor set forth in 45 CFR part 
74, the regulations of this part, and the other terms and conditions of 
the grant.



Sec. 52b.8  How will NIH monitor the use of facilities constructed with 

federal funds?

    NIH may monitor the use of each facility constructed with funds 
awarded under this part to ensure its continued use for the originally 
authorized research purpose, by means of reviewing periodic facility use 
certifications or reports, site visits, and other appropriate means.

[[Page 205]]



Sec. 52b.9  What is the right of the United States to recover Federal funds 

when facilities are not used for research or are transferred?

    (a) If the grantee plans to cease using the facility for the 
particular biomedical research or training purposes for which it was 
constructed as required by Sec. 52b.7 (or alternate use authorized 
under Sec. 52b.7(a) or paragraph (c) of this section), or the grantee 
decides to sell or transfer title to an entity ineligible for a grant 
under Sec. 52b.3, the grantee shall request disposition instructions 
from NIH in the form and manner as the Director may prescribe. Those 
instructions shall provide for one of the following alternatives:
    (1) The facility may be sold and the grantee or transferee shall pay 
to the United States an amount computed by multiplying the federal share 
of the facility times the proceeds from the sale (after deducting the 
actual and reasonable selling and fix-up expenses, if any, from the 
sales proceeds). The sales procedures must provide for competition to 
the extent practicable, and be designed to provide the highest possible 
return;
    (2) The grantee may retain title and shall pay to the United States 
an amount computed by multiplying the current fair market value of the 
facility by the federal share of the facility; or
    (3) The grantee shall transfer the title to either the United States 
or to an eligible non-federal party approved by the Director. The 
grantee shall be entitled to be paid an amount computed by multiplying 
the current fair market value of the facility by the nonfederal share of 
the facility.
    (b) The grantee or transferor of a facility which is sold or 
transferred, or the owner of a facility the use of which has changed, as 
described in paragraph (a) of this section, shall report that action in 
writing to the Director not later than 10 days from the date on which 
the sale, transfer, or change occurs, in the form and manner as the 
Director may prescribe.
    (c) In lieu of disposition of a facility pursuant to the provisions 
of paragraph (a) of this section, the Director may, for good cause, 
supported by assurances provided by the grantee or transferee, approve 
one of the following alternatives:
    (1) Transfer of the remaining usage obligation to facilities of 
substantially comparable or greater value or utility, to carry out the 
biomedical research or training purpose for which the grant was awarded. 
In this event, the remaining usage obligation shall be released from the 
original facility constructed with grant funds and transferred to the 
new facility, and the grantee shall remain subject to all other 
requirements imposed under this part with respect to the new facility; 
or
    (2) Use the facility for as long as needed, in order of priority, 
for one of the following purposes:
    (i) For other health related activities consistent with the purposes 
of one or more of the activities of the awarding institute as authorized 
under title IV or other provisions of the Act;
    (ii) To provide training and instruction in the health fields for 
health professionals or health related information programs for the 
public; or
    (iii) Other health related purposes consistent with one or more of 
the purposes authorized under the Act.
    (d) The right of recovery of the United States set forth in 
paragraph (a) of this section shall not, prior to judgment, constitute a 
lien on any facility supported in whole or in part by a federal grant, 
including a construction grant under this part.
    (e) Any amount required to be paid to the United States under this 
section will be paid to the awarding institute for disposition as 
required by law.

(Approved by the Office of Management and Budget under Control Number 
0925-0424; expires November 30, 2001)



Sec. 52b.10  What are the terms and conditions of awards?

    In addition to any other requirement imposed by law or determined by 
the Director to be reasonably necessary to fulfill the purposes of the 
grant, each construction grant shall be subject to the terms and 
conditions and the grantee assurances required by this section, 
supported by such documentation as the Director may reasonably require. 
The Director may, by general policy or for good cause shown by an 
applicant, approve exceptions to these

[[Page 206]]

terms and conditions or assurances where the Director finds that the 
exceptions are consistent with the applicable provisions of the Act and 
the purposes of the particular program:
    (a) Title. The applicant must have a fee simple or other estate or 
interest in the site, including necessary easements and rights-of-way, 
sufficient to assure for the estimated useful life of the facility, as 
determined by the Director, undisturbed use and possession for the 
purpose of the construction and operation of the facility.
    (b) Plans and specifications. Approval by the Director of the final 
working drawings, specifications, and cost estimates must be obtained 
before the project is advertised or placed on the market for bidding. 
The approval must include a determination by the Director that the final 
plans and specifications conform to the minimum standards of 
construction and equipment as set forth in Sec. 52b.12.
    (c) Relocation assistance. An applicant with an approved project 
which involves the displacement of persons or businesses shall comply 
with the provisions of the Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970, as amended (42 U.S.C. 4601 et 
seq.) and the applicable regulations issued under that Act (45 CFR part 
15; 49 CFR part 24).
    (d) Approval of changes in estimated cost. Unless approved by the 
Director, the applicant shall not enter into any construction contracts 
for the project or a part of the project, the cost of which exceeds the 
estimated cost approved in the terms of an award for that portion of the 
work covered by the plans and specifications. Exceptions shall be 
requested in the form and manner as the Director may prescribe.
    (e) Completion responsibility. The applicant must construct the 
project, or cause it to be constructed, to final completion in 
accordance with the grant application, the terms and conditions of the 
award, and the approved plans and specifications.
    (f) Construction schedule inspection. Prior to the start of 
construction, the grantee shall submit an approved copy of the 
construction schedule (critical path method) to the Director in the form 
and manner as the Director may prescribe.
    (g) Construction management. The applicant must provide and maintain 
competent and adequate construction management services for inspection 
at the construction site to ensure that the completed work conforms with 
the approved plans and specifications. Construction management services 
shall include daily construction logs and monthly status reports which 
shall be maintained at the job site and shall be submitted to the 
Director at the times and in the form and manner as the Director may 
prescribe.
    (h) Nonfederal share. Sufficient funds must be available to meet the 
nonfederal share of the costs of constructing the facility.
    (i) Funds for operation. Sufficient funds must be available when 
construction is completed for effective use of the facility for the 
purposes for which it is being constructed.
    (j) Inspection. The Director and the Director's representatives 
shall have access at all reasonable times to all work areas and 
documents during any stage of construction and the contractor shall 
provide proper facilities for this access and inspection.
    (k) Accessibility to handicapped persons. The facility must be 
designed to comply with the Uniform Federal Accessibility Standards (41 
CFR part 101-19, subpart 101-19.6, Appendix A), as modified by other 
standards prescribed by the Director or the Administrator of General 
Services. The applicant shall conduct inspections to ensure compliance 
with these specifications by the contractor.
    (l) Notice of Federal Interest. The grantee shall record a Notice of 
Federal Interest in the appropriate official land records of the 
jurisdiction in which the property is located.
    (m) Title insurance. The grantee shall purchase a title insurance 
policy unless a legal opinion has been provided which certifies that the 
grantee institution has fee simple title to the site free and clear of 
all liens, easements, rights-of-way, and any other adverse interests 
which would encumber the project. The Director may waive this 
requirement upon a request from the grantee adequately documenting self-
insurance

[[Page 207]]

against the risks involved and containing such other information as the 
Director may prescribe.
    (n) Physical destruction insurance. At the time construction is 
completed or at the time of beneficial occupancy, whichever comes first, 
the grantee shall purchase an insurance policy which insures the 
facility for the full appraised value of the property using state 
certified appraisers. The insurance policy must protect the property 
from total and partial physical destruction. The insurance policy must 
be maintained throughout the period of federal interest. The Director 
may waive this requirement upon a written request from the grantee 
adequately documenting self-insurance against the risks involved and 
containing such other information as the Director may prescribe.

(Approved by the Office of Management and Budget under Control Number 
0925-0424; expires November 30, 2001)



Sec. 52b.11  What are the requirements for acquisition and modernization of 

existing facilities?

    Grant awards for the acquisition and modernization of existing 
facilities are permitted if authorized by the statutes authorizing the 
construction grant program and shall be subject to the requirements of 
this section.
    (a) Minimum standards of construction and equipment. A determination 
by the Director that the facility conforms (or upon completion of any 
necessary construction will conform) to the minimum standards of 
construction and equipment as set forth in Sec. 52b.12 shall be 
obtained before entering into a final or unconditional contract for the 
acquisition and/or modernization of facilities. Where the Director finds 
that exceptions to or modifications of these minimum standards would be 
consistent with the purposes of the applicable section of the Act under 
which the acquisition or modernization is supported, the Director may 
authorize the exceptions or modifications.
    (b) Estimated cost of acquisition and remodeling: suitability of 
facility. Each application for a project involving the acquisition of 
existing facilities shall include in the detailed estimates of the costs 
of the project, the cost of acquiring the facilities, and any cost of 
remodeling, renovating or altering the facilities to serve the purposes 
for which they are acquired. The application shall demonstrate to the 
satisfaction of the Director that the architectural, mechanical, 
electrical, plumbing, structural, and other pertinent features of the 
facility, as modified by any proposed expansion, remodeling, renovation, 
or alteration, will be suitable for the purposes of the applicable 
sections of the Act.
    (c) Bona fide sale. Grant awards for the acquisition of existing 
facilities shall be subject to the condition that the acquisition 
constitutes a bona fide sale involving an actual cost to the applicant 
and will result in additional or improved facilities for purposes of the 
applicable provisions of the Act.
    (d) Facility previously funded by a federal grant. No grant for the 
acquisition or modernization of a facility which has previously been 
funded in whole or in part by a federal grant for construction, 
acquisition, or equipment shall serve either to reduce or restrict the 
liability of the applicant or any other transferor or transferee from 
any obligation of accountability imposed by the Federal Government by 
reason of the prior grant.

(Approved by the Office of Management and Budget under Control Number 
0925-0424; expires November 30, 2001)



Sec. 52b.12  What are the minimum requirements of construction and equipment?

    (a) General. In addition to being subject to other laws, 
regulations, executive orders, and policies referred to in Sec. 52b.14, 
the standards set forth in this section have been determined by the 
Director to constitute minimum requirements of construction and 
equipment, including the expansion, remodeling, renovation, or 
alteration of existing buildings, and these standards, as may be 
amended, or any revisions or successors of these standards, shall apply 
to all projects for which federal assistance is requested under this 
part. The publications referenced in this section are hereby 
incorporated by reference and made a part of the regulations in this 
part.

[[Page 208]]

    (b) Incorporation by reference. The Director of the Federal Register 
approves the incorporations by reference in paragraph (c) of this 
section in accordance with 5 U.S.C. 552(a)(1) and 1 CFR part 51. Copies 
may also be obtained from the organizations at the addresses listed in 
paragraph (c) of this section. Copies may be inspected at the National 
Cancer Institute, Executive Plaza North, Room 539, 6130 Executive 
Boulevard, Rockville, MD 20852 (telephone 301-496-8534; not a toll-free 
number); the National Center for Research Services, Building 31, Room 
3B11, 9000 Rockville Pike, Bethesda, MD 20892 (telephone 301-496-5793); 
not a toll-free number); and at the National Archives and Records 
Administration (NARA). For information on the availability of this 
material at NARA, call 202-741-6030, or go to: http://www.archives.gov/
federal--register/code--of--federal--regulations/ibr--locations.html. 
The Director may for good cause shown, approve plans and specifications 
which contain deviations from the requirements prescribed in paragraph 
(c) of this section, if the Director is satisfied that the purposes of 
the requirements have been fulfilled. In addition to these requirements, 
each project shall meet the requirements of the applicable state and 
local codes and ordinances relating to construction.
    (c) Design and construction standards. The facility shall comply 
with the following mandatory design and construction standards:
    (1) ``Guidelines for Design and Construction of Hospital and Health 
Care Facilities'' (1996-97). American Institute of Architects Academy of 
Architecture for Health (AIA); available from AIA Rizzoli Catalogue 
Sales, 117 Post Street, San Francisco, CA 94108 (telephone 1-800-522-
6657, fax 415-984-0024).
    (2) 1995 ASHRAE Handbook: Heating, Ventilating, and Air Conditioning 
Applications (1995), Chapter 13, ``Laboratory Systems.'' American 
Society of Heating, Refrigerating and Air Conditioning Engineers, Inc., 
1791 Tullie Circle, NE, Atlanta, GA 30329 (telephone 404-636-8400).
    (3) ICBO ``Uniform Building Code,'' Volumes 1-3 (1997). 
International Conference of Building Officials (ICBO), 5360 South 
Workman Mill Road, Whittier, CA 90601-2298 (telephone 562-699-0541 or 
800-284-4406).
    (4) BOCA National Building Code (1996) 1998 Supplement, Building 
Officials and Code Administrators International, Inc. (BOCA), 4051 West 
Fossmoor Road, Country Club Hills, IL 60478-5795 (telephone 708-799-
4981; fax 708-799-4981).
    (5) ``Recommended Lateral Force Requirements and Commentary'' 
(1996). Structural Engineers Association of California; available from 
International Conference of Building Officials, 5360 South Workman Mill 
Road, Whittier, CA 90601-2298 (telephone 562-699-0541).
    (6) ``Prudent Practices in the Laboratory: Handling and Disposal of 
Chemicals'' (1995). National Research Council; available from National 
Academy Press, 8700 Spectrum Drive, Landover, MD 20785 (telephone 1-800-
624-6242).
    (7) The following material is available for purchase from the 
National Fire Protection Association (NFPA), 11 Tracy Drive, Avon, MA 
02322-9908 (telephone 617-770-3000 or 1-800-735-0100):
    (i) NFPA 45, ``Standard on Protection for Laboratories Using 
Chemicals'' (1996).
    (ii) NFPA 70, ``National Electric Code'' (1996).
    (iii) NFPA 99, Chapter 4, ``Gas and Vacuum Systems'' (1996).
    (iv) NFPA 101, ``Life Safety Code'' (1997).
    (v) NFPA ``Health Care Facilities Handbook'' (1996).
    (8) NSF Standard No. 49 for Class II (Laminar Flow) Biohazard 
Cabinetry (1992). National Sanitation Foundation (NSF), 3475 Plymouth 
Road, Box 1468, Ann Arbor, MI 48106 (telephone 734-769-9010).
    (9) ACGIH ``Industrial Ventilation: A Manual of Recommended 
Practice'' (1998). American Conference of Governmental Industrial 
Hygienists (ACGIH), 1330 Kemper Meadow Drive, Cincinnati, OH 45240-1634 
(telephone 513-742-2020).
    (10) AIHA ``Laboratory Ventilation Workbook'' (1994). American 
Industrial Hygiene Association (AIHA), 2700 Prosperity Avenue, Suite 
250, Fairfax, VA 22031 (telephone 703-849-8888).

[[Page 209]]

    (11) The following material is available for purchase from the 
Southern Building Code Congress (SBCC), 900 Montclair Road, Birmingham, 
AL 35213-1206 (telephone 205-591-1853; fax 202-591-0075:
    (i) SBCC ``International Standard Plumbing Code'' (1997).
    (ii) SBCC ``Standard Building Code'' (1997).

[64 FR 63722, Nov. 22, 1999, as amended at 69 FR 18803, Apr. 9, 2004]



Sec. 52b.13  Additional conditions.

    The Director may with respect to any grant award impose additional 
conditions consistent with the regulations of this part prior to or at 
the time of any award when in the Director's judgment the conditions are 
necessary to assure or protect advancement of the approved project, the 
purposes of the applicable provisions of the Act, or the conservation of 
grant funds.



Sec. 52b.14  Other federal laws, regulations, executive orders, and policies 

that apply.

    Other federal laws, regulations, executive orders, and policies 
apply to grants under this part. These include, but are not necessarily 
limited to:
    (a) Laws.
    An Act to Provide for the Preservation of Historical and 
Archeological Data (and other purposes), as amended (16 U.S.C. 469 et 
seq.).

Architectural Barriers Act of 1968, as amended (42 U.S.C. 4151 et seq.).
Earthquake Hazards Reduction Act of 1977, as amended (42 U.S.C. 7701 et 
seq.).
Flood Disaster Protection Act of 1973, section 202, as amended (42 
U.S.C. 4106).
National Historic Preservation Act, section 106, as amended (16 U.S.C. 
470f).
Safe Drinking Water Act, as amended (42 U.S.C. 300f et seq.).

    (b) Regulations.

9 CFR part 3--Standards (Animal Welfare).
29 CFR 1910.1450--Occupational exposure to hazardous chemicals in 
laboratories.
36 CFR part 1190--Minimum guidelines and requirements for accessible 
design.
41 CFR part 101-19, subpart 101-19.6--Accommodations for the physically 
handicapped.
41 CFR part 101-19, subpart 101-19.6, Appendix A--Uniform Federal 
accessibility standards.
42 CFR part 50, subpart A--Responsibility of PHS awardee and applicant 
institutions for dealing with and reporting possible misconduct in 
science.
42 CFR part 50, subpart D--Public Health Service grant appeals 
procedure.
45 CFR part 15--Uniform relocation assistance and real property 
acquisition for Federal and federally assisted programs.
45 CFR part 16--Procedures of the Departmental Grant Appeals Board.
45 CFR part 46--Protection of human subjects.
45 CFR part 74--Uniform administrative requirements for awards and 
subawards to institutions of higher education, hospitals, other 
nonprofit organizations, and commercial organizations; and certain 
grants and agreements with states, local governments and Indian tribal 
governments.
45 CFR part 76--Governmentwide debarment and suspension (nonprocurement) 
and governmentwide requirements for drug-free workplace (grants).
45 CFR part 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.
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this chapter.
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving Federal financial assistance.
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefitting from Federal financial 
assistance.
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance.
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to State and local governments.
45 CFR part 93--New restrictions on lobbying.
49 CFR part 24--Uniform relocation assistance and real property 
acquisition for Federal and federally assisted programs.

    (c) Executive orders.

Executive Order 11988, Floodplain Management (May 24, 1977)(3 CFR, 1977 
Comp., p. 117).
Executive Order 11990, Protection of Wetlands (May 24, 1977)(3 CFR, 1977 
Comp., p. 121).
Executive Order 12699, Seismic Safety of Federal and Federally Assisted 
or Regulated New Building Construction (January 5, 1990)(3 CFR, 1990 
Comp., p. 269).

    (d) Policies. (1) Design Policy and Guidelines (1996). Division of 
Engineering Services, National Institutes of Health (Note: To obtain 
copies of the

[[Page 210]]

policy, interested persons should contact the Division of Engineering 
Services, 9000 Rockville Pike, Building 13, Room 2E43, Bethesda, MD 
20892 (telephone 301-496-6186; not a toll-free number) or visit the 
following site on the World Wide Web (http://des.od.nih/gov/
nihpol.html).).
    (2) NIH Guidelines on the Inclusion of Women and Minorities as 
Subjects in Clinical Research (1994) (Note: To obtain copies of the 
policy, interested persons should contact the Office of Research on 
Women's Health, NIH, Room 201, Building 1, MSC 0161, Bethesda, MD 20892-
0161 (telephone 301-402-1770; not a toll-free number).).
    (3) NIH Guidelines for Research Involving Recombinant DNA Molecules 
(1994) (Note: To obtain copies of the policy, interested persons should 
contact the Office of Recombinant DNA Activities, NIH, 6000 Executive 
Boulevard, Suite 323, MSC 7010, Bethesda, MD 20892-7010 (telephone 301-
496-9838; not a toll-free number).).
    (4) ``NIH Grants Policy Statement.'' NIH Pub. No. 99-80 (Oct. 1998) 
(Note: To obtain copies of the policy, interested persons should contact 
the Extramural Outreach and Information Resources Office (EOIRO), Office 
of Extramural Research, NIH, 6701 Rockledge Drive, Room 6208, MSC 7910, 
Bethesda, MD 20892-7910 (telephone 301-435-0714; not a toll-free 
number). Information may also be obtained by contacting the EOIRO via 
its e-mail address (asknih@odrockml.od.nih.gov) and by browsing the NIH 
Home Page site on the World Wide Web (http://www.nih.gov).).
    (5) ``Guide for the Care and Use of Laboratory Animals (1996). 
Institute of Laboratory Animal Resources, Commission on Life Sciences, 
National Research Council (Note: To obtain copies of the policy, 
interested persons should contact the Office for Protection from 
Research Risks, NIH, 6100 Executive Boulevard, Suite 3B01, MSC 7507, 
Rockville, MD 20852-7507 (telephone 301-496-7005; not a toll-free 
number).).
    (6) ``Public Health Service Policy on Humane Care and Use of 
Laboratory Animals.'' (Rev. Sept. 1986). Office for Protection from 
Research Risks, NIH (Note: To obtain copies of the policy, interested 
persons should contact the Office for Protection from Research Risks, 
NIH, 6100 Executive Boulevard, Suite 3B01, MSC 7507, Rockville, MD 
20852-7507 (telephone 301-496-7005; not a toll-free number).).
    (7) ``Biosafety in Microbiological and Biomedical Laboratories.'' 
DHHS Publication No. (CDC) 88-8395 (1993). Centers for Disease Control 
and Prevention (CDC) (Note: To obtain copies of the policy, interested 
persons should contact the Division of Safety, Occupational Safety and 
Health Branch, NIH, 13 South Drive, Room 3K04, MSC 5760, Bethesda, MD 
20892-5760 (telephone 301-496-2960; not a toll-free number).).
    (8) ``NIH Guidelines for the Laboratory Use of Chemical 
Carcinogens,'' DHHS Publication No. (NIH) 81-2385 (May 1981) (Note: To 
obtain copies of the policy, interested persons should contact the 
Division of Safety, Occupational Safety and Health Branch, NIH, 13 South 
Drive, Room 3K04, MSC 5760, Bethesda, MD 20892-5760 (telephone 301-496-
2960; not a toll-free number).).
    (9) ``NIH Policy and Guidelines on the Inclusion of Children as 
Participants in Research Involving Human Subjects (March 6, 1998).'' NIH 
Guide for Grants and Contracts (Note: To obtain copies of the policy, 
interested persons should contact the Office of Extramural Research, 
NIH, 6701 Rockledge Drive, Room 6208, MSC 7910, Bethesda, MD 20817-7910 
(telephone 301-435-0714; not a toll-free number). Information may also 
be obtained by browsing the NIH Home Page site on the World Wide Web 
(http://www.nih.gov).).



PART 52c_MINORITY BIOMEDICAL RESEARCH SUPPORT PROGRAM--Table of Contents




Sec.
52c.1 Applicability.
52c.2 Definitions.
52c.3 Eligibility.
52c.4 Application.
52c.5 Grant awards.
52c.6 Expenditure of grant funds.
52c.7 Other HHS regulations that apply.
52c.8 Additional conditions.

    Authority: 42 U.S.C. 216, 241(a)(3).

    Source: 45 FR 12246, Feb. 25, 1980, unless otherwise noted.

[[Page 211]]



Sec. 52c.1  Applicability.

    The regulations in this part apply to grants (under the Minority 
Biomedical Research Support Program) awarded in accordance with section 
301(a)(3) of the Public Health Service (PHS) Act (42 U.S.C. 241(a)(3)) 
to increase the numbers of ethnic minority faculty, students, and 
investigators engaged in biomedical research, and to broaden the 
opportunities for participation in biomedical research of ethnic 
minority faculty, students, and investigators, by providing general 
support for biomedical research programs at eligible institutions.

[58 FR 61030, Nov. 19, 1993]



Sec. 52c.2  Definitions.

    As used in this part:
    Act means the Public Health Service Act, as amended (42 U.S.C. 201 
et seq.).
    Ethnic minorities includes but is not limited to such groups as 
Black Americans, Hispanic Americans, Asian/Pacific Islanders, and 
American Indians/Native Alaskans (Native Americans).
    HHS means the Department of Health and Human Services.
    Nonprofit as applied to any institution means an institution which 
is a corporation or association no part of the net earnings of which 
inures or may lawfully inure to the benefit of any private shareholder 
or individual.
    Program director means a single individual, designated in the grant 
application, who is scientifically trained and has research experience 
and who is responsible for the overall execution of the program 
supported under this part at the grantee institution.
    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.

[58 FR 61030, Nov. 19, 1993]



Sec. 52c.3  Eligibility.

    To be eligible for a grant under this Program, an applicant must be:
    (a) One of the following:
    (1) A public or private nonprofit university, four year college, or 
other institution offering undergraduate, graduate, or health 
professional degrees, with a traditionally high (more than 50 percent) 
minority student enrollment;
    (2) A public or private nonprofit two year college with a 
traditionally high (more than 50 percent) minority student enrollment;
    (3) A public or private nonprofit university, four year college, or 
other institution offering undergraduate, graduate, or health 
professional degrees, with a student enrollment a significant proportion 
(but not necessarily more than 50 percent) of which is derived from 
ethnic minorities, provided the Secretary determines that said 
institution has a demonstrated commitment to the special encouragement 
of and assistance to ethnic minority faculty, students, and 
investigators; or
    (4) An Indian tribe which has a recognized governing body which 
performs substantial governmental functions, or an Alaska Regional 
Corporation as defined in the Alaska Native Claims Settlement Act (43 
U.S.C. 1601 et seq.), and
    (b) Located in a State, the District of Columbia, Puerto Rico, the 
Virgin Islands, the Canal Zone, Guam, American Samoa, or the successor 
States of the Trust Territory of the Pacific Islands (the Federated 
States of Micronesia, the Republic of the Marshall Islands, and the 
Republic of Palau).

[45 FR 12246, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980; 58 FR 61030, 
Nov. 19, 1993]



Sec. 52c.4  Application.

    An institution interested in applying for a grant under this part 
must submit an application at the time and in the form and manner that 
the Secretary may prescribe.

[58 FR 61030, Nov. 19, 1993]



Sec. 52c.5  Grant awards.

    (a) Within the limits of funds available, and upon such 
recommendation as may be required by law, the Secretary shall award 
grants to those applications with proposed biomedical research programs 
which will, in the Secretary's judgment, best promote the purposes of 
this part, taking into consideration among other pertinent factors:

[[Page 212]]

    (1) The benefits that can be expected to accrue to the national 
effort in biomedical research and in increasing the pool of biomedical 
researchers;
    (2) The institution's capability, from a scientific and technical 
standpoint, to engage in biomedical research;
    (3) The benefits that can be expected to accrue to the institution 
and its students;
    (4) The administrative and managerial capability and competence of 
the applicant;
    (5) The availability of the facilities and resources (including 
where necessary collaborative arrangements with other institutions) to 
engage in biomedical research;
    (6) The applicant's relative need for funding; and
    (7) The overall significance of the proposal in terms of numbers of 
ethnic minority persons benefited thereby.
    (b) The notice of grant award specifies how long HHS intends to 
support the project without requiring the project to recompete for 
funds. This period, called the project period, will usually be for 1-5 
years.
    (c) Generally the grant will initially be for one year and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit a separate application to have the support continued 
for each subsequent year. Decisions regarding continuation awards and 
the funding level of such awards will be made after consideration of 
such factors as the grantee's progress and management practices, and the 
availability of funds. In all cases, continuation awards require a 
determination by HHS that continued funding is in the best interest of 
the government.
    (d) Neither the approval of any application nor the award of any 
grant commits or obligates the United States in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.

[45 FR 12246, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980; 58 FR 61030, 
Nov. 19, 1993]



Sec. 52c.6  Expenditure of grant funds.

    (a) Any funds granted pursuant to this part shall be expended solely 
for the purposes for which the funds were granted in accordance with the 
approved application and budget, the regulations of this part, the terms 
and conditions of the award, and the applicable cost principles 
prescribed by subpart Q of 45 CFR part 74.
    (b) The Secretary may permit unobligated grant funds remaining in 
the grant account at the close of a budget period to be carried forward 
for obligation during a subsequent budget period, provided a 
continuation award is made for that period and the Secretary's written 
approval is obtained. The amount of any subsequent award will take into 
consideration unobligated grant funds remaining in the grant account.

[45 FR 12246, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980; 45 FR 68392, 
Oct. 15, 1980]



Sec. 52c.7  Other HHS regulations that apply.

    Several other regulations and policies apply to grants under this 
part. These include, but are not necessarily limited to:

37 CFR part 401--Rights to inventions made by nonprofit organizations 
and small business firms under government grants, contracts, and 
cooperative agreements
42 CFR part 50, subpart A--Responsibilities of PHS awardee and applicant 
institutions for dealing with and reporting possible misconduct in 
science
42 CFR part 50, subpart D--Public Health Service grant appeals 
procedures
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 46--Protection of human subjects
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76--Governmentwide debarment and suspension (nonprocurement) 
and governmentwide requirements for drug-free workplace (grants)
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving Federal financial assistance

[[Page 213]]

45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs 
and activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to State and local governments
45 CFR part 93--New restrictions on lobbying
51 FR 16958, or successor--NIH Guidelines for Research Involving 
Recombinant DNA Molecules
``Public Health Service Policy on Humane Care and Use of Laboratory 
Animals,'' Office for Protection from Research Risks, NIH (Revised 
September 1986), or successor

[58 FR 61030, Nov. 19, 1993]



Sec. 52c.8  Additional conditions.

    The Secretary may with respect to any grant award impose additional 
conditions prior to or at the time of any award when in the Secretary's 
judgment those conditions are necessary to assure or protect advancement 
of the approved program, the interests of the public health, or the 
conservation of grant funds.



PART 52d_NATIONAL CANCER INSTITUTE CLINICAL CANCER EDUCATION PROGRAM--Table of 

Contents




Sec.
52d.1 Applicability.
52d.2 Definitions.
52d.3 Eligibility.
52d.4 Application.
52d.5 Program requirements.
52d.6 Grant awards.
52d.7 Expenditure of grant funds.
52d.8 Other HHS regulations that apply.
52d.9 Additional conditions.

    Authority: Sec. 215, 58 Stat. 690, as amended, 63 Stat. 835 (42 
U.S.C. 216); sec. 404(a)(4), 92 Stat. 3426 (42 U.S.C. 285).

    Source: 45 FR 12247, Feb. 25, 1980, unless otherwise noted.



Sec. 52d.1  Applicability.

    The regulations in this part apply to grants under the Clinical 
Cancer Education Program authorized by section 404(a)(4) of the Public 
Health Service Act, to encourage planning and development of 
multidisciplinary educational programs aimed at achieving optimal care 
of cancer patients and to enable students in the health professions to 
acquire basic knowledge of neoplastic disease and the preventive 
measures and diagnostic and therapeutic skills necessary to the 
provision of such care.



Sec. 52d.2  Definitions.

    (a) Act means the Public Health Service Act, as amended.
    (b) Director, NCI, means the Director of the National Cancer 
Institute and any other officer or employee of said Institute to whom 
the authority involved has been delegated.
    (c) [Reserved]
    (d) Board means the National Cancer Advisory Board established by 
section 407 of the Act (42 U.S.C. 286b).
    (e) Affiliated teaching hospital means a hospital which, although 
not owned by such school, has a written agreement with a school of 
medicine, osteopathy, dentistry, or public health eligible for 
assistance under this part, providing for effective control by the 
school of the teaching in the hospital.
    (f) Specialized cancer institute means an institution which has as 
its primary mission the diagnosis, prevention, or treatment of cancer.

[45 FR 12247, Feb. 25, 1980; 45 FR 20096, Mar. 27, 1980, as amended at 
47 FR 53012, Nov. 24, 1982]



Sec. 52d.3  Eligibility.

    To be eligible for a grant under this part, an applicant must be:
    (a) A public or private school of medicine, osteopathy, dentistry, 
or public health, affiliated teaching hospital, or specialized cancer 
institute; and
    (b) Located in a State, the District of Columbia, Puerto Rico, the 
Virgin Islands, the Canal Zone, Guam, American Samoa, or the Trust 
Territory of the Pacific Islands.

[45 FR 12247, Feb. 25, 1980, as amended at 47 FR 53012, Nov. 24, 1982]



Sec. 52d.4  Application.

    (a) Application for a grant under this subpart shall be made on an 
authorized

[[Page 214]]

form. \1\ Applicants shall submit completed forms, on or before the 
dates the Director, NCI, may prescribe.
---------------------------------------------------------------------------

    \1\ Applications and instructions are available from the Division of 
Cancer Research Resources and Centers, Education Branch, Westwood 
Building, 5333 Westbard Avenue, Bethesda, MD 20205.
---------------------------------------------------------------------------

    (b) [Reserved]
    (c) In addition to any other pertinent information that the 
Director, NCI, may require, each application shall set forth in detail:
    (1) A program plan defining the objectives of the proposed program 
and the means by which these objectives would be achieved, including 
descriptions of:
    (i) The general educational level (e.g., pre-doctoral, post-
doctoral) of the students to be involved in the program;
    (ii) The proposed course of study and its relation to the diagnosis, 
prevention, control, and treatment of cancer;
    (iii) The clinical experiences to be provided to the students;
    (iv) Multidisciplinary aspects of the program;
    (v) The particular schools or branches within the institution which 
would have responsibility for individual aspects of the program; and
    (vi) The teaching mechanisms to be employed, including specific 
discussion of those techniques which would be innovative.
    (2) The availability of personnel, facilities, and resources needed 
to carry out the program;
    (3) The names, qualifications, and proposed duties of the program 
director and any staff members who would be responsible for the program, 
including a description of those duties which would actually be carried 
out by the program director and those which would be shared with or 
assigned to others;
    (4) The names and qualifications of proposed members of a cancer 
education committee which would be established by the applicant to 
advise it on the planning, organization, operation and evaluation of the 
program and the specific duties which would be assigned to said 
committee;
    (5) Insofar as necessary, cooperative arrangements with other 
schools, hospitals, and institutions which would participate in the 
program;
    (6) The proposed project period, a detailed budget for the first 
budget period including a list of other anticipated sources of support 
and anticipated total needs for each of the succeeding budget periods of 
the requested project period, and a justification for the amount of 
grant funds requested;
    (7) Proposed methods for monitoring and evaluating the program; and
    (8) A description of how the education and training effort will be 
sustained upon expiration of the award.

[45 FR 12247, Feb. 25, 1980, as amended at 47 FR 53012, Nov. 24, 1982]



Sec. 52d.5  Program requirements.

    (a) If the program is to be offered at the graduate level, it must 
be multidisciplinary in scope involving at least two or more clinical or 
preclinical sciences relating to cancer;
    (b) The cancer education committee provided for in the approved 
application must meet at least four times per year, and must be chaired 
by the program director.



Sec. 52d.6  Grant awards.

    (a) Within the limits of funds available, after consultation with 
the Board, the Director, NCI, may award grants to applicants with 
proposed programs which in the NCI Director's judgment best promote the 
purposes of this part, taking into consideration among other pertinent 
factors:
    (1) The relevance of the proposed program to the objectives of this 
part;
    (2) The extent to which the program would involve innovative 
teaching techniques;
    (3) The availability of adequate staff, facilities, and resources 
(including where necessary cooperative arrangements with other 
institutions or hospitals) to carry out the program;
    (4) The qualifications and experience of the program director;
    (5) The authority of the program director to ensure that the program 
is planned with multidisciplinary input and that multidisciplinary 
aspects of the program are carried out;
    (6) The extent to which the cancer education committee is broadly 
representative of the disciplines concerned

[[Page 215]]

with cancer care and teaching and is allowed to participate in the 
planning, organization, operation, and evaluation of the program;
    (7) If the program is to be offered at the pre-doctoral level, the 
extent to which its objectives are designed to aid students:
    (i) To acquire a basic understanding of fundamental principles of 
cancer biology, epidemiology, detection, diagnosis, prevention, 
treatment and control;
    (ii) To interest students in learning more about cancer; and
    (iii) To develop an appreciation of the need for a comprehensive 
multidisciplinary approach to the care of cancer patients;
    (8) The administrative and managerial capability of the applicant;
    (9) The reasonableness of the proposed budget in relation to the 
proposed program;
    (10) The adequacy of the methods for monitoring and evaluating the 
program on a continuing basis; and
    (11) The degree to which the application adequately provides for the 
requirements set forth in Sec. 52d.5.
    (b) The notice of grant award specifies how long HHS intends to 
support the program without requiring the program to recompete for 
funds. This period, called the project period, will usually be for 1-5 
years.
    (c) Generally, the grant will initially be for one year and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit a separate application to have the support continued 
for each subsequent year. Decisions regarding continuation awards and 
the funding level of such awards will be made after consideration of 
such factors as the grantee's progress and management practices, and the 
availability of funds. In all cases, continuation awards require a 
determination by HHS that continued funding is in the best interest of 
the government.
    (d) Neither the approval of any application nor the award of any 
grant commits or obligates the United States in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.



Sec. 52d.7  Expenditure of grant funds.

    (a) Any funds granted pursuant to this part shall be expended solely 
for the purposes for which the funds were granted in accordance with the 
approved application and budget, the regulations of this part, the terms 
and conditions of the awards, and the applicable cost principles 
prescribed by subpart Q of 45 CFR part 74, except that grant funds may 
not be used for costs incurred in connection with activities which, 
prior to the grant, were part of the grantee's standard curriculum.
    (b) The Director, NCI, may permit unobligated grant funds remaining 
in the grant account at the close of a budget period to be carried 
forward for obligation during a subsequent budget period, provided a 
continuation award is made for that period and the NCI Director's 
written approval is obtained. The amount of any subsequent award will 
take into consideration unobligated grant funds remaining in the grant 
account.



Sec. 52d.8  Other HHS regulations that apply.

    Several other regulations apply to grants under this subpart. These 
include, but are not limited to:

42 CFR part 50, subpart D--Public Health Service grant appeals procedure
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance

[49 FR 38111, Sept. 27, 1984]

[[Page 216]]



Sec. 52d.9  Additional conditions.

    The Director, NCI, may with respect to any grant award impose 
additional conditions prior to or at the time of any award when in the 
NCI Director's judgment those conditions are necessary to assure or 
protect advancement of the approved program, the interests of the public 
health, or the conservation of grant funds.



PART 52e_NATIONAL HEART, LUNG, AND BLOOD INSTITUTE GRANTS FOR PREVENTION AND 

CONTROL PROJECTS--Table of Contents




Sec.
52e.1 To what programs do these regulations apply?
52e.2 Definitions.
52e.3 Who is eligible to apply?
52e.4 How to apply.
52e.5 What are the project requirements?
52e.6 How will NIH evaluate applications?
52e.7 What are the terms and conditions of awards?
52e.8 Other HHS regulations and policies that apply.
52e.9 Additional conditions.

    Authority: 42 U.S.C. 216, 285b-1.

    Source: 45 FR 12249, Feb. 25, 1980, unless otherwise noted.



Sec. 52e.1  To what programs do these regulations apply?

    (a) This part applies to grants under section 419 of the Act (42 
U.S.C. 285b-1) for projects to:
    (1) Demonstrate and evaluate the effectiveness of new techniques or 
procedures for the prevention and control of heart, blood vessel, lung, 
and blood diseases, with special consideration given to the prevention 
and control of these diseases in children, and in populations that are 
at increased risk with respect to such diseases;
    (2) Develop and evaluate methods of educating health practitioners 
concerning the prevention and control of these diseases; and
    (3) Develop and evaluate methods of educating the public concerning 
the prevention and control of these diseases.
    (b) For purposes of this part, prevention and control projects shall 
include community-based and population-based programs carried out in 
cooperation with other Federal agencies, with public health agencies of 
State or local governments, with nonprofit private entities that are 
community-based health agencies, or with other appropriate public or 
nonprofit private entities.

[45 FR 12249, Feb. 25, 1980; 45 FR 20097, Mar. 27, 1980, as amended at 
58 FR 54298, Oct. 21, 1993; 59 FR 59372, Nov. 17, 1994]



Sec. 52e.2  Definitions.

    As used in this part:
    Act means the Public Health Service Act, as amended (42 U.S.C. 201 
et seq.).
    Council means the National Heart, Lung, and Blood Advisory Council, 
established under section 406 of the Act (42 U.S.C. 284a).
    Director means the Director of the National Heart, Lung, and Blood 
Institute and any official to whom the authority involved may be 
delegated.
    Emergency medical services means the services utilized in responding 
to the perceived individual need for immediate medical care in order to 
prevent loss of life or aggravation of physiological or psychological 
illness or injury.
    HHS means the Department of Health and Human Services.
    National program means the National Heart, Blood Vessel, Lung, and 
Blood Diseases and Blood Resources Program referred to in section 421 of 
the Act (42 U.S.C. 285b-3).
    Nonprofit as applied to any agency or institution means an agency or 
institution which is a corporation or an association, no part of the net 
earnings of which inures or may lawfully inure to the benefit of any 
private shareholder or individual.
    PHS means the Public Health Service.

[58 FR 54298, Oct. 21, 1993]



Sec. 52e.3  Who is eligible to apply?

    To be eligible for a grant under this part, an applicant must be a 
public or nonprofit private agency or institution.

[45 FR 12249, Feb. 25, 1980, as amended at 58 FR 54298, Oct. 21, 1993]

[[Page 217]]



Sec. 52e.4  How to apply.

    (a) Application for a grant under this subpart shall be made on an 
authorized form. \2\ Applicants shall submit completed forms on or 
before the dates the Director may prescribe.
---------------------------------------------------------------------------

    \2\ Applications and instructions are available from the Division of 
Extramural Affairs, National Heart, Lung, and Blood Institute, National 
Institutes of Health, 9000 Rockville Pike, Bethesda, MD 20205.
---------------------------------------------------------------------------

    (b) Each private institution which does not already have on file 
with the National Institutes of Health evidence of nonprofit status, 
must submit with its application acceptable proof of such status.
    (c) In addition to any other pertinent information that the Director 
may require each application shall set forth in detail:
    (1) The nature and purpose of the proposed project and the methods 
to be employed in carrying it out;
    (2) The relevance of the proposed project to the National Program;
    (3) The defined population to participate in the proposed project 
and the rationale for its selection;
    (4) With respect to applications relating to projects covered by 
Sec. 52e.1(a)(1), prior research findings on which the proposed project 
is based;
    (5) The personnel, facilities, and other resources, including 
community resources, available to carry out the proposed project;
    (6) Current activities of the applicant involving prevention or 
control of heart, blood vessel, lung, and blood diseases, the sources of 
funding for such activities, and the anticipated relationship of these 
activities to the proposed project;
    (7) The names and qualifications of the project director and key 
staff members who would be responsible for conducting the proposed 
project;
    (8) Proposed methods for monitoring and evaluating the project; and
    (9) The proposed project period; a detailed budget for the first 
budget period, including a list of other anticipated sources of support 
and anticipated total needs for each of the succeeding budget periods of 
the requested project period; and a justification for the amount of 
grant funds requested.

[45 FR 12249, Feb. 25, 1980, as amended at 58 FR 54298, Oct. 21, 1993]



Sec. 52e.5  What are the project requirements?

    (a) An approvable application must demonstrate to the satisfaction 
of the Director that:
    (1) With respect to applications relating to projects covered by 
Sec. 52e.1(a)(1), the techniques or procedures to be demonstrated and 
evaluated have been found safe and effective in the research setting 
and, based upon research findings, appear to have the potential for 
general applicability to the prevention, diagnosis, or treatment of 
heart, blood vessel, lung, or blood diseases;
    (2) With respect to applications relating to projects covered by 
Sec. 52e.1(a)(2) and Sec. 52e.1(a)(3), the project will include 
development and evaluation of one or more methods for educating health 
practitioners or the public concerning advances in the prevention, 
diagnosis, or treatment of such diseases; and
    (3) The nature of the project is such that its completion may be 
anticipated within the project period, or such other period as may be 
specified in the application.
    (b) The project must, in the judgment of the Director, be necessary 
for cooperation by the National Heart, Lung, and Blood Institute with 
one or more other Federal Health agencies, State, local or regional 
public health agencies, or nonprofit private health agencies in the 
diagnosis, prevention, or treatment of heart, blood vessel, lung or 
blood diseases.

[45 FR 12249, Feb. 25, 1980, as amended at 58 FR 54298 and 54299, Oct. 
21, 1993]



Sec. 52e.6  How will NIH evaluate applications?

    (a) Within the limits of funds available, after consultation with 
the Council, the Director may award grants to applicants with proposed 
projects which in the Director's judgment will best promote the purposes 
of section 419 of the Act, taking into consideration among other 
pertinent factors:
    (1) The scientific and technical merit of the proposed project;

[[Page 218]]

    (2) The significance of the project in relation to the goals of the 
National Program;
    (3) Whether the project appropriately emphasizes the prevention, 
diagnosis, or treatment of heart, blood vessel, lung, or blood diseases 
of children;
    (4) The qualifications and experience of the project director and 
other key personnel;
    (5) The administrative and managerial capability and fiscal 
responsibility of the applicant;
    (6) The reasonableness of the proposed budget in relation to the 
proposed project;
    (7) The adequacy of the methods proposed for monitoring and 
evaluating the proposed project; and
    (8) The degree to which the application adequately provides for the 
requirements set forth in Sec. Sec. 52e.5(a) and 52e.5(b).
    (b) The notice of grant award specifies how long HHS intends to 
support the project without requiring the project to recompete for 
funds. This period, called the project period, will usually be for 1-5 
years.
    (c) Generally, the grant will initially be for one year and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit a separate application to have the support continued 
for each subsequent year. Decisions regarding continuation awards and 
the funding level of such awards will be made after consideration of 
such factors as the grantee's progress and management practices, and the 
availability of funds. In all cases, continuation awards require a 
determination by HHS that continued funding is in the best interest of 
the government.
    (d) Neither the approval of any application nor the award of any 
grant commits or obligates the United States in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.
    (e) Any funds granted under this part shall be expended solely for 
the purposes for which the funds were granted in accordance with the 
approved application and budget, the regulations of this part, the 
terms, and conditions of the award, and the applicable cost principles 
prescribed in subpart Q of 45 CFR part 74.

[45 FR 12249, Feb. 25, 1980, as amended at 58 FR 54298, Oct. 21, 1993]



Sec. 52e.7  What are the terms and conditions of awards?

    (a) Any funds granted pursuant to this part shall be expended solely 
for the purposes for which the funds were granted in accordance with the 
approved application and budget, the regulations of this part, the terms 
and conditions of the award, and the applicable cost principles 
prescribed by subpart Q of 45 CFR part 74.
    (b) The Director may permit unobligated grant funds remaining in the 
grant account at the close of a budget period to be carried forward for 
obligation during a subsequent budget period, provided a continuation 
award is made for that period and the NHLBI Director's written approval 
is obtained. The amount of any subsequent award will take into 
consideration unobligated grant funds remaining in the grant account.

[45 FR 12249, Feb. 25, 1980, as amended at 58 FR 54298 and 54299, Oct. 
21, 1993]



Sec. 52e.8  Other HHS regulations and policies that apply.

    Several other regulations apply to grants under this part. These 
include but are not necessarily limited to:

42 CFR part 50, subpart A--Responsibility of PHS awardee and applicant 
institutions for dealing with and reporting possible misconduct in 
science
42 CFR part 50, subpart D--Public Health Service grant appeals procedure
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 46--Protection of human subjects
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76--Governmentwide debarment and suspension (nonprocurement) 
and governmentwide requirements for drug-free workplace (grants)
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title

[[Page 219]]

45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to State and local governments
45 CFR part 93--New restrictions on lobbying
51 FR 16958 or successor--NIH Guidelines for Research Involving 
Recombinant DNA Molecules
``Public Health Service Policy on Humane Care and Use of Laboratory 
Animals,'' Office for Protection from Research Risks, NIH (Revised 
September 1986), or successor
59 FR 14508 (as republished March 28, 1994), as may be amended, or its 
successor--NIH Guidelines on the Inclusion of Women and Minorities as 
Subjects in Clinical Research.

[58 FR 54298, Oct. 21, 1993, as amended at 59 FR 59372, Nov. 17, 1994]



Sec. 52e.9  Additional conditions.

    The Director, may with respect to any grant award impose additional 
conditions prior to or at the time of any award when in the Director's 
judgment those conditions are necessary to assure or protect advancement 
of the approved project, the interests of the public health, or the 
conservation of grant funds.

[45 FR 12249, Feb. 25, 1980, as amended at 58 FR 54299, Oct. 21, 1993]



PART 52h_SCIENTIFIC PEER REVIEW OF RESEARCH GRANT APPLICATIONS AND RESEARCH 

AND DEVELOPMENT CONTRACT PROJECTS--Table of Contents




Sec.
52h.1 Applicability.
52h.2 Definitions.
52h.3 Establishment and operation of peer review groups.
52h.4 Composition of peer review groups.
52h.5 Conflict of interest.
52h.6 Availability of information.
52h.7 What matters must be reviewed for grants?
52h.8 What are the review criteria for grants?
52h.9 What matters must be reviewed for unsolicited contract proposals?
52h.10 What matters must be reviewed for solicited contract proposals?
52h.11 What are the review criteria for contract projects and proposals?
52h.12 Other regulations that apply.

    Authority: 42 U.S.C. 216; 42 U.S.C. 282 (b)(6); 42 U.S.C. 284 
(c)(3); 42 U.S.C. 289a.

    Source: 69 FR 275, Jan. 5, 2004, unless otherwise noted.



Sec. 52h.1  Applicability.

    (a) This part applies to:
    (1) Applications of the National Institutes of Health for grants or 
cooperative agreements (a reference in this part to grants includes 
cooperative agreements) for biomedical and behavioral research; and
    (2) Biomedical and behavioral research and development contract 
project concepts and proposals for contract projects administered by the 
National Institutes of Health.
    (b) This part does not apply to applications for:
    (1) Continuation funding for budget periods within an approved 
project period;
    (2) Supplemental funding to meet increased administrative costs 
within a project period; or
    (3) Construction grants.



Sec. 52h.2  Definitions.

    As used in this part:
    (a) Act means the Public Health Service Act, as amended (42 U.S.C. 
201 et seq.).
    (b) Appearance of a conflict of interest means that a reviewer or 
close relative or professional associate of the reviewer has a financial 
or other interest in an application or proposal that is known to the 
reviewer or the government official managing the review and would cause 
a reasonable person to question the reviewer's impartiality if he or she 
were to participate in the review; the government official managing the 
review (the Scientific Review Administrator or equivalent) will evaluate 
the appearance of a conflict of interest and determine, in accordance 
with this subpart, whether or not the interest would likely bias the 
reviewer's evaluation of the application or proposal.

[[Page 220]]

    (c) Awarding official 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; 
except that, where the Act specifically authorizes another official to 
make awards in connection with a particular program, the awarding 
official shall mean that official and any other officer or employee of 
the Department of Health and Human Services to whom the authority 
involved has been delegated.
    (d) Budget period means the interval of time (usually 12 months) 
into which the project period is divided for budgetary and reporting 
purposes.
    (e) Close relative means a parent, spouse, domestic partner, or son 
or daughter.
    (f) Contract proposal means a written offer to enter into a contract 
that is submitted to the appropriate agency official by an individual or 
nonfederal organization which includes, at a minimum, a description of 
the nature, purpose, duration, and cost of the project, and the methods, 
personnel, and facilities to be utilized in carrying it out. A contract 
proposal may be unsolicited by the federal government or submitted in 
response to a request for proposals.
    (g) Development means the systematic use of knowledge gained from 
research to create useful materials, devices, systems, or methods.
    (h) DHHS means the Department of Health and Human Services.
    (i) Director means the Director of the National Institutes of Health 
and any other official or employee of the National Institutes of Health 
to whom the authority involved has been delegated.
    (j) Grant as used in this part, includes cooperative agreements.
    (k) Peer review group means a group of primarily nongovernment 
experts qualified by training and experience in particular scientific or 
technical fields, or as authorities knowledgeable in the various 
disciplines and fields related to the scientific areas under review, to 
give expert advice on the scientific and technical merit of grant 
applications or contract proposals, or the concept of contract projects, 
in accordance with this part.
    (l) Principal investigator has the same meaning as in 42 CFR part 
52.
    (m) Professional associate means any colleague, scientific mentor, 
or student with whom the peer reviewer is currently conducting research 
or other significant professional activities or with whom the member has 
conducted such activities within three years of the date of the review.
    (n) Project approach means the methodology to be followed and the 
resources needed in carrying out the project.
    (o) Project concept means the basic purpose, scope, and objectives 
of the project.
    (p) Project period has the same meaning as in 42 CFR part 52.
    (q) Real conflict of interest means a reviewer or a close relative 
or professional associate of the reviewer has a financial or other 
interest in an application or proposal that is known to the reviewer and 
is likely to bias the reviewer's evaluation of that application or 
proposal as determined by the government official managing the review 
(the Scientific Review Administrator, or equivalent), as acknowledged by 
the reviewer, or as prescribed by this part. A reviewer shall have a 
real conflict of interest if he/she or a close relative or professional 
associate of the reviewer:
    (1) Has received or could receive a direct financial benefit of any 
amount deriving from an application or proposal under review;
    (2) Apart from any direct financial benefit deriving from an 
application or proposal under review, has received or could receive a 
financial benefit from the applicant institution, offeror or principal 
investigator that in the aggregate exceeds $10,000 per year; this amount 
includes honoraria, fees, stock or other financial benefit, and 
additionally includes the current value of the reviewer's already 
existing stock holdings. The Director, NIH, may amend the dollar 
threshold periodically, as appropriate, after public notice and comment; 
or
    (3) Has any other interest in the application or proposal that is 
likely to bias the reviewer's evaluation of that application or 
proposal. Regardless of the level of financial involvement or

[[Page 221]]

other interest, if the reviewer feels unable to provide objective 
advice, he/she must recuse him/herself from the review of the 
application or proposal at issue. The peer review system relies on the 
professionalism of each reviewer to identify to the designated 
government official any real or apparent conflicts of interest that are 
likely to bias the reviewer's evaluation of an application or proposal.
    (r) Request for proposals means a Government solicitation to 
prospective offerors, under procedures for negotiated contracts, to 
submit a proposal to fulfill specific agency requirements based on terms 
and conditions defined in the request for proposals. The request for 
proposals contains information sufficient to enable all offerors to 
prepare proposals, and is as complete as possible with respect to: 
nature of work to be performed; descriptions and specifications of items 
to be delivered; performance schedule; special requirements clauses, or 
other circumstances affecting the contract; format for cost proposals; 
and evaluation criteria by which the proposals will be evaluated.
    (s) Research has the same meaning as in 42 CFR part 52.
    (t) Research and development contract project means an identified, 
circumscribed activity, involving a single contract or two or more 
similar, related, or interdependent contracts, intended and designed to 
acquire new or fuller knowledge and understanding in the areas of 
biomedical or behavioral research and/or to use such knowledge and 
understanding to develop useful materials, devices, systems, or methods.
    (u) Scientific review group has the same meaning as peer review 
group, which is defined in paragraph (k) of this section.
    (v) Solicited contract proposal has the same meaning as the 
definition of offer in 48 CFR 2.101.
    (w) Unsolicited contract proposal has the same meaning as 
unsolicited proposal in 48 CFR 15.601.



Sec. 52h.3  Establishment and operation of peer review groups.

    (a) To the extent applicable, the Federal Advisory Committee Act, as 
amended (5 U.S.C. appendix 2) and chapter 9 of the DHHS General 
Administration Manual \1\ shall govern the establishment and operation 
of peer review groups.
---------------------------------------------------------------------------

    \1\ The DHHS General Administration Manual is available for public 
inspection and copying at the Department's information centers listed in 
45 CFR 5.31 and may be purchased from the Superintendent of Documents, 
U.S. Government Printing Office, Washington, DC 20402.
---------------------------------------------------------------------------

    (b) Subject to Sec. 52h.5 and paragraph (a) of this section, the 
Director will adopt procedures for the conduct of reviews and the 
formulation of recommendations under Sec. Sec. 52h.7, 52h.9, and 
52h.10.



Sec. 52h.4  Composition of peer review groups.

    (a) To the extent applicable, the selection and appointment of 
members of peer review groups and their terms of service shall be 
governed by chapter 9 of the DHHS General Administration Manual.
    (b) Subject to paragraph (a) of this section, members will be 
selected based upon their training and experience in relevant scientific 
or technical fields, or upon their qualifications as authorities 
knowledgeable in the various disciplines and fields related to the 
scientific areas under review, taking into account, among other factors:
    (1) The level of formal scientific or technical education completed 
or experience acquired by the individual;
    (2) The extent to which the individual has engaged in relevant 
research, the capacities (e.g., principal investigator, assistant) in 
which the individual has done so, and the quality of the research;
    (3) Recognition as reflected by awards and other honors received 
from scientific and professional organizations; and
    (4) The need for the group to have included within its membership 
experts from various areas of specialization within relevant scientific 
or technical fields, or authorities knowledgeable in the various 
disciplines and fields related to the scientific areas under review.
    (c) Except as otherwise provided by law, not more than one-fourth of 
the members of any peer review group to

[[Page 222]]

which this part applies may be officers or employees of the United 
States. Being a member of a scientific peer review group does not make 
an individual an officer or employee of the United States.



Sec. 52h.5  Conflict of interest.

    (a) This section applies only to conflicts of interest involving 
members of peer review groups. This section does not cover individuals 
serving on National Advisory Councils or Boards, Boards of Scientific 
Counselors, or Program Advisory Committees who, if not already officers 
or employees of the United States, are special Government employees and 
covered by title 18 of the United States Code, the Office of Government 
Ethics Standards of Ethical Conduct for Employees of the Executive 
Branch (5 CFR part 2635), and Executive Order 11222, as amended. For 
those federal employees serving on peer review groups, in accordance 
with Sec. 52h.4, the requirements of title 18 of the United States 
Code, 5 CFR part 2635 and Executive Order 12674, as modified by 
Executive Order 12731, apply.
    (b) A reviewer with a real conflict of interest must recuse him/
herself from the review of the application or proposal, except as 
otherwise provided in this section.
    (1) A reviewer who is a salaried employee, whether full-time or 
part-time, of the applicant institution, offeror, or principal 
investigator, or is negotiating for employment, shall be considered to 
have a real conflict of interest with regard to an application/proposal 
from that organization or principal investigator, except that the 
Director may determine there is no real conflict of interest or an 
appearance of a conflict of interest where the components of a large or 
multicomponent organization are sufficiently independent to constitute, 
in effect, separate organizations, provided that the reviewer has no 
responsibilities at the institution that would significantly affect the 
other component.
    (2) Where a reviewer's real conflict of interest is based upon the 
financial or other interest of a close relative or professional 
associate of the reviewer, that reviewer must recuse him/herself, unless 
the Director provides a waiver in accordance with paragraph (b)(4) of 
this section.
    (3) For contract proposal reviews, an individual with a real 
conflict of interest in a particular proposal(s) is generally not 
permitted to participate in the review of any proposals responding to 
the same request for proposals. However, if there is no other qualified 
reviewer available having that individual's expertise and that expertise 
is essential to ensure a competent and fair review, a waiver may be 
granted by the Director to permit that individual to serve as a reviewer 
of those proposals with which the reviewer has no conflict, while 
recusing him/herself from the review of any particular proposal(s) in 
which there is a conflict of interest.
    (4) The Director may waive any of the requirements in paragraph (b) 
of this section relating to a real conflict of interest if the Director 
determines that there are no other practical means for securing 
appropriate expert advice on a particular grant or cooperative agreement 
application, contract project, or contract proposal, and that the real 
conflict of interest is not so substantial as to be likely to affect the 
integrity of the advice to be provided by the reviewer.
    (c) Any appearance of a conflict of interest will result in recusal 
of the reviewer, unless the Director provides a waiver, determining that 
it would be difficult or impractical to carry out the review otherwise, 
and the integrity of the review process would not be impaired by the 
reviewer's participation.
    (d) When a peer review group meets regularly it is assumed that a 
relationship among individual reviewers in the group exists and that the 
group as a whole may not be objective about evaluating the work of one 
of its members. In such a case, a member's application or proposal shall 
be reviewed by another qualified review group to ensure that a competent 
and objective review is obtained.
    (e) When a member of a peer review group participates in or is 
present during the concept review of a contract proposal that occurs 
after release of the solicitation, as described under Sec. 52h.10(b), 
but before receipt of proposals, the member is not considered to

[[Page 223]]

have a real conflict of interest as described in paragraph (b) of this 
section, but is subject to paragraph (c) of this section concerning 
appearance of conflict of interest if the member is planning to respond 
to the solicitation. When the concept review occurs after receipt of 
proposals, paragraph (b) applies.
    (f) No member of a peer review group may participate in any review 
of a specific grant application or contract project for which the member 
has had or is expected to have any other responsibility or involvement 
(whether pre-award or post-award) as an officer or employee of the 
United States.
    (g) The Director may periodically issue guidance to the government 
officials responsible for managing reviews and reviewers on what 
interests would constitute a real conflict of interest or an appearance 
of a conflict of interest.



Sec. 52h.6  Availability of information.

    (a) Transcripts, minutes, and other documents made available to or 
prepared for or by a peer review group will be available for public 
inspection and copying to the extent provided by the Freedom of 
Information Act, as amended (5 U.S.C. 552), the Federal Advisory 
Committee Act, as amended (5 U.S.C. appendix 2), the Privacy Act of 
1974, as amended (5 U.S.C. 552a), and implementing DHHS regulations (45 
CFR parts 5, 5b).
    (b) Meetings of peer review groups reviewing grant applications or 
contract proposals are closed to the public in accordance with sections 
552b(c)(4) and 552b(c)(6) of the Government in the Sunshine Act, as 
amended (5 U.S.C. 552b(c)(4) and 552b(c)(6)) and section 10(d) of the 
Federal Advisory Committee Act, as amended (5 U.S.C. appendix 2). 
Documents made available to, or prepared for or by peer review groups 
that contain trade secrets or commercial or financial information 
obtained from a person that is privileged or confidential, and personal 
information concerning individuals associated with applications or 
proposals, the disclosure of which would constitute a clearly 
unwarranted invasion of personal privacy, are exempt from disclosure in 
accordance with the Freedom of Information Act, as amended (5 U.S.C. 
552(b)(4) and 552(b)(6)).
    (c) Meetings of peer review groups reviewing contract project 
concepts are open to the public in accordance with the provisions of the 
Federal Advisory Committee Act, as amended (5 U.S.C. appendix 2) and the 
Government in the Sunshine Act, as amended (5 U.S.C. 552b).



Sec. 52h.7  What matters must be reviewed for grants?

    (a) Except as otherwise provided by law, no awarding official shall 
award a grant based upon an application covered by this part unless the 
application has been reviewed by a peer review group in accordance with 
the provisions of this part and the group has made recommendations 
concerning the scientific merit of that application. In addition, where 
under applicable law an awarding official is required to secure the 
approval or advice of a national council or board concerning an 
application, the application may not be considered by the council or 
board unless it has been reviewed by the appropriate peer review group, 
in accordance with the provisions of this part, and the group has made 
recommendations concerning the scientific merit of the application, 
except where the council or board is the peer review group.
    (b) Except to the extent otherwise provided by law, recommendations 
by peer review groups are advisory only and not binding on the awarding 
official or the national advisory council or board.



Sec. 52h.8  What are the review criteria for grants?

    In carrying out its review under Sec. 52h.7, the scientific peer 
review group shall assess the overall impact that the project could have 
on the research field involved, taking into account, among other 
pertinent factors:
    (a) The significance of the goals of the proposed research, from a 
scientific or technical standpoint;
    (b) The adequacy of the approach and methodology proposed to carry 
out the research;
    (c) The innovativeness and originality of the proposed research;

[[Page 224]]

    (d) The qualifications and experience of the principal investigator 
and proposed staff;
    (e) The scientific environment and reasonable availability of 
resources necessary to the research;
    (f) The adequacy of plans to include both genders, minorities, 
children and special populations as appropriate for the scientific goals 
of the research;
    (g) The reasonableness of the proposed budget and duration in 
relation to the proposed research; and
    (h) The adequacy of the proposed protection for humans, animals, and 
the environment, to the extent they may be adversely affected by the 
project proposed in the application.



Sec. 52h.9  What matters must be reviewed for unsolicited contract proposals?

    (a) Except as otherwise provided by law, no awarding official shall 
award a contract based upon an unsolicited contract proposal covered by 
this part unless the proposal has been reviewed by a peer review group 
in accordance with the provisions of this part and the group has made 
recommendations concerning the scientific merit of that proposal.
    (b) Except to the extent otherwise provided by law, peer review 
group recommendations are advisory only and not binding on the awarding 
official.



Sec. 52h.10  What matters must be reviewed for solicited contract proposals?

    (a) Subject to paragraphs (b) and (c) of this section, no awarding 
official shall issue a request for contract proposals with respect to a 
contract project involving solicited contract proposals, unless the 
project concept has been reviewed by a peer review group or advisory 
council in accordance with this part and the group has made 
recommendations concerning the scientific merit of the concept.
    (b) The awarding official may delay carrying out the requirements 
for peer review of paragraph (a) of this section until after issuing a 
request for proposals if the official determines that the accomplishment 
of essential program objectives would otherwise be placed in jeopardy 
and any further delay clearly would not be in the best interest of the 
Government. The awarding official shall specify in writing the grounds 
on which this determination is based. Under these circumstances, the 
awarding official will not award a contract until peer review of the 
project concept and the proposals has been completed. The request for 
proposals shall state that the project concept will be reviewed by a 
peer review group and that no award will be made until the review is 
conducted and recommendations made based on that review.
    (c) The awarding official may determine that peer review of the 
project concept for behavioral or biomedical research and development 
contracts is not needed if one of the following circumstances applies: 
the solicitation is to re-compete or extend a project that is within the 
scope of a current project that has been peer reviewed, or there is a 
Congressional authorization or mandate to conduct specific contract 
projects. If a substantial amount of time has passed since the concept 
review, the awarding official shall determine whether peer review is 
required to ensure the continued scientific merit of the concept.
    (d) Except to the extent otherwise provided by law, the 
recommendations referred to in this section are advisory only and not 
binding on the awarding official.



Sec. 52h.11  What are the review criteria for contract projects and proposals?

    (a) In carrying out its review of a project concept under Sec. 
52h.10(a) or Sec. 52h.10(b), the peer review group shall take into 
account, among other pertinent factors:
    (1) The significance from a scientific or technical standpoint of 
the goals of the proposed research or development activity;
    (2) The availability of the technology and other resources necessary 
to achieve those goals;
    (3) The extent to which there are identified, practical uses for the 
anticipated results of the activity; and
    (4) Where the review includes the project approach, the adequacy of 
the methodology to be utilized in carrying out the activity.

[[Page 225]]

    (b) In carrying out its review of unsolicited contract proposals 
under Sec. 52h.9, the peer review group shall take into account, among 
other pertinent factors, the criteria in Sec. 52h.8 which are relevant 
to the particular proposals.
    (c) In carrying out its review of solicited proposals under Sec. 
52h.10(a) or (b), the peer review group shall evaluate each proposal in 
accordance with the criteria set forth in the request for proposals.



Sec. 52h.12  Other regulations that apply.

    The regulations in this part are in addition to, and do not 
supersede other regulations concerning grant applications, contract 
projects, or contract proposals set forth elsewhere in this title, title 
45, or title 48 of the Code of Federal Regulations.



PART 53_GRANTS, LOANS AND LOAN GUARANTEES FOR CONSTRUCTION AND MODERNIZATION 

OF HOSPITALS AND MEDICAL FACILITIES--Table of Contents




Subparts A-K [Reserved]

    Subpart L_Services for Persons Unable To Pay; Community Service; 
                            Nondiscrimination

Sec.
53.111 Services for persons unable to pay.
53.112 Nondiscrimination.
53.113 Community service.

Subpart M [Reserved]

               Subpart N_Loan Guarantees and Direct Loans

53.154 Waiver of right of recovery.
53.155 Modification of loans.
53.156 Fees for modification requests.

    Authority: Secs. 215, 603, 609, 621, 623, Public Health Service Act 
as amended, 58 Stat. 690, 78 Stat. 451 and 456, 84 Stat. 344 and 346 (42 
U.S.C. 216, 291c, 291i, 291j-1 and 291j-3; 31 U.S.C. 9701).

Subparts A-K [Reserved]



    Subpart L_Services for Persons Unable To Pay; Community Service; 

                           Nondiscrimination.



Sec. 53.111  Services for persons unable to pay.

    (a) Applicability. The provisions of this section apply to every 
applicant which heretofore has given or hereafter will give an assurance 
that it will make available a reasonable volume of services to persons 
unable to pay therefor but shall not apply to an applicant (1) for more 
than 20 years after the completion of construction of any facility with 
respect to which funds have been paid under section 606 of the Act or 
(2) beyond the period during which any amount of a direct loan made 
under sections 610 or 623 of the Act, or any amount of a loan with 
respect to which a loan guarantee and interest subsidy has been provided 
under sections 623 and 624 of the Act remains unpaid.
    (b) Definitions. As used in this section:
    (1) The term facility includes hospitals, facilities for long-term 
care, outpatient facilities, rehabilitation facilities, and public 
health centers;
    (2) The term applicant means an applicant for, or recipient of, a 
grant, a loan guarantee or a loan under the Act;
    (3) Fiscal year means the fiscal year of the applicant;
    (4) The term operating costs means the actual operating costs of the 
applicant for a fiscal year as determined in accordance with cost 
determination principles and requirements under title XVIII of the 
Social Security Act (42 U.S.C. 1395): Provided, That such ``operating 
costs'' shall be determined for the applicant's entire facility and for 
all patients regardless of the source of payment for such care: And 
provided further, That in determining such operating costs there shall 
be deducted the amount of all actual or estimated reimbursements, as 
applicable, for services received or to be received pursuant to title 
XVIII and XIX of the Social Security Act (42 U.S.C. 1395 and 1936);
    (5) The term reasonable cost means the cost of providing services to 
a specific patient determined in accordance with the cost determination 
principles and requirements under title XVIII of

[[Page 226]]

the Social Security Act (42 U.S.C. 1395) and subpart D of the 
regulations thereunder (20 CFR part 405, \1\ part 401 et seq.);
---------------------------------------------------------------------------

    \1\ Redesignated as 42 CFR part 405 at 42 FR 52826, Sept. 30, 1977.
---------------------------------------------------------------------------

    (6) The term uncompensated services means services which are made 
available to persons unable to pay therefor without charge or at a 
charge which is less than the reasonable cost of such services. The 
level of such services is measured by the difference between the amount 
charged such persons for such services and the reasonable cost thereof;
    (7) Reasonable volume of services to persons unable to pay therefor 
means a level of uncompensated services which meets a need for such 
services in the area served by an applicant and which is within the 
financial ability of such applicant to provide.
    (c) Assurance. (1) Before an application under this part is 
recommended by a State agency to the Secretary for approval, the State 
agency shall obtain an assurance from the applicant that there will be 
made available in the facility or portion thereof to be constructed or 
modernized a reasonable volume of services to persons unable to pay 
therefor. The requirement of an assurance from an applicant shall be 
waived if the applicant demonstrates to the satisfaction of the State 
agency, subject to subsequent approval by the Secretary, that such a 
requirement is not feasible from a financial viewpoint.
    (2) Prior to recommending that such requirement be waived, the State 
agency shall publish in a newspaper of general circulation in the area 
served by the applicant a notice of the request for such waiver and 
invite public comment thereon, allowing not less than 30 days therefor. 
All comments received shall be available for public inspection, and 
shall be considered by the State agency in arriving at its 
recommendation. Notice of the determination on the request for waiver 
shall be given to all interested persons and to the public before the 
approval of the Secretary is sought.
    (d) Presumptive compliance guideline. An applicant which, for a 
fiscal year, (1) budgets for the support of, and makes available on 
request, uncompensated services at a level not less than the lesser of 3 
percent of operating costs or 10 percent of all Federal assistance 
provided to or on behalf of the applicant under the Act, or (2) 
certifies that it will not exclude any person from admission on the 
ground that such person is unable to pay for needed services and that it 
will make available to each person so admitted services provided by the 
facility without charge or at a charge below reasonable cost which does 
not exceed any such person's ability to pay therefor as determined in 
accordance with criteria established pursuant to paragraph (g), shall be 
deemed in presumptive compliance with its assurance. In the case of a 
loan guarantee with interest subsidy or a direct loan guarantee be sold 
by the Secretary with an interest subsidy, the amount of Federal 
assistance shall include the total amount of the interest subsidy which 
the Secretary is, or will be, obligated to pay over the full life of the 
loan, as well as any other payments which the Secretary makes on behalf 
of the applicant in connection with the loan guarantee or the direct 
loan which has been sold.
    (e) Compliance reports. (1) Each applicant shall, not later than 120 
days after the end of a fiscal year, unless a longer period is approved 
by the State agency for good cause shown, file with the State agency a 
copy of its annual statement for such year as required by section 646 of 
the Act and Sec. 53.128(q), which shall set forth its operating costs.
    (2) With respect to each fiscal year for which a level of 
uncompensated services has been established in accordance with this 
section, the annual statement shall also set forth the amount of 
uncompensated services provided in such year.
    (i) The provision of a level of uncompensated services in such year 
which equals or exceeds the level established pursuant to paragraph (h) 
of this section for such year shall constitute compliance with the 
assurance.
    (ii) If the level of services provided was less than the level of 
uncompensated services established pursuant to paragraph (h) of this 
section, the applicant shall submit with such statement:

[[Page 227]]

A justification therefor, showing that the provision of such lower level 
of uncompensated services was reasonable under the circumstances; and a 
description of the steps it proposes to take to assure the availability 
and utilization of the level of uncompensated services to be established 
for the current fiscal year, which shall include an affirmative action 
plan, utilizing press releases or other appropriate means as the 
facility may desire to bring to the attention of the public the 
availability of such uncompensated services and the conditions of 
eligibility therefor.
    (3) Each applicant shall file with its annual statement a copy of 
that portion of its adopted budget for the current fiscal year relating 
to the support of uncompensated services in such year. Such budget for 
uncompensated services shall be based on the operating costs of the 
applicant for the preceding fiscal year and shall give due cognizance to 
probable increases in operating costs. Except in the case of a 
certification pursuant to paragraph (d)(2) of this section, if the 
budget statement does not conform to the presumptive compliance 
guideline, the applicant shall submit with its statement.
    (i) A justification therefor, showing that such lower level of 
uncompensated services is reasonable under the circumstances, and
    (ii) A plan to increase such uncompensated services to meet the 
presumptive compliance guideline or such other level of uncompensated 
services as may have been established or as it requests the State agency 
to establish in accordance with paragraph (h) of this section.
    (4) The applicant shall also submit such additional reports related 
to compliance with its assurance as the State agency may reasonably 
require.
    (5) Pending the establishment of a level of uncompensated services 
for any fiscal year pursuant to paragraph (h) of this section, the 
applicant shall, in such fiscal year, provide a level of services which 
is the higher of
    (i) The level established for the preceding fiscal year (or if no 
such level has been established for such prior year, the level of 
services provided in such year) or
    (ii) The level proposed in its adopted budget for the current fiscal 
year.
    (f) Qualifying services. (1) In determining the amount of 
uncompensated services provided by an applicant, there shall be included 
only those services provided to an individual with respect to whom the 
applicant has made a written determination prior to the provision of 
such services that such individual is unable to pay therefor under the 
criteria established pursuant to 42 CFR 53.111(g), except that:
    (i) Such determination may be made after the provision of such 
services in the case of services provided on an emergency basis: 
Provided, That when billing is made for such service, such billing must 
be accompanied by substantially the information required in the posted 
notice under paragraph (i) of this section; and
    (ii) Such determination may be made after the provision of such 
services in the case of a change in circumstances as a result of the 
illness or injury occasioning such services (e.g., the patient's 
financial condition has changed due to a loss of wages resulting from 
the illness) or in case of insurance coverage or other resources being 
less than anticipated or the costs of services being greater than 
anticipated. Further, in all cases where such determination was not made 
prior to the provision of services, such services may not be included as 
uncompensated services if any collection effort has been made other than 
the rendering of bills permissible in the above exceptions: Provided, 
That such a determination may be made at any time if the determination 
was hindered or delayed by reason of erroneous or incomplete information 
furnished by or in behalf of the patient.
    (2) There shall be excluded from the computation of uncompensated 
services:
    (i) Any amount which the applicant has received, or is entitled to 
receive, from a third party insurer or under a governmental program; and
    (ii) The reasonable cost of any services for which payment in whole 
or in part would be available under a governmental program (e.g., 
Medicare and

[[Page 228]]

Medicaid) in which the applicant, although eligible to do so, does not 
participate, but only to the extent of such otherwise available payment.
    (g) Persons unable to pay for services. (1) The State agency shall 
set forth in its State plan, subject to approval by the Secretary, 
criteria for identifying persons unable to pay for services, which shall 
include persons who are otherwise self-supporting but unable to pay the 
full charge for needed services. Such criteria shall be based on the 
following or similar factors:
    (i) The health and medical care insurance coverage, personal or 
family income, the size of the patient's family, and other financial 
obligations and resources of the patient or the family in relation to 
the reasonable cost of the services;
    (ii) Generally recognized standards of need such as:
    (a) The State standard for the medically needy as determined for the 
purposes of the Aid for Families with Dependent Children program;
    (b) The current Social Security Administration poverty income level;
    (c) The current Office of Economic Opportunity Income Poverty 
Guidelines applicable in the area; or
    (iii) Any other equivalent measures which are found by the Secretary 
to provide a reasonable basis for determining an individual's ability to 
pay for medical and hospital services.
    (2) A copy of such criteria shall be provided by the applicant, upon 
request, to any patient or former patient of the applicant and to any 
person seeking services from the applicant.
    (3) The State agency shall provide a copy of such criteria to any 
person requesting it.
    (h) Level of uncompensated services. (1) The State agency shall set 
forth in its State plan procedures for the determination for each 
applicant of the level of uncompensated services which constitutes a 
reasonable volume of services to persons unable to pay therefor provided 
that in no event shall the level of uncompensated services established 
under this section exceed the presumptive compliance guideline.
    (2) The State agency shall for the purpose of making such 
determination, review, and evaluate the annual statement, the budget and 
the related documents submitted by each applicant pursuant to paragraph 
(e) of this section, by applying the following criteria:
    (i) The financial status of the applicant, taking account of income 
from all sources, and its financial ability to provide uncompensated 
services;
    (ii) The nature and quantity of services provided by the applicant;
    (iii) The need within the area served by the applicant for the 
provision, without charge or at charge which is less than reasonable 
cost, for services of the nature provided or to be provided by the 
applicant; and
    (iv) The extent and nature of joint or cooperative programs with 
other facilities for the provision of uncompensated services, and the 
extent and nature of outreach services directed to the needs of 
underserved areas.
    (3) In accordance with its findings made after such review and 
evaluation, the State agency shall, within 60 days after receipt of the 
annual statement and related documents required by paragraph (e) of this 
section, for each fiscal year of an applicant which begins following the 
expiration of 90 days after the effective date of this regulation:
    (i) Establish a level of uncompensated services for each applicant 
which may be equal to or less than the presumptive compliance guideline: 
Provided, That if the State agency determines, in accordance with 
paragraph (h)(2) of this section, that (a) there is a need in the area 
served by an applicant for a level of uncompensated services greater 
than the level proposed in the applicant's budget statement, and (b) the 
applicant is financially able to provide such greater level of 
uncompensated services, the State agency shall establish such greater 
level as the level applicable to the applicant; and
    (ii) Accept or modify a plan submitted pursuant to paragraph (e) of 
this section.
    (4) The State agency shall notify the applicant in writing of the 
level of uncompensated services which it has established for the 
applicant for the fiscal year. At the time of notifying the applicant, 
the State agency shall also

[[Page 229]]

publish as a public notice in a newspaper of general circulation within 
the community served by the applicant the rate that has been established 
and a statement that the documents upon which the agency based its 
determination are available for public inspection at a location and time 
prescribed. In the case of the establishment by the State agency of a 
rate which is less than the presumptive compliance guideline, such 
notice shall also include a statement that persons wishing to object to 
the rate established may do so by writing to the State agency within 20 
days after publication of the notice: Provided, That the applicant may 
object to any level established which is greater than the level proposed 
in the applicant's budget statement.
    (5) In accordance with the provisions of paragraph (h)(4) of this 
section, the applicant or any person or persons residing or located 
within the area served by the applicant, or any organization on behalf 
of such person or persons, may submit to the State agency within 20 days 
of the publication and sending of the notice objections to the rate 
established by the State agency for the applicant. Such objections may 
be supported in writing by factual information and argument. The State 
agency shall give public notice of receipt of the objections and shall 
make the objections and their supporting documents available for public 
inspection and comment. It may, if it believes that determination of the 
objections will be assisted by oral evidence or by oral argument, set a 
public hearing on the objections and shall give notice of such hearing 
to all interested parties and to the public. The State agency shall 
within 60 days of the expiration of the period within which objections 
may be filed, rule upon the objections in writing, stating its reason 
for sustaining or overruling them, in whole or in part, and establishing 
finally the rate of uncompensated services either the same as, above, or 
below the rate previously established, as may best accord with all of 
the evidence on file with or heard by the State agency. Notice of the 
final determination shall be mailed to all parties who filed objections 
or who participated in the proceedings leading to the redetermination.
    (6) Within 20 days of receipt of written notice of the final 
determination of a State agency after ruling on objections to the rate 
established by the State agency, the applicant or any other interested 
person or organization may submit to the Secretary a written request for 
review of the State agency determination. Such review shall be made upon 
the record of the State agency determination which shall be sustained if 
supported by substantial evidence and is not otherwise arbitrary or 
capricious. If the Secretary or his designee determines that the rate 
established by the State agency is unsupported by the evidence in the 
record or is otherwise arbitrary or capricious, the Secretary or his 
designee shall, upon the basis of the record or upon other evidence or 
information which is before him or which he may obtain, establish a 
level of uncompensated services which he determines, in accordance with 
the criteria set out in paragraph (h)(2) of this section, is 
appropriate.
    (7) The level of uncompensated services established for an applicant 
under this section for any fiscal year shall constitute a reasonable 
volume of services to persons unable to pay therefor with respect to 
such applicant for such fiscal year.
    (i) Posted notice. The applicant shall post notice (which shall be 
multilingual where the applicant serves a multilingual community), in 
substantially the following form, in appropriate areas within the 
facility (admissions, office, emergency department and business office) 
for the purpose of informing patients or potential patients that 
criteria for eligibility and applications are available upon request:

                    Notice of Hill-Burton Obligation

    This hospital (or other facility) is required by law to give a 
reasonable amount of service at no cost or less than full cost to people 
who cannot pay. If you think that you are eligible for these services, 
please contact our business office (give office location) and ask for 
assistance. If you are not satisfied with the results, you may contact 
(the State Hill-Burton agency with address).

[[Page 230]]

    Provided, That an applicant which has selected a presumptive 
compliance guideline under paragraph (d)(1) of this section may, at its 
option, either (1) add to such notice language stating that the 
facility's obligation is limited to a specified dollar volume of 
uncompensated services and that if the facility has, during a specified 
period (e.g., year, quarter, month), already provided a volume of 
uncompensated services sufficient to satisfy such obligation, any person 
inquiring about such services will be given a written statement to that 
effect which shall also state when additional uncompensated services 
will be available; or (2) post an additional notice stating that the 
facility's obligation has been satisfied for the current period and 
stating when additional uncompensated services will be available.

    (j) Evaluation and enforcement. The State plan shall provide for 
evaluation and enforcement of the assurance in accordance with the 
following requirements:
    (1) The State agency shall,
    (i) At least annually, perform evaluations of the amount of the 
various services provided in each facility with respect to which Federal 
assistance has been provided under the Act, to determine whether such 
assurance is being complied with; and
    (ii) Establish procedures for the investigation of complaints that 
such assurance is not being complied with.
    (2) Evaluation pursuant to paragraph (j)(1) of this section shall be 
based on the annual budget of each facility for uncompensated services 
and on financial statements of such facilities filed pursuant to section 
646 of the Act and Sec. 53.128(q), and on such other information, 
including reports of investigations and hearing decisions, as the State 
agency deems relevant and material.
    (3) The State plan shall provide for adequate methods of enforcement 
of the assurance, including effective sanctions to be applied against 
any facility which fails to comply with such assurance. Such sanctions 
may include, but need not be limited to, license revocation, termination 
of State assistance, and court action.
    (k) Reports. (1) The State agency shall, not less often than 
annually, report in writing to the Secretary its evaluation of each 
facility's compliance with the assurance, the disposition of each 
complaint received by the State agency, proposed remedial action with 
respect to each facility found by the State agency to be not in 
compliance with the assurance, and the status of such remedial action.
    (2) In addition, the State agency shall promptly report to the 
Regional Attorney and Regional Health Director of the Department of 
Health and Human Services the institution of any legal action against a 
facility or the State agency involving compliance with the assurance.

[37 FR 14721, July 22, 1972, as amended at 38 FR 16354, June 22, 1973; 
40 FR 46203, Oct. 6, 1975]



Sec. 53.112  Nondiscrimination.

    (a) Before an application is recommended by a State agency to the 
Secretary for approval, the State agency shall obtain an assurance from 
the applicant that all portions and services of the entire facility for 
the construction or modernization of which, or in connection with which, 
aid under the Act is sought will be made available without 
discrimination on account of creed and no professionally qualified 
person will be discriminated against on account of creed with respect to 
the privilege of professional practice in the facility.
    (b) Each construction contract is subject to the condition that the 
applicant shall comply with the requirements of Executive Order 11246, 
September 24, 1965 (30 FR 12319), relating to nondiscrimination in 
construction contract employment, and the applicable rules, regulations, 
and procedures prescribed pursuant thereto.
    (c) Attention is called to the requirement of title VI of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d; 78 Stat. 252) which provides that 
no person in the United States shall, on the ground of race, color, or 
national origin be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity receiving Federal financial assistance. A regulation 
implementing such title VI, applicable to assistance under this part for 
construction and modernization of hospitals and medical facilities, has 
been issued by the Secretary of Health and Human Services

[[Page 231]]

with the approval of the President (45 CFR part 80).

[37 FR 182, Jan. 6, 1972, as amended at 39 FR 31767, Aug. 30, 1974]



Sec. 53.113  Community service.

    (a) Applicability. The provisions of this section apply to every 
applicant which heretofore has given or hereafter will give a community 
service assurance.
    (b) Definitions. As used in this section:
    (1) The term community service assurance means an assurance required 
by regulations promulgated pursuant to section 603(e)(1) of the Act or 
the predecessor of that section (section 622(f), Public Health Service 
Act, enacted by Pub. L. 79-725, 60 Stat. 1041).
    (2) The term facility has the same meaning as is given it in Sec. 
53.111(b)(1).
    (3) The term applicant has the same meaning as is given it in Sec. 
53.111(b)(2).
    (4) The term fiscal year has the same meaning as is given it in 
Sec. 53.111(b)(3).
    (c) Assurance. Before an application under this part is recommended 
by a State agency to the Secretary for approval, the State agency shall 
obtain an assurance from the applicant that the facility will furnish a 
community service.
    (d) Compliance. In order to comply with its community service 
assurance an applicant must:
    (1)(i) Make the services it furnishes available to the general 
public, or
    (ii) Limit the availability of such services only on the basis of 
age, medical indigency, or type or kind of medical or mental disability, 
or
    (iii) If the facility constitutes a medical or nursing care unit of 
a home or other institution, make such home or other institution 
available in accordance with paragraph (d)(1) (i) or (ii) of this 
section; and
    (2)(i) Make arrangements, if eligible to do so, for reimbursement 
for services with:
    (A) Those principal State and local governmental third-party payors 
which provide reimbursement for services that is not less than the 
actual cost of such services as determined in accordance with accepted 
cost accounting principles; and
    (B) Those Federal governmental third-party programs, such as 
Medicare and Medicaid, to the extent that the applicant is entitled to 
reimbursement at reasonable cost under a formula established in 
accordance with applicable Federal law.
    (ii) Take such additional steps as may be necessary to ensure that 
admission to and services of the facility will be available to 
beneficiaries of the governmental programs specified in paragraph 
(d)(2)(i) of this section without discrimination (or preference) on 
account of their being such beneficiaries.
    (e) Reports. The annual statement required by section 646 of the Act 
and Sec. 53.128(q), a copy of which must be submitted to the State 
agency in accordance with the requirements of Sec. 53.111(e)(1), shall 
set forth the amount of the reimbursement received pursuant to each 
arrangement with a principal governmental third-party payor.
    (f) Evaluation and enforcement. The State plan shall provide for 
evaluation and enforcement of the community service assurance in 
accordance with the following requirements:
    (1) The State agency shall,
    (i) At least annually, evaluate the compliance of facilities with 
such assurance; and
    (ii) Establish procedures for the investigation of complaints that 
such assurance is not being complied with.
    (2) The State plan shall provide for adequate methods of enforcement 
of the assurance, including effective sanctions to be applied against 
any facility which fails to comply with such assurance. Such sanctions 
may include, but need not be limited to, license revocation, termination 
of State assistance and court action.
    (g) Reports. (1) The State agency shall, not less often than 
annually, report in writing to the Secretary its general evaluation of 
facilities' compliance with the assurance, the disposition of each 
complaint received by the State agency, proposed remedial action with 
respect to each facility found by the State agency to be not in 
compliance with the assurance, and the status of such remedial action.
    (2) In addition, the State agency shall promptly report to the 
Regional Attorney and Regional Health Director

[[Page 232]]

of the Department of Health and Human Services the institution of any 
legal action against a facility or the State agency involving compliance 
with the assurance.

[39 FR 31767, Aug. 30, 1974, as amended at 42 FR 16780, Mar. 30, 1977]

Subpart M [Reserved]



               Subpart N_Loan Guarantees and Direct Loans



Sec. 53.154  Waiver of right of recovery.

    In determining whether there is good cause for waiver of any right 
of recovery which he may have against a nonprofit private agency by 
reason of any payments made pursuant to a loan guarantee, or against a 
public agency by reason of the failure of such agency to make payments 
of principal and interest on a direct loan to such agency, the Secretary 
shall take into consideration the extent to which:
    (a) The facility with respect to which the loan guarantee or direct 
loan was made will continue to be devoted by the applicant or other 
owner to use for the purpose for which it was constructed or another 
public or nonprofit purpose which will promote the purposes of the Act;
    (b) There are reasonable assurances that for the remainder of the 
repayment period of the loan other public or non-profit facilities not 
previously utilized for the purpose for which the facility was 
constructed will be so utilized and are substantially equivalent in 
nature and extent for such purposes; and
    (c) Such recovery would seriously curtail the provision of medical 
services to persons in need of such services in the area.

[37 FR 182, Jan. 6, 1972]



Sec. 53.155  Modification of loans.

    No official of the Department of Health and Human Services will 
approve any proposal to modify the terms of a loan guaranteed under 
title VI of the Public Health Service Act (42 U.S.C. 291 et seq.) and 
this subpart which would permit the use of the guaranteed loan (or the 
guarantee) as collateral for an issue of tax-exempt securities.

[48 FR 42984, Sept. 21, 1983]



Sec. 53.156  Fees for modification requests.

    (a) Fees will be charged for the processing of requests for parity, 
and for major and minor modifications of the terms of documents 
evidencing and securing direct and guaranteed loans. In accordance with 
the requirements of the User Charge Statute, 31 U.S.C. 9701(b), the 
Secretary determines the amount of the application fee that must be 
submitted with each type of modification.
    (1) As used in this section, a request for parity allows new debt to 
share lien position (i.e. collateral) with an existing Hill-Burton loan.
    (2) As used in this section, a major modification is any 
modification involving the release of $100,000 or more of collateral; a 
corporate restructuring that involves a transfer of assets; master 
indenture requests; modifications to a sinking fund; defeasance requests 
and requests for additional secured indebtedness; and any, other 
modification that involves a comparably significant use of Department 
resources.
    (3) As used in this section, a minor modification is any 
modification involving the release of less than $100,000 of collateral; 
an easement; and any other modification that involves a comparable use 
of Department resources.
    (b) A request for modification is to be accompanied by a certified 
check or money order in the amount of the appropriate fee, payable to 
the U.S. Treasury. The fees for modification requests submitted on or 
after October 28, 1986 are as follows:
    (1) $1,500 for a minor modification,
    (2) $4,500 for a major modification, and
    (3) $5,500 for a request for parity.
    (c) A submitter may withdraw its request for modification within 10 
business days following its receipt and receive a refund of the fee.
    (d) If the Secretary determines that a change in the amount of a fee 
is appropriate, the Department will issue a notice of proposed 
rulemaking in the

[[Page 233]]

Federal Register to announce the proposed amount.

[51 FR 39376, Oct. 28, 1986]



  PART 54_CHARITABLE CHOICE REGULATIONS APPLICABLE TO STATES RECEIVING 

SUBSTANCE ABUSE PREVENTION AND TREATMENT BLOCK GRANTS AND/OR PROJECTS FOR 

ASSISTANCE IN TRANSITION FROM HOMELESSNESS GRANTS--Table of Contents




Sec.
54.1 Scope.
54.2 Definitions.
54.3 Nondiscrimination against religious organizations.
54.4 Religious activities.
54.5 Religious character and independence.
54.6 Employment practices.
54.7 Nondiscrimination requirement.
54.8 Right to services from an alternative provider.
54.9 Assurances and State oversight of the Charitable Choice 
          requirements.
54.10 Fiscal accountability.
54.11 Effects on State and local funds.
54.12 Treatment of intermediate organizations.
54.13 Educational requirements for personnel in drug treatment programs.

    Authority: 42 U.S.C. 300x-65, et seq., 42 U.S.C. 290kk, et seq., 42 
U.S.C. 300x-21, et seq., 42 U.S.C. 290cc-21, et seq., and 42 U.S.C. 
2000bb, et seq.

    Source: 68 FR 56444, Sept. 30, 2003, unless otherwise noted.



Sec. 54.1  Scope.

    These provisions apply only to funds provided directly to pay for 
substance abuse prevention and treatment services under 42 U.S.C. 300x-
21 et seq., and 42 U.S.C. 290cc-21 to 290cc-35. This part does not apply 
to direct funding under any such authorities for activities that do not 
involve the provision of substance abuse services, such as for 
infrastructure activities authorized under Section 1971 of the PHS Act, 
42 U.S.C. 300y, and for technical assistance activities. This part 
implements the SAMHSA Charitable Choice provisions, 42 U.S.C. 300x-65 
and 42 U.S.C. 290kk, et seq.



Sec. 54.2  Definitions.

    (a) Applicable program means the programs authorized under:
    (1) The Substance Abuse Prevention and Treatment (SAPT) Block Grant, 
42 U.S.C. 300x to 300x-66, and
    (2) The Projects for Assistance in Transition from Homelessness 
(PATH) Formula Grants, 42 U.S.C. 290cc-21 to 290cc-35 insofar as they 
fund substance abuse prevention and/or treatment services.
    (b) Religious organization means a nonprofit religious organization.
    (c) Program beneficiary means an individual who receives substance 
abuse services under a program funded in whole or in part by applicable 
programs.
    (d) Program participant means a public or private entity that has 
received financial assistance, under an applicable program.
    (e) SAMHSA means the U.S. Substance Abuse and Mental Health Services 
Administration.
    (f) SAMHSA Charitable Choice provisions means the provisions of 42 
U.S.C. 300x-65 and 42 U.S.C. 290kk, et seq.
    (g) Direct funding or Funds provided directly means funding that is 
provided to an organization directly by a governmental entity or 
intermediate organization that has the same duties under this part as a 
governmental entity, as opposed to funding that an organization receives 
as the result of the genuine and independent private choice of a 
beneficiary through a voucher, certificate, coupon, or other similar 
mechanism.



Sec. 54.3  Nondiscrimination against religious organizations.

    (a) Religious organizations are eligible, on the same basis as any 
other organization, to participate in applicable programs, as long as 
their services are provided consistent with the Establishment Clause and 
the Free Exercise Clause of the First Amendment to the United States 
Constitution. Except as provided herein or in the SAMHSA Charitable 
Choice provisions, nothing in these regulations shall restrict the 
ability of the Federal government, or a State or local government, from 
applying to religious organizations the same

[[Page 234]]

eligibility conditions in applicable programs as are applied to any 
other nonprofit private organization.
    (b) Neither the Federal government nor a State or local government 
receiving funds under these programs shall discriminate against an 
organization that is, or applies to be, a program participant on the 
basis of religion or the organization's religious character or 
affiliation.



Sec. 54.4  Religious activities.

    No funds provided directly from SAMHSA or the relevant State or 
local government to organizations participating in applicable programs 
may be expended for inherently religious activities, such as worship, 
religious instruction, or proselytization. If an organization conducts 
such activities, it must offer them separately, in time or location, 
from the programs or services for which it receives funds directly from 
SAMHSA or the relevant State or local government under any applicable 
program, and participation must be voluntary for the program 
beneficiaries.



Sec. 54.5  Religious character and independence.

    A religious organization that participates in an applicable program 
will retain its independence from Federal, State, and local governments 
and may continue to carry out its mission, including the definition, 
practice and expression of its religious beliefs. The organization may 
not expend funds that it receives directly from SAMHSA or the relevant 
State or local government to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations may use space in their 
facilities to provide services supported by applicable programs, without 
removing religious art, icons, scriptures, or other symbols. In 
addition, a SAMHSA-funded religious organization retains the authority 
over its internal governance, and it may retain religious terms in its 
organization's name, select its board members on a religious basis, and 
include religious references in its organization's mission statements 
and other governing documents.



Sec. 54.6  Employment practices.

    (a) The participation of a religious organization in, or its receipt 
of funds from, an applicable program does not affect that organization's 
exemption provided under 42 U.S.C. 2000e-1 regarding employment 
practices.
    (b) To the extent that 42 U.S.C. 300x-57(a)(2) or 42 U.S.C. 290cc-
33(a)(2) precludes a program participant from employing individuals of a 
particular religion to perform work connected with the carrying on of 
its activities, those provisions do not apply if such program 
participant is a religious corporation, association, educational 
institution, or society and can demonstrate that its religious exercise 
would be substantially burdened by application of these religious 
nondiscrimination requirements to its employment practices in the 
program or activity at issue. In order to make this demonstration, the 
program participant must certify: that it sincerely believes that 
employing individuals of a particular religion is important to the 
definition and maintenance of its religious identity, autonomy, and/or 
communal religious exercise; that it makes employment decisions on a 
religious basis in analogous programs; that the grant would materially 
affect its ability to provide the type of services in question; and that 
providing the services in question is expressive of its values or 
mission. The organization must maintain documentation to support these 
determinations and must make such documentation available to SAMHSA upon 
request.
    (c) Nothing in this section shall be construed to modify or affect 
any State law or regulation that relates to discrimination in 
employment.
    (d) The phrases ``with respect to the employment,'' ``individuals of 
a particular religion,'' and ``religious corporation, association, 
educational institution, or society'' shall have the same meaning as 
those terms have under section 702 of the Civil Rights Act of 1964, 42 
U.S.C. 2000e-1(a).



Sec. 54.7  Nondiscrimination requirement.

    A religious organization that is a program participant shall not, in 
providing program services or engaging in outreach activities under 
applicable

[[Page 235]]

programs, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion, a religious belief, a 
refusal to hold a religious belief, or a refusal to actively participate 
in a religious practice.



Sec. 54.8  Right to services from an alternative provider.

    (a) General requirements. If an otherwise eligible program 
beneficiary or prospective program beneficiary objects to the religious 
character of a program participant, within a reasonable period of time 
after the date of such objection, such program beneficiary shall have 
rights to notice, referral, and alternative services, as outlined in 
paragraphs (b) through (d) of this section.
    (b) Notice. Program participants that refer an individual to 
alternative service providers, and the State government that administers 
the applicable programs, shall ensure that notice of the individual's 
right to services from an alternative provider is provided to all 
program beneficiaries or prospective beneficiaries. The notice must 
clearly articulate the program beneficiary's right to a referral and to 
services that reasonably meet the requirements of timeliness, capacity, 
accessibility, and equivalency as discussed in this section. A model 
notice is set out in appendix A to part 54a.
    (c) Referral to an alternative provider. If a program beneficiary or 
prospective program beneficiary objects to the religious character of a 
program participant that is a religious organization, that participating 
religious organization shall, within a reasonable time after the date of 
such objection, refer such individual to an alternative provider. The 
State shall have a system in place to ensure that referrals are made to 
an alternative provider. That system shall ensure that the following 
occurs:
    (1) The religious organization that is a program participant shall, 
within a reasonable time after the date of such objection, refer the 
beneficiary to an alternative provider;
    (2) In making such referral, the program participant shall consider 
any list that the State or local government makes available to entities 
in the geographic area that provide program services, which may include 
utilizing any treatment locator system developed by SAMHSA;
    (3) All referrals shall be made in a manner consistent with all 
applicable confidentiality laws, including, but not limited to, 42 CFR 
Part 2 (``Confidentiality of Alcohol and Drug Abuse Patient Records'');
    (4) Upon referring a program beneficiary to an alternative provider, 
the program participant shall notify the State or responsible unit of 
government of such referral; and
    (5) The program participant shall ensure that the program 
beneficiary makes contact with the alternative provider to which he or 
she is referred.
    (d) Provision and funding of alternative services. If an otherwise 
eligible applicant or recipient objects to the religious character of a 
SAMHSA-funded service provider, the recipient is entitled to receive 
services from an alternative provider. In such cases, the State or local 
agency must provide the individual with alternative services within a 
reasonable period of time, as defined by the State agency. That 
alternative provider must be reasonably accessible and have the capacity 
to provide comparable services to the individual. Such services shall 
have a value that is not less than the value of the services that the 
individual would have received from the program participant to which the 
individual had such objection, as defined by the State agency. The 
alternative provider need not be a secular organization. It must simply 
be a provider to which the recipient has no religious objection. States 
may define and apply the terms ``reasonably accessible,'' ``a reasonable 
period of time,'' ``comparable,'' ``capacity,'' and ``value that is not 
less than.'' The appropriate State or local governments that administer 
SAMHSA-funded programs shall ensure that notice of their right to 
alternative services is provided to applicants or recipients. The notice 
must clearly articulate the recipient's right to a referral and to 
services that reasonably meet the timeliness, capacity, accessibility, 
and equivalency requirements discussed above.

[[Page 236]]

    (e) PATH annual report. As part of the annual report to SAMHSA, PATH 
grantees shall include a description of the activities the grantee has 
taken to comply with 42 CFR part 54.



Sec. 54.9  Assurances and State oversight of the Charitable Choice 

requirements.

    In order to ensure that States receiving grant funding under the 
SAPT block grant and PATH formula grant programs comply with the SAMHSA 
Charitable Choice provisions and provide oversight of religious 
organizations that provide substance abuse services under such programs, 
States are required as part of their applications for funding to certify 
that they will comply with all of the requirements of such provisions 
and the implementing regulations under this part, and that they will 
provide such oversight of religious organizations.



Sec. 54.10  Fiscal accountability.

    (a) Religious organizations that receive applicable program funds 
for substance abuse services are subject to the same regulations as 
other nongovernmental organizations to account, in accordance with 
generally accepted auditing and accounting principles, for the use of 
such funds.
    (b) Religious organizations shall segregate Federal funds they 
receive under an applicable program into a separate account from non-
Federal funds. Only the Federal funds shall be subject to audit by 
government under the SAMHSA program.



Sec. 54.11  Effects on State and local funds.

    If a State or local government contributes its own funds to 
supplement activities carried out under the applicable programs, the 
State or local government has the option to separate out the Federal 
funds or commingle them. If the funds are commingled, the provisions of 
this part shall apply to all of the commingled funds in the same manner, 
and to the same extent, as the provisions apply to the Federal funds.



Sec. 54.12  Treatment of intermediate organizations.

    If a nongovernmental organization (referred to here as an 
``intermediate organization''), acting under a contract or other 
agreement with the Federal Government or a State or local government, is 
given the authority under the contract or agreement to select 
nongovernmental organizations to provide services under any applicable 
program, the intermediate organization shall have the same duties under 
this part as the government. The intermediate organization retains all 
other rights of a nongovernmental organization under this part and the 
SAMHSA Charitable Choice provisions.



Sec. 54.13  Educational requirements for personnel in drug treatment programs.

    In determining whether personnel of a program participant that has a 
record of successful drug treatment for the preceding three years have 
satisfied State or local requirements for education and training, a 
State or local government shall not discriminate against education and 
training provided to such personnel by a religious organization, so long 
as such education and training is comparable to that provided by 
nonreligious organizations, or is comparable to education and training 
that the State or local government would otherwise credit for purposes 
of determining whether the relevant requirements have been satisfied.



PART 54a_CHARITABLE CHOICE REGULATIONS APPLICABLE TO STATES, LOCAL GOVERNMENTS 

AND RELIGIOUS ORGANIZATIONS RECEIVING DISCRETIONARY FUNDING UNDER TITLE V OF 

THE PUBLIC HEALTH SERVICE ACT, 42 U.S.C. 290aa, ET SEQ., FOR SUBSTANCE ABUSE 

PREVENTION AND TREATMENT SERVICES--Table of Contents




Sec.
54a.1 Scope.
54a.2 Definitions.
54a.3 Nondiscrimination against religious organizations.
54a.4 Religious activities.

[[Page 237]]

54a.5 Religious character and independence.
54a.6 Employment practices.
54a.7 Nondiscrimination requirement.
54a.8 Right to services from an alternative provider.
54a.9 Oversight of the Charitable Choice requirements.
54a.10 Fiscal accountability.
54a.11 Effect on State and local funds.
54a.12 Treatment of intermediate organizations.
54a.13 Educational requirements for personnel in drug treatment 
          programs.
54a.14 Determination of nonprofit status.

Appendix to Part 54a--Model Notice to Individuals Receiving Substance 
          Abuse Services.

    Authority: 42 U.S.C. 300x-65, and 42 U.S.C. 290kk, et seq., 42 
U.S.C. 290aa, et seq.

    Source: 68 FR 56446, Sept. 30, 2003, unless otherwise noted.



Sec. 54a.1  Scope.

    These provisions apply only to funds provided directly to pay for 
substance abuse prevention and treatment services under Title V of the 
Public Health Service Act, 42 U.S.C. 290aa, et seq., which are 
administered by the Substance Abuse and Mental Health Services 
Administration. This part does not apply to direct funding under any 
such authorities for only mental health services or for certain 
infrastructure and technical assistance activities, such as cooperative 
agreements for technical assistance centers, that do not provide 
substance abuse services to clients. This part implements the provisions 
of 42 U.S.C. 300x-65 and 42 U.S.C. 290kk, et seq.



Sec. 54a.2  Definitions.

    (a) Applicable program means the programs authorized under Title V 
of the PHS Act, 42 U.S.C. 290aa, et seq., for the provision of substance 
abuse prevention and or treatment services.
    (b) Religious organization means a nonprofit religious organization.
    (c) Program beneficiary means an individual who receives substance 
abuse services under a program funded in whole or in part by applicable 
programs.
    (d) Program participant means a public or private entity that has 
received financial assistance under an applicable program.
    (e) SAMHSA means the Substance Abuse and Mental Health Services 
Administration.
    (f) SAMHSA Charitable Choice provisions means the provisions of 42 
U.S.C. 300x-65 and 42 U.S.C. 290kk, et seq.
    (g) Direct funding or Funds provided directly means funding that is 
provided to an organization directly by a governmental entity or 
intermediate organization that has the same duties under this part as a 
governmental entity, as opposed to funding that an organization receives 
as the result of the genuine and independent private choice of a 
beneficiary through a voucher, certificate, coupon, or other similar 
mechanism.



Sec. 54a.3  Nondiscrimination against religious organizations.

    (a) Religious organizations are eligible, on the same basis as any 
other organization, to participate in applicable programs as long as 
their services are provided consistent with the Establishment Clause and 
the Free Exercise Clause of the First Amendment to the United States 
Constitution. Except as provided herein or in the SAMHSA Charitable 
Choice provisions, nothing in these regulations shall restrict the 
ability of the Federal government, or a State or local government, from 
applying to religious organizations the same eligibility conditions in 
applicable programs as are applied to any other nonprofit private 
organization.
    (b) Neither the Federal government nor a State or local government 
receiving funds under these programs shall discriminate against an 
organization that is, or applies to be, a program participant on the 
basis of the organization's religious character or affiliation.



Sec. 54a.4  Religious activities.

    No funds provided directly from SAMHSA or the relevant State or 
local government to organizations participating in applicable programs 
may be expended for inherently religious activities, such as worship, 
religious instruction, or proselytization. If an organization conducts 
such activities, it must offer them separately, in time or location, 
from the programs or services for which it receives funds directly from 
SAMHSA or the relevant State or

[[Page 238]]

local government under any applicable program, and participation must be 
voluntary for the program beneficiaries.



Sec. 54a.5  Religious character and independence.

    A religious organization that participates in an applicable program 
will retain its independence from Federal, State, and local governments 
and may continue to carry out its mission, including the definition, 
practice and expression of its religious beliefs. The organization may 
not expend funds that it receives directly from SAMHSA or the relevant 
State or local government to support any inherently religious 
activities, such as worship, religious instruction, or proselytization. 
Among other things, faith-based organizations may use space in their 
facilities to provide services supported by applicable programs, without 
removing religious art, icons, scriptures, or other symbols. In 
addition, a SAMHSA-funded religious organization retains the authority 
over its internal governance, and it may retain religious terms in its 
organization's name, select its board members on a religious basis, and 
include religious references in its organization's mission statements 
and other governing documents.



Sec. 54a.6  Employment practices.

    (a) The participation of a religious organization in or its receipt 
of funds from an applicable program does not affect that organization's 
exemption provided under 42 U.S.C. 2000e-1 regarding employment 
practices.
    (b) Nothing in this section shall be construed to modify or affect 
any State law or regulation that relates to discrimination in 
employment.



Sec. 54a.7  Nondiscrimination requirement.

    A religious organization that is a program participant shall not, in 
providing program services or engaging in outreach activities under 
applicable programs, discriminate against a program beneficiary or 
prospective program on the basis of religion, a religious belief, a 
refusal to hold a religious belief, or a refusal to actively participate 
in a religious practice.



Sec. 54a.8  Right to services from an alternative provider.

    (a) General requirements. If an otherwise eligible program 
beneficiary or prospective program beneficiary objects to the religious 
character of a program participant, within a reasonable period of time 
after the date of such objection, such program beneficiary shall have 
rights to notice, referral, and alternative services, as outlined in 
paragraphs (b) through (d) of this section. With respect to SAMHSA 
discretionary programs, for purposes of determining what is the 
appropriate Federal, State, or local government, the following principle 
shall apply: When SAMHSA provides funding directly to another unit of 
government, such as a State or local government, that unit of government 
is responsible for providing the alternative services. When SAMHSA 
provides discretionary grant funding directly to a nongovernmental 
organization, SAMHSA is the responsible unit of government.
    (b) Notice. Program participants that refer an individual to 
alternative providers, and the appropriate Federal, State, or local 
governments that administer the applicable programs, shall ensure that 
notice of the individual's rights to services from an alternative 
provider is provided to all program beneficiaries or prospective 
beneficiaries. The notice must clearly articulate the program 
beneficiary's right to a referral and to services that reasonably meet 
the requirements of timeliness, capacity, accessibility, and equivalency 
as discussed in this section. A model notice is set out in appendix A to 
this part.
    (c) Referral to services from an alternative provider. If a program 
beneficiary or a prospective program beneficiary objects to the 
religious character of a program participant that is a religious 
organization, that participating religious organization shall, within a 
reasonable time after the date of such objection, refer such individual 
to an alternative provider.
    (1) When the State or local government is the responsible unit of 
government, the State shall have a system in place to ensure that such 
referrals are made. That system shall ensure that the following occurs:

[[Page 239]]

    (i) The religious organization that is a program participant shall, 
within a reasonable time after the date of such objection, refer the 
beneficiary to an alternative provider;
    (ii) In making such referral, the religious organization shall 
consider any list that the State or local government makes available to 
entities in the geographic area that provide program services, which may 
include utilizing any treatment locator system developed by SAMHSA;
    (iii) All referrals are to be made in a manner consistent with all 
applicable confidentiality laws, including, but not limited to, 42 CFR 
part 2 (``Confidentiality of Alcohol and Drug Abuse Patient Records'');
    (iv) Upon referring a program beneficiary to an alternative 
provider, the religious organization shall notify the responsible unit 
of government of such referral; and
    (v) The religious organization shall ensure that the program 
beneficiary makes contact with the alternative provider to which he or 
she is referred.
    (2) When SAMHSA is the responsible unit of government, the referral 
process is as follows:
    (i) When a program beneficiary requests alternative services, the 
religious organization will seek to make such a referral.
    (ii) If the religious organization cannot locate an appropriate 
provider of alternative services, the religious organization will 
contact SAMHSA. They will work together to identify additional 
alternative providers, utilizing the SAMHSA Treatment Locator system, if 
appropriate.
    (iii) The religious organization will contact these alternative 
providers and seek to make the referral, in a manner consistent with all 
applicable confidentiality laws, including, but not limited to, 42 CFR 
part 2 (``Confidentiality of Alcohol and Drug Abuse Patient Records'').
    (iv) In the event the religious organization is still unable to 
locate an alternative provider, it may again contact SAMHSA for 
assistance.
    (d) Referral reporting procedures. The program participant shall 
notify the appropriate Federal, State or local government agency that 
administers the program of such referral. If a State or local government 
is the responsible unit of government, it may determine its own 
reporting procedures. When SAMHSA is the responsible unit of government, 
this notification will occur during the course of the regular reports 
that may be required under the terms of the funding award.
    (e) Provision and funding of alternative services. The responsible 
unit of government, as defined in paragraph (a) of this section, shall 
provide to an otherwise eligible program beneficiary or prospective 
program beneficiary who objects to the religious character of a program 
participant, services and fund services from an alternative provider 
that is reasonably accessible to, and has the capacity to provide such 
services to the individual. Such services shall have a value that is not 
less than the value of the services that the individual would have 
received from the program participant to which the individual had such 
objection. The appropriate State or local governments that administer 
SAMHSA-funded programs shall ensure that notice of their right to 
alternative services is provided to applicants or recipients. The 
alternative provider need not be a secular organization. It must simply 
be a provider to which the program beneficiary has no religious 
objection.
    (1) When the State receives a discretionary grant from SAMHSA, it 
shall utilize its own implementation procedures for these provisions and 
shall use funds from the SAMHSA discretionary grant to finance such 
alternative services, as needed;
    (2) When the local government receives a discretionary grant from 
SAMHSA, it shall utilize State implementation procedures for these 
provisions and shall use funds from the SAMHSA discretionary grant to 
finance such alternative services, as needed;
    (3) When a religious organization receives a discretionary grant 
from SAMHSA, if a publicly funded alternative provider is available that 
is reasonably accessible and can provide equivalent services, the 
religious organization shall refer the beneficiary to

[[Page 240]]

that provider. However, if such a provider is not available, the 
religious organization shall contract with an alternative provider to 
provide such services and may finance such services with funds from the 
SAMHSA discretionary grant.



Sec. 54a.9  Oversight of the Charitable Choice requirements.

    In order to ensure that program funds are used in compliance with 
the SAMHSA Charitable Choice provisions, applicants for funds under 
applicable programs are required, as part of their applications for 
funding, to certify that they will comply with all of the requirements 
of the SAMHSA Charitable Choice provisions and the implementing 
regulations under this part.



Sec. 54a.10  Fiscal accountability.

    (a) Religious organizations that receive applicable program funds 
for substance abuse services are subject to the same regulations as 
other nongovernmental organizations to account, in accordance with 
generally accepted auditing and accounting principles, for the use of 
such funds.
    (b) Religious organizations shall segregate Federal funds they 
receive under applicable programs into a separate account from non-
Federal funds. Only the Federal funds shall be subject to audit by the 
government under the SAMHSA program.



Sec. 54a.11  Effect on State and local funds.

    If a State or local government contributes its own funds to 
supplement activities carried out under the applicable programs, the 
State or local government has the option to separate out the Federal 
funds or commingle them. If the funds are commingled, the provisions of 
this part shall apply to all of the commingled funds, in the same 
manner, and to the same extent, as the provisions apply to the Federal 
funds.



Sec. 54a.12  Treatment of intermediate organizations.

    If a nongovernmental organization (referred to here as an 
``intermediate organization''), acting under a contract or other 
agreement with the Federal Government or a State or local government, is 
given the authority under the contract or agreement to select 
nongovernmental organizations to provide services under any applicable 
program, the intermediate organization shall have the same duties under 
this part as the government. The intermediate organization retains all 
other rights of a nongovernmental organization under this part and the 
SAMHSA Charitable Choice provisions.



Sec. 54a.13  Educational requirements for personnel in drug treatment 

programs.

    In determining whether personnel of a program participant that has a 
record of successful drug treatment for the preceding three years have 
satisfied State or local requirements for education and training, a 
State or local government shall not discriminate against education and 
training provided to such personnel by a religious organization, so long 
as such education and training is comparable to that provided by 
nonreligious organizations, or is comparable to education and training 
that the State or local government would otherwise credit for purposes 
of determining whether the relevant requirements have been satisfied.



Sec. 54a.14  Determination of nonprofit status.

    The nonprofit status of any SAMHSA applicant can be determined by 
any of the following:
    (a) Reference to the organization's listing in the Internal Revenue 
Service's (IRS) most recent list of tax-exempt organizations described 
in section 501(c)(3) of the IRS code.
    (b) A copy of a currently valid IRS Tax exemption certificate.
    (c) A statement from a State taxing body, State Attorney General, or 
other appropriate State official certifying that the applicant 
organization has a nonprofit status and that none of its net earnings 
accrue to any private shareholder or individuals.
    (d) A certified copy of the organization's certificate of 
incorporation or similar document if it clearly establishes the 
nonprofit status of the organization.
    (e) Any of the above proof for a State or national parent 
organization and a

[[Page 241]]

statement signed by the parent organization that the applicant 
organization is a local nonprofit affiliate.



    Sec. Appendix to Part 54a--Model Notice of Individuals Receiving 
                        Substance Abuse Services

     Model Notice to Individuals Receiving Substance Abuse Services

    No provider of substance abuse services receiving Federal funds from 
the U.S. Substance Abuse and Mental Health Services Administration, 
including this organization, may discriminate against you on the basis 
of religion, a religious belief, a refusal to hold a religious belief, 
or a refusal to actively participate in a religious practice.
    If you object to the religious character of this organization, 
Federal law gives you the right to a referral to another provider of 
substance abuse services. The referral, and your receipt of alternative 
services, must occur within a reasonable period of time after you 
request them. The alternative provider must be accessible to you and 
have the capacity to provide substance abuse services. The services 
provided to you by the alternative provider must be of a value not less 
than the value of the services you would have received from this 
organization.



PART 55a_PROGRAM GRANTS FOR BLACK LUNG CLINICS--Table of Contents




                      Subpart A_General Provisions

Sec.
55a.101 Definitions.
55a.102 Who is eligible to apply for a Black Lung clinics grant?
55a.103 What criteria has HHS established for deciding which grant 
          application to fund?
55a.104 What confidentiality requirements must be met?
55a.105 How must grantees carry out their projects?
55a.106 Provision for waiver by the Secretary.
55a.107 What other regulations apply?

                       Subpart B_Grants to States

55a.201 What is required for a State application?

             Subpart C_Grants to Entities Other Than States

55a.301 What is required for an application from an entity other than a 
          State?

    Authority: Sec. 427(a), Federal Mine Safety and Health Act of 1977, 
92 Stat. 100 (30 U.S.C. 937(a)).

    Source: 50 FR 7913, Feb. 27, 1985, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 55a.101  Definitions.

    Act, as used in this part, means the Federal Mine Safety and Health 
Act of 1977, as amended (30 U.S.C. 801 et seq.).
    Secretary means the Secretary of Health and Human Services and any 
other officer or empolyee of the Department of Health and Human Services 
to whom the authority involved has been delegated.
    Miner or coal miner means any individual who works or has worked in 
or around a coal mine or coal preparation facility in the extraction or 
preparation of coal. The term also includes an individual who works or 
has worked in coal mine construction or transportation in or around a 
coal mine, to the extent that the individual was exposed to coal dust as 
a result of employment.



Sec. 55a.102  Who is eligible to apply for a Black Lung clinics grant?

    Any State or public or private entity may apply for a grant under 
this part.



Sec. 55a.103  What criteria has HHS established for deciding which grant 

application to fund?

    (a) The Secretary will give preference to a State, which meets the 
requirements of this part and applies for a grant under this part, over 
other applicants in that State.
    (b) Within the limits of funds available for these purposes the 
Secretary may award grants to assist in the carrying out of those 
programs which will in the Secretary's judgment best promote the 
purposes of section 427(a) of the Act, taking into account;
    (1) The number of miners to be served and their needs; and
    (2) The quality and breadth of services to be provided.



Sec. 55a.104  What confidentiality requirements must be met?

    All information as to personal facts and circumstances obtained by 
the grantee's staff about recipients of services shall be held 
confidential and shall not be disclosed without the individual's consent 
except as may be required

[[Page 242]]

by law or as may be necessary to provide service to the individual or to 
provide for audits with appropriate safeguards for confidentiality of 
patient records. Otherwise, information may be disclosed only in 
summary, statistical, or other form which does not identify particular 
individuals.



Sec. 55a.105  How must grantees carrry out their projects?

    Grantees must carry out their projects in accordance with their 
applications and the provisions of this part.



Sec. 55a.106  Provision for waiver by the Secretary.

    The Secretary may, for good cause shown, waive provisions of these 
regulations.



Sec. 55a.107  What other regulations apply?

    Other regulations which apply to the Black Lung Clinics Program 
include, but are not limited to, the following:

42 CFR part 50, subpart D--Public Health Service grant appeals 
procedure;
42 CFR part 50, subpart E--Maximum allowable cost for drugs;
45 CFR part 16--Procedures of the Departmental Grant Appeals Board;
45 CFR part 19--Limitations on payment or reimbursement for drugs;
45 CFR part 74--Administration of grants;
45 CFR part 75--Informal grant appeals procedures;
45 CFR part 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;
45 CFR part 81--Practice and procedure for hearings under part 80;
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial 
assistance; and
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance.



                       Subpart B_Grants to States



Sec. 55a.201  What is required for a State application?

    An approvable State application must contain assurances that the 
State will:
    (a) Provide the following services for active and inactive miners in 
the State:
    (1) Primary care;
    (2) Patient and family education and counseling;
    (3) Outreach;
    (4) Patient care coordination, including individual patient care 
plans for all patients;
    (5) Antismoking advice; and
    (6) Other symptomatic treatments.
    (b) Provide medical services in consultation with a physician with 
special training or experience in the diagnosis and treatment of 
respiratory diseases.
    (c) Meet all criteria for approval and designation by the Department 
of Labor under 20 CFR part 725 to perform disability examination and 
provide treatment under the Act.
    (d) Use grant funds under this part to supplement and not supplant 
existing services of the State.
    (e) Provide the services described above for those miners previously 
served by a Black Lung Clinic in the State for which grant support 
expires during the funding period of the State's grant.
    (f) Provide services described above regardless of a person's 
ability to pay.
    (g) Audit its expenditures from amounts received under this part in 
accordance with the provisions of Attachment P, Audit Requirements, of 
Office of Management and Budget Circular A-102, Uniform Requirements for 
Assistance to State and Local Governments, as adopted for the Department 
of Health and Human Services by 45 CFR part 74.

(Approved by the Office of Management and Budget under control number 
0915-0081)

[50 FR 7913, Feb. 27, 1985, as amended at 50 FR 53156, Dec. 30, 1985]



             Subpart C_Grants to Entities Other Than States



Sec. 55a.301  What is required for an application from an entity other than a 

State?

    An approvable application must contain the following:
    (a) A plan for the provision of the services required by Sec. 
55a.201(a), consistent with the requirements of Sec. 55a.201 (b) and 
(c). The plan must also

[[Page 243]]

contain at least the following elements:
    (1) A description of the target population to whom services are to 
be provided, including a statement of the need for services;
    (2) An assurance that charges shall be made for services rendered as 
follows:
    (i) A schedule shall be maintained listing fees or payments for the 
provision of services, designed to cover reasonable costs of operations;
    (ii) A schedule of discounts adjusted on the basis of a patient's 
ability to pay shall be maintained. The schedule of discounts must 
provide for a full discount to individuals and families with annual 
incomes at or below the poverty line established in accordance with 
section 673(2) of the Community Services Block Grant Act (42 U.S.C. 
9902(2)), (except that nominal fees for service may be requested, but 
not required, from individuals and families with annual incomes at or 
below the poverty line). No discounts shall be provided to individuals 
and families with annual incomes greater than twice the poverty line; 
and
    (iii) Where third-party payors (including Government Agencies) are 
authorized or under a legal obligation to pay all or a portion of such 
charges, all services covered by that reimbursement plan will be billed 
and every reasonable effort will be made to obtain payment.
    (b) An assurance that no person will be denied services because of 
inability to pay.
    (c) An assurance that grant funds received under this part will be 
used to supplement and not supplant existing services of the grantee.

(Approved by the Office of Management and Budget under control number 
0915-0081)

[50 FR 7913, Feb. 27, 1985, as amended at 50 FR 53156, Dec. 30, 1985]



PART 56_GRANTS FOR MIGRANT HEALTH SERVICES--Table of Contents




                      Subpart A_General Provisions

Sec.
56.101 Applicability.
56.102 Definitions.
56.103 Eligibility.
56.104 Application.
56.105 Accord with health planning.
56.106 Amount of grant.
56.107 Priorities for grants.
56.108 Use of grant funds.
56.109 Grant payments.
56.110 Nondiscrimination.
56.111 Confidentiality.
56.112 Publications and copyright.
56.113 Grantee accountability.
56.114 Applicability of 45 CFR part 74.

   Subpart B_Grants for Planning and Developing Migrant Health Centers

56.201 Applicability.
56.202 Application.
56.203 Project elements.
56.204 Grant evaluation and award.

          Subpart C_Grants for Operating Migrant Health Centers

56.301 Applicability.
56.302 Application.
56.303 Project elements.
56.304 Governing board.
56.305 Grant evaluation and award.

         Subpart D_Grants for Operating Migrant Health Entities

56.401 Applicability.
56.402 Application.
56.403 Project elements.
56.404 Grant evaluation and award.

  Subpart E_Grants for Planning and Developing Migrant Health Programs

56.501 Applicability.
56.502 Application.
56.503 Project elements.
56.504 Grant evaluation and award.

         Subpart F_Grants for Operating Migrant Health Programs

56.601 Applicability.
56.602 Application.
56.603 Project elements.
56.604 Grant evaluation and award.

                Subpart G_Grants for Technical Assistance

56.701 Applicability.
56.702 Application.
56.703 Project elements.
56.704 Grant evaluation and award.

      Subpart H_Acquisition and Modernization of Existing Buildings

56.801 Applicability of 42 CFR part 51c, subpart E.


[[Page 244]]


    Authority: Secs. 215, 319, Public Health Service Act (42 U.S.C. 216, 
247d).

    Source: 42 FR 60406, Nov. 25, 1977, unless otherwise noted.



                      Subpart A_General Provisions



Sec. 56.101  Applicability.

    The regulations of this subpart are applicable to all grants 
authorized by section 319 of the Public Health Service Act (42 U.S.C. 
247d).



Sec. 56.102  Definitions.

    As used in this part:
    (a) Act means the Public Health Service Act (42 U.S.C. 201 et seq.), 
as amended.
    (b)(1) Agriculture means farming in all its branches, including--
    (i) Cultivation and tillage of the soil;
    (ii) The production, cultivation, growing, and harvesting of any 
commodity grown on, in, or as an adjunct to or part of a commodity grown 
in, or on, the land; and
    (iii) Any practice (including preparation and processing for market 
and delivery to storage or to market or to carriers for transportation 
to market) performed by a farmer or on a farm incident to or in 
conjunction with an activity described in subsection (ii).
    (c) Catchment area means the geographic area served by a project 
funded under section 319 of the Act.
    (d) Environmental health services means the detection and 
alleviation of unhealthful conditions of the environment of the persons 
served by the project, such as problems associated with water supply, 
sewage treatment, solid waste disposal, rodent and parasite infestation, 
field sanitation, and housing conditions and the treatment of medical 
conditions arising therefrom. For the purposes of this part, the 
detection and alleviation of unhealthful conditions of the environment 
includes the notification of appropriate Federal, State, or local 
authorities responsible for correcting such conditions and the making of 
arrangements therefor with such authorities.
    (e) Health professionals means professionals (such as physicians, 
dentists, nurses, podiatrists, optometrists, and physicians' extenders) 
who are engaged in the delivery of health services and who meet all 
applicable Federal or State requirements to provide their professional 
services.
    (f) High impact area means a catchment area which has not less than 
6,000 migratory agricultural workers, seasonal agricultural workers, and 
members of the families of such workers residing within its boundaries 
for more than two months in the most recent calendar year for which 
statistical data acceptable to the Secretary is available.
    (g)(1) Migrant health center means an entity which either through 
its staff and supporting resources or through contracts or cooperative 
arrangements with other public or private entities provides for 
migratory agricultural workers, seasonal agricultural workers, and the 
members of the families of such workers, within its catchment area:
    (i) Primary health services;
    (ii) As determined by the Secretary to be appropriate for particular 
centers, supplemental health services necessary for the adequate support 
of primary health services;
    (iii) Referral to providers of supplemental health services and 
payment, as determined by the Secretary to be appropriate and feasible, 
for the provision of such services;
    (iv) Environmental health services, as determined by the Secretary 
to be appropriate for particular centers;
    (v) As determined by the Secretary to be appropriate for particular 
centers, infectious and parasitic disease screening and control 
services;
    (vi) As determined by the Secretary to be appropriate for particular 
centers, accident prevention programs, including prevention of excessive 
exposure to pesticides through, but not limited to, notification of 
appropriate Federal, State or local authorities of hazardous conditions 
due to pesticide use; and
    (vii) Information on the availability and proper use of health 
services.
    (2) For purposes of paragraph (g)(1) of this section, the provision 
of a given service by a center will be determined by the Secretary to be 
appropriate where

[[Page 245]]

    (i) There is a need, as determined by the Secretary, for the 
provision of such service to individuals described in paragraph (g)(1) 
of this section in the catchment area; and
    (ii) The provision of such service by the center is feasible, taking 
into consideration the center's projected revenues, other resources, and 
grant support under this part.
    (h) Migratory agricultural worker means an individual whose 
principal employment is in agriculture on a seasonal basis, who has been 
so employed within the last 24 months, and who establishes for the 
purpose of such employment a temporary place of abode;
    (i) Nonprofit, as applied to any private agency, institution, or 
organization, means one which is a corporation or association, or is 
owned and operated by one or more corporations or associations, no part 
of the net earnings of which inures, or may lawfully inure, to the 
benefit of any private shareholder or individual.
    (j) Physician means a licensed doctor of medicine or doctor of 
osteopathy.
    (k) Primary care means preventive, diagnostic, treatment, 
consultant, referral, and other services rendered by physicians 
(including, as appropriate, physicians' extenders), routine associated 
laboratory services and diagnostic radiologic services, and emergency 
health services.
    (l) Primary health services means:
    (1) Diagnostic, treatment, consultative referral, and other services 
rendered by physicians and, where feasible, by physicians' extenders, 
such as physicians' assistants, nurse clinicians, and nurse 
practitioners;
    (2) Diagnostic laboratory services and diagnostic radiologic 
services;
    (3) Preventive health services, including children's eye and ear 
examinations, prenatal and post-partum care, perinatal services, well 
child care (including periodic screening), immunizations, and voluntary 
family planning services;
    (4) Emergency medical services, including provision, through clearly 
defined arrangements, for access of users of the center to health care 
for medical and dental emergencies during and after the center's 
regularly scheduled hours;
    (5) Transportation services as needed for adequate patient care, 
sufficient so that residents of the catchment area served by the center 
with special difficulties of access to services provided by the center 
receive such services; and
    (6) Preventive dental services provided by a licensed dentist or 
other qualified personnel, including--
    (i) Oral hygiene instruction;
    (ii) Oral prophylaxis, as necessary; and
    (iii) Topical application of fluorides, and the prescription of 
fluorides for systemic use when not available in the community water 
supply.
    (m) Seasonal agricultural worker means an individual whose principal 
employment is in agriculture on a seasonal basis and who is not a 
migratory agricultural worker.
    (n) 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.
    (o) Supplemental health services means health services which are not 
included as primary health services and which are:
    (1) Inpatient and outpatient hospital services;
    (2) Home health services;
    (3) Extended care facility services;
    (4) Rehabilitative services (including physical and occupational 
therapy) and long-term physical medicine;
    (5) Mental health services, including services of psychiatrists, 
psychologists, and other appropriate mental health professionals;
    (6) Dental services other than those provided as primary health 
services;
    (7) Vision services, including routine eye and vision examinations 
and provision of eyeglasses, as appropriate and feasible;
    (8) Allied health services;
    (9) Pharmaceutical services, including the provision of prescription 
drugs;
    (10) Therapeutic radiologic services;
    (11) Ambulatory surgical services;
    (12) Public health services (including nutrition education and 
social services);
    (13) Health education services; and
    (14) Services including the services of outreach workers, which 
promote and

[[Page 246]]

facilitate optimal use of primary health services and services referred 
to in the preceding subparagraphs of this paragraph and, if a 
substantial number of individuals in the population served by the center 
are of limited English-speaking ability, the services of outreach 
workers and other personnel fluent in the language or languages spoken 
by such individuals.



Sec. 56.103  Eligibility.

    Any public or nonprofit private entity is eligible to apply for a 
grant under this part.



Sec. 56.104  Application.

    (a) An application for a grant under this part shall be submitted to 
the Secretary at such time and in such form and manner as the Secretary 
may prescribe.
    (b) The application shall contain a budget and narrative plan of the 
manner in which the applicant intends to conduct the project and carry 
out the requirements of this part. The application must describe how and 
the extent to which the project has met, or plans to meet, each of the 
requirements in subpart B (relating to grants for planning and 
development of migrant health centers), subpart C (relating to grants 
for the operation of migrant health centers), subpart D (relating to 
grants for the operation of migrant health entities), subpart E 
(relating to grants for planning and developing migrant health 
programs), subpart F (relating to grants for the operation of migrant 
health programs), or subpart G (relating to grants for technical 
assistance), as applicable. In addition, applications must include:
    (1) A statement of specific, measurable objectives and the methods 
to be used to assess the achievement of the objectives in specified time 
periods and at least on an annual basis.
    (2) The precise boundaries of the catchment area to be served by the 
applicant. In addition, the application shall include information 
sufficient to enable the Secretary to determine that the applicant's 
catchment area meets the following criteria:
    (i) The size of such area is such that the services to be provided 
by the applicant are available and accessible to the residents of the 
area promptly and as appropriate;
    (ii) The boundaries of such area conform, to the extent practicable, 
to relevant boundaries of political subdivisions, school districts, and 
areas served by Federal and State health and social service programs; 
and
    (iii) The boundaries of such area eliminate, to the extent possible, 
barriers resulting from the area's physical characteristics, its 
residential patterns, its economic and social groupings, and available 
transportation.
    (3)(i) The number of migratory agricultural workers and members of 
their families, and seasonal agricultural workers and members of their 
families which resided in the project's catchment area in the most 
recent calendar year for which statistical data acceptable to the 
Secretary is available; and
    (ii) The approximate period or periods of residence of all groups of 
migratory agricultural workers and their families counted under 
paragraph (b)(3)(i) of this section.
    (4) The results of an assessment of the need that the population to 
be served has for the services to be provided by the project (or in the 
case of applications for planning and development projects, the methods 
to be used in assessing such need), taking into consideration the 
following factors:
    (i) Available health resources in relation to size of the catchment 
area and population of migratory and seasonal agricultural workers and 
their families in such area, including appropriate ratios of primary 
care physicians in general or family practice, internal medicine, 
pediatrics, or obstetrics and gynecology, to such population;
    (ii) Health indices for such population, such as infant mortality 
rate;
    (iii) Economic factors affecting such population's use of health 
services, such as percentage of such population with incomes below the 
poverty level;
    (iv) Demographic factors affecting such population's need and demand 
for health services, such as percentage of such population age 65 and 
over; and
    (v) Special factors of access resulting from the conditions of 
employment of

[[Page 247]]

such workers (including working hours, housing, and sanitation).
    (5) Position descriptions for personnel who will be utilized in 
carrying out the activities of the project and a statement indicating 
the need for the positions to be supported with grant funds to 
accomplish the objectives of the project.
    (6) Letters and other forms of evidence showing that efforts have 
been made to secure financial and professional assistance and support 
for the project within the proposed catchment area and the continuing 
involvement of the community in the development and operation of the 
project.
    (7) An assurance that an independent certified public accountant 
will be engaged to certify that the project's system for the management 
and control of its finances will be in accord with sound financial 
management practices, including applicable Federal requirements.
    (8) A list of all services proposed to be provided by the project.
    (9) A list of services which are to be provided directly by the 
project through its own staff and resources and a description of any 
contractual or other arrangements (including copies of documents, where 
available) entered into, or planned for the provision of services.
    (10) The schedule of fees and/or payments and schedule of discounts 
for services provided by the project.
    (11) If the applicant provides services to populations other than 
migratory and seasonal agricultural workers and their families, 
identification of such populations.

    Note: Funds granted under this part and non-Federal funds required 
to be expended by the project as a condition of any such grant may not 
be used to provide services to individuals who are not migratory or 
seasonal agricultural workers or members of the families of such 
workers.

    (12) Evidence that all applicable requirements for review and/or 
approval of the application under title XV of the Act have been met.
    (13) An assurance that the project will be conducted in accordance 
with the applicable requirements of this part.
    (c) The application must be executed by an individual authorized to 
act for the applicant and to assume on behalf of the applicant the 
obligations imposed by the statute, the applicable regulations of this 
part, and any additional conditions of the grant.

(Sec. 215, Public Health Service Act, 58 Stat. 690, 67 Stat. 631 (42 
U.S.C. 216); sec. 329, Public Health Service Act, 95 Stat. 569 (42 
U.S.C. 254b)).

[42 FR 60406, Nov. 25, 1977, as amended at 48 FR 29202, June 24, 1983; 
48 FR 45559, Oct. 6, 1983]



Sec. 56.105  Accord with health planning.

    A grant may be made under this part only if the applicable 
requirements of title XV of the Act relating to review and approval by 
the appropriate health planning agencies have been met.



Sec. 56.106  Amount of grant.

    (a) The amount of any award under this part will be determined by 
the Secretary on the basis of his estimate of the sum necessary for a 
designated portion of direct project costs plus an additional amount for 
indirect costs, if any, which will be calculated by the Secretary 
either:
    (1) On the basis of the estimate of the actual indirect costs 
reasonably related to the project; or
    (2) On the basis of a percentage of all, or a portion of, the 
estimated direct costs of the project when there are reasonable 
assurances that the use of such percentage will not exceed the 
approximate actual indirect costs. Such award may include an estimated 
provisional amount for indirect costs or for designated direct costs 
(such as fringe benefit rates) subject to upward (within the limits of 
available funds) as well as downward adjustments to actual costs when 
the amount properly expended by the grantee for provisional items has 
been determined by the Secretary: Provided, however, That no grant shall 
be made for an amount in excess of the total costs found necessary by 
the Secretary to carry out the project.
    (i) In determining the percentage of project costs to be borne by 
the grantee, factors which the Secretary will take into consideration 
will include the following:

[[Page 248]]

    (A) The ability of the grantee to finance its share of project costs 
from non-Federal sources;
    (B) The need in the area served by the project for the services to 
be provided; and
    (C) The extent to which the project will provide services in an 
innovative manner which the Secretary desires to stimulate in the 
interest of developing more effective health service delivery systems on 
a regional or national basis.
    (ii) At any time after approval of an application under this part, 
the Secretary may retroactively agree to a percentage of project costs 
to be borne by the grantee lower than that determined pursuant to 
paragraph (a)(2)(i) of this section where he finds that changed 
circumstances justify a smaller contribution.
    (iii) In determining the grantee's share of project costs, costs 
borne by Federal grant funds, or costs used to match other Federal 
grants, may not be included except as otherwise provided by law or 
regulations.
    (b) All grant awards shall be in writing, and shall set forth the 
amount of funds granted and the period for which support is recommended.
    (c) Neither the approval of any project nor any grant award, shall 
commit or obligate the United States in any way to make any additional, 
supplemental, continuation, or other award with respect to any approved 
project or portion thereof. For continuation support, grantees must make 
separate application.



Sec. 56.107  Priorities for grants.

    (a) Grants under sections 319(c) (1)(A), 319(d)(1)(A), 319(d)(1)(B) 
of the Act and subparts B, C, and D of this part shall be made in 
accordance with the following priorities:
    (1) Highest priority will be given to approvable applications which 
propose to serve catchment areas in which 6,000 or more migratory 
agricultural workers and members of their families reside for more than 
two months in the calendar year.
    (2) Second priority will be given to approvable applications which 
propose to serve catchment areas in which fewer than 6,000 but more than 
1,000 migratory agricultural workers and members of their families 
reside for more than two months in the applicable calendar year.
    (3) Third priority will be given to approvable applications which 
propose to serve catchment areas in which migratory agricultural workers 
and members of their families reside but in which fewer than 1,000 such 
persons reside for more than two months in the applicable calendar year.
    (4) Fourth priority will be given to approvable applications which 
propose to serve catchment areas in which migratory agricultural workers 
and members of their families reside in the applicable calendar year but 
in which no such persons reside for more than two months in such year.
    (5) Fifth priority will be given to approvable applications which 
propose to serve catchment areas in which no migratory agricultural 
workers or members of their families reside for any period in the 
applicable calendar year but in which 6,000 or more seasonal 
agricultural workers and the members of their families reside.
    (6) Lowest priority will be given to approvable applications which 
propose to serve catchment areas in which no migratory agricultural 
workers or members of their families reside for any period in the 
applicable calendar year and in which fewer than 6,000 seasonal 
agricultural workers and the members of their families reside.
    (b) Grants under sections 319(c) (1)(B) and 319(d)(1)(C) of the Act 
and subparts E and F of this part will be made in accordance with 
priorities set forth in paragraphs (a)(2) through (a)(6) of this 
section, in the order set forth.
    (c) For the purposes of this section, the applicable calendar year 
will be the calendar year for which data is provided in accordance with 
Sec. 56.104(b)(3) of this subpart.



Sec. 56.108  Use of grant funds.

    (a) Any funds granted pursuant to this part, as well as other funds 
to be used in performance of the approved project, may be expended 
solely for carrying out the approved project in accordance with section 
319 of the Act, the applicable regulations of this part, the terms and 
conditions of the award,

[[Page 249]]

and the applicable cost principles prescribed in subpart Q of 45 CFR 
part 74.
    (b) Project funds awarded under this part may be used for, but need 
not be limited to, the following:
    (1) The costs of acquiring and modernizing existing buildings 
(including the costs of amortizing the principal of, and paying interest 
on, loans), but only in accordance with subpart H of this part and as 
approved in the grant award;
    (2) The costs of obtaining technical assistance to develop and 
improve the management or service capability of the project but only as 
approved by the Secretary;
    (3) To reimburse members of the grantee's governing board 
established pursuant to Sec. 56.304 of subpart C, or advisory council 
established pursuant to Sec. 56.603(q) of subpart F, if any, for 
reasonable expenses actually incurred by reason of their participation 
in the activities of such board or council;
    (4) To reimburse such governing board or advisory council members 
who are individuals eligible to be served by the project for wages lost 
by reason of participation in the activities of such board or council;
    (5) The cost of delivering health services to migratory agricultural 
workers, seasonal agricultural workers and the members of their families 
within the project's catchment area, within the following limitations: 
grant funds may be used to pay the full cost of project services to such 
individuals and families with annual incomes at or below those set forth 
in the most recent ``CSA Income Poverty Guidelines'' (45 CFR 1060.2) 
issued by the Community Services Administration, and to pay the portion 
of the cost of services provided in accordance with the schedule of 
discounts which, under such schedule, is uncompensated; Provided, That
    (i) Charges will be made to such individuals and families in 
accordance with Sec. 56.303(f) of subpart C or Sec. 56.603(e) of 
subpart F, as applicable;
    (ii) Reasonable effort shall be made to collect such charges under a 
billing and collections system; and
    (iii) The charge to grant funds shall exclude any amounts collected 
pursuant to paragraph (b)(5)(ii) of this section;
    (6) The cost of insurance for medical emergency and out-of-area 
coverage; and
    (7) The cost of providing to the staff and governing board, if any, 
of the project training related to the management of an ambulatory care 
facility, and to the staff of a project funded under subpart C, D, or F 
of this part, training related to the provision of primary, supplemental 
and environmental health services provided or to be provided by the 
project, consistent with the applicable requirements of 45 CFR part 74.
    (c) Prior approval by the Secretary of revisions of the budget and 
project plan is required whenever there is to be a significant change in 
the scope or nature of project activities.



Sec. 56.109  Grant payments.

    The Secretary shall from time to time make payments to a grantee of 
all or a portion of any grant award, either in advance or by way of 
reimbursement for expenses incurred or to be incurred, to the extent he 
determines such payments necessary to promote prompt initiation and 
advancement of the approved project.



Sec. 56.110  Nondiscrimination.

    (a) Attention is called to the requirements of title VI of the Civil 
Rights Act of 1964 (78 Stat. 252, 42 U.S.C. 2000d et seq.) and in 
particular section 601 of such Act which provides that no person in the 
United States shall on the grounds of race, color, or national origin be 
excluded from participation in, be denied the benefits of, or be 
subjected to discrimination under any program or activity receiving 
Federal financial assistance. A regulation implementing such title VI, 
which applies to grants made under this part, has been issued by the 
Secretary of Health and Human Services with the approval of the 
President (45 CFR part 80). In addition, no person shall, on the grounds 
of age, sex, creed, or marital status (unless otherwise medically 
indicated), be excluded from participation in, be denied the benefits 
of, or be subjected to discrimination under any program or activity so 
receiving Federal financial assistance.

[[Page 250]]

    (b) Attention is called to the requirements of section 504 of the 
Rehabilitation Act of 1973, as amended, which provides that no otherwise 
qualified handicapped individual in the United States shall, solely by 
reason of his handicap, be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under any program or 
activity receiving Federal financial assistance.



Sec. 56.111  Confidentiality.

    All information as to personal facts and circumstances obtained by 
the project staff about recipients of services shall be held 
confidential and shall not be divulged without the individual's consent 
except as may be required by law or as may be necessary to provide 
service to the individual or to provide for medical audits by the 
Secretary or his designee with appropriate safeguards for 
confidentiality of patient records. Otherwise, information may be 
disclosed only in summary, statistical, or other form which does not 
identify particular individuals.



Sec. 56.112  Publications and copyright.

    Except as may otherwise be provided under the terms and conditions 
of the award, the grantee may copyright without prior approval any 
publications, films, or similar materials developed or resulting from a 
project supported by a grant under this part, subject, however, to a 
royalty-free, non-exclusive, and irrevocable license or right in the 
Government to reproduce, translate, publish, use, disseminate, and 
dispose of such materials and to authorize others to do so.



Sec. 56.113  Grantee accountability.

    (a) Accounting for grant award payments. All payments made by the 
Secretary shall be recorded by the grantee in accounting records 
separate from the records of all other funds, including funds derived 
from other grant awards. With respect to each approved project, the 
grantee shall account for the sum total of all amounts paid as well as 
other funds and in-kind contributions by presenting or otherwise making 
available evidence satisfactory to the Secretary of expenditures for 
direct and indirect costs meeting the requirements of this part: 
Provided, however, That when the amount awarded for indirect costs was 
based on a predetermined fixed-percentage of estimated direct costs, the 
amount allowed for indirect costs shall be computed on the basis of such 
predetermined fixed-percentage rates applied to the total, or a selected 
element thereof, of the reimbursable direct costs incurred.
    (b) Accounting for interest earned on grant funds. Pursuant to 
section 203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 
4213), a State will not be held accountable for interest earned on grant 
funds, pending their disbursement for grant purposes. A State, as 
defined in section 102 of the Intergovernmental Cooperation Act, means 
any one of the several States, the District of Columbia, Puerto Rico, 
any territory or possession of the United States, or any agency or 
instrumentality of a State, but does not include the government of the 
political subdivisions of the State. All grantees other than a State, as 
so defined, must return all interest earned on grant funds to the 
Federal Government.
    (c) Grant closeout--(1) Date of final accounting. A grantee shall 
render, with respect to each approved project, a full account, as 
provided herein, as of the date of the termination of grant support. The 
Secretary may require other special and periodic accounting.
    (2) Final settlement. There shall be payable to the Federal 
Government as final settlement with respect to each approved project, 
the sum of:
    (i) Any amount not accounted for pursuant to paragraph (a) of this 
section;
    (ii) Any credits for earned interest pursuant to paragraph (b) of 
this section;
    (iii) Any other amounts due pursuant to subparts F, M, and O of 45 
CFR part 74.

Such total sum shall constitute a debt owed by the grantee to the 
Federal Government and shall be recovered from the grantee or its 
successors or assignees by setoff or other action as provided by law.

[[Page 251]]



Sec. 56.114  Applicability of 45 CFR part 74.

    The provisions of 45 CFR part 74, establishing uniform 
administrative requirements and cost principles, shall apply to all 
grants under this part to States and local governments as those terms 
are defined in subpart A of that part 74. The relevant provisions of the 
following subparts of part 74 shall also apply to grants to all other 
grantee organizations under this part:

                             45 CFR Part 74

Subpart
A General.
B Cash depositories.
C Bonding and insurance.
D Retention and custodial requirements for records.
F Grant-related income.
G Matching and cost sharing.
K Grant payment requirements.
L Budget revision procedures.
M Grant closeout, suspension, and termination.
O Property.
Q Cost principles.



   Subpart B_Grants for Planning and Developing Migrant Health Centers



Sec. 56.201  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part, are applicable to grants awarded pursuant to 
section 319(c)(1)(A) of the Act for projects for planning and developing 
migrant health centers in high impact areas.



Sec. 56.202  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
56.104 of subpart A of this part, contain information sufficient to 
enable the Secretary to determine that the project for which the grant 
is sought will meet the requirements of this part.



Sec. 56.203  Project elements.

    A project for planning and developing a migrant health center 
supported under this subpart must:
    (a) Determine (by survey or other appropriate means) the approximate 
number of (1) migratory agricultural workers and the members of their 
families, and (2) seasonal agricultural workers and the members of their 
families, within the proposed catchment area in the calendar year in 
which the grant is made and the period of time these workers and their 
families reside in the catchment area during such year.
    (b) Prepare an assessment of the need of the population proposed to 
be served by the migrant health center for the services set forth in 
Sec. 56.102(g)(1) of subpart A of this part. This assessment of need 
must, at a minimum, include the factors listed in Sec. 56.104(b)(3) 
(i)-(iv).
    (c) Design a migrant health center program for such population, 
based on the assessment prepared pursuant to paragraph (b) of this 
section which indicates in detail how the proposed center will fulfill 
the needs identified in that assessment and meet the requirements of 
subpart C of this part.
    (d) Develop a plan for the implementation of the program designed 
pursuant to paragraph (c) of this section. This implementation plan must 
provide for the time-phased recruitment and training of the personnel 
essential for the operation of a migrant health center and the gradual 
assumption of operational status of the project so that the project 
will, in the judgment of the Secretary, meet the requirements contained 
in subpart C of this part by the end of the project period.
    (e) Implement the plan developed pursuant to paragraph (d) of this 
section in accordance with such paragraph.
    (f) Make efforts to secure within the proposed catchment area of 
such center, to the extent possible, financial and professional 
assistance and support for the project.
    (g) Initiate and encourage continuing community involvement in the 
development and operation of the project through, for example, 
contributions or loans of cash, services, equipment, full-or part-time 
staff, space, materials, or facilities.
    (h) Provide for sufficient staff, qualified by training and 
experience, to carry out the project and establish standards and 
qualifications for personnel (including the project director).

[[Page 252]]

    (i) Utilize, to the maximum extent feasible, other Federal, State, 
local, and private resources available for support of the project, prior 
to use of project funds under this subpart.
    (j) Provide the means for evaluating the project's progress in 
achievement of its specific objectives, and submit such progress reports 
on the project as the Secretary may from time to time request.



Sec. 56.204  Grant evaluation and award.

    (a) Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which, in his judgment, will provide 
needed health services in a catchment area which will not be served by 
another project funded under this part and meet the applicable 
requirements of section 319(c)(1)(A) of the Act and this part, in 
accordance with priorities established pursuant to section 319(b) of the 
Act and Sec. 56.107 of subpart A of this part; Provided, That in the 
case of applicants which propose to serve substantially the same 
catchment areas or where available funds are insufficient to fund all 
approvable applications within a priority category specified in Sec. 
56.107,
    (1) Priority shall be given to applications submitted by community-
based organizations which are representative of the population to be 
served by the project. For purposes of this paragraph, an applicant 
shall be deemed to be such an organization if it provides a formal 
mechanism (such as membership on the organization's governing body or 
membership on an advisory body) which gives migratory seasonal 
agricultural workers and their families significant involvement in the 
formulation of the organization's policies; and
    (2) Where all such applicants are community-based organizations 
representative of the population to be served by the project, the 
Secretary shall award the grant to the applicants which will, in his 
judgment, best promote the purposes of section 319(c)(1)(A) of the Act 
and the applicable regulations of this part, taking into account with 
respect to each application:
    (i) The degree to which the proposed project satisfactorily provides 
for the elements set forth in Sec. 56.203;
    (ii) The administrative and management capability of the applicant;
    (iii) The extent to which community resources will be utilized in 
the project; and
    (iv) The degree to which the applicant intends to integrate services 
supported by a grant under this part with health services provided under 
other federally assisted health services or reimbursement programs or 
projects.
    (b) The Secretary shall award no more than two grants under this 
subpart for the same project.



          Subpart C_Grants for Operating Migrant Health Centers



Sec. 56.301  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part, are applicable to grants awarded pursuant to 
section 319(d)(1)(A) of the Act for the costs of operation of migrant 
health centers in high impact areas.



Sec. 56.302  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
56.104 of subpart A of this part,
    (a) Be submitted by an entity (which may be a co-applicant) which 
the Secretary determines is a migrant health center, and
    (b) Contain information sufficient to enable the Secretary to 
determine that the center will meet the requirements of this part.



Sec. 56.303  Project elements.

    A migrant health center supported under this subpart must:
    (a) Provide the health services of the center so that such services 
are available and accessible promptly, as appropriate, and in a manner 
which will assure continuity of service to the migratory and seasonal 
agricultural workers and their families within the center's catchment 
area.
    (b) Implement a system for maintaining the confidentiality of 
patient

[[Page 253]]

records in accordance with the requirements of Sec. 56.111 of subpart A 
of this part.
    (c) Have an ongoing quality assurance program which provides for the 
following:
    (1) Organizational arrangements, including a focus of 
responsibility, to support the quality assurance program and the 
provision of high quality patient care;
    (2) Periodic assessment of the appropriateness of the utilization of 
services and the quality of services provided or proposed to be provided 
by the center, and by other providers through contract or other 
cooperative arrangement with the center. Such assessments must:
    (i) Be conducted by physicians or by other appropriate health 
professionals under the supervision of physicians or, as appropriate, by 
health professionals who are peers of the health professionals who 
provided the services;
    (ii) Be based on the systematic collection and evaluation of patient 
records; and
    (iii) Identify and document the necessity for change in the 
provision of services by the center and result in the institution of 
such change, where indicated.
    (d) Develop management and control systems which are in accordance 
with sound financial management procedures, including the provision for 
an audit (1) conducted in accordance with the ``Guide for Audits of 
Migrant Health Grants'' of the DHHS Audit Agency, and (2) conducted with 
reasonable frequency, usually annually but not less frequently than 
every two years (unless waived for cause by the Secretary), to be made 
by qualified individuals who are sufficiently independent of those who 
authorize the expenditure of Federal funds to produce unbiased opinions, 
conclusions, or judgments, and to determine, at a minimum, the fiscal 
integrity of grant financial transactions and reports, and compliance 
with the applicable regulations of this part and the terms and 
conditions of the grant.
    (e) Where the cost of care and services furnished by or through the 
center is to be reimbursed under title XIX or title XX of the Social 
Security Act, obtain or make every reasonable effort to obtain a written 
agreement with the title XIX or title XX State agency for such 
reimbursement.
    (f) Have prepared a schedule of fees or payments for the provision 
of its services designed to cover its reasonable costs of operation and 
a corresponding schedule of discounts adjusted on the basis of the 
patient's ability to pay. The schedule of discounts must provide for a 
full discount to individuals and families with annual incomes at or 
below those set forth in the most recent CSA Poverty Income Guidelines 
(42 CFR 1060.2) (except that nominal fees for service may be collected 
from such individuals and families) and for no discount to individuals 
and families with annual incomes greater than twice those set forth in 
such Guidelines.
    (g) Make every reasonable effort, including the establishment of 
systems for eligibility determination, billing, and collection, to
    (1) Collect reimbursement for its costs in providing health services 
to persons who are entitled to insurance benefits under title XVIII of 
the Social Security Act, to medical assistance under a State plan 
approved under title XIX of such Act, to social services and family 
planning under title XX of such Act, or to assistance for medical 
expenses under any other public assistance program, grant program, or 
private health insurance or benefit program on the basis of the schedule 
of fees prepared pursuant to paragraph (f) of this section without 
application of any discounts, and
    (2) Secure from patients payments for services in accordance with 
the schedule of fees and discounts required by paragraph (f) of this 
section.
    (h) Have a governing board which meets the requirements of Sec. 
56.304.
    (i) Have developed an overall plan and budget for the center that:
    (1) Provides for an annual operating budget and a three-year 
financial management plan which includes all anticipated income and 
expenses related to items which would, under generally accepted 
accounting principles, be considered income and expense items;
    (2) Provides for a capital expenditure plan for at least a three-
year period

[[Page 254]]

(including the year to which the operating budget described in paragraph 
(h)(i)(1) is applicable) which includes and identifies in detail the 
anticipated sources of financing for, and the objective of, each 
anticipated expenditure in excess of $100,000 related to the acquisition 
of land, the improvement of land, buildings, and equipment and the 
replacement, modernization and expansion of buildings and equipment 
which would, under generally accepted accounting principles, be 
considered capital items;
    (3) Provides for plan review and updating at least annually; and
    (4) Is prepared under the direction of the governing board by a 
committee consisting of representatives of the governing board, the 
administrative staff, and the medical staff, if any, of the center.
    (j) Establish basic statistical data, cost accounting, management 
information, and reporting or monitoring systems which will enable the 
center to provide such statistics and other information as the Secretary 
may reasonably require relating to the center's costs of operation, 
patterns of utilization of services, and the availability, 
accessibility, and acceptability of its services, and to make such 
reports to the Secretary in a timely manner with such frequency as the 
Secretary may reasonably require.
    (k) Review its catchment area annually to insure that the criteria 
set out in Sec. 56.104(b)(2) are met and, if criteria are not met, 
revise its catchment area, with the approval of the Secretary, to 
conform with such criteria to the extent feasible.
    (l) In the case of a center which serves a population including a 
substantial proportion of individuals of limited English-speaking 
ability, have developed a plan and made arrangements responsive to the 
needs of such populations for providing services to the extent 
practicable in the language and cultural context most appropriate to 
such individuals, and have identified an individual on its staff who is 
fluent in both that language and in English and whose responsibilities 
include providing guidance to such individuals and to appropriate staff 
members with respect to cultural sensitivities and bridging linguistic 
and cultural differences. If more than one non-English language is 
spoken by such group or groups, an individual or individuals fluent in 
those languages and English must be so identified.
    (m) Be operated in a manner calculated to preserve human dignity and 
to maximize acceptability and effective utilization of services.
    (n) To the extent possible, coordinate and integrate project 
activities with the activities of other federally funded, as well as 
State and local, health services delivery projects and programs serving 
the same population.
    (o) Establish means for evaluating progress toward the achievement 
of the specific objectives of the project.
    (p) Provide sufficient staff, qualified by training and experience, 
to carry out the activities of the center.
    (q) Assure that facilities utilized in the performance of the 
project meet applicable fire and life safety codes.
    (r) Utilize, to the maximum extent feasible, other Federal, State 
and local, and private resources available for support of the project, 
prior to use of project funds under this part.
    (s) Provide for community participation through, for example, 
contributions of cash or services, loans of full- or part-time staff, 
equipment, space, materials, or facilities.
    (t) Where the center will provide services through contract or other 
cooperative arrangements with other providers of services, the center 
must:
    (1) Enter into the contract or arrangement only if the provider of 
services will provide the services in a timely manner and make the 
services accessible and acceptable to the population to be served;
    (2) Make payment for services so provided only pursuant to 
agreements with the providers in accordance with a schedule of rates and 
payment procedures established and maintained by the center. The center 
must be prepared to substantiate that such rates are reasonable and 
necessary;
    (3) Directly provide at least primary care unless the center has 
made arrangements for the provision of primary care which include 
transfer of all medical and financial information relating to such care 
to the center; and

[[Page 255]]

    (4) Enter into contracts or arrangements for the provision of 
primary health services only if alternative resources are reasonably 
available to provide these services in the event of termination of such 
arrangements.
    (u) Operate in a manner such that no migratory or seasonal 
agricultural worker or member of their family will be denied service by 
reason of his or her inability to pay therefor. Provided, however, That 
a charge for the provision of services will be made to the extent that a 
third party (including a Government agency) is authorized or is under 
legal obligation to pay such charges.



Sec. 56.304  Governing board.

    The governing board of the center must meet the following 
requirements:
    (a) Size. The board must consist of at least 9 but not more than 25 
members except that this provision may be waived by the Secretary for 
good cause shown.
    (b) Composition. (1) A majority of the board members must be 
migratory and seasonal agricultural workers and members of their 
families who are or will be served by the center and who, as a group, 
represent the individuals being or to be served in terms of demographic 
factors, such as race, ethnicity, and sex.
    (2) No more than two-thirds of the remaining members of the board 
may be individuals who derive more than 10 percent of their annual 
income from the health care industry.
    (3) The remaining members of the board must be representatives of 
the community in which the center's catchment area is located and shall 
be selected for their expertise in relevant subject areas, such as 
community affairs, local government, finance and banking, legal affairs, 
trade unions, and other commercial and industrial concerns, or social 
services within the community.
    (4) No member of the board shall be an employee of the center, or 
spouse or child, parent, brother or sister by blood of marriage of such 
an employee. The project director may be a nonvoting, ex-officio member 
of the board.
    (c) Selection of members. The method of selection must be prescribed 
in the by-laws or other internal governing rules of the center. Such by-
laws or other rules must specify a process of selection of individuals 
on the governing board who represent the population served or to be 
served by the center so that such individuals, as a group, are 
representative of such population. Such process of selection in the by-
laws or other rules is subject to approval by the Secretary.
    (d) Functions and responsibilities. (1) The governing board shall 
have authority for the establishment of policy in the conduct of the 
center.
    (2) The governing board shall hold regularly scheduled meetings, at 
least once each month, except for periods of the year, as specified in 
the bylaws, during which monthly meetings are not practical due to 
migration out of the catchment area.
    (3) Minutes must be kept for all regularly scheduled meetings of the 
board.
    (4) The governing board shall have specific responsibility for:
    (i) Approval of the selection and dismissal of the project director 
or chief executive officer of the center;
    (ii) Establishing personnel policies and procedures, including 
selection and dismissal procedures, salary and benefit scales;
    (iii) The development of bylaws which specify the responsibility of 
the board and principal operating officials of the centers;
    (iv) Adopting policy for financial management practices, including a 
system to assure accountability for center resources, approval of the 
annual project budget, center priorities, eligibility for services, 
including criteria for partial payment schedules, and long-range 
financial planning;
    (v) Evaluating center activities, including services utilization 
patterns, productivity of the center, patient satisfaction, achievement 
of project objectives, and development of a process for hearing and 
resolving patient grievances;
    (vi) Assuring that the center is operated in compliance with 
applicable Federal, State, and local laws and regulations; and

[[Page 256]]

    (vii) Adopting health care policies including scope and availability 
of services, location and hours of services, and quality assurance 
procedures.



Sec. 56.305  Grant evaluation and award.

    (a) Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which, in his judgment, will provide 
needed health services in a catchment area which will not be served by 
another project funded under this part and meet the applicable 
requirements of section 319(d)(1)(A) of the Act and this part, in 
accordance with priorities established pursuant to section 319(b) of the 
Act and Sec. 56.107 of subpart A of this part: Provided, That in the 
case of applicants which propose to serve substantially the same 
catchment area or where available funds are insufficient to fund all 
approvable applications within a priority category specified in Sec. 
56.107, the Secretary will award grants to the applicants which, in his 
judgment, will best promote the purpose of section 319(d)(1)(A) of the 
Act and the applicable regulations of this part, taking into account 
with respect to each application:
    (1) The extent to which the project would provide for the elements 
set forth in Sec. 56.303;
    (2) The capability of the applicant to provide quality health care 
services;
    (3) The soundness of the financial management plan for assuring 
effective utilization of grant funds and maximizing non-grant revenue;
    (4) The administrative and management capability of the applicant;
    (5) The capability of the applicant to provide primary health 
services directly. In evaluating the relative capability of the 
applicant to provide such services directly, the Secretary shall take 
into consideration whether the direct provision of such services is 
inappropriate because:
    (i) Provision of such services through contract or other arrangement 
would be more cost-effective;
    (ii) Provision of such services directly would unnecessarily 
duplicate existing resources; or
    (iii) Provision of such services other than directly would enhance 
the accessibility or acceptability of such services to the population to 
be served.
    (6) The degree to which the applicant intends to integrate services 
supported by a grant under this part with health services provided under 
other federally assisted health services or reimbursement programs or 
projects;
    (7) The extent that community resources will be utilized by the 
project; and
    (8) Consistent with the other requirements of this part, the degree 
to which and the manner in which the applicant provides specific health 
services which the Secretary has, through publication of a notice in the 
Federal Register, established as services which should receive emphasis 
by applicants.



         Subpart D_Grants for Operating Migrant Health Entities



Sec. 56.401  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part, are applicable to grants awarded pursuant to 
section 319(d)(1)(B) of the Act for the costs of operation of entities 
which intend to become migrant health centers and which provide health 
services to migratory agricultural workers, seasonal agricultural 
workers, and the members of their families in high impact areas.



Sec. 56.402  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
56.104 of subpart A of this part,
    (a) Be submitted by an entity which the Secretary determines intends 
to become a migrant health center but which will not, at the time of the 
grant award, meet one or more of the requirements of paragraphs (a) 
through (l) of Sec. 56.303 of subpart C of this part; and
    (b) Contain information sufficient to enable the Secretary to 
determine that the project for which the grant is sought will meet the 
requirements of this part. Such information must include a plan which 
identifies which requirements of Sec. 56.303 will not be met at

[[Page 257]]

the time of grant award and provides a timetable for and a detailed 
statement of the means to be employed in meeting those requirements.



Sec. 56.403  Project elements.

    A project for the operation of a migrant health entity supported 
under this subpart must:
    (a) Meet all of the requirements of Sec. 56.303 of this part, 
Provided, That the project will not be required to meet the requirements 
of paragraphs (c), (h), (i), or (n) of such section if the Secretary 
finds that meeting any such requirement is not feasible or practical at 
the time of grant award.
    (b) Provide those services enumerated in Sec. 56.102(g)(1) of 
subpart A of this part which are specified in the grant award.
    (c) Meet the requirements of Sec. 56.303 of subpart C of this part 
by the end of the period of support under section 319(d)(1)(B) of the 
Act and this subpart, in accordance with the plan submitted under Sec. 
56.402(b) of this subpart.



Sec. 56.404  Grant evaluation and award.

    (a) Within the limits of funds determined by the Secretary to be 
available for such purposes, the Secretary may award grants under this 
subpart to applicants therefor which, in his judgment, will provide 
needed health services in a catchment area not served by another project 
funded under this part and meet the applicable requirements of section 
319(d)(1)(B) of the Act and this part, in accordance with the priorities 
established pursuant to section 319(b) of the Act and Sec. 56.107 of 
subpart A of this part; Provided, That in the case of applicants which 
propose to serve substantially the same catchment area or where 
available funds are insufficient to fund all approvable applications 
within a priority category specified in Sec. 56.107, the Secretary will 
award the grant to the applicants which, in his judgment, will best 
promote the purposes of section 319(d)(1)(B) of the Act and the 
applicable regulations of this part, taking into account with respect to 
each application:
    (1) The degree to which the project would provide the services 
enumerated in Sec. 56.102(g)(1) and the feasibility of its providing 
all of such enumerated services by the end of the period of support 
under section 319(d)(1)(B) of the Act and this subpart;
    (2) The degree to which the applicant intends to integrate services 
supported by a grant under this subpart with health services provided 
under other federally assisted health service or reimbursement programs 
or projects;
    (3) The capability of the project to provide quality health care 
services;
    (4) The administrative and management capability of the applicant; 
and
    (5) The capability of the applicant to provide primary health 
services directly. In evaluating the relative capability of the 
applicant to provide such services directly, the Secretary shall take 
into consideration whether the direct provision of services is 
inappropriate because:
    (i) Provision of such services through contract or other arrangement 
would be more cost-effective;
    (ii) Provision of such services directly would unnecessarily 
duplicate existing resources; or
    (iii) Provision of the services other than directly would enhance 
the accessibility or acceptability of the services to the population 
served.
    (6) The extent to which community resources will be utilized by the 
project; and
    (7) Consistent with the other requirements of this part, the degree 
to which and the manner in which the applicant provides specific health 
services which the Secretary has, through publication of a notice in the 
Federal Register, established as services which should receive emphasis 
by applicants.
    (b) The Secretary shall:
    (1) Make no more than two grants for the same entity under section 
319(d)(1)(B) of the Act;
    (2) Not make any grant under section 319(d)(1)(B) to an entity 
which, for the same project, has been awarded more than one grant under 
section 319(c) of the Act;
    (3) Not make a grant under section 319(d)(1)(B) to an entity which 
has been awarded a grant under section 319(d)(1)(A) of the Act.

[[Page 258]]



  Subpart E_Grants for Planning and Developing Migrant Health Programs



Sec. 56.501  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part, are applicable to grants awarded pursuant to 
section 319(c)(1)(B) of the Act for projects to plan and develop migrant 
health programs to provide health services to migratory agricultural 
workers, seasonal agricultural workers and the members of their families 
in areas in which no migrant health center exists and in which not more 
than 6,000 migratory agricultural workers and their families reside for 
more than two months.



Sec. 56.502  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
56.104 of subpart A of this part,
    (a) Be submitted for a project within a catchment area which
    (1) Is not served, in whole or in part, by a migrant health center, 
and
    (2) Has not more than 6,000 migratory agricultural workers and 
members of their families residing therein for more than 2 months per 
year; and
    (b) Contain information sufficient to enable the Secretary to 
determine that the project for which the grant is sought will meet the 
requirements of this part.



Sec. 56.503  Project elements.

    A project for the planning and development of a migrant health 
program supported under this subpart must:
    (a) Determine (by survey or other appropriate means) the approximate 
number of
    (1) Migratory agricultural workers and the members of their 
families, and
    (2) Seasonal agricultural workers and the members of their families 
within the project's catchment area in the calendar year in which the 
grant is made and the period of time these workers and their families 
reside in the catchment area during such year.
    (b) Prepare an assessment of need of the population proposed to be 
served by the migrant health program for the services set forth in Sec. 
56.603(a) of subpart F of this part. This assessment of need must, at a 
minimum, consider the factors listed in Sec. 56.104(b)(3) (i)-(iv).
    (c) Design a migrant health program for such population, based on 
such assessment, which indicates in detail how the proposed program will 
fulfill the needs identified in that assessment and meet the 
requirements of subpart F of this part.
    (d) Develop a plan for the implementation of the program designed 
pursuant to paragraph (c) of this section. The implementation plan must 
provide for the time-phased recruitment and training of the personnel 
essential for the operation of a migrant health program and the gradual 
assumption of operational status of the project so that the project 
will, in the judgment of the Secretary, meet the requirements of subpart 
F of this part as of the end of the project period.
    (e) Implement the plan developed pursuant to paragraph (d) of this 
section in accordance with such paragraph.
    (f) Make efforts to secure within the proposed catchment area of 
such project, to the extent possible, financial and professional 
assistance and support for the project.
    (g) Initiate and encourage continuing community involvement in the 
development and operation of the project through, for example, 
contributions or loans of cash, services, equipment, full- or part-time 
staff, space, materials, or facilities.
    (h) Provide for sufficient staff, qualified by training and 
experience, to carry out the project and establish standards and 
qualifications for personnel (including the project director).
    (i) Utilize, to the maximum extent feasible, other Federal, State, 
local, and private resources available for support of the project, prior 
to use of project funds under this subpart.
    (j) Provide for the means of evaluating the project's progress in 
achievement of its specific objectives and submission of such progress 
reports on the project as the Secretary may from time to time request.

[[Page 259]]



Sec. 56.504  Grant evaluation and award.

    (a) Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which, in his judgment, will provide 
needed health services in a catchment area not served by another project 
funded under this part and meet the applicable requirements of section 
319(c)(1)(B) of the Act and this part, in accordance with priorities 
established pursuant to section 319(b) of the Act and Sec. 56.107 of 
subpart A of this part; Provided, That in the case of applicants which 
propose to serve substantially the same catchment areas or where 
available funds are insufficient to fund all approvable applications 
within a priority category specified in Sec. 56.107,
    (1) Priority shall be given to applications submitted by community-
based organizations which are representative of the population to be 
served by the project. For purposes of this paragraph, an applicant 
shall be deemed to be such an organization if it provides a formal 
mechanism (such as membership on the organization's governing body or 
membership on an advisory body) which gives migratory and seasonal 
agricultural workers and their families significant involvement in the 
formulation of the organization's policies; and
    (2) Where all such applicants are community-based organizations 
representative of the population to be served by the project, the 
Secretary shall award the grant to the applicants which will, in his 
judgment, best promote the purposes of section 319(c)(1)(B) of the Act 
and the applicable regulations of this part, taking into account with 
respect to each application:
    (i) The degree to which the proposed project satisfactorily provides 
for the elements set forth in Sec. 56.203;
    (ii) The administrative and management capability of the applicant;
    (iii) The extent to which community resources will be utilized in 
the project; and
    (iv) The degree to which the applicant intends to integrate services 
supported by a grant under this part with health services provided under 
other federally assisted health services or reimbursement programs or 
projects.
    (b) The Secretary shall award no more than one grant under this 
subpart for the same project.



         Subpart F_Grants for Operating Migrant Health Programs



Sec. 56.601  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part, are applicable to grants awarded pursuant to 
section 319(d)(1)(C) of the Act for projects for operating programs to 
provide health services to migratory agricultural workers, seasonal 
agricultural workers and the members of their families in areas in which 
no migrant health center exists and in which not more than 6,000 
migratory agricultural workers and their families reside for more than 
two months.



Sec. 56.602  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must, in addition to meeting the requirements of Sec. 
56.104 of subpart A of this part,
    (a) Be submitted for a project with a catchment area which
    (1) Is not served, in whole or in part, by a migrant health center, 
and
    (2) Has not more than 6,000 migratory agricultural workers and the 
members of their families residing therein for more than two months per 
year; and
    (b) Contain information sufficient to enable the Secretary to 
determine that the project for which the grant is sought will meet the 
requirements of this part.



Sec. 56.603  Project elements.

    A project for operating a migrant health program supported under 
this subpart must:
    (a) Provide to migratory and seasonal agricultural workers and the 
members of their families in its catchment area one or more of the 
following groups of services so that such services are available and 
accessible promptly as appropriate, and in a manner which will assure 
continuity of care, as approved by the Secretary and

[[Page 260]]

set forth (including specific services to be provided) in the grant 
award:
    (1) Emergency health care, including diagnostic and treatment 
services in an ambulatory health care setting or hospital and dental 
services for the alleviation of acute pain and suffering for medical 
emergencies, when provision of such services is necessary to avoid 
jeopardizing the patient's condition until appropriate services from 
other providers can reasonably be obtained;
    (2) Primary care;
    (3) Arrangements with existing health care facilities to furnish 
primary health services (other than primary care);
    (4) Other services set forth in Sec. 56.102(g)(1) which are needed 
to improve the health of such individuals.
    (b) Implement a system for maintaining the confidentiality of 
patient records in accordance with the requirement of Sec. 56.111 of 
subpart A of this part.
    (c) Develop management and control systems which are in accordance 
with sound financial management procedures, including the provision for 
an audit conducted in accordance with the DHHS Audit Agency Guide for 
Audits of Migrant Health Grants, as amended, on at least an annual basis 
(unless waived for cause by the Secretary), by an independent certified 
public accountant or public accountant licensed before December 31, 
1970, to determine, at a minimum, the fiscal integrity of grant 
financial transactions and reports and compliance with the regulations 
of this part and the terms and conditions of the grant.
    (d) When the cost of care and services furnished by or through the 
project is to be reimbursed under title XIX or title XX of the Social 
Security Act, obtain or make every reasonable effort to obtain a written 
agreement with the title XIX or title XX State agency for such 
reimbursement.
    (e) Have prepared a schedule of fees or payments for the provision 
of its services designed to cover its reasonable costs of operation and 
a corresponding schedule of discounts adjusted on the basis of the 
patient's ability to pay. The schedule of discounts must provide for a 
full discount to individuals and families with annual incomes at or 
below those set forth in the most recent CSA Poverty Income Guidelines 
(42 CFR 1060.2) (except that nominal fees for service may be collected 
from individuals and families with annual incomes at or below such 
levels if imposition of such fees is consistent with project goals) and 
for no discount to individuals and families with annual incomes greater 
than twice those set forth in the Guidelines.
    (f) Make every reasonable effort, including the establishment of 
systems for eligibility determination, billing, and collection, to
    (1) Collect reimbursement for its costs in providing health services 
to persons who are entitled to insurance benefits under title XVIII of 
the Social Security Act, to medical assistance under a State plan 
approved under title XIX of such Act, to social services and family 
planning under title XX of such Act, or to assistance for medical 
expenses under any other public assistance program, grant program, or 
private health insurance or benefit program on the basis of the schedule 
of fees prepared pursuant to paragraph (e) of this section without 
application of any discounts, and
    (2) Secure from patients payments for services in accordance with 
the schedule of fees and discounts required by paragraph (e) of this 
section.
    (g) Develop an overall financial management plan and an operating 
budget for the project which include and identify, in accordance with 
generally accepted accounting principles, all anticipated current income 
and expense items and capital income and expense items, if any.
    (h) Establish basic statistical data, cost accounting, management 
information, and reporting or monitoring systems which will meet the 
project's management needs and shall enable the project to provide such 
statistics and other information as the Secretary may reasonably require 
relating to the project's costs of operation, patterns of utilization of 
services, and the availability, accessibility, and acceptability of its 
services, and to make such reports to the Secretary in a timely manner 
with such frequency as the Secretary may reasonably require.

[[Page 261]]

    (i) Review its catchment area annually to insure that the criteria 
set out in Sec. 56.104(b)(2) are met and, where such criteria are not 
met, revise its catchment area, with the approval of the Secretary, to 
conform with such criteria to the extent feasible.
    (j) In the case of a project which serves a population including a 
substantial proportion of individuals of limited English-speaking 
ability, have a plan and made arrangements responsive to the needs of 
these populations for providing services to the extent practicable in 
the language and cultural context most appropriate to such individuals, 
and have identified an individual on its staff who is fluent in both 
that language and in English and whose responsibilities include 
providing guidance to such individuals and to appropriate staff members 
with respect to cultural sensitivities and bridging linguistic and 
cultural differences. If more than one non-English language is spoken by 
such group or groups, an individual or individuals fluent in those 
languages and English must be so identified.
    (k) Be operated in a manner calculated to preserve human dignity and 
to maximize acceptability and effective utilization of services.
    (l) To the extent possible, coordinate and integrate project 
activities with the activities of other federally funded, as well as 
State and local, health services delivery projects and programs serving 
the same population.
    (m) Establish means for evaluating progress toward the achievement 
of the specific objectives of the project.
    (n) Provide sufficient staff, qualified by training and experience, 
to carry out the activities of the project.
    (o) Assure that facilities utilized in the performance of the 
project meet applicable fire and life safety codes.
    (p) Utilize, to the maximum extent feasible, other Federal, State 
and local, and private resources available for support of the project, 
prior to use of project funds under this part.
    (q) Provide for community participation through, for example, 
contributions of cash or services, loans of full- or part-time staff, 
equipment, space, materials, or facilities, and, to the extent feasible, 
establishment of an advisory council to advise with respect to the 
overall management of the project including services to be provided, the 
manner of their provision, and appointment of personnel. The membership 
of such advisory council shall be representative of the population to be 
served in terms of appropriate demographic characteristics, such as 
race, sex, and ethnicity.
    (r) Where the project will provide services through contract or 
other cooperative arrangements with other providers of services, the 
project must
    (1) Enter into any such contract or arrangement only if the provider 
of services will provide the services in a timely manner and make the 
services accessible and acceptable to the population to be served; and
    (2) Make payment for services so provided in accordance with a 
schedule of rates and payment procedures established and maintained by 
the project. The project must be prepared to substantiate that such 
rates are reasonable and necessary.
    (s) Operate in a manner such that no migratory or seasonal 
agricultural worker or member of their families will be denied service 
by reason of his or her inability to pay therefor. Provided, however, 
That a charge for the provision of services will be made to the extent 
that a third party (including a Government agency) is authorized or is 
under legal obligation to pay such charges.
    (t) Have an ongoing quality assurance program as described in Sec. 
56.303(c) except as the Secretary finds that such a program would not be 
feasible.



Sec. 56.604  Grant evaluation and award.

    (a) Within the limit of funds determined by the Secretary to be 
available the Secretary may award grants under this subpart to 
applicants therefor which will, in his judgment, provide needed health 
services in a catchment area which will not be served by another project 
funded under this part and meet the applicable requirements of section 
319(d)(1)(C) of the Act and this subpart, in accordance with priorities 
established pursuant to section 319(b) of the Act and Sec. 56.107 of 
subpart A of this part; Provided, That in the case of applicants which 
propose to

[[Page 262]]

serve substantially the same catchment areas or where available funds 
are insufficient to fund all approvable applications within a priority 
category specified in Sec. 56.107,
    (1) Priority shall be given to applications submitted by community-
based organizations which are representative of the population to be 
served by the project. For purposes of this paragraph, an applicant 
shall be deemed to be such an organization if it provides a formal 
mechanism (such as membership on the organization's governing body or 
membership on an advisory body) which gives migratory seasonal 
agricultural workers and their families significant involvement in the 
formulation of the organization's policies; and
    (2) Where all such applicants are community-based organizations 
representative of the population to be served by the project, the 
Secretary shall award the grant to the applicants which will, in his 
judgment, best promote the purposes of section 319(d)(1)(C) of the Act 
and the applicable regulations of this part, taking into account with 
respect to each application:
    (i) The degree to which the proposed project satisfactorily provides 
for the elements set forth in Sec. 56.203;
    (ii) The administrative and management capability of the applicant;
    (iii) The extent to which community resources will be utilized in 
the project; and
    (iv) The degree to which the applicant intends to integrate services 
supported by a grant under this part with health services provided under 
other federally assisted health services or reimbursement programs or 
projects.



                Subpart G_Grants for Technical Assistance



Sec. 56.701  Applicability.

    The regulations of this subpart, in addition to the regulations of 
subpart A of this part except as otherwise set forth herein, are 
applicable to grants awarded pursuant to section 319(g) of the Act for 
the provision of technical and other non-financial assistance to 
grantees under sections 319(c)(1)(A), 319(d)(1)(A) and 319(d)(1)(B) of 
the Act.



Sec. 56.702  Application.

    To be approved by the Secretary under this subpart, an application 
for a grant must meet the requirements of Sec. Sec. 56.104(a), 
56.104(b) (1), (4), (7), (10), and (11), and 56.104(c) of subpart A of 
this part.



Sec. 56.703  Project elements.

    A project for the provision of technical assistance to migrant 
health centers and entities which intend to become migrant health 
centers which is supported under this subpart must:
    (a) Provide to such centers and entities as are specified in the 
grant award, such technical and other nonfinancial assistance (such as 
fiscal and program management assistance or training of the staff of 
such center or entity in such management) as may be specified in the 
grant award. Such technical or other nonfinancial assistance shall be 
designed to assist such centers and entities in:
    (1) Developing plans for becoming migrant centers; and/or
    (2) Meeting the requirements of sections 319(f)(2) of the Act.
    (b) Provide such assistance through its own staff or resources.
    (c) Where the project will provide training to the staff of a center 
or entity in management or the provision of health services, provide 
such training consistent, as applicable, with Sec. 56.108(b)(7).
    (d) Maintain such records and make such reports on the expenditure 
of funds under this subpart and provision of such assistance as the 
Secretary may require.



Sec. 56.704  Grant evaluation and award.

    Within the limits of funds determined by the Secretary to be 
available for such purpose, the Secretary may award grants under this 
subpart to applicants therefor which will, in his judgment, best promote 
the purposes of section 319(g) of the Act and applicable regulations of 
this part, taking into consideration:
    (a) The cost-effectiveness of the application; and
    (b) The number of centers and entities to be served by the 
applicant.

[[Page 263]]



      Subpart H_Acquisition and Modernization of Existing Buildings



Sec. 56.801  Applicability of 42 CFR part 51c, subpart E.

    The provisions of 42 CFR part 51c, subpart E, establishing 
requirements for the acquisition and modernization of existing 
buildings, shall apply to all grants under section 319 of the Act for 
project costs which include the cost of acquisition and/or modernization 
of existing buildings (including the cost of amortizing the principal 
of, and paying the interest on, loans); except that, for purposes of 
this subpart, references within subpart E to part 51c, or to subparts of 
part 51c, shall be deemed to be references to part 56, or to the 
appropriate subparts of part 56, and references to section 330 of the 
Act shall be deemed to be references to section 319 of the Act.

[43 FR 5353, Feb. 7, 1978]



PART 57_GRANTS FOR CONSTRUCTION OF TEACHING FACILITIES, EDUCATIONAL 

IMPROVEMENTS, SCHOLARSHIPS AND STUDENT LOANS--Table of Contents




Subparts A-B [Reserved]

               Subpart C_Health Professions Student Loans

Sec.
57.201 Applicability.
57.202 Definitions.
57.203 Application by school.
57.204 Payment of Federal capital contributions and reallocation of 
          funds remitted to the Secretary.
57.205 Health professions student loan funds.
57.206 Eligibility and selection of health professions student loan 
          applicants.
57.207 Maximum amount of health professions student loans.
57.208 Health professions student loan promissory note and disclosure 
          requirements.
57.209 Payment of health professions student loans.
57.210 Repayment and collection of health professions student loans.
57.211 Cancellation of health professions student loans for disability 
          or death.
57.212 [Reserved]
57.213 Continuation of provisions for cancellation of loans made prior 
          to November 18, 1971.
57.213a Loan cancellation reimbursement.
57.214 Repayment of loans made after November 17, 1971, for failure to 
          complete a program of study.
57.215 Records, reports, inspection, and audit.
57.216 What additional Department regulations apply to schools?
57.216a Performance standard.
57.217 Additional conditions.
57.218 Noncompliance.

                     Subpart D_Nursing Student Loans

57.301 Applicability.
57.302 Definitions.
57.303 Application by school.
57.304 Payment of Federal capital contributions and reallocation of 
          funds remitted to the Secretary.
57.305 Nursing student loan funds.
57.306 Eligibility and selection of nursing student loan applicants.
57.307 Maximum amount of nursing student loans.
57.308 Nursing student loan promissory note.
57.309 Payment of nursing student loans.
57.310 Repayment and collection of nursing student loans.
57.311 Cancellation of nursing student loans for disability or death.
57.312 Repayment of loans for service in a shortage area.
57.313 Loan cancellation for full-time employment as a registered nurse.
57.313a Loan cancellation reimbursement.
57.314 Repayment of loans made after November 17, 1971, for failure to 
          complete a program of study.
57.315 Records, reports, inspection, and audit.
57.316 What additional Department regulations apply to schools?
57.316a Performance standard.
57.317 Additional conditions.
57.318 Noncompliance.

     Subpart E_Grants for Construction of Nurse Training Facilities

57.409 Good cause for other use of completed facility.

Subparts F-O [Reserved]

     Subpart P_Loan Guarantees and Interest Subsidies to Assist in 
   Construction of Teaching Facilities for Health Profession Personnel

57.1501 Applicability.
57.1502 Definitions.
57.1503 Eligibility.

[[Page 264]]

57.1504 Application.
57.1505 Approval of applications.
57.1506 Priority.
57.1507 Limitations applicable to loan guarantee.
57.1508 Amount of interest subsidy payments; limitations.
57.1509 Forms of credit and security instruments.
57.1510 Security for loans.
57.1511 Opinion of legal counsel.
57.1512 Length and maturity of loans.
57.1513 Repayment.
57.1514 Loan guarantee and interest subsidy agreements.
57.1515 Loan closing.
57.1516 Right of recovery-subordination.
57.1517 Waiver of right of recovery.
57.1518 Modification of loans.

Subparts Q-T [Reserved]

      Subpart U_Armed Forces Health Professions Scholarship Program

57.2001 Applicability.
57.2002 Definitions.
57.2003 Determinations of increased enrollment solely for the program.

Subpart V [Reserved]

          Subpart W_Physician Shortage Area Scholarship Grants

57.2201 Applicability.
57.2202 Definitions.
57.2203 Eligibility.
57.2204 Application.
57.2205 Priority for selection of scholarship recipients.
57.2206 Grant award.
57.2207 Amount of scholarship grant.
57.2208 Payment of scholarship grant.
57.2209 Conditions of scholarship grant.
57.2210 Failure to comply.
57.2211 Waiver or suspension.

Subparts X-FF [Reserved]

       Subpart GG_Payment for Tuition and Other Educational Costs

57.3201 To which programs do these regulations apply?
57.3202 How will allowable increases be determined?

Subparts HH-PP [Reserved]

Subparts A-B [Reserved]



               Subpart C_Health Professions Student Loans

    Authority: Sec. 215 of the Public Health Service Act, 58 Stat. 690, 
as amended, 63 Stat. 35 (42 U.S.C. 216); secs. 740-747 of the Public 
Health Service Act, 77 Stat. 170-173, as amended by 90 Stat. 2266-2268, 
91 Stat. 390-391, 95 Stat. 920, 99 Stat. 532-536, and 102 Stat. 3125 (42 
U.S.C. 294m-q); renumbered as secs. 721-735, as amended by Pub. L. 102-
408, 106 Stat. 2011-2022 (42 U.S.C. 292q--292y).

    Source: 44 FR 29055, May 18, 1979, unless otherwise noted.



Sec. 57.201  Applicability.

    The regulations of this subpart apply to the federal capital 
contributions made by the Secretary to public or other nonprofit health 
professions schools for the establishment of health professions student 
loan funds and to loans made to students by schools from these funds.



Sec. 57.202  Definitions.

    As used in this subpart:
    Act means the Public Health Service Act, as amended.
    Date upon which a student ceases to be a full-time student means the 
first day of the month which is nearest to the date upon which an 
individual ceases to be a full-time student as defined in this section.
    Default means the failure of a borrower of a loan made under this 
subpart to make an installment payment when due, or comply with any 
other term of the promissory note for such loan, except that a loan made 
under this subpart shall not be considered to be in default if the loan 
is discharged in bankruptcy, the borrower's repayment schedule has been 
renegotiated and the borrower is complying with the renegotiated 
schedule, or the loan is in forbearance.
    Federal capital loan means a loan made by the Secretary to a school 
under section 744(a) of the Act, as in effect prior to October 1, 1977, 
the proceeds of which are to be returned to the Secretary.
    Full-time student means a student who is enrolled in a health 
professions school and pursuing a course of study

[[Page 265]]

which is a full-time academic workload, as determined by the school, 
leading to a degree specified in section 722(b) of the Act.
    Grace period means the period of 1 year beginning on the date upon 
which a student ceases to be a full-time student at a school of 
medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, 
optometry, or veterinary medicine.
    Health professions school or school, for purposes of this subpart, 
means a public or private nonprofit school of medicine, school of 
dentistry, school of osteopathic medicine, school of pharmacy, school of 
podiatric medicine, school of optometry, or school of veterinary 
medicine as defined in section 799(1)(A) of the Act.
    Health professions student loan means the amount of money advanced 
to a student by a school from a health professions student loan fund 
under a properly executed promissory note.
    Institutional capital contribution means the money provided by a 
school, in an amount not less than one-ninth of the federal capital 
contribution, and deposited in a health professions student loan fund.
    National of the United States means: (1) A citizen of the United 
States, or (2) a person who, though not a citizen of the United States, 
owes permanent allegiance to the United States, as defined in the 
Immigration and Nationality Act, at 8 U.S.C. section 1101(a)(22).
    School year means the traditional approximately 9-month September to 
June annual session. For the purpose of computing school year 
equivalents for students who, during a 12-month period, attend for a 
longer period than the traditional school year, the school year will be 
considered to be 9 months in length.
    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, in addition to the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, the 
Republic of Palau, the Republic of the Marshall Islands, and the 
Federated States of Micronesia.

[44 FR 29055, May 18, 1979, as amended at 52 FR 20987, June 3, 1987; 53 
FR 46549, Nov. 17, 1988; 56 FR 19293, Apr. 26, 1991; 56 FR 25446, June 
4, 1991; 61 FR 6123, Feb. 16, 1996]



Sec. 57.203  Application by school.

    (a) Each school seeking a Federal capital contribution must submit 
an application at the time and in the form and manner that the Secretary 
may require. The application must be signed by an individual authorized 
to act for the applicant and to assume on behalf of the applicant the 
obligations imposed by the statute, the regulations of this subpart, and 
the terms and conditions of the award.
    (b) Each application will be reviewed to determine eligibility and 
the reasonableness of the amount of Federal support requested. The 
Secretary may require the applicant to submit additional data for this 
purpose.
    (c) An application will not be approved unless an agreement between 
the Secretary and the applicant school for a Federal capital 
contribution under section 721 of the Act is reached.

[44 FR 29055, May 18, 1979, as amended at 49 FR 38112, Sept. 27, 1984; 
56 FR 19293, Apr. 26, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 
16, 1996]



Sec. 57.204  Payment of Federal capital contributions and reallocation of 

funds remitted to the Secretary.

    (a) Annual payment. The Secretary will make payments to each school 
with which he or she has entered into an agreement under the Act at a 
time determined by him or her. If the total of the amounts requested for 
any fiscal year by all schools for Federal capital contributions exceeds 
the amount of Federal funds determined by the Secretary at the time of 
payment to be available for this purpose, the payment to each school 
will be reduced to whichever is smaller:
    (1) The amount requested in the application, or
    (2) An amount which bears the same ratio to the total amount of 
Federal funds determined by the Secretary at the time of payment to be 
available for

[[Page 266]]

that fiscal year for the Health Professions Student Loan Program as the 
number of full-time students estimated by the Secretary to be enrolled 
in that school bears to the estimated total number of full-time students 
in all participating schools during that year. Amounts remaining after 
these payments are made will be distributed in accordance with this 
paragraph among schools whose applications requested more than the 
amount paid to them, but with whatever adjustments that may be necessary 
to prevent the total paid to any school from exceeding the total 
requested by it.
    (b) Method of payment. The payment of Federal capital contributions 
to a school will be paid in a manner that avoids unnecessary 
accumulations of money in any health professions student loan fund.
    (c) Reallocation of funds remitted to the Secretary. All funds from 
a student loan fund established under this subpart which are remitted to 
the Secretary in any fiscal year shall be available for allotment under 
this subpart, in the same fiscal year and the succeeding fiscal year, to 
schools which, during the period beginning on July 1, 1972, and ending 
on September 30, 1985, established student loan funds with Federal 
capital contributions under this subpart. The Secretary will from time 
to time set dates by which the schools must file applications to receive 
a portion of these funds. If the total of the amounts requested for any 
fiscal year by eligible schools exceeds the amount of funds determined 
by the Secretary at the time of payment to be available for this 
purpose, the payment to each school will be reduced to whichever is 
smaller:
    (1) The amount requested in the application, or
    (2) An amount which bears the same ratio to the total amount of 
returned funds determined by the Secretary at the time of payment to be 
available for that fiscal year for the Health Professions Student Loan 
program as the number of full-time students estimated by the Secretary 
to be enrolled in that school bears to the estimated total number of 
full-time students in all eligible schools during that year.

Amounts remaining after these payments are made will be distributed in 
accordance with this paragraph among schools whose applications 
requested more than the amount paid to them, with whatever adjustments 
may be necessary to prevent the total paid to any school from exceeding 
the total requested by it.

[44 FR 29055, May 18, 1979, as amended at 53 FR 46549, Nov. 17, 1988; 56 
FR 19293, Apr. 26, 1991]



Sec. 57.205  Health professions student loan funds.

    (a) Funds established with Federal capital contributions. Any fund 
established by a school with Federal capital contributions will be 
accounted for separately from other funds, providing a clear audit trail 
for all transactions. At all times the fund must contain monies 
representing the institutional capital contribution. The school must at 
all times maintain all monies relating to the fund in one or more 
interest-bearing accounts or investment instruments which meet OMB 
requirements established for Federal monies held by third parties. The 
school must place all earnings into the fund but may first deduct from 
total earnings any reasonable and customary charges incurred through the 
use of an interest-bearing account. An institution shall exercise the 
level of care required of a fiduciary with regard to these deposits and 
investments, and shall be responsible for reimbursing the fund for any 
losses that occur due to the use of investments that are not federally 
insured.
    (1) The Federal capital contribution fund is to be used by the 
school only for:
    (i) Health professions student loans to full-time students;
    (ii) Capital distribution as provided in section 728 of the Act or 
as agreed to by the school and the Secretary; and
    (iii) Costs of litigation, costs associated with membership in 
credit bureaus, and to the extent specifically approved by the 
Secretary, other collection costs that exceed the usual expenses 
incurred in the collection of health professions student loans.
    (2) A school must review the balance in the fund on at least a semi-
annual basis to determine whether the fund

[[Page 267]]

balance compared with projected levels of expenditures and collections 
exceeds its needs. A school in closing status must review the balance in 
the fund on a quarterly basis. Monies identified as in excess of the 
school's needs must be reported, and the Federal share returned to the 
Federal Government, by the due date of the required report which 
identifies the excess monies. The school's determination is subject to 
the review and approval of the Secretary.
    (b) Funds established with Federal capital loans. (1) Each Federal 
capital loan is subject to the terms of the promissory note executed by 
an authorized official on behalf of the borrowing school.
    (2) The Federal capital loans must be carried in a special account 
of the school, to be used by the school only for (i) repayments of 
principal and interest on Federal capital loans; and (ii) costs of 
litigation; costs associated with membership in credit bureaus; and, to 
the extent specifically approved by the Secretary, other collection 
costs that exceed the usual expenses incurred in the collection of 
health professions student loans.
    (c) Failure to comply with the requirements of this section will 
subject a school to the noncompliance provisions of Sec. 57.218 and the 
Department's Claims Collections regulations (45 CFR part 30), as 
appropriate.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[44 FR 29055, May 18, 1979, as amended at 48 FR 25069, June 3, 1983; 56 
FR 40725, Aug. 15, 1991; 61 FR 6123, Feb. 16, 1996]



Sec. 57.206  Eligibility and selection of health professions student loan 

applicants.

    (a) Determination of eligibility. (1) Applicants are eligible for 
consideration for a health professions student loan if they are:
    (i) Residents of the United States and either a citizen or national 
of the United States, an alien lawfully admitted for permanent residence 
in the United States, a citizen of the Commonwealth of the Northern 
Mariana Islands, a citizen of the Republic of Palau, a citizen of the 
Republic of the Marshall Islands, or a citizen of the Federated States 
of Micronesia;
    (ii) Enrolled, or accepted for enrollment in the school as full-time 
students;
    (iii) In need of the amount of the loan to pursue a full-time course 
of study at the school;
    (iv) Of exceptional financial need in the case of students of 
medicine or osteopathic medicine. A student will be considered to 
demonstrate exceptional financial need if the school determines that his 
or her resources, as described in paragraph (b)(1) of this section, do 
not exceed the lesser of $6,700 or one-half of the costs of attendance 
at the school. Summer earnings, educational loans, veterans (G.I.) 
benefits and earnings during the school year will not be considered as 
resources in determining whether an applicant meets the eligibility 
criteria for exceptional financial need, but will be considered in 
determining the amount of funds a student may receive; and
    (v) In compliance with the requirement to register for the draft, if 
required to do so under section 3 of the Military Selective Service Act.
    (2) An applicant who has previously attended an institution of 
higher education must submit a financial aid transcript which includes 
at least the following data:
    (i) Applicant's name and social security number;
    (ii) Amounts and sources of loans and grants previously received by 
the applicant for study at an institution of higher education;
    (iii) Whether the applicant is in default on any of these loans, or 
owes a refund on any grants;
    (iv) Certification from each institution previously attended by the 
applicant that the applicant has received no financial aid, if 
applicable; and
    (v) From each institution previously attended, the signature of an 
official authorized by the institution to sign such transcripts on 
behalf of the institution.
    (b) Selection of applicants. The school will select qualified 
applicants, including medical (M.D. and D.O.) applicants, and determine 
the amount of student loans by considering:
    (1) The financial resources available to the student by using one of 
the national need analysis systems or any

[[Page 268]]

other procedure approved by the Secretary of Education in combination 
with other information which the school has regarding the student's 
financial status. The school must take into account, regardless of the 
tax status of the student, the expected contribution from parents, 
spouse, self or other family members; and
    (2) The costs reasonably necessary for the student's attendance at 
the school, including any special needs and obligations which directly 
affect the student's ability to attend the school on a full-time basis. 
The school must document the criteria used for determining these costs.
    (c) Selection of medical (M.D. and D.O.) student applicants. In 
addition to the factors in Sec. 57.206(b), the school must select 
medical (M.D. and D.O.) students graduating after June 30, 1979, based 
on the order of greatest need, taking into consideration the other 
resources available to the student through the school. For purposes of 
establishing priority for selecting medical (M.D. and D.O.) student 
applicants to receive health professions student loans, summer earnings, 
educational loans, veterans (G.I.) benefits, and earnings during the 
school year will be considered as financial resources.
    (d) Verification of loan information. The school must verify, to the 
best of its ability, the information provided by the student on the loan 
application. To comply with this requirement, a school may require that 
a student provide, for example: Photocopies of the parents', student's, 
and spouse's Federal income tax forms with original signatures for the 
most recent tax year (or certification that no Federal income tax return 
was filed); tax returns that are certified as having been received by 
the Internal Revenue Service; or other documentation that the school 
considers necessary to help assure that information on the loan 
application is correct.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[44 FR 32698, June 7, 1979, as amended at 48 FR 25069, June 3, 1983; 49 
FR 38112, Sept. 27, 1984; 52 FR 20987, June 3, 1987; 53 FR 46549, Nov. 
17, 1988; 56 FR 19293, Apr. 26, 1991; 61 FR 6123, Feb. 16, 1996]



Sec. 57.207  Maximum amount of health professions student loans.

    The total of the health professions student loans made from the fund 
to any student for a school year may not exceed $2,500 and the cost of 
tuition. The maximum amount loaned during a 12-month period to any 
student enrolled in a school which provides a course of study longer 
than the 9-month school year may be proportionately increased.



Sec. 57.208  Health professions student loan promissory note and disclosure requirements.

    (a) Promissory note form. Each health professions student loan must 
be evidenced by a properly executed promissory note in a form approved 
by the Secretary. The school must safeguard the promissory note against 
fire, theft, and tampering.
    (1) Each promissory note must state that the loan will bear interest 
on the unpaid balance computed only for periods during which repayment 
of the loan is required, at the rate of 5 percent per year.
    (2) Each promissory note must contain an acceleration clause 
provided by the Secretary, which will permit the acceleration of 
delinquent loans at the school's option.
    (3) A copy of each executed note must be supplied by the school to 
the student borrower.
    (b) Security. A school must require security or endorsement if the 
borrower is a minor and if, under the applicable State law, the note 
signed by him or her would not create a binding obligation. The school 
may not require security or endorsement in any other circumstances.
    (c) Disclosure requirements. (1) For any loan made after June 30, 
1986, the school shall, at the time the loan is made, provide the 
following loan information to the student:
    (i) The yearly and cumulative maximum amounts that may be borrowed 
by the student;
    (ii) The terms under which repayment of the loan will begin;
    (iii) The maximum number of years in which the loan must be repaid;
    (iv) The interest rate that will be paid by the borrower and the 
minimum

[[Page 269]]

amount of the required monthly payment;
    (v) The amount of any other fees charged to the borrower by the 
lender;
    (vi) Any options the borrower may have for deferral, cancellation, 
prepayment, consolidation, or other refinancing of the loan;
    (vii) A definition of default on the loan and a specification of the 
consequences which will result to the borrower if the borrower defaults, 
including a description of any arrangements which may be made with 
credit bureau organizations;
    (viii) To the extent practicable, the effect of accepting the loan 
on the eligibility of the borrower for other forms of student 
assistance; and
    (ix) A description of the actions that may be taken by the Federal 
Government to collect the loan, including a description of the type of 
information concerning the borrower that the Federal Government may 
disclose to:
    (A) Officers, employees, or agents of the Department of Health and 
Human Services,
    (B) Officers, employees, or agents of schools with which the 
Secretary has an agreement under this subpart, or
    (C) Any other person involved in the collection of a loan under this 
subpart.
    (2) For any loan made after June 30, 1986, the school shall, prior 
to the borrower's completion or termination of studies at the school, 
provide the following loan information to the student:
    (i) Each amount borrowed by the student under this subpart;
    (ii) The total amount borrowed by the student under this subpart; 
and
    (iii) A schedule for the repayment of the amounts borrowed under 
this subpart, including the number, amount, and frequency of payments to 
be made.
    (3) In addition to the requirements set forth in paragraphs (c)(1) 
and (c)(2) of this section, the school must comply with the applicable 
requirements of Truth in Lending Regulation Z (12 CFR part 226).

(Approved by the Office of Management and Budget under control number 
0915-0047)

[44 FR 29055, May 18, 1979, as amended at 48 FR 25069, June 3, 1983; 50 
FR 34420, Aug. 23, 1985; 52 FR 20987, June 3, 1987; 56 FR 19293, Apr. 
26, 1991; 57 FR 45734, Oct. 5, 1992]



Sec. 57.209  Payment of health professions student loans.

    (a) Health professions student loans from any fund may be paid to or 
on behalf of student borrowers in installments considered appropriate by 
the school except that a school may not pay to or on behalf of any 
borrower more during any given installment period (e.g., semester, term, 
or quarter) than the school determines the student needs for that 
period.
    (b) No payment may be made from a fund to or on behalf of any 
student borrower if at the time of the payment the borrower is not a 
full-time student.



Sec. 57.210  Repayment and collection of health professions student loans.

    (a) Each health professions student loan, including accrued 
interests, will be repayable in equal or graduated periodic installments 
in amounts calculated on the basis of a 10-year repayment period. Except 
as otherwise provided in this paragraph, repayment of a loan must begin 
one year after the student ceases to be a full-time student.
    (1) If a borrower reenters the same or another school as a full-time 
student within the 1-year period, the date upon which interest will 
accrue and the repayment period will begin will be determined by the 
date on which the student last ceases to be a full-time student at that 
school.
    (2) The following periods will be excluded from the 10-year 
repayment period:
    (i) All periods for up to a total of 3 years of active duty 
performed by the borrower as a member of the Army, Navy, Air Force, 
Marine Corps, Coast Guard, National Oceanic and Atmospheric 
Administration Corps or the U.S. Public Health Service Corps;
    (ii) All periods for up to a total of 3 years of service as a 
volunteer under the Peace Corps Act;
    (iii) All periods of advanced professional training including 
internships and residencies, except as specified in paragraph (a)(2)(vi) 
of this section;
    (iv) All periods during which the borrower is pursuing a full-time 
course of study at an eligible health professions school;
    (v) A period not in excess of 2 years during which a borrower who is 
a full-

[[Page 270]]

time student in a health professions school leaves the school, with the 
intent to return to such school as a full-time student, to engage in a 
full-time educational activity which is directly related to the health 
profession for which the individual is preparing. To qualify for such 
deferment, the full-time educational activity must be one which:
    (A) Is part of a joint-degree program or a formal program of joint 
study in conjunction with the health profession for which the borrower 
is preparing at the school; or
    (B) Is an activity which will enhance the borrower's knowledge and 
skills in the health profession for which the borrower is preparing at 
the school, as determined by the school.

The borrower must request such deferment from the school in which he or 
she is enrolled no later than 60 days prior to leaving such school to 
engage in the full-time educational activity. The school must then 
determine, no later than 30 days prior to the borrower's leaving such 
school, whether the borrower qualifies for such deferment. A borrower 
who qualifies for this type of deferment receives the grace period upon 
completion or termination of his or her studies leading to the first 
professional degree in the health discipline being pursued. If the 
borrower fails to return to school, the school retroactively must begin 
the borrower's grace period based on the date the borrower terminated 
his or her studies at the school, and must begin the repayment period 
immediately following the end of the grace period; and
    (vi) A period not in excess of 2 years during which a borrower who 
is a graduate of a health professions school participates in:
    (A) A fellowship training program which is directly related to the 
health profession for which the borrower prepared at the school, as 
determined by the school from which the borrower received his or her 
loan, and is engaged in by the borrower no later than 12 months after 
the completion of the borrower's participation in advanced professional 
training as described in paragraph (a)(2)(iii) of this section, or prior 
to the completion of such borrower's participation in such training. To 
qualify for such deferment, the fellowship training program must be one 
which:
    (1) Is a full-time activity in research or research training or in 
health care policy; and
    (2) Is a formally established fellowship program which was not 
created for a specific individual; or
    (B) A full-time educational activity which is directly related to 
the health profession for which the borrower prepared at the school, as 
determined by the school from which the borrower received his or her 
loan, and is engaged in by the borrower no later than 12 months after 
the completion of the borrower's participation in advanced professional 
training as described in paragraph (a)(2)(iii) of this section, or prior 
to the completion of the borrower's participation in such training. To 
qualify for such deferment, the full-time educational activity must be 
one which:
    (1) Is part of a joint-degree program in conjunction with the health 
profession for which the borrower prepared at the school; or
    (2) Is required for licensure, registration, or certification in the 
health profession for which the borrower received the HPSL loan; or
    (3) Is a full-time educational program in public health, health 
administration, or a health care discipline directly related to the 
health profession for which the borrower received the loan.
    (3) To receive a deferment, a borrower must, no later than 30 days 
prior to the onset of the activity (or no later than 30 days prior to 
the due date of the first payment if the borrower begins the activity 
during the grace period), and annually thereafter, provide the lending 
school with evidence of his or her status in the deferrable activity, 
and evidence that verifies deferment eligibility of the activity. This 
evidence must include certification by the Program Director or other 
authorized official that the borrower's activity meets the deferment 
requirements. The borrower must also notify the school upon completion 
or termination of the activity. It is the responsibility of the borrower 
to provide the lending school

[[Page 271]]

with all required information or other information regarding the 
requested deferment. The school may deny a request for deferment if it 
is not filed in accordance with the requirements of this section.
    (4) Subject to the provisions of paragraph (b)(3) of this section, a 
borrower must establish a repayment schedule with the school providing 
for payments not less often than quarterly. Any borrower whose repayment 
is delinquent more than 60 days must establish a monthly repayment 
schedule with the school. However, a borrower may at his or her option 
and without penalty, prepay all or part of the principal and accrued 
interest at any time.
    (5) A school may grant forbearance whenever extraordinary 
circumstances such as unemployment, poor health or other personal 
problems temporarily affect the borrower's ability to make scheduled 
loan repayments.
    (b)(1) Each school at which a fund is established must exercise due 
diligence in the collection of health professions student loans due the 
fund. In the exercise of due diligence, a school must follow procedures 
which are at least as extensive and effective as those used in the 
collection of other student loan accounts due the school, and must use 
the steps outlined below in accordance with collection practices which 
are generally accepted among institutions of higher education:
    (i) Conduct and document an entrance interview (individually or in 
groups) with the borrower prior to disbursing HPSL funds in an academic 
year. During the entrance interview the school must obtain documentation 
which indicates that the borrower is aware of the rights and 
responsibilities associated with HPSL funds and personal information 
which would assist in locating the borrower if he or she fails to keep 
the school informed of his or her current address. The requirements of 
this subparagraph may be met by correspondence, if the school determines 
that a face-to-face meeting (individually or in groups) is 
impracticable.
    (ii) Conduct and document an exit interview (individually or in 
groups) with the borrower. During the exit interview, the school must 
provide each borrower with information necessary to carry out the terms 
of repayment, remind the borrower of the rights and responsibilities 
associated with HPSL funds, and update the personal information 
collected prior to disbursing HPSL funds which would assist in locating 
the borrower if he or she fails to keep the school informed of his or 
her current address. If the borrower terminates studies without advance 
notice, the school must document attempts to inform the borrower of the 
substance of the exit interview and to secure exit interview information 
from the borrower by mail.
    (iii) Notify the borrower in writing of the impending repayment 
obligation at least twice during the grace period;
    (iv) Notify a borrower who is in deferment status in writing of the 
impending repayment obligation 1 to 3 months prior to the expiration of 
the approved period of deferment;
    (v) Perform regular billing;
    (vi) Follow up past due payments with a series of at least four 
documented and reasonably spaced attempts to contact the borrower, at 
least three of which must be in writing at not more than 30-day 
intervals, prior to the loan becoming 120 days past due, provided that 
the school has a current address for the borrower;
    (vii) Perform address searches when necessary;
    (viii) Use collection agents, which may include the use of an 
internal collection agent;
    (ix) Institute legal proceedings against borrowers after all other 
attempts at collection have failed, unless the school determines, 
subject to the approval of the Secretary, that such litigation would not 
be cost-effective; and
    (x) Become a member of a credit bureau and notify the credit bureau 
of accounts past due by more than 120 days.

In place of one or more of the procedures outlined above schools may 
substitute collection techniques that are equally or more effective, but 
only after they have demonstrated the effectiveness of the techniques 
and obtained written approval from the Secretary.
    (2) Late charge. (i) For any health professions student loan made 
after June 30, 1969, but prior to October 22,

[[Page 272]]

1985, the school may fix a charge for failure of the borrower to pay all 
or any part of an installment when it is due and, in the case of a 
borrower who is entitled to deferment under section 722(c) of the Act 
for any failure to file timely and satisfactory evidence of the 
entitlement. The amount of the charge may not exceed $1 for the first 
month or part of a month by which the installment or evidence is late 
and $2 for each succeeding month or part of a month. The school may 
elect to add the amount of this charge to the principal amount of the 
loan as of the day after the day on which the installment or evidence 
was due, or to make the amount of the charge payable to the school no 
later than the due date of the next installment following receipt of the 
notice of the charge by the borrower.
    (ii) For any health professions student loan made on or after 
October 22, 1985, the school shall assess a charge for failure of the 
borrower to pay all or any part of an installment when the loan is more 
than 60 days past due and, in the case of a borrower who is entitled to 
deferment under section 722(c) of the Act, for any failure to file 
satisfactory evidence of the entitlement within 60 days of the date 
payment would otherwise be due. No charge may be made if the loan is 
less than 61 days past due. The amount of this charge may not exceed an 
amount equal to 6 percent of the amount due at the time the charge is 
calculated. The school may elect to add the amount of this charge to the 
principal amount of the loan as of the day on which the charge is 
calculated, or to make the amount of the charge payable to the school no 
later than the due date of the next installment following receipt of the 
notice of the charge by the borrower.
    (3) With respect to any health professions student loan made after 
June 30, 1969, the school may require the borrower to make payments of 
at least $15 per month on all outstanding health professions student 
loans during the repayment period.
    (4) A school must, on an annual basis, review and assess the 
collectibility of any loan more than 3 years past due. If the school 
determines that the prospects of future collection are promising enough 
to justify periodic review of the debt, and neither the statute of 
limitations nor the 10-year repayment period has expired, the school may 
retain the account for continued collections, provided that it makes an 
attempt at least semi-annually to collect from the borrower. When the 
due diligence procedures required by paragraph (b)(1) of this section 
have been exhausted, the school is responsible for determining the 
collection methods it will use for the semi-annual collection effort 
required on these loans. If the school determines that the prospects of 
future collection are not promising, or when the statute of limitations 
or the 10-year repayment period has expired, the loan must be considered 
uncollectible. A school may determine a loan to be uncollectible sooner 
than 3 years past due when it has evidence that the loan cannot be 
collected, but in no case should a school consider a loan as 
uncollectible if it has not been in default for a least 120 days. A 
school is not subject to the requirements in paragraphs (b)(4) (i) and 
(iii) of this section for loans that became uncollectible, as determined 
by the school, before August 1, 1985.
    (i) A school must request permission to write off an uncollectible 
loan within 30 days of the determination that it is uncollectible or 
reimburse the fund in the full amount of the loan, pursuant to Sec. 
57.210(b)(4)(iii). The 30-day period for submitting the loan for write-
off review begins on the date that the determination of uncollectibility 
is made, in accordance with paragraph (b)(4) of this section. In any 
instance where the Secretary determines that a school has failed to 
exercise due diligence in the collection of a loan, in accordance with 
the applicable regulatory requirements, the school will be required to 
place in the fund the full amount of principal, interest, and penalty 
charges that remains uncollected on the loan. Reimbursement must be made 
by the following June 30 or December 31, whichever is sooner, except 
that in no case will a school be required to reimburse the fund in less 
than 30 days following the Secretary's disapproval of the request for 
write-off approval.

[[Page 273]]

    (ii) If the Secretary determines that a school has exercised due 
diligence in the collection of a loan, in accordance with the applicable 
regulatory requirements, or if the school determines that the loan was 
uncollectible prior to August 1, 1985, the school will be permitted to 
reduce its accounts receivable for the HPSL fund by the full amount of 
principal, interest, and penalty charges that remains uncollected on 
that loan and will not be required to return the Federal share of the 
loss to the Secretary.
    (iii) If a school does not request permission to write off an 
uncollectible loan within the required timeframe, it must reimburse the 
fund for the full amount of principal, interest, and penalty charges 
that remains uncollected on that loan. This reimbursement must be made 
by the following June 30 or December 31, whichever is sooner, except 
that in no case will a school be required to reimburse the fund in less 
than 30 days following its determination that a loan is uncollectible.
    (iv) Failure to comply with the requirement of this section will 
subject a school to the noncompliance provisions of Sec. 57.218 and the 
Department's Claims Collection regulations (45 CFR part 30), as 
appropriate.
    (5) Disclosure of taxpayer identity information. Upon written 
request by the Secretary, the Secretary of the Internal Revenue Service 
(IRS) may disclose the address of any taxpayer who has defaulted on a 
health professions student loan, for use only by officers, employees, or 
agents of the Department, to locate the defaulted borrower to collect 
the loan. Any such mailing address may be disclosed by the Secretary to 
any school from which the defaulted borrower received a health 
professions student loan, for use only by officers, employees, or agents 
of the school whose duties relate to the collection of health 
professions student loan funds, to locate the defaulted borrower to 
collect the loan. Any school which requests and obtains this address 
information must comply with the requirements of the Secretary and the 
IRS regarding the safeguarding and proper handling of this information.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[44 FR 29055, May 18, 1979, as amended at 48 FR 25069, June 3, 1983; 49 
FR 38112, Sept. 27, 1984; 50 FR 34420, Aug. 23, 1985; 52 FR 20988, June 
3, 1987; 53 FR 6092, Feb. 29, 1988; 56 FR 19293, Apr. 26, 1991; 56 FR 
40726, Aug. 15, 1991; 57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 
1996]



Sec. 57.211  Cancellation of health professions students loans for disability 

or death.

    (a) Permanent and total disability. The Secretary will cancel a 
student borrower's indebtedness in accordance with section 722(d) of the 
Act if the borrower is found to be permanently and totally disabled on 
recommendation of the school and as supported by whatever medical 
certification the Secretary may require. A borrower is totally and 
permanently disabled if he or she is unable to engage in any substantial 
gainful activity because of a medically determinable impairment, which 
the Secretary expects to continue for a long time or to result in death.
    (b) Death. The Secretary will cancel a student borrower's 
indebtedness in accordance with section 722(d) of the Act upon the death 
of the borrower. The school to which the borrower was indebted must 
secure a certification of death or whatever official proof is conclusive 
under State law.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[44 FR 29055, May 18, 1979, as amended at 56 FR 19293, Apr. 26, 1991; 61 
FR 6123, Feb. 16, 1996]



Sec. 57.212  [Reserved]



Sec. 57.213  Continuation of provisions for cancellation of loans made prior 

to November 18, 1971.

    Individuals who received health professions student loans as 
students of medicine, osteopathic medicine, dentistry or optometry prior 
to November 18, 1971, may still receive cancellation of these loans for 
practicing in a shortage area or for practicing in a rural shortage area 
characterized by low family income. The regulations set forth in 42 CFR 
57.215(b) (1976), as

[[Page 274]]

adopted on February 7, 1974 remain applicable to cancellation on this 
basis. The provisions can be found at 39 FR 4774 (February 7, 1974) and 
a copy can be obtained by writing to the Division of Student Assistance, 
Bureau of Health Professions, Room 8-34, Parklawn Building, 5600 Fishers 
Lane, Rockville, MD 20857.

[49 FR 38112, Sept. 27, 1984, as amended at 56 FR 19294, Apr. 26, 1991]



Sec. 57.213a  Loan cancellation reimbursement.

    (a) For loans made prior to October 22, 1985, in the event that 
insufficient funds are available to the Secretary in any fiscal year to 
enable him or her to pay to all schools their proportionate shares of 
all loans and interest canceled under this subpart for practice in a 
shortage area, death, or disability:
    (1) Each school will be paid an amount bearing the same ratio to the 
total of the funds available for that purpose as the principal of loans 
canceled by that school in that fiscal year bears to the total principal 
of loans canceled by all schools in that year; and
    (2) Any additional amounts to which a school is entitled will be 
paid by the Secretary at the time of distribution of the assets of the 
school's Fund under section 728 of the Act.
    (b) For loans made on or after October 22, 1985, a school may assess 
the borrower a charge to insure against the loss of the institutional 
share of a loan canceled due to the borrower's death or permanent and 
total disability. The school must develop annually a rate which reflects 
its cancellation experience. This charge shall not exceed .6 percent of 
the loan amount. Funds collected under this provision must be maintained 
by the school in an insured, interest-bearing account (with any earned 
interest credited to this insurance fund), and used only to reimburse 
the school for the institutional share of any HPSL loan made on or after 
October 22, 1985, that is canceled due to the borrower's death or 
permanent and total disability. A school is not required to establish a 
separate bank account, but is required to maintain separate 
accountability.

[53 FR 46549, Nov. 17, 1988, as amended at 56 FR 19294, Apr. 26, 1991; 
57 FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996]



Sec. 57.214  Repayment of loans made after November 17, 1971, for failure to 

complete a program of study.

    In the event that the Secretary undertakes to repay educational 
loans under section 722(k) of the Act, he or she will use the following 
criteria to make a determination as to each applicant's eligibility:
    (a) An applicant will be considered to have failed to complete the 
course of study leading to the first professional degree for which an 
eligible education loan was made upon certification by a health 
professions school that the individual ceased to be enrolled in the 
school subsequent to November 17, 1971;
    (b) An applicant will be considered to be in exceptionally needy 
circumstances if, upon comparison of the income and other financial 
resources of the applicant with his or her expenses and financial 
obligations, the Secretary determines that repayment of the loan would 
constitute a serious economic burden on the applicant. In making this 
determination, the Secretary will take into consideration the 
applicant's net financial assets, his or her potential earning capacity, 
and the relationship of the income available to the applicant to the 
low-income levels published annually by the Secretary under paragraph 
(c) of this section;
    (c) An applicant will be considered to be from a low-income family 
if the applicant comes from a family with an annual income below a level 
based on low-income thresholds according to family size published by the 
U.S. Bureau of the Census, adjusted annually for changes in the Consumer 
Price Index, and adjusted by the Secretary for use in this program, and 
the family has no substantial net financial assets. Income levels as 
adjusted will be published annually by the Secretary in the Federal 
Register.
    (d) An applicant will be considered to be from a disadvantaged 
family if the individual comes from a family in which the annual income 
minus unusual expenses which contribute to the

[[Page 275]]

economic burdens borne by the family does not exceed the low-income 
levels published by the Secretary under paragraph (c) of this section 
and the family has no substantial net financial assets;
    (e) An applicant will be considered as not having resumed his or her 
health professions studies within two years following the date the 
individual ceased to be a student upon a certification so stating from 
the applicant; and
    (f) An applicant will be considered as not reasonably expected to 
resume his or her health professions studies within two years following 
the date upon which he or she terminated these studies, based upon 
consideration of the reasons for the applicant's failure to complete 
these studies, taking into account such factors as academic, medical, or 
financial difficulties.

The Secretary will only repay education loans made subsequent to 
November 17, 1971.

[44 FR 29055, May 18, 1979, as amended at 61 FR 6123, Feb. 16, 1996; 61 
FR 9532, Mar. 8, 1996]



Sec. 57.215  Records, reports, inspection, and audit.

    (a) Each Federal capital contribution and Federal capital loan is 
subject to the condition that the school must maintain those records and 
file with the Secretary those reports relating to the operation of its 
health professions student loan funds as the Secretary may find 
necessary to carry out the purposes of the Act and these regualtions. A 
school must submit required reports to the Secretary within 45 days of 
the close of the reporting period.
    (1) A school which fails to submit a required report for its Federal 
capital contribution fund within 45 days of the close of the reporting 
period:
    (i) Shall be prohibited from receiving new Federal capital 
contributions;
    (ii) Must place the revolving fund and all subsequent collections in 
an insured interest-bearing account; and
    (iii) May make no loan disbursements.

The above restrictions apply until the Secretary determines that the 
school is in compliance with the reporting requirement.
    (2) A school that fails to submit a complete report within 6 months 
of the close of the reporting period will be subject to termination. The 
Secretary will provide the school with a written notice specifying his 
or her intention to terminate the school's participation in the program 
and stating that the school may request, within 30 days of the receipt 
of this notice, a formal hearing. If the school requests a hearing, it 
must within 90 days of the receipt of the notice, submit 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 (i.e., fails to meet the 
30-day requirement);
    (ii) The school does not provide a statement of material, factual 
issues in dispute within the 90-day required period; 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 school setting forth the reasons for 
denial. If a hearing is denied, or if as a result of the hearing, 
termination is still determined to be necessary, the school will be 
terminated from participation in the program and will be required to 
return the Federal share of the revolving fund to the Department. A 
school terminated for failure to submit a complete report within 6 
months of the close of the reporting period must continue to pursue 
collections and may reapply for participation in the program once it has 
submitted the overdue report.
    (3) The school must also comply with the requirements of 45 CFR part 
74 and section 798(e) of the Act concerning recordkeeping, audit, and 
inspection.
    (b) The following student records must be retained by the school for 
5 years after an individual student ceases to be a full-time student:
    (1) Approved student applications for health professions student 
loans;

[[Page 276]]

    (2) Documentation of the financial need of applicants; and
    (3) Copy of financial aid transcript(s).
    (c) The following repayment records for each individual borrower 
must be retained for at least 5 years from the date of retirement of a 
loan:
    (1) The amount and date of each loan;
    (2) The amount and date of each payment or cancellation;
    (3) Records of periods of deferment;
    (4) Date, nature and result of each contact with the borrower or 
proper endorser in the collection of an overdue loan;
    (5) Copies of all correspondence to or from the borrower and 
endorser;
    (6) Copies of all correspondence with collection agents related to 
the individual borrower;
    (7) Copies of all correspondence with a credit bureau related to an 
individual borrower; and
    (8) Copies of all correspondence relating to uncollectible loans 
which have been written off by the Federal Government or repaid by the 
school.
    (d) The school must also retain other records as the Secretary may 
prescribe. In all cases where questions have arisen as a result of a 
Federal audit, the records must be retained until resolution of all 
questions.
    (e) Institutional officials who have information which indicates the 
potential or actual commission of fraud or other offenses against the 
United States, involving these loan funds, should promptly provide this 
information to the appropriate Regional Office of Inspector General for 
Investigations.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[48 FR 25070, June 3, 1983, as amended at 50 FR 34421, Aug. 23, 1985; 53 
FR 46549, Nov. 17, 1988; 56 FR 19294, Apr. 26, 1991; 57 FR 45734, Oct. 
5, 1992; 61 FR 6123, Feb. 16, 1996]



Sec. 57.216  What additional Department regulations apply to schools?

    (a) Participating schools are advised that in addition to complying 
with the terms and conditions of these regulations, several other 
regulations apply under this subpart. These include, but are not limited 
to:

45 CFR part 76--Governmentwide Debarment and Suspension (nonprocurement) 
and Governmentwide Requirements for Drug-Free Workplace (Grants)
45 CFR part 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
45 CFR part 83--Regulation for the administration and enforcement of 
sections 794 and 855 of the Public Health Service Act
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in Health and 
Human Services programs or activities receiving Federal financial 
assistance
45 CFR part 93--New Restrictions on Lobbying

    (b) The recipient may not discriminate on the basis of religion in 
the admission of individuals to its training programs.

[44 FR 29055, May 18, 1979, as amended at 56 FR 19294, Apr. 26, 1991; 57 
FR 45734, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996]



Sec. 57.216a  Performance standard.

    On June 30, 1984, and on each June 30 thereafter, except as provided 
in paragraph (b) of this section, each school must have a default rate 
(as calculated under paragraph (a) of this section) of not more than 5 
percent.
    (a) The default rate for each school shall be the ratio (stated as a 
percentage) that the defaulted principal amount outstanding of the 
school bears to the matured loans of the school. For this purpose:
    (1) The term defaulted principal amount outstanding means the total 
amount borrowed from the loan fund of a school that has reached the 
repayment stage (minus any principal amount repaid or canceled) on loans 
in default for more than 120 days; and
    (2) The term matured loans means the total principal amount of all 
loans made by a school under this subpart minus the total principal 
amount of loans made by the school to students who are:
    (i) Enrolled in a full-time course of study at the school; or
    (ii) In their grace period.

[[Page 277]]

    (b) Any school that has a default rate greater than 5 percent on 
June 30 of any year will be required to:
    (1) Reduce its default rate by 50 percent (or a school with a 
default rate below 10 percent must reduce its rate to 5 percent) by the 
close of the following 6-month period; and
    (2) By the end of each succeeding 6-month period, reduce its default 
rate to 50 percent of the required rate for the previous 6-month period, 
until it reaches 5 percent.
    (c) Any school subject to the provisions of paragraph (b) of this 
section which fails to comply with those requirements will receive no 
new HPSL funds and will be required to:
    (1) Place the revolving fund monies and all subsequent collections 
into an insured interest-bearing account;
    (2) Make no loan disbursements; and
    (3) By the end of the succeeding 6-month period, reduce its default 
rate to 50 percent of the rate it failed to achieve under paragraph (b) 
of this section, or 5 percent. A school that meets this requirement wil 
be permitted to resume the use of its health professions student loan 
funds, but must continue to comply with the requirements of paragraph 
(b)(2) of this section if its default rate is still greater than 5 
percent.
    (d) Any school subject to the provisions of paragraph (c)(3) of this 
section which fails to comply with those requirements will be subject to 
termination. The Secretary will provide the school with a written notice 
specifying his or her intention to terminate the school's participation 
in the program and stating that the school may request, within 30 days 
of the receipt of this notice, a formal hearing. If the school requests 
a hearing, it must within 90 days of the receipt of the notice, submit 
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:
    (1) The request for a hearing is untimely (i.e., fails to meet the 
30-day requirement);
    (2) The school does not provide a statement of material, factual 
issues in dispute within the 90-day required period; or
    (3) 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 school setting forth the reasons for 
denial. If a hearing is denied, or if as a result of the hearing, 
termination is still determined to be necessary, the school will be 
terminated from participation in the program and will be required to 
return the Federal share of the revolving fund to the Department. A 
school terminated for failure to comply with the provisions of paragraph 
(c)(3) of this section must continue to pursue collections and may 
reapply for participation in the program only when it has attained a 
default rate of 5 percent or less.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34423, Aug. 23, 1985, as amended at 52 FR 20988, June 3, 1987; 53 
FR 46550, Nov. 17, 1988; 56 FR 19294, Apr. 26, 1991]



Sec. 57.217  Additional conditions.

    The Secretary may with respect to any agreement entered into with 
any school under Sec. 57.205, impose additional conditions prior to or 
at the time of any award when in his or her judgment these conditions 
are necessary to assure or protect the advancement of the purposes of 
the agreement, the interest of the public health, or the conservation of 
funds awarded.



Sec. 57.218  Noncompliance.

    Wherever the Secretary finds that a participating school has failed 
to comply with the applicable provisions of the Act or the regulations 
of this subpart, he or she may, on reasonable notice to the school, 
withhold further payment of Federal capital contributions, and take such 
other action, including the termination of any agreement, as he or she 
finds necessary to enforce the Act and regulations. In this case no 
further expenditures shall be made from the health professions student 
loan fund or funds involved until the Secretary determines that there is 
no longer any failure of compliance.

[[Page 278]]



                     Subpart D_Nursing Student Loans

    Authority: Sec. 215 of the Public Health Service Act, 58 Stat. 690, 
67 Stat. 631 (42 U.S.C. 216); secs. 835-842 of the Public Health Service 
Act, 77 Stat. 913-916, as amended by 99 Stat. 397-400, 536-537, and 102 
Stat. 3160-3161 (42 U.S.C. 297 a-i).

    Source: 50 FR 34434, Aug. 23, 1985, unless otherwise noted.



Sec. 57.301  Applicability.

    The regulations in this subpart apply to the Federal capital 
contributions made by the Secretary to public or other nonprofit schools 
of nursing for the establishment of nursing student loan funds and to 
loans made to students from these funds.



Sec. 57.302  Definitions.

    As used in this subpart:
    Academic year means the traditional, approximately 9-month September 
to June annual session. For the purpose of computing academic year 
equivalents for students who, during a 12-month period, attend for a 
longer period than the traditional academic year, the academic year will 
be considered to be of 9 months' duration.
    Act means the Public Health Service Act, as amended.
    Community health center means an entity as defined under section 
330(a) of the Public Health Service Act, and in regulations at 42 CFR 
51c.102(c).
    Date upon which a student ceases to be a full-time or half-time 
student means the first day of the month which is nearest to the date 
upon which an individual ceases to be a full-time or half-time student, 
as defined in this section.
    Default means the failure of a borrower of a loan made under this 
subpart to make an installment payment when due, or comply with any 
other term of the promissory note for such loan, except that a loan made 
under this subpart shall not be considered to be in default if the loan 
is discharged in bankruptcy, the borrower's repayment schedule has been 
renegotiated and the borrower is complying with the renegotiated 
schedule, or the loan is in forbearance.
    Federal capital loan means a loan made by the Secretary to a school 
under section 827(a) of the Act, as in effect prior to July 29, 1975, 
the proceeds of which are to be returned to the Secretary.
    Full-time student means a student who is enrolled in a school and 
pursuing a course of study which constitutes a full-time academic 
workload, as determined by the school, leading to a diploma in nursing, 
an associate degree in nursing or an equivalent degree, a baccalaureate 
degree in nursing or an equivalent degree, or a graduate degree in 
nursing.
    Good standing means the eligibility of a student to continue in 
attendance at the school where he or she is enrolled as a student in 
accordance with the school's standards and practices.
    Grace period means the period of 9 months beginning on the date upon 
which a student ceases to be a full-time or half-time student at a 
school of nursing.
    Half-time student means a student who is enrolled in a school and 
pursuing a course of study which constitutes at least one-half of a 
full-time academic workload but less than a full-time academic workload, 
as determined by the school, leading to a diploma in nursing, an 
associate degree in nursing or an equivalent degree, a baccalaureate 
degree in nursing or an equivalent degree, or a graduate degree in 
nursing.
    Indian Health Service health center means a health care facility 
(whether operated directly by the Indian Health Service or operated by a 
tribal contractor or grantee under the Indian Self-Determination Act), 
which is physically separated from a hospital, and which provides one or 
more clinical treatment services, such as physician, dentist or nursing 
services, available at least 40 hours a week for outpatient care to 
persons of Indian or Alaska Native descent.
    Institutional capital contribution means the money provided by a 
school, in an amount not less than one-ninth of the Federal capital 
contribution, and deposited in a nursing student loan fund.
    Migrant health center means an entity as defined under section 
329(a) of the Public Health Service Act, and in regulations at 42 CFR 
56.102(g).

[[Page 279]]

    National of the United States means: (1) A citizen of the United 
States, or (2) a person who, though not a citizen of the United States, 
owes permanent allegiance to the United States, as defined in the 
Immigration and Nationality Act, at 8 U.S.C. 1101(a)(22).
    Native Hawaiian health center means an entity (as defined in section 
8 of Public Law 100-579)--
    (a) Which is organized under the laws of the State of Hawaii,
    (b) Which provides or arranges for health care services through 
practitioners licensed by the State of Hawaii, where licensure 
requirements are applicable,
    (c) Which is a public or private nonprofit entity, and
    (d) In which Native Hawaiian health practitioners significantly 
participate in the planning, management, monitoring, and evaluation of 
health services.
    Nursing facility means a facility as defined in section 1919(a) of 
the Social Security Act (SSA) (for fiscal year (FY) 1991 and subsequent 
fiscal years), except for FYs 1989 and 1990, the term means a ``skilled 
nursing facility,'' as such term is defined in section 1861(j) of the 
SSA, and an ``intermediate care facility,'' as such term is defined in 
section 1905(c) of such Act.
    Nursing student loan means the amount of money advanced to a student 
by a school from a nursing student loan fund under a properly executed 
promissory note.
    Registered nurse means an individual who has been licensed by a 
State Board of Nursing to practice professional nursing in accordance 
with State licensing laws requiring as a minimum one of the degrees or 
diplomas specified in this section.
    Rural health clinic means an entity as defined under section 
1861(aa)(2) of the Social Security Act, and in regulations at 42 CFR 
491.2.
    School means a public or other nonprofit school of nursing, as 
defined in section 853 of the Act.
    Secretary means the Secretary of Health and Human Services and any 
other officer or employee to whom the authority involved has been 
delegated.
    State means, in addition to the several States, the District of 
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the 
Northern Mariana Islands, the Virgin Islands, Guam, American Samoa, the 
Republic of Palau, the Republic of the Marshall Islands, and the 
Federated States of Micronesia.

[50 FR 34434, Aug. 23, 1985, as amended at 52 FR 10195, Mar. 30, 1987; 
53 FR 46554, Nov. 17, 1988; 56 FR 13771, Apr. 4, 1991; 61 FR 6123, Feb. 
16, 1996]



Sec. 57.303  Application by school.

    (a) Each school seeking a Federal capital contribution must submit 
an application at the time and in the form and manner that the Secretary 
may require. The application must be signed by an individual authorized 
to act for the applicant and to assume on behalf of the applicant the 
obligations imposed by the statute, the regulations of this subpart, and 
the terms and conditions of the award.
    (b) Each application will be reviewed to determine eligibility and 
the reasonableness of the amount of Federal support requested. The 
Secretary may require the applicant to submit additional data for this 
purpose.
    (c) An application will not be approved unless an agreement between 
the Secretary and the applicant school for a Federal capital 
contribution under section 835 of the Act is reached.

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 13771, Apr. 4, 1991; 57 
FR 45735, Oct. 5, 1992]



Sec. 57.304  Payment of Federal capital contributions and reallocation of 

funds remitted to the Secretary.

    (a) Annual payment. The Secretary will make payments at a time 
determined by him or her, to each school with which he or she has 
entered into an agreement under the Act.
    (1) For any fiscal year for which ``set-aside'' funds are available, 
the Secretary will first make payments in the manner described in (a)(2) 
of this section of not less than $1,000,000 of the amount of Federal 
funds determined by the Secretary at the time of payment to be available 
for making loans under this subpart. These funds will be paid to schools 
submitting an application for ``set-aside'' funds to be used only

[[Page 280]]

for the purpose of making loans to individuals qualified to receive 
loans under this subpart who, on the date they receive the loan, have 
not been employed on a full-time basis or been enrolled in any 
educational institution on a full-time basis for at least 7 years. An 
individual may not receive a loan under this subparagraph that exceeds 
$500 for any academic year.
    (2) If the total of the amounts requested for any fiscal year by all 
schools for Federal capital contributions minus the amount received 
under paragraph (a)(1) of this section exceeds the amount of Federal 
funds determined by the Secretary at the time of payment to be available 
for this purpose, the payment to each school will be reduced to 
whichever is smaller: (i) The amount requested in the application, or 
(ii) an amount which bears the same ratio to the total amount of Federal 
funds determined by the Secretary at the time of payment to be available 
for that fiscal year for the Nursing Student Loan program as the number 
of full-time students estimated by the Secretary to be enrolled in that 
school bears to the estimated total number of full-time students in all 
participating schools during that year.
    (3) Amounts remaining after these payments are made will be 
distributed in accordance with this paragraph among schools whose 
applications requested more than the amount paid to them, but with 
whatever adjustments that may be necessary to prevent the total paid to 
any school from exceeding the total requested by it.
    (b) Method of payment. The payment of Federal capital contributions 
to a school will be paid in a manner that avoids unnecessary 
accumulations of money in any nursing student loan fund.
    (c) Reallocation of funds remitted to the Secretary. (1) All funds 
from a student loan fund established under this subpart which are 
remitted to the Secretary in any fiscal year shall be available for 
allotment under this subpart, in the same fiscal year and the succeeding 
fiscal year, to eligible nursing schools. In making these allotments, 
the Secretary shall give priority to nursing schools which established a 
student loan fund under this subpart after September 30, 1975. The 
Secretary will make payments to eligible schools at a time determined by 
him or her, according to the procedures indicated in paragraphs (c)(2) 
and (c)(3) of this section.
    (2) Eligible schools which established a nursing student loan fund 
after September 30, 1975. The Secretary will make awards first to those 
eligible schools that established a nursing student loan fund after 
September 30, 1975. If the total of the amounts requested for any fiscal 
year by these schools exceeds the amount of funds determined by the 
Secretary at the time of payment to be available for this purpose, the 
payment to each school will be reduced to whichever is smaller:
    (i) The amount requested in the application, or
    (ii) An amount which bears the same ratio to the total amount of 
returned funds determined by the Secretary at the time of payment to be 
available for that fiscal year for the Nursing Student Loan program as 
the number of full-time students estimated by the Secretary to be 
enrolled in that school bears to the estimated total number of full-time 
students in these eligible schools during that year.

Amounts remaining after these payments are made will be distributed in 
accordance with this paragraph among schools whose applications 
requested more than the amount paid to them, with whatever adjustments 
may be necessary to prevent the total paid to any school from exceeding 
the total requested by it.
    (3) Eligible schools which established a nursing student loan fund 
prior to October 1, 1975. If there are funds remaining after making 
awards as specified by paragraph (c)(2) of this section, the Secretary 
will make awards to eligible schools which established a nursing student 
loan fund prior to October 1, 1975. If the total of the amounts 
requested for any fiscal year by these schools exceeds the amount of 
funds determined by the Secretary at the time of payment to be available 
for this purpose, the payment to each school will be reduced to 
whichever is smaller:
    (i) The amount requested in the application, or

[[Page 281]]

    (ii) An amount which bears the same ratio to the total amount of 
returned funds determined by the Secretary at the time of payment to be 
available for that fiscal year for the Nursing Student Loan program as 
the number of full-time students estimated by the Secretary to be 
enrolled in that school bears to the estimated total number of full-time 
students in these eligible schools during that year.

Amounts remaining after these payments are made will be distributed in 
accordance with this paragraph among schools whose applications 
requested more than the amount paid to them, with whatever adjustments 
may be necessary to prevent the total paid to any school from exceeding 
the total requested by it.

[50 FR 34434, Aug. 13, 1985, as amended at 53 FR 46554, Nov. 17, 1988]



Sec. 57.305  Nursing student loan funds.

    (a) Funds established with Federal capital contributions. Any fund 
established by a school with Federal capital contributions will be 
accounted for separately from other funds, providing a clear audit trail 
for all transactions. At all times the fund must contain monies 
representing the institutional capital contribution. The school must at 
all times maintain all monies relating to the fund in one or more 
interest-bearing accounts or investment instruments which meet OMB 
requirements established for Federal monies held by third parties, 
except that if the school documents that the costs associated with the 
use of an interest-bearing account would exceed expected earnings, the 
school is not required to maintain these monies in an interest-bearing 
account. The school must place all earnings into the fund but may first 
deduct from total earnings any reasonable and customary charges incurred 
through the use of an interest-bearing account. An institution shall 
exercise the level of care required of a fiduciary with regard to these 
deposits and investments, and shall be responsible for reimbursing the 
fund for any losses that occur due to the use of investments that are 
not federally insured.
    (1) The Federal capital contribution fund is to be used by the 
school only for:
    (i) Nursing student loans to full-time or half-time students;
    (ii) Capital distribution as provided in section 839 of the Act or 
as agreed to by the school and the Secretary; and
    (iii) Costs of litigation, costs associated with membership in 
credit bureaus, and to the extent specifically approved by the 
Secretary, other collection costs that exceed the usual expenses 
incurred in the collection of nursing student loans.
    (2) A school must review the balance in the fund on at least a semi-
annual basis to determine whether the fund balance compared with 
projected levels of expenditures and collections exceeds its needs. A 
school in closing status must review the balance in the fund on a 
quarterly basis. Monies identified as in excess of the school's needs 
must be reported, and the Federal share returned to the Federal 
Government, by the due date of the required report which identifies the 
excess monies. The school's determination is subject to the review and 
approval of the Secretary.
    (b) Funds established with Federal capital loans. (1) Each Federal 
capital loan is subject to the terms of the promissory note executed by 
an authorized official on behalf of the borrowing school.
    (2) The Federal capital loans must be carried in a special account 
of the school, to be used by the school only for: (i) Repayments of 
principal and interest on Federal capital loans; and (ii) costs of 
litigation, costs associated with membership in credit bureaus, and, to 
the extent specifically approved by the Secretary, other collection 
costs that exceed the usual expenses incurred in the collection of 
nursing student loans.
    (c) Failure to comply with the requirements of this section will 
subject a school to the noncompliance provisions of Sec. 57.318 and the 
Department's Claims Collections regulations (45 CFR part 30), as 
appropriate.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 40734, Aug. 15, 1991; 
61 FR 6123, Feb. 16, 1996]

[[Page 282]]



Sec. 57.306  Eligibility and selection of nursing student loan applicants.

    (a) Determination of eligibility. (1) Applicants are eligible for 
consideration for a nursing student loan if they are:
    (i) Residents of the United States and either a citizen or national 
of the United States, an alien lawfully admitted for permanent residence 
in the United States, a citizen of the Commonwealth of the Northern 
Mariana Islands, a citizen of the Republic of Palau, a citizen of the 
Republic of the Marshall Islands, or a citizen of the Federated States 
of Micronesia;
    (ii) Enrolled, or accepted for enrollment in the school as full-time 
or half-time students;
    (iii) In need of the amount of the loan to pursue the course of 
study at the school; and
    (iv) Capable, in the opinion of the school, of maintaining good 
standing in the course of study.
    (2) An applicant who has previously attended an institution of 
higher education must submit a financial aid transcript which includes 
at least the following data:
    (i) Applicant's name and social security number;
    (ii) Amounts and sources of loans and grants previously received by 
the applicant for study at an institution of higher education;
    (iii) Whether the applicant is in default on any of these loans, or 
owes a refund on any grants;
    (iv) Certification from each institution previously attended by the 
applicant that the applicant has received no financial aid, if 
applicable; and
    (v) From each institution previously attended, the signature of an 
official authorized by the institution to sign such transcripts on 
behalf of the institution.
    (b) Selection of nursing student loan applicants and determinations 
of need. The school will select qualified applicants, make reasonable 
determinations of need, and determine the amount of student loans.
    (1) In selecting nursing student loan applicants the school will 
give preference to licensed practical nurses, and to persons with 
exceptional financial need. For purposes of this preference, a student 
will be considered to demonstrate exceptional financial need if the 
school determines that the student's resources, as described in 
paragraph (b)(2)(i) of this section, do not exceed one-half of the costs 
of attendance at the school. Summer earnings, educational loans, 
veterans (G.I.) benefits, earnings during the school year, and Aid to 
Families with Dependent Children (AFDC) will not be considered as 
resources in determining whether an applicant meets these criteria for 
exceptional financial need, but will be considered in determining the 
amount of funds a student may receive.
    (2) In determining whether a student is in need of a nursing student 
loan to pursue a full-time or half-time course of study at the school, 
the school will take into consideration:
    (i) The financial resources available to the student by using one of 
the national need analysis systems or any other procedure approved by 
the Secretary of Education in combination with other information which 
the school has regarding the student's financial status; and
    (ii) The costs reasonably necessary for the student's attendance at 
the school, including any special needs and obligations which directly 
affect the student's financial ability to attend the school on a full-
time or half-time basis. The school must document the criteria used for 
determining these costs.
    (c) Verification of loan information. The school must verify, to the 
best of its ability, the information provided by the student on the loan 
application. To comply with this requirement, a school may require that 
a student provide, for example: Photocopies of the parents', student's, 
and spouse's Federal income tax forms with original signatures for the 
most recent tax year (or certification that no Federal income tax return 
was filed); tax returns that are certified as having been received by 
the Internal Revenue Service; or other documentation that the school 
considers necessary to help assure that information on the loan 
application is correct.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 53 FR 46554, Nov. 17, 1988; 
56 FR 13771, Apr. 4, 1991; 61 FR 6123, Feb. 16, 1996]

[[Page 283]]



Sec. 57.307  Maximum amount of nursing student loans.

    The total of the nursing student loans made from the fund to any 
student for an academic year may not exceed $2,500, except that for each 
of the final 2 academic years of the program, the total must not exceed 
$4,000. The maximum amount loaned during a 12-month period to any 
student enrolled in a school which provides a course of study longer 
than the 9-month academic year may be proportionately increased. The 
total of all nursing student loans to any student must not exceed 
$13,000.

[56 FR 13771, Apr. 4, 1991]



Sec. 57.308  Nursing student loan promissory note.

    (a) Promissory note form. Each nursing student loan must be 
evidenced by a properly executed promissory note in a form approved by 
the Secretary. The school must safeguard the promissory note against 
fire, theft, and tampering.
    (1) Each promissory note must state that the loan will bear interest 
on the unpaid balance computed only for periods during which repayment 
of the loan is required, at the rate of 5 percent per year.
    (2) Each promissory note must contain an acceleration clause 
provided by the Secretary, which will permit the acceleration of 
delinquent loans at the school's option.
    (3) A copy of each executed note must be supplied by the school to 
the student borrower.
    (b) Security. A school must require security or endorsement if the 
borrower is a minor and if, under the applicable State law, the note 
signed by him or her would not create a binding obligation. The school 
may not require security or endorsement in any other circumstances.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 13771, Apr. 4, 1991; 57 
FR 45735, Oct. 5, 1992]



Sec. 57.309  Payment of nursing student loans.

    (a) Nursing student loans from any fund may be paid to or on behalf 
of student borrowers in installments considered appropriate by the 
school except that a school may not pay to or on behalf of any borrower 
more during any given installment period (e.g., semester, term, or 
quarter) than the school determines the student needs for that period.
    (b) No payment may be made from a fund to or on behalf of any 
student borrower if at the time of the payment the borrower is not a 
full-time or half-time student.



Sec. 57.310  Repayment and collection of nursing student loans.

    (a) Each nursing student loan, including accrued interest, will be 
repayable in equal or graduated periodic installments in amounts 
calculated on the basis of a 10-year repayment period. Repayment of a 
loan must begin 9 months after the student ceases to be a full-time or 
half-time student, except that if a borrower reenters the same or 
another school as a full-time or half-time student within the 9-month 
period, the date upon which interest will accrue and the repayment 
period will begin will be determined by the date upon which the student 
last ceases to be a full-time or half-time student at that school.
    (1) The following periods will be excluded from the 10-year 
repayment period: (i) All periods up to a total of 3 years of active 
duty performed by the borrower as a member of the Army, Navy, Air Force, 
Marine Corps, Coast Guard, National Oceanic and Atmospheric 
Administration Corps or the U.S. Public Health Service Commissioned 
Corps;
    (ii) All periods up to a total of 3 years of service as a volunteer 
under the Peace Corps Act; and
    (iii) All periods up to a total of 10 years during which the 
borrower is pursuing a full-time or half-time course of study at a 
school leading to a baccalaureate degree in nursing or an equivalent 
degree, or to a graduate degree in nursing, or is otherwise pursuing 
advanced professional training in nursing (or training to be a nurse 
anesthetist). For purposes of this paragraph, ``otherwise pursuing 
advanced professional training in nursing'' shall include full-time or 
half-time training, beyond the

[[Page 284]]

first diploma or degree in nursing received by the particular borrower, 
of at least 1 academic year which will advance the borrower's knowledge 
of and strengthen his or her skills in the provision of nursing 
services. \1\
---------------------------------------------------------------------------

    \1\ Individuals who received nursing student loans prior to July 1, 
1969, remain subject to the repayment provisions of 42 CFR 
57.314(a)(3)(1976) as adopted on February 4, 1974. These provisions can 
be found at 39 FR 16473 (May 9, 1974), and a copy can be obtained by 
writing the Division of Student Assistance, Bureau of Health 
Professions, 5600 Fishers Lane, Parklawn Building, room 8-34, Rockville, 
MD 20857.
---------------------------------------------------------------------------

    (2) Subject to the provisions of paragraph (b)(3) of this section, a 
borrower must establish a repayment schedule with the school providing 
for payments not less often than quarterly. Any borrower whose repayment 
becomes more than 60 days past due must be placed on a monthly repayment 
schedule by the school. A borrower may at his or her option and without 
penalty, prepay all or part of the principal and accrued interest at any 
time.
    (3) A school may grant forbearance whenever extraordinary 
circumstances such as unemployment, poor health or other personal 
problems temporarily affect the borrower's ability to make scheduled 
loan repayments.
    (b) Collection of nursing student loans. (1) Each school at which a 
fund is established must exercise due diligence in the collection of 
nursing student loans due the fund. In the exercise of due diligence, a 
school must follow procedures which are at least as extensive and 
effective as those used in the collection of other student loan accounts 
due the school, and must use the steps outlined below in accordance with 
collection practices which are generally accepted among institutions of 
higher education:
    (i) Conduct and document an entrance interview (individually or in 
groups) with the borrower prior to disbursing NSL funds in any academic 
year. During the entrance interview the school must obtain documentation 
which indicates that the borrower is aware of the rights and 
responsibilities associated with NSL funds and personal information 
which would assist in locating the borrower if he or she fails to keep 
the school informed of his or her current address. The requirement of 
this subparagraph may be met by correspondence if the school determines 
that a face-to-face meeting (individually or in groups) is 
impracticable.
    (ii) Conduct and document an exit interview (individually or in 
groups) with the borrower. During the exit interview, the school must 
provide each borrower with information necessary to carry out the terms 
of repayment, remind the borrower of the rights and responsibilities 
associated with NSL funds, and update the personal information collected 
prior to disbursing NSL funds which would assist in locating the 
borrower if he or she fails to keep the school informed of his or her 
current address. If the borrower terminates studies without advance 
notice, the school must document attempts to inform the borrower of the 
substance of the exit interview and to secure exit interview information 
from the borrower by mail.
    (iii) Notify the borrower in writing of the impending repayment 
obligation at least twice during the grace period;
    (iv) Notify a borrower who is in deferment status in writing of the 
impending repayment obligation 1 to 3 months prior to the expiration of 
the approved period of deferment;
    (v) Perform regular billing;
    (vi) Follow up past due payments with a series of at least four 
documented and reasonably spaced attempts to contact the borrower, at 
least three of which must be in writing at not more than 30-day 
intervals, prior to the loan becoming 120 days past due, provided that 
the school has a current address for the borrower;
    (vii) Perform address searches when necessary;
    (viii) Use collection agents, which may include the use of an 
internal collection agent;
    (ix) Institute legal proceedings against borrowers after all other 
attempts at collection have failed, unless the school determines, 
subject to the approval of the Secretary, that such litigation would not 
be cost-effective; and

[[Page 285]]

    (x) Become a member of a credit bureau and notify the credit bureau 
of accounts past due by more than 120 days.

In place of one or more of the procedures outlined above schools may 
substitute collection techniques that are equally or more effective, but 
only after they have demonstrated the effectiveness of the techniques 
and obtained written approval from the Secretary.
    (2) Late charge. (i) For any nursing student loan made after June 
30, 1969, but prior to October 1, 1985, the school may fix a charge for 
failure of the borrower to pay all or any part of an installment when it 
is due and, in the case of a borrower who is entitled to deferment under 
section 836(b)(2) of the Act, or cancellation or repayment under section 
836(b)(3) of the Act, for any failure to file timely and satisfactory 
evidence of the entitlement. The amount of the charge may not exceed $1 
for the first month or part of a month by which the installment or 
evidence is late and $2 for each succeeding month or part of a month. 
The school may elect to add the amount of this charge to the principal 
amount of the loan as of the day after the day on which the installment 
or evidence was due, or to make the amount of the charge payable to the 
school no later than the due date of the next installment following 
receipt of the notice of the charge by the borrower.
    (ii) For any nursing student loan made on or after October 1, 1985, 
the school shall assess a charge for failure of the borrower to pay all 
or any part of an installment when the loan is more than 60 days past 
due and, in the case of a borrower who is entitled to deferment under 
section 836(b)(2) of the Act, for any failure to file satisfactory 
evidence of the entitlement within 60 days of the date payment would 
otherwise be due. No charge may be made if the loan is less than 61 days 
past due. The amount of this charge may not exceed an amount equal to 6 
percent of the amount due at the time the charge is calculated. The 
school may elect to add the amount of this charge to the principal 
amount of the loan as of the day on which the charge is calculated, or 
to make the amount of the charge payable to the school no later than the 
due date of the next installment following receipt of the notice of the 
charge by the borrower.
    (3) With respect to any nursing student loan made after June 30, 
1969, the school may require the borrower to make payments of at least 
$15 per month on all outstanding nursing student loans during the 
repayment period.
    (4) A school must, on an annual basis, review and assess the 
collectibility of any loan more than 3 years past due. If the school 
determines that the prospects of future collection are promising enough 
to justify periodic review of the debt, and neither the statute of 
limitations nor the 10-year repayment period has expired, the school may 
retain the account for continued collections, provided that it makes an 
attempt at least semi-annually to collect from the borrower. When the 
due diligence procedures required by paragraph (b)(1) of this section 
have been exhausted, the school is responsible for determining the 
collection methods it will use for the semi-annual collection effort 
required on these loans. If the school determines that the prospects of 
future collection are not promising, or when the statute of limitations 
or the 10-year repayment period has expired, the loan must be considered 
uncollectible. A school may determine a loan to be uncollectible sooner 
than 3 years past due when it has evidence that the loan cannot be 
collected, but in no case should a school consider a loan as 
uncollectible if it has not been in default for at least 120 days. A 
school is not subject to the requirements in paragraphs (b)(4) (i) and 
(iii) of this section for loans that became uncollectible, as determined 
by the school, before January 1, 1983.
    (i) A school must request permission to write off an uncollectible 
loan within 30 days of the determination that it is uncollectible or 
reimburse the fund in the full amount of the loan, pursuant to Sec. 
57.310(b)(4)(iii). The 30-day period for submitting the loan for write-
off review begins on the date that the determination of uncollectibility 
is made, in accordance with paragraph (b)(4) of this section. In any 
instance where the Secretary determines that a

[[Page 286]]

school has failed to exercise due diligence in the collection of a loan, 
in accordance with the applicable regulatory requirements, the school 
will be required to place in the fund the full amount of principal, 
interest, and penalty charges that remains uncollected on the loan. 
Reimbursement must be made by the following June 30 or December 31, 
whichever is sooner, except that in no case will a school be required to 
reimburse the fund in less than 30 days following the Secretary's 
disapproval of the request for write-off approval.
    (ii) If the Secretary determines that a school has exercised due 
diligence in the collection of a loan, in accordance with the applicable 
regulatory requirements, or if the school determines that the loan was 
uncollectible prior to January 1, 1983, the school will be permitted to 
reduce its accounts receivable for the NSL fund by the full amount of 
principal, interest, and penalty charges that remains uncollected on 
that loan and will not be required to return the Federal share of the 
loss to the Secretary.
    (iii) If a school does not request permission to write off an 
uncollectible loan within the required timeframe, it must reimburse the 
fund for the full amount of principal, interest, and penalty charges 
that remains uncollected on that loan. This reimbursement must be made 
by the following June 30 or December 31, whichever is sooner, except 
that in no case will a school be required to reimburse the fund in less 
than 30 days following its determination that a loan is uncollectible.
    (iv) Failure to comply with the requirements of this section will 
subject a school to the noncompliance provisions of Sec. 57.318 and the 
Department's Claims Collection regulations (45 CFR part 30), as 
appropriate.
    (5) Disclosure of taxpayer identity information. Upon written 
request by the Secretary, the Secretary of the Internal Revenue Service 
(IRS) may disclose the address of any taxpayer who has defaulted on a 
nursing student loan, for use only by officers, employees, or agents of 
the Department, to locate the defaulted borrower to collect the loan. 
Any such mailing address may be disclosed by the Secretary to any school 
from which the defaulted borrower received a nursing student loan, for 
use only by officers, employees, or agents of the school whose duties 
relate to the collection of nursing student loan funds, to locate the 
defaulted borrower to collect the loan. Any school which requests and 
obtains such address information must comply with the requirements of 
the Secretary and the IRS regarding the safeguarding and proper handling 
of this information.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 52 FR 10195, Mar. 30, 1987; 
56 FR 13771, Apr. 4, 1991; 56 FR 40734, Aug. 15, 1991; 57 FR 45735, Oct. 
5, 1992; 61 FR 6123, Feb. 16, 1996]



Sec. 57.311  Cancellation of nursing student loans for disability or death.

    (a) Permanent and total disability. The Secretary will cancel a 
borrower's indebtedness in accordance with section 836(b)(4) of the Act 
if the borrower is found to be permanently and totally disabled on 
recommendation of the school and as supported by whatever medical 
certification the Secretary may require. A borrower is totally and 
permanently disabled if he or she is unable to engage in any substantial 
gainful activity because of a medically determinable impairment, which 
the Secretary expects to continue for a long time or to result in death.
    (b) Death. The Secretary will cancel a borrower's indebtedness in 
accordance with section 836(b)(4) of the Act upon the death of the 
borrower. The school to which the borrower was indebted must secure a 
certification of death or whatever official proof is conclusive under 
State law.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 13772, Apr. 4, 1991]



Sec. 57.312  Repayment of loans for service in a shortage area.

    (a) Service in a shortage area. Subject to the availability of 
funds, a person who:
    (1) Has obtained a degree as specified in section 846(a)(1) of the 
Act;

[[Page 287]]

    (2) Has obtained one or more nursing student loans or any other 
loans necessary for costs (including tuition, books, fees, equipment, 
living and other expenses which the Secretary determines were necessary) 
of attending a school of nursing; and
    (3) Enters into an agreement with the Secretary to serve as a full-
time registered nurse for a period of not less than 2 years in an Indian 
Health Service health center, a Native Hawaiian health center, a public 
hospital, a migrant health center, a community health center, a nursing 
facility, a rural health clinic, or in a health facility determined by 
the Secretary to have a critical shortage of nurses, will have a portion 
of these loans repaid by the Secretary in accordance with paragraph (c) 
of this section. Prior to entering an agreement for repayment of loans, 
other than nursing student loans, the Secretary will require that 
satisfactory evidence be provided of the existence and reasonableness of 
the education loans (i.e., a copy of the written loan agreement 
establishing the loan).
    (b) When entering into agreements under paragraph (a) of this 
section, the Secretary shall give priority to:
    (1) Applicants with the greatest financial need; and
    (2) Applicants that, with respect to health facilities described in 
paragraph (a)(3) of this section, agree to serve in such facilities 
located in geographic areas with a shortage of and need for nurses, as 
determined by the Secretary.
    (3) In addition to the priorities under paragraphs (b) (1) and (2) 
of this section, should specific needs warrant, the Secretary may 
establish additional preferences which will be announced from time to 
time in the Federal Register.
    (c) Repayment. Loan repayment will be made by the Secretary to 
persons who meet the conditions set forth in paragraph (a) of this 
section. Payment will be as follows:
    (1) Upon completion by the borrower of the first year of service as 
specified in the agreement, the Secretary will pay 30 percent of the 
principal of, and the interest on, each loan which was unpaid as of the 
date the borrower began his or her service;
    (2) Upon completion by the borrower of the second year of service, 
the Secretary will pay another 30 percent of the principal of, and the 
interest on, each loan which was unpaid as of the date the borrower 
began his or her service;
    (3) Upon completion by the borrower of a third year of service, the 
Secretary will pay another 25 percent of the principal of, and the 
interest on, each loan which was unpaid as of the date the borrower 
began his or her service; and
    (4) No more than 85 percent of the principal of any loan will be 
paid under this section.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 13772, Apr. 4, 1991; 61 
FR 6123, Feb. 16, 1996]



Sec. 57.313  Loan cancellation for full-time employment as a registered nurse.

    (a) For loans made after November 18, 1971, and before September 29, 
1979. A person who: (1) Received one or more nursing student loans after 
November 18, 1971, and before September 29, 1979; (2) is in compliance 
with the requirements of title VIII of the Act and these regulations; 
and (3) engages in full-time employment as a registered nurse (including 
teaching in any of the fields of nurse training or service as an 
administrator, supervisor, or consultant in any of the fields of 
nursing) in any public or nonprofit private agency, institution, or 
organization (including neighborhood health centers) is entitled to have 
a portion of these nursing student loans canceled as follows: 15 percent 
of the total amount of the loans plus accrued interest on the loan which 
is unpaid on the first day of his or her service, for each of the first, 
second, and third year of service; and 20 percent of the total amount of 
the loan plus accrued interest on the loan for each complete fourth and 
fifth year of service thereafter, up to 85 percent of the total of the 
loans, plus accrued interest.
    (b) Continuation of provisions for cancellation of loans made prior 
to November 18, 1971. A person who received one or more nursing student 
loans prior to

[[Page 288]]

November 18, 1971, may still receive cancellation of these loans for 
service under section 836(h) of the Act. The regulations set forth in 42 
CFR 57.316 (a) and (b)(6) (1976), as adopted on February 4, 1974, remain 
applicable to cancellation on this basis. The provisions can be found at 
39 FR 16473 (May 9, 1974) and a copy can be obtained by writing to the 
Division of Student Assistance, Bureau of Health Professions, Room 8-34, 
Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857.
    (c) The determination of whether a person is entitled to have any 
portion of his or her nursing student loan canceled for full-time 
employment as a registered nurse will be made by the institution to 
whose fund his or her loan is payable, upon receipt and evaluation of an 
application for cancellation from that person.

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 13772, Apr. 4, 1991; 57 
FR 45735, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996]



Sec. 57.313a  Loan cancellation reimbursement.

    In the event that insufficient funds are available to the Secretary 
in any fiscal year to enable him or her to pay to all schools their 
proportionate shares of all loans and interest canceled under this 
subpart for full-time employment as a nurse, death, or disability:
    (a) Each school will be paid an amount bearing the same ratio to the 
total of the funds available for that purpose as the principal of loans 
canceled by that school in that fiscal year bears to the total principal 
of loans canceled by all schools in that year; and
    (b) Any additional amounts to which a school is entitled will be 
paid by the Secretary at the time of distribution of the assets of the 
school's fund under section 839 of the Act.



Sec. 57.314  Repayment of loans made after November 17, 1971, for failure to 

complete a program of study. \2\
---------------------------------------------------------------------------

    \2\ Effective November 26, 1984, the Secretary stopped accepting 
applications under Sec. 57.314 because Federal funds are not available 
for this provision.
---------------------------------------------------------------------------

    In the event that the Secretary undertakes to repay educational 
loans under section 836(i) of the Act, he or she will use the following 
criteria to make a determination as to each applicant's eligibility:
    (a) An applicant will be considered to have failed to complete the 
course of study in nursing for which an eligible education loan was made 
upon certification by a school of nursing that the individual ceased to 
be enrolled in the school subsequent to November 17, 1971;
    (b) An applicant will be considered to be in exceptionally needy 
circumstances if, upon comparison of the income and other financial 
resources of the applicant with his or her expenses and financial 
obligations, the Secretary determines that repayment of the loan would 
constitute a serious economic burden on the applicant. In making this 
determination, the Secretary will take into consideration the 
applicant's net financial assets, his or her potential earning capacity, 
and the relationship of the income available to the applicant to the 
low-income levels published annually by the Secretary in the Federal 
Register;
    (c) An applicant will be considered as not having resumed his or her 
nursing studies within 2 years following the date the individual ceased 
to be a student upon certification so stating from the applicant; and
    (d) An applicant will be considered as not reasonably expected to 
resume his or her nursing studies within 2 years following the date upon 
which he or she terminated these studies, based upon consideration of 
the reasons for the applicant's failure to complete these studies, 
taking into account such factors as academic, medical, or financial 
difficulties. The Secretary will only repay education loans made after 
November 17, 1971.

[50 FR 34434, Aug. 23, 1985, as amended at 56 FR 13772, Apr. 4, 1991; 57 
FR 45735, Oct. 5, 1992; 61 FR 6123, Feb. 16, 1996]



Sec. 57.315  Records, reports, inspection, and audit.

    (a) Records and reports. (1) Each Federal capital contribution and 
Federal capital loan is subject to the condition that the school must 
maintain those

[[Page 289]]

records and file with the Secretary those reports relating to the 
operation of its nursing student loan funds as the Secretary may find 
necessary to carry out the purposes of the Act and these regulations. A 
school must submit required reports to the Secretary within 45 days of 
the close of the reporting period.
    (i) A school which fails to submit a required report for its Federal 
capital contribution fund within 45 days of the close of the reporting 
period:
    (A) Shall be prohibited from receiving new Federal capital 
contributions;
    (B) Must place the revolving fund and all subsequent collections in 
an insured interest-bearing account; and
    (C) May make no loan disbursements.

The above restrictions apply until the Secretary determines that the 
school is in compliance with the reporting requirement.
    (ii) A school that fails to submit a complete report within 6 months 
of the close of the reporting period will be subject to termination. The 
Secretary will provide the school with a written notice specifying his 
or her intention to terminate the school's participation in the program 
and stating that the school may request, within 30 days of the receipt 
of this notice, a formal hearing. If the school requests a hearing, it 
must within 90 days of the receipt of the notice, submit 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:
    (A) The request for a hearing is untimely (ie., fails to meet the 
30-day requirement);
    (B) The school does not provide a statement of material, factual 
issues in dispute within the 90-day required period; or
    (C) 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 school setting forth the reasons for 
denial. If a hearing is denied, or if as a result of the hearing, 
termination is still determined to be necessary, the school will be 
terminated from participation in the program and will be required to 
return the Federal share of the revolving fund to the Department. A 
school terminated for failure to submit a complete report within 6 
months of the close of the reporting period must continue to pursue 
collections and may reapply for participation in the program once it has 
submitted the overdue report.
    (2) The following student records must be retained by the school for 
5 years after the individual student ceases to be a full-time or half-
time student:
    (i) Approved student applications for nursing student loans;
    (ii) Documentation of the financial need of applicants; and
    (iii) Copy of financial aid transcripts.
    (3) The following repayment records for each individual borrower 
must be retained for at least 5 years from the date of retirement of a 
loan:
    (i) The amount and date of each loan;
    (ii) The amount and date of each payment or cancellation;
    (iii) Records of periods of deferment;
    (iv) Date, nature, and result of each contract with the borrower or 
proper endorser in the collection of an overdue loan;
    (v) Copies of all correspondence to or from the borrower and 
endorser;
    (vi) Copies of all correspondence with a collection agency related 
to the individual borrower;
    (vii) Copies of all correspondence with a credit bureau related to 
an individual borrower; and
    (viii) Copies of all correspondence relating to uncollectible loans 
which have been written off by the Federal Government or repaid by the 
school.
    (4) The school must also retain other records as the Secretary may 
prescribe. In all cases where questions have arisen as a result of a 
Federal audit, the records must be retained until resolution of all 
questions.
    (b) Inspection and audit. (1) Any application for a Federal capital 
contribution will constitute the consent of the applicant school to 
inspection and fiscal audit, by the Secretary and the Comptroller 
General of the United States or any of their duly authorized 
representatives, of the fiscal and other

[[Page 290]]

records of the applicant school which relate to the Federal capital 
contribution or Federal capital loan.
    (2) The school must comply with the audit requirements of the 
Department of Health and Human Services' Administration of Grants 
regulations which are set forth in 45 CFR part 74.
    (c) Institutional officials who have information which indicates the 
potential or actual commission of fraud or other offenses against the 
United States, involving these loan funds, should promptly provide this 
information to the appropriate Regional Office of Inspector General for 
Investigations.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 53 FR 46555, Nov. 17, 1988; 
56 FR 13772, Apr. 4, 1991; 57 FR 45735, Oct. 1, 1992]



Sec. 57.316  What additional Department regulations apply to schools?

    Participating schools are advised that in addition to complying with 
the terms and conditions of these regulations, several other regulations 
apply under this subpart. These include, but are not limited to:

45 CFR part 76--Governmentwide Debarment and Suspension (nonprocurement) 
and Governmentwide Requirements for Drug-Free Workplace (Grants)
45 CFR part 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
45 CFR part 83--Regulation for the administration and enforcement of 
sections 794 and 855 of the Public Health Service Act
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in Health and 
Human Services programs or activities receiving Federal financial 
assistance
45 CFR part 93--New Restrictions on Lobbying

[56 FR 13772, Apr. 4, 1991, as amended at 57 FR 45735, Oct. 5, 1992; 61 
FR 6123, Feb. 16, 1996]



Sec. 57.316a  Performance standard.

    On June 30, 1986, and on each June 30 thereafter, except as provided 
in paragraph (b) of this section, each school must have a default rate 
(as calculated under paragraph (a) of this section) of not more than 5 
percent.
    (a) The default rate for each school shall be the ratio (stated as a 
percentage) that the defaulted principal amount outstanding of the 
school bears to the matured loans of the school. For this purpose:
    (1) The term ``defaulted principal amount outstanding'' means the 
total amount borrowed from the loan fund of a school that has reached 
the repayment stage (minus any principal amount repaid or canceled) on 
loans in default for more than 120 days; and
    (2) The term ``matured loans'' means the total principal amount of 
all loans made by a school under this subpart minus the total principal 
amount of loans made by the school to students who are:
    (i) Enrolled in a full-time or half-time course of study at the 
school; or
    (ii) In their grace period.
    (b) Any school that has a default rate greater than 5 percent on 
June 30, 1986, or on June 30 of any year thereafter will be required to:
    (1) Reduce its default rate by 50 percent (or a school with a 
default rate below 10 percent must reduce its rate to 5 percent) by the 
close of the following 6-month period; and
    (2) By the end of each succeeding 6-month period, reduce its default 
rate to 50 percent of the required rate for the previous 6-month period, 
until it reaches 5 percent.
    (c) Any school subject to the provisions of paragraph (b) of this 
section which fails to comply with those requirements will receive no 
new NSL funds and will be required to:
    (1) Place the revolving fund monies and all subsequent collections 
into an insured interest-bearing account;
    (2) Make no loan disbursements; and
    (3) By the end of the succeeding 6-month period, reduce its default 
rate to 50 percent of the rate it failed to achieve under paragraph(b) 
of this section, or 5 percent. A school that meets this requirement will 
be permitted to resume the use of its nursing student

[[Page 291]]

loan funds, but must continue to comply with the requirements of 
paragraph (b)(2) of this section if its default rate is still greater 
than 5 percent.

A school that meets the requirements of subparagraph (c)(3) of this 
section will be permitted to resume the use of its NSL funds, but must 
continue to comply with the requirements of subparagraph (b)(2) of this 
section if its delinquency rate is still greater than 5 percent.
    (d) Any school subject to the provisions of paragraph (c)(3) of this 
section which fails to comply with those requirements will be subject to 
termination. The Secretary will provide the school with a written notice 
specifying his or her intention to terminate the school's participation 
in the program and stating that the school may request, within 30 days 
of the receipt of this notice, a formal hearing. If the school requests 
a hearing, it must within 90 days of the receipt of the notice, submit 
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:
    (1) The request for a hearing is untimely (i.e., fails to meet the 
30-day requirement);
    (2) The school does not provide a statement of material, factual 
issues in dispute within the 90-day required period; or
    (3) 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 school setting forth the reasons for 
denial. If a hearing is denied, or if as a result of the hearing, 
termination is still determined to be necessary, the school will be 
terminated from participation in the program and will be required to 
return the Federal share of the revolving fund to the Department. A 
school terminated for failure to comply with the provisions of paragraph 
(c)(3) of this section must continue to pursue collections and may 
reapply for participation in the program only when it has attained a 
default rate of 5 percent or less.

(Approved by the Office of Management and Budget under control number 
0915-0047)

[50 FR 34434, Aug. 23, 1985, as amended at 52 FR 10195, Mar. 30, 1987; 
53 FR 46555, Nov. 17, 1988; 56 FR 13772, Apr. 4, 1991]



Sec. 57.317  Additional conditions.

    The Secretary may, with respect to any agreement entered into with 
any school under Sec. 57.305, impose additional conditions prior to or 
at the time of any award when in his or her judgment the conditions are 
necessary to assure or protect advancement of the purposes of the 
agreement, the interest of the public health, or the conservation of 
funds awarded.



Sec. 57.318  Noncompliance.

    Whenever the Secretary finds that a participating school has failed 
to comply with the applicable provisions of the Act or the regulations 
of this subpart he or she may, on reasonable notice to the school, 
withhold further payments of Federal capital contributions and take 
other action, including the termination of any agreement, as he or she 
finds necessary to enforce the Act and regulations. In such case no 
further expenditures shall be made from the nursing student loan fund or 
funds involved until the Secretary determines that there is no longer 
any failure of compliance.



     Subpart E_Grants for Construction of Nurse Training Facilities

    Authority: Sec. 215, 58 Stat. 690, as amended; 42 U.S.C. 216.



Sec. 57.409  Good cause for other use of completed facility.

    If, within 20 years after completion of construction (or, in the 
case of interim facilities prior to the time at which teaching in such 
facilities is moved to a permanent facility, whichever comes first), the 
facility shall cease to be used for any one or more of the purposes for 
which it was constructed, the Secretary, in determining whether there is 
good cause for releasing the applicant or other owner of the facility 
from the obligation so to use the facility, shall

[[Page 292]]

take into consideration the extent to which:
    (a) The facility will be devoted by the applicant or other owner to 
the teaching of other health personnel;
    (b) There are reasonable assurances that for the remainder of such 
period other facilities not previously utilized for nurse training will 
be so utilized and are substantially the equivalent in nature and extent 
for such purposes.

[37 FR 20548, Sept. 30, 1972]

Subparts F-O [Reserved]



     Subpart P_Loan Guarantees and Interest Subsidies to Assist in 

   Construction of Teaching Facilities for Health Profession Personnel

    Authority: Sec. 727, Public Health Service Act. 77 Stat. 170, as 
amended (42 U.S.C. 293g).

    Source: 38 FR 31836, Nov. 19, 1973, unless otherwise noted.



Sec. 57.1501  Applicability.

    The regulations of this subpart are applicable to loan guarantees 
and interest subsidy payments made pursuant to section 729 of the Public 
Health Service Act (42 U.S.C. 293i) to assist nonprofit private entities 
which are eligible for grants under subpart B of this part in carrying 
out projects for construction of teaching facilities for health 
professions personnel.



Sec. 57.1502  Definitions.

    As used in this subpart:
    (a) All terms not defined herein shall have the same meanings as 
given them in section 724 of the Act.
    (b) Act means the Public Health Service Act, as amended.
    (c) 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 may be delegated.
    (d) School means a school of medicine, dentistry, osteopathy, 
pharmacy, optometry, podiatry, veterinary medicine, or public health 
which provides a course of study or a portion thereof which leads 
respectively to a degree of doctor of medicine, doctor of dental surgery 
or an equivalent degree, doctor of osteopathy, doctor of optometry or an 
equivalent degree, doctor of podiatry or an equivalent degree, bachelor 
of science in pharmacy or an equivalent degree, doctor of veterinary 
medicine or an equivalent degree, or a graduate degree in public health, 
and which is accredited as provided in section 721(b)(1) of the Act.
    (e) Affiliated hospital or affiliated outpatient facility means a 
hospital or outpatient facility (as defined in section 645 of the Act) 
which, although not owned by such school, has a written agreement with a 
school of medicine, osteopathy, or dentistry eligible for assistance 
under subpart B of this part, providing for effective control by the 
school of the health professions teaching program in the hospital or 
outpatient facility.
    (f) Nonprofit as applied to any school, hospital, outpatient 
facility, or other entity means one which is owned and operated by one 
or more corporations or associations no part of the net earnings of 
which inures, or may lawfully inure to the benefit of any private 
shareholder or individual.
    (g) Council means the National Advisory Council on Health 
Professions Education (established pursuant to section 725 of the Act).



Sec. 57.1503  Eligibility.

    (a) Eligible applicants. In order to be eligible for a loan 
guarantee or interest subsidy under this subpart, the applicant shall:
    (1) Be a nonprofit private school of medicine, dentistry, 
osteopathy, pharmacy, optometry, podiatry, veterinary medicine, or 
public health, or any combination of such schools, or a nonprofit 
private affiliated hospital or affiliated outpatient facility: Provided, 
however, That in the case of an affiliated hospital or affiliated 
outpatient facility, an application which is approved by the school of 
medicine, osteopathy or dentistry with which the hospital or outpatient 
facility is affiliated and which otherwise complies with the 
requirements of subpart B of this part may be filed by any nonprofit 
private entity qualified to file an application under section 605 of the 
Act; and

[[Page 293]]

    (2) Otherwise meet the applicable requirements set forth in section 
721(b) of the Act and Sec. 57.103 with respect to eligiblity for grants 
for construction of teaching facilities for health professions 
personnel.
    (b) Eligible loans. Subject to the provisions of this subpart, the 
Secretary may guarantee payment, when due, of principal and interest on, 
or may pay interest subsidies with respect to, or may both guarantee and 
pay interest subsidies with respect to any loan or portion thereof made 
to an eligible applicant by a non-Federal lender: Provided, That no such 
guarantee or interest subsidy shall apply to any loan the interest on 
which is exempt from Federal income taxation.



Sec. 57.1504  Application.

    Each applicant desiring to have a loan guaranteed or to have 
interest subsidies paid on its behalf, or any combination of such loan 
guarantee or interest subsidies, shall submit an application for such 
assistance in such form and manner and at such time as the Secretary may 
require. \1\
---------------------------------------------------------------------------

    \1\ Applications and instructions are available from the Division of 
Facilities Conversion and Utilization, Bureau of Health Maintenance 
Organizations and Resources Development, Parklawn Building, 5600 Fishers 
Lane, Rockville, MD 20857.
---------------------------------------------------------------------------

    (a) The application shall contain or be supported by such 
information as the Secretary may require to enable him to make the 
determinations required of him under the Act and this subpart.
    (b) The application shall be executed by an individual authorized to 
act for the applicant and to assume on behalf of the applicant the 
obligations imposed by the terms and conditions of any loan guarantee or 
agreement to pay interest subsidies, including the applicable 
regulations of this subpart.

[38 FR 31836, Nov. 19, 1973, as amended at 49 FR 38113, Sept. 27, 1984]



Sec. 57.1505  Approval of applications.

    (a) General. Any application for loan guarantee or interest 
subsidies, or for a combination of both, may be approved by the 
Secretary, after consultation with the Council, only if he makes each of 
the applicable determinations set forth in section 721(c) of the Act. In 
addition:
    (1) Any such approval shall be subject to compliance by the 
applicant with the applicable provisions set forth in Sec. Sec. 57.106, 
57.107, 57.108, and 57.110: Provided however, That for purposes of the 
title assurance in Sec. 57.107(a) the period shall be not less than 20 
years or the term of the guaranteed loan, whichever is longer or in the 
case of interim facilities, the term of the guaranteed loan, and
    (2) Any such application may be approved by the Secretary only if he 
determines:
    (i) That the applicant will have sufficient financial resources to 
enable him to comply with the terms and conditions of the loan;
    (ii) That the applicant has the necessary legal authority to 
finance, construct, and maintain the proposed project, to apply for and 
receive the loan, and to pledge or mortgage any assets or revenues to be 
given as security for such loan;
    (iii) That the loan will be made only with respect to the initial 
permanent financing of the project;
    (iv) That the loan will be secured by a lien against the facilities 
to be constructed or against other security satisfactory to the 
Secretary specified in Sec. 57.2210;
    (v) That the rate of interest on the loan does not exceed such 
percent per annum as the Secretary determines to be reasonable, taking 
into account the range of interest rates prevailing in the private 
market for similar loans and the risks assumed by the United States; and
    (vi) Such additional determinations as the Secretary finds necessary 
with respect to particular applications in order to protect the 
financial interests of the United States.
    (b) Loan guarantees. In addition to the requirements of paragraph 
(a) of this section, any application for a loan guarantee may be 
approved by the Secretary only if he determines that the loan with 
respect to which such guarantee is sought would not be available to the 
applicant on reasonable terms and conditions without such guarantee. To 
assist the Secretary in making such

[[Page 294]]

determination, each applicant for a loan guarantee shall submit 
statements from at least three non-Federal institutions normally engaged 
in making long-term loans for construction, describing whether, and the 
terms and conditions under which, each institution would make a loan to 
the applicant for the project described in the application.
    (c) Interest subsidies. In addition to the requirements of paragraph 
(a) of this section, any application for interest subsidies may be 
approved by the Secretary only if he determines that without such 
interest subsidy payments the applicant would not, over a substantial 
portion of the loan term, be able to repay the principal and interest of 
the loan without jeopardizing the quality of the educational program.



Sec. 57.1506  Priority.

    (a) Priority in approving applications for loan guarantee and/or 
interest subsidies shall be determined in accordance with the factors 
specified in section 721(d) of the Act, and the following: (1) The 
relative need for increased enrollment and the availability of students; 
(2) the relative effectiveness of the project relative to the cost to 
the Federal Government; and (3) the relative ability of the applicant to 
make efficient and productive use of the facility constructed.
    (b) In the case of applications to aid in the construction of new 
schools of medicine, osteopathy, or dentistry, the Secretary shall give 
special consideration to those applications which contain or are 
reasonably supported by assurances that, because of the use that will be 
made by such school of already existing facilities (including Federal 
medical or dental facilities), the school will be able to accelerate the 
date on which it will begin its teaching program.



Sec. 57.1507  Limitations applicable to loan guarantee.

    (a) The amount of loan with respect to which a guarantee is made 
under this subpart shall be determined by the Secretary based upon such 
considerations as the availability of funds and the applicant's need 
therefor; Provided, That: (1) Subject to paragraph (a)(2) of this 
section, no loan with respect to which a guarantee is made for any 
project under this subpart may be in an amount which, when added to the 
amount of any grant made with respect to such project under part B of 
title VII of the Act or any other law of the United States, or to the 
total of such grants, exceeds 90 percent of the eligible cost of 
construction of such project as determined by the Secretary;
    (2) Notwithstanding paragraph (a)(1) of this section, the Secretary 
may in particular cases guarantee loans in excess of the amount 
specified in paragraph (a)(1) of this section where he determines that, 
because of special circumstances, such additional loan guarantee will 
further the purposes of part B of title VII of the Act. In making such 
determinations, the Secretary will in each case consider the following 
factors:
    (i) The need for the project in the area to be served;
    (ii) The availability of financing for the project on reasonable 
terms and conditions without such additional loan guarantee;
    (iii) Whether the project can be constructed without such additional 
loan guarantee; and
    (iv) Other relevant factors consistent with the purpose of part B of 
title VII of the Act and this subpart.
    (3) In determining the cost of construction of the project there 
shall be excluded from such cost all fees, interest, and other charges 
relating or attributable to the financing of the project except the 
following:
    (i) Reasonable fees attributable to services rendered by legal 
counsel in connection with such loan;
    (ii) With the approval of the Secretary, reasonable fees 
attributable to the services of a financial advisor in assisting the 
applicant in securing the loan and arranging for repayment thereof; and
    (iii) Interest attributable to the interim financing of construction 
of the project prior to the initial permanent financing thereof.
    (b) No loan guarantee under this subpart shall apply to more than 90 
percent of the loss of principal of and interest on such loan incurred 
by the

[[Page 295]]

holder of such loan upon default by the applicant.



Sec. 57.1508  Amount of interest subsidy payments; limitations.

    The length of time for which interest subsidy payments will be made 
under the agreement, the amount of loan with respect to which such 
payments will be made, and the level of such payments shall be 
determined by the Secretary on the basis of the availability of funds 
and his determination of the applicant's need therefor taking into 
consideration his analysis of the present and reasonable projected 
future financial ability of the applicant to repay the principal and 
interest of the loan without jeopardizing the quality of its educational 
program: Provided however, That each such interest subsidy payment shall 
not exceed the amount necessary to reduce by 3 percent per annum the net 
effective interest rate otherwise payable on the loan or the portion 
thereof with respect to which such interest subsidy is paid.



Sec. 57.1509  Forms of credit and security instruments.

    Each loan with respect to which a guarantee is made or interest 
subsidies are paid under this subpart shall be evidenced by a credit 
instrument and secured by a security instrument in such forms as may be 
acceptable to the Secretary.



Sec. 57.1510  Security for loans.

    Each loan with respect to which a guarantee is made or interest 
subsidies are paid under this subpart shall be secured in a manner which 
the Secretary finds reasonably sufficient to insure repayment. The 
security may be one or a combination of the following:
    (a) A first mortgage on the facility and site thereof.
    (b) Negotiable stocks or bonds of a quality and value acceptable to 
the Secretary.
    (c) A pledge of unrestricted and unencumbered income from an 
endowment or other trust fund acceptable to the Secretary.
    (d) A pledge of a specified portion of annual general or special 
revenues of the applicant acceptable to the Secretary.
    (e) Such other security as the Secretary may find acceptable in 
specific instances.



Sec. 57.1511  Opinion of legal counsel.

    At appropriate stages in the application and approval procedure for 
a loan guarantee or interest subsidy, the applicant shall furnish to the 
Secretary a memorandum or opinion of legal counsel with respect to the 
legality of any proposed note issue, the legal authority of the 
applicant to issue the note and secure it by the proposed collateral, 
and the legality of the issue upon delivery. ``Legal counsel'' means 
either a law firm or individual lawyer, thoroughly experienced in the 
long-term financing of construction projects, and whose approving 
opinions have previously been accepted by lenders or lending 
institutions. The legal memorandum or opinion to be provided by legal 
counsel in each case shall be as follows:
    (a) A memorandum, submitted with the application for a loan 
guarantee or interest subsidy, stating that the applicant is or will be 
lawfully authorized to finance, construct, and maintain the project, and 
to issue the proposed obligations and to pledge or mortgage the assets 
and/or revenues offered to secure the loan, citing the basis for such 
authority; and
    (b) A final approving opinion, delivered to the Secretary at the 
time of delivery of the evidence of indebtedness to the lender, stating 
that the credit and security instruments executed by the applicant are 
duly authorized and delivered and that the indebtedness of the applicant 
is valid, binding, and payable in accordance with the terms on which the 
loan guarantee was approved by the Secretary.



Sec. 57.1512  Length and maturity of loans.

    The repayment period for loans with respect to which guarantees are 
made or interest subsidies paid under this subpart shall be limited to 
30 years: Provided, That:
    (a) The Secretary may, in particular cases where he determines that 
a repayment period of less than 30 years is more appropriate to an 
applicant's

[[Page 296]]

total financial plan, approve such shorter repayment period;
    (b) The Secretary may, in particular cases where he determines that, 
because of unusual circumstances, the applicant would be financially 
unable to amortize the loan over a repayment period of 30 years, approve 
a longer requirement period which shall in no case exceed 40 years; and
    (c) In no case shall a loan repayment period exceed the useful life 
of the facility to be constructed with the assistance of the loan.



Sec. 57.1513  Repayment.

    Unless otherwise specifically authorized by the Secretary, each loan 
with respect to which a guarantee is made or interest subsidies are paid 
shall be repayable in substantially level total annual installments of 
principal and interest, sufficient to amortize the loan through the 
final year of the life of the loan.



Sec. 57.1514  Loan guarantee and interest subsidy agreements.

    For each application for a loan guarantee or interest subsidy, or 
combination thereof, which is approved by the Secretary under this 
subpart, an offer to guarantee such loan and/or make interest subsidy 
payments with respect thereto will be sent to the applicant, setting 
forth the pertinent terms and conditions for the loan guarantee and/or 
interest subsidy, and will be conditioned upon the fulfillment of such 
terms and conditions. The accepted offer will constitute the loan 
guarantee agreement, the interest subsidy agreement, or the loan 
guarantee and interest subsidy agreement, as the case may be. Each such 
agreement shall include the applicable provisions set forth below:
    (a) Loan guarantee. Each agreement pertaining to a loan guarantee 
shall include the following provisions:
    (1) That the loan guarantee evidenced by the agreement shall be 
incontestable (i) in the hands of the applicant on whose behalf such 
loan guarantee is made except for fraud or misrepresentation on the part 
of such applicant, and (ii) as to any person who makes or contracts to 
make a loan to such applicant in reliance on such guarantee, except for 
fraud or misrepresentation on the part of such other person.
    (2) That the applicant shall be permitted to prepay up to 15 percent 
of the original principal amount of such loan in any calendar year 
without additional charge. The applicant and the lender may further 
agree that the applicant shall be permitted to prepay in excess of 15 
percent of the original amount of the loan in any calendar year without 
additional charge, but no such payment in excess of 15 percent shall be 
made without the prior written approval of the Secretary.
    (3) That if the applicant shall default in making periodic payment, 
when due, of the principal and interest on the loan guaranteed under the 
agreement, the holder of the loan shall promptly give the Secretary 
written notification of such default. The Secretary shall, immediately 
upon receipt of such notice, provide the holder with written 
acknowledgement of such receipt.
    (4) That if such default in making periodic payment when due of the 
principal and interest on the guaranteed loan is not cured within 90 
days after receipt by the Secretary of notice of such default, the 
holder of the loan shall have the right to make demand upon the 
Secretary, in such form and manner as the Secretary may prescribe, for 
payment of 90 percent of the amount of the overdue payments of principal 
and accrued interest, together with such reasonable late charges as are 
made in accordance with the terms of the credit instrument or security 
instrument evidencing or securing such loan. The Secretary shall pay 
such amount from funds available to him for these purposes.
    (5) That in the event of exercise by the holder of the loan of any 
right to accelerate payment of such loan as a result of the applicants 
default in making periodic payment when due of the principal and 
interest on the guaranteed loan, the Secretary shall, upon demand by the 
holder not less than 90 days after receipt by the Secretary of 
notification of such default, pay to such holder 90 percent of the total 
amount of principal and of interest on the loan remaining unpaid after 
the holder has exercised his right to foreclose upon and dispose of the 
security

[[Page 297]]

and has applied the proceeds thereby received to reduce the outstanding 
balance of the loan, in accordance with applicable law and the terms of 
the security instrument.
    (6) That the Secretary shall not guarantee any funds which are 
disbursed by a lender following notification by the Secretary to such 
lender that the Assurance executed by the Applicant under section 799A 
of the Act is no longer satisfactory.
    (b) Interest subsidy. Each agreement pertaining to the payment of 
interest subsidies with respect to a loan shall include the following 
provisions:
    (1) That the holder of the loan shall have a contractual right to 
receive from the United States interest subsidy payments in amounts 
sufficient to reduce by up to 3 percent per annum the net effective 
interest rate determined by the Secretary to be otherwise payable on 
such loan.
    (2) That payments of interest subsidies pursuant to paragraph (b)(1) 
of this section will be made by the Secretary, in accordance with the 
terms of the loan with respect to which the interest subsidies are paid, 
directly to the holder of such loan, or to a trustee or agent designated 
in writing to the Secretary by such holder, until such time as the 
Secretary is notified in writing by the holder that such loan has been 
transferred. Pursuant to such written notification of transfer, the 
Secretary will make such interest payments directly to the new holder 
(transferee) of the loan: Provided, however, That it shall be the 
responsibility of the holder to remit any payments of interest subsidy 
to the new holder which the Secretary may have made to the holder after 
such transfer and prior to receipt of such written notice, and the 
Secretary shall not be liable to any party for amounts remitted to the 
holder prior to receipt of such written notice and acknowledgment in 
writing by the Secretary of receipt of such notice.
    (3) That the holder of the loan will promptly notify the Secretary 
of any default or prepayment by the applicant with respect to the loan.
    (4) In the event of any exercise by the holder of the loan of the 
right to accelerate payment of such loan, whether as a result of default 
on the part of the applicant or otherwise, the Secretary's obligations 
with respect to the payment of interest subsidies shall cease.
    (5) Where, during the life of the loan with respect to which 
interest subsidies are to be paid, the applicant ceases to use the 
facility for the purposes for which constructed, the Secretary's 
obligation with respect to the payment of interest subsidies shall 
cease: Provided, however, That where the applicant is continuing to use 
the facility for purposes eligible for support under part B of title VII 
of the act, the Secretary may make a determination, based upon the 
health manpower needs of the community served by the facility as well as 
other relevant factors, to continue to make interest subsidy payments in 
accord with the agreement.
    (6) Where during the life of the loan with respect to which interest 
subsidies are to be paid, it is determined, after an opportunity for a 
hearing pursuant to 45 CFR part 83, that the Assurance executed by the 
applicant under section 704 (or its predecessor, section 799A) of the 
Act, is no longer satisfactory, the Secretary's obligation with respect 
to the payment of interest subsidies shall cease: Provided, however, 
That the Secretary shall resume making interest subsidy payments if he 
determines that a subsequent Assurance submitted by the applicant is 
satisfactory.
    (7) Where during the life of the loan with respect to which interest 
subsidies are to be paid, it is determined by the Secretary, after an 
opportunity for a hearing pursuant to 45 CFR parts 80 and 81, that the 
applicant has ceased to comply with the Assurance it has executed under 
45 CFR 80.4(d) concerning nondiscrimination on the basis of race, color 
or national origin, the Secretary's obligation with respect to the 
payment of interest subsidies shall cease: Provided, however, That the 
Secretary shall resume making interest subsidy payments if he 
subsequently determines that the applicant has come into compliance with 
the requirements of title VI of the Civil Rights Act of 1964 and 
implementing regulations.

[[Page 298]]

    (8) Where during the life of the loan with respect to which interest 
subsidies are to be paid, it is determined by the Secretary after an 
opportunity for a hearing pursuant to title IX of the Education 
Amendments of 1972, that the applicant has ceased to comply with such 
title, and its implementing regulations, the Secretary's obligation with 
respect to the payment of interest subsidies shall cease: Provided, 
however, That the Secretary shall resume making interest subsidy 
payments if he subsequently determines that the applicant has come into 
compliance with the requirements of title IX of the Education Amendments 
of 1972 and implementing regulations.
    (c) General. In addition to the applicable requirements of 
paragraphs (a) and (b) of this section, each agreement, whether 
pertaining to a loan guarantee or interest subsidy or both, shall 
contain such other provisions as the Secretary finds necessary in order 
to protect the financial interests of the United States.

[38 FR 31836, Nov. 19, 1973, as amended at 49 FR 38113, Sept. 27, 1984]



Sec. 57.1515  Loan closing.

    Closing of any loan with respect to which a guarantee is made or 
interest subsidies are paid under this subpart shall be accomplished at 
such time as may be agreed upon by the parties to such loan and found 
acceptable to the Secretary.



Sec. 57.1516  Right of recovery-subordination.

    (a) The United States shall be entitled to recover from the 
applicant for a loan guarantee under this subpart the amount of any 
payment made pursuant to such guarantee, unless the Secretary waives 
such right of recovery as provided in Sec. 57.1517.
    (b) Upon making of any payments pursuant to a loan guarantee under 
this subpart, the United States shall be subrogated to all of the rights 
of the recipient of the payments with respect to which the guarantee was 
made.



Sec. 57.1517  Waiver of right of recovery.

    In determining whether there is good cause for waiver of any right 
of recovery which he may have against any applicant by reason of any 
payments made pursuant to a loan guarantee under this subpart, the 
Secretary shall take into consideration the extent to which:
    (a) The facility with respect to which the loan guarantee was made 
will continue to be devoted by the applicant or other owner to the 
teaching of health professions personnel, or to other purposes in the 
sciences related to health for which funds are available under part B of 
title VII of the act and these regulations;
    (b) A hospital or outpatient facility will be used as provided for 
under title VI of the act;
    (c) There are reasonable assurances that for the remainder of the 
repayment period of the loan other facilities not previously utilized 
for the purpose for which the facility was constructed will be so 
utilized and are substantially equivalent in nature and extent for such 
purposes; and
    (d) Such recovery would seriously curtail the training of qualified 
health professions personnel in the area served by the facility.



Sec. 57.1518  Modification of loans.

    No official of the Department of Health and Human Services will 
approve any proposal to modify the terms of a loan guaranteed under 
title VII of the Public Health Service Act (42 U.S.C. 293 et seq.) and 
this subpart which would permit the use of the guaranteed loan (or the 
guarantee) as collateral for an issue of tax-exempt securities.

(Secs. 215 and 726, Public Health Service Act, 58 Stat. 690 and 85 Stat. 
432, 42 U.S.C. 216 and 293i, as amended)

[48 FR 42984, Sept. 21, 1983]

Subparts Q-T [Reserved]



      Subpart U_Armed Forces Health Professions Scholarship Program

    Authority: Sec. 2(a), Pub. L. 92-426, 86 Stat. 719 (10 U.S.C. 
2127(d)).

    Source: 38 FR 20447, Aug. 1, 1973, unless otherwise noted.

[[Page 299]]



Sec. 57.2001  Applicability.

    In the event the Secretary of Defense decides to enter into one or 
more contracts under 10 U.S.C. 2127(d), the regulations in this subpart 
outline considerations the Secretary of Defense will take into account 
in determining whether an accredited civilian educational institution 
has increased its total enrollment for the sole purpose of accepting 
members of the Armed Forces health professions scholarship program.



Sec. 57.2002  Definitions.

    As used in this subpart:
    (a) Institution means a college, university, or other institution or 
a department, division, or other administrative unit within a college, 
university, or other institution, which provides primarily or 
exclusively a course of study in medicine, dentistry, or other health 
profession, as determined under regulations prescribed by the Secretary 
of Defense, leading to a degree in one of said health professions, and 
which is accredited by an accrediting agency or association recognized 
by the United States Commissioner of Education.
    (b) Enrollment in any fiscal year means the number of full-time 
students enrolled in an institution on October 15 of said year and 
pursuing a course of study which constitutes a full-time academic 
workload, as determined by the institution, leading to a degree in 
medicine, dentistry, or other health profession, as determined under 
regulations prescribed by the Secretary of Defense: Provided, That if 
the Secretary of Defense finds that a date other than October 15 would 
more accurately reflect an institution's enrollment in any fiscal year, 
the Secretary of Defense may use such other date in place of October 15 
in making his determination under this subpart.
    (c) Fiscal year means the Federal fiscal year beginning July 1 and 
ending on the following June 30.
    (d) Program means the Armed Forces health professions scholarship 
program established under section 2(a) of the Uniformed Services Health 
Professions Revitalization Act of 1972 (86 Stat. 713, Pub. L. 92-426), 
and codified in chapter 105 of 10 U.S.C.



Sec. 57.2003  Determinations of increased enrollment solely for the program.

    In the event the Secretary of Defense decides to enter into one or 
more contracts under 10 U.S.C. 2127(d), his determination as to whether 
an institution has increased its total enrollment in any fiscal year for 
the sole purpose of accepting members of the program will take into 
account the following considerations:
    (a) A comparison of the total enrollment in said fiscal year with 
the total enrollments in immediately preceding fiscal years;
    (b) Any increases in enrollment to which the institution has 
directly or indirectly committed itself in said fiscal year under: (1) 
Other Federal programs, such as those set forth in title VII and VIII of 
the Public Health Service Act (42 U.S.C. 292 et seq.), the Veterans' 
Administration Medical School Assistance and Health Manpower Training 
Act of 1972 (Pub. L. 92-541, 86 Stat. 1100 (38 U.S.C. 5070 et seq.)) and 
section 225 of the Public Health Service Act (sec. 5, Pub. L. 92-585, 86 
Stat. 1293 (42 U.S.C. 234)); (2) programs of State or local governments 
or other public or private agencies, or (3) any legally binding 
arrangement: Provided, That insofar as a single increase may be applied 
to satisfy the commitments under two or more programs and/or other 
arrangements, said increase shall be considered to meet all such 
commitments;
    (c) Any unusual factors, such as: (1) An institution having been 
newly established or (2) an institution experiencing what is for it an 
abnormal rate of attrition and/or admission.

Subpart V [Reserved]



          Subpart W_Physician Shortage Area Scholarship Grants

    Authority: Sec. 215, 58 Stat. 690, as amended (42 U.S.C. 216).

    Source: 39 FR 28730, Aug. 9, 1974, unless otherwise noted.



Sec. 57.2201  Applicability.

    The regulations of this subpart are applicable to scholarship grants 
awarded under section 784 of the Public Health Service Act, which 
authorizes

[[Page 300]]

the Secretary to award scholarship grants to students of medicine and 
osteopathy who agree to engage in the full-time practice of primary care 
for a prescribed period of time (a) in a physician shortage area or (b) 
in such manner as to assure that of the patients receiving medical care 
in such practice a substantial portion will consist of migratory 
agricultural workers or members of their families.



Sec. 57.2202  Definitions.

    As used in this subpart, the following terms shall have the 
following meanings:
    (a) Act means the Public Health Service Act, as amended.
    (b) 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.
    (c) School means a public or other nonprofit school of medicine or 
osteopathy which provides a course of study, or a portion thereof, which 
leads respectively to a degree of Doctor of Medicine or Doctor of 
Osteopathy and which is accredited as provided in section 721(b)(1)(B) 
of the Act.
    (d) Scholarship grant means the amount of money awarded to an 
individual by the Secretary for an academic year pursuant to section 
784(a) of the Act.
    (e) Full-time student means a student who is enrolled, or accepted 
for enrollment, in a school and pursuing a course of study which 
constitutes a full-time academic workload, as determined by the school, 
leading to a degree specified in paragraph (c) of this section.
    (f) Academic year means the traditional, approximately 9-month 
September to June annual session. For the purpose of computing academic 
year equivalents for students who, during a 12-month period, attend for 
a longer period than the traditional academic year, the academic year 
will be considered to be of 9 months' duration.
    (g) National of the United States means (1) a citizen of the United 
States or (2) a person who, though not a citizen of the United States, 
owes permanent allegiance to the United States (8 U.S.C. 1101(a)(22)).
    (h) Professional training means the course of study leading to the 
degree of doctor of medicine or doctor of osteopathy, plus a period, not 
to exceed a total of four years, of internship and residency training.
    (i) Low-income background as applied to any individual means that 
the individual comes from a family with an annual income below low-
income levels developed pursuant to Sec. 57.605(c).
    (j) The practice of primary care means the provision of health 
services characterized by the delivery of first contact medicine, the 
assumption of longitudinal responsibility for the patient regardless of 
the presence or absence of disease, and the integration of the physical, 
psychological and social aspects of health care to the limits of the 
capability of the practitioner. For purposes of this section, primary 
care shall include the fields of general practice, family practice, 
general internal medicine, general pediatrics, and general obstetrics 
and gynecology.
    (k) Migratory agricultural worker means a domestic agricultural 
migratory worker as defined in Sec. 56.102(d).
    (l) Physician shortage area means an area designated by the 
Secretary pursuant to Sec. 57.216(a)(5) as an area having a need for 
and shortage of physicians.



Sec. 57.2203  Eligibility.

    To be eligible for a scholarship grant under this subpart, the 
applicant must:
    (a) Be a national of the United States or a permanent resident of 
the Trust Territory of the Pacific Islands or a lawful permanent 
resident of the United States, Puerto Rico, the Virgin Islands or Guam;
    (b) Be a full-time student in a school located in the United States, 
the Trust Territory of the Pacific Islands, Puerto Rico, the Virgin 
Islands, the Canal Zone, American Samoa or Guam; and
    (c) Agree to engage in the full-time practice of primary care as 
defined in Sec. 57.2202(j) in accord with conditions specified in Sec. 
57.2209.



Sec. 57.2204  Application.

    Each eligible applicant desiring a scholarship grant under this 
subpart shall submit an application at such time and in such form as the 
Secretary may prescribe.

[[Page 301]]



Sec. 57.2205  Priority for selection of scholarship recipients.

    (a) When funds determined by the Secretary to be available for 
scholarship grants under this subpart are insufficient to permit the 
awarding of scholarships to all individuals applying therefor, the 
Secretary shall accord priority to eligible applicants as follows:
    (1) First priority for scholarship grants shall be accorded to 
applicants who (i) are from a low-income background as defined in Sec. 
57.2202 (i), (ii) reside in a physician shortage area and (iii) agree to 
return to such area and engage in the full-time practice of primary 
care. For purposes of this paragraph, an individual resides in a 
physician shortage area if he presently is residing in such an area or 
if he (or his parents) resided in such an area in the year prior to his 
admission to an institution of higher education.
    (2) Second priority shall be accorded to applicants meeting the 
criteria in paragraphs (a)(1) (ii) and (iii) of this section.
    (3) Third priority shall be accorded to applicants meeting the 
criterion in paragraph (a)(1)(i) of this section.
    (4) Fourth priority shall be accorded to other applicants.
    (b) Where there are insufficient funds available to make scholarship 
grants to all members of any single priority grouping enumerated in 
paragraph (a) of this section, the following criteria will be used to 
accord priority within each affected priority group:
    (1) Within the priority groupings specified in paragraphs (a) (1) 
and (2) of this section, the Secretary shall rank recipients according 
to the degree of the severity of shortage of physicians practicing 
primary care in such area. Scholarship grants shall be awarded within 
each priority group first to applicants within that grouping from 
physician shortage areas with the least favorable ratio of such 
physicians to the population to be served.
    (2) Within the priority groupings specified in paragraphs (a) (3) 
and (4) of this section, the Secretary shall award scholarship grants 
within each priority group first to applicants who agree to practice 
primary care in a physician shortage area with a substantial portion of 
migratory agricultural workers in such area; second, to applicants 
within that grouping who agree to practice in a physician shortage area; 
and third, to applicants within that grouping who agree to practice in 
such place or places, facility or facilities, and in such manner as the 
Secretary finds necessary to assure that, of the patients receiving 
medical care in such practice, a substantial portion will consist of 
persons who are migratory agricultural workers or members of their 
families.



Sec. 57.2206  Grant award.

    The Secretary may award scholarship grants to individuals who have 
been selected to receive scholarship grants in accordance with Sec. 
57.2205. Any such award under this subpart shall state the specific 
conditions under which the award is being made and shall indicate the 
distribution between funds awarded to cover the costs of tuition and 
fees payable to the school and funds awarded for the costs of equipment, 
supplies, books, and living expenses payable to the individual.



Sec. 57.2207  Amount of scholarship grant.

    (a) The amount of the scholarship grant to any student for any 
academic year shall be the total of (1) the lesser of (i) $5,000 or (ii) 
the amount determined by the Secretary to be the cost of tuition and 
fees; plus (2) an allowance for equipment, supplies, books and living 
expenses which shall be the lesser of (i) $3,600 or (ii) the difference 
between $5,000 and the amount determined pursuant to paragraph (a)(1) of 
this section.
    (b) The maximum amount of a scholarship grant during a 12-month 
period to any student enrolled in a school which provides a course of 
study longer than the traditional 9-month academic year may be 
proportionately increased.



Sec. 57.2208  Payment of scholarship grant.

    The portion of a scholarship grant awarded for the costs of tuition 
and fees as indicated on the notice of grant award document will be paid 
directly to the school upon receipt of an invoice from the school. The 
portion of the scholarship grant awarded for the costs

[[Page 302]]

of equipment, supplies, books, and living expenses will be paid to the 
individual in equal monthly installments.



Sec. 57.2209  Conditions of scholarship grant.

    (a) Any scholarship grant made to any individual under this subpart 
shall be awarded upon the condition that such individual will, following 
completion of his professional training, engage in the full-time 
practice of primary care for a period of 12 continuous months for each 
academic year (i.e., 9 months) for which a scholarship grant was made, 
as follows:
    (1) In the case of any individual selected pursuant to Sec. 
57.2205(a) (1) or (2), such practice must be in the physician shortage 
area to which such individual agreed to return: Provided however, That 
if the Secretary determines at the time the individual proposes to 
engage in the required practice that such area is no longer a physician 
shortage area and cannot reasonably be expected to become such an area 
within 2 years from such time, such practice shall, at the option of the 
individual, be either in any then current physician shortage area, or in 
such place or places, facility, or facilities, and in such manner as the 
Secretary finds necessary to assure that, of the patients receiving 
medical care in such practice, a substantial portion will consist of 
persons who are migratory agricultural workers or members of their 
families.
    (2) In the case of any individual selected pursuant to Sec. 
57.2205(a) (3) or (4), such practice must be in accordance with the 
agreement described in Sec. 57.2205(b)(2) (i.e., in a physician 
shortage area with a substantial portion of migratory agricultural 
workers in such area; a physician shortage area; or in such place or 
places, facility or facilities, and in such manner as may be necessary 
to assure that, of the patients receiving medical care in such practice, 
a substantial portion will consist of persons who are migratory 
agricultural workers or members of their families; as the case may be).
    (b) Subject to the provision of Sec. 57.2211(f) and except as 
provided in paragraph (c) of this section, any individual to whom the 
conditions of this section apply must complete the practice required by 
paragraph (a) of this section within a period beginning on the date of 
completion by the individual of his professional training, as determined 
by the Secretary, and not to exceed the period of practice determined in 
accordance with such paragraph (a) of this section, plus 6 months.
    (c) Where an individual to whom the conditions of this section apply 
is currently performing an active duty service obligation under section 
235 of the Act, the individual must complete the practice required by 
paragraph (a) of this section within a period beginning on the date of 
completion by the individual of his service obligation under section 225 
of the Act or completion of his internship and residency training (not 
to exceed four years) if not previously received, whichever comes later, 
and not to exceed the period of practice determined in accordance with 
paragraph (a) of this section, plus 6 months.
    (d) Where an individual has received scholarship grant support for 
four academic years, such individual shall be considered to have 
received scholarship grant support for only three academic years if the 
Secretary determines (1) that such individual has served his internship 
or residency in a hospital (i) which is located in a physician shortage 
area, or (ii) in which a substantial portion of the patients of such 
hospital consists of persons who are migratory agricultural workers or 
members of the families of such workers and (2) that while so serving 
such internship or residency, he has received training or professional 
experience designed to prepare him to engage in the practice of primary 
care.
    (e) For purposes of paragraph (c)(2) of this section, (1) 
internships which will be recognized by the Secretary as providing 
training or professional experience designed to prepare an individual to 
engage in the practice of primary care are: Rotating internships without 
a major emphasis, rotating internships with an emphasis on internal 
medicine, rotating internships with an emphasis on pediatrics, rotating 
internships with an emphasis on obstetrics and gynecology, straight 
internships in internal

[[Page 303]]

medicine, straight internships in pediatrics and straight internships in 
obstetrics and gynecology; Provided, That such internships are approved 
or provisionally approved by the Council on Medical Education of the 
American Medical Association or the Board of Trustees of the American 
Osteopathic Association; and
    (2) Residencies which will be recognized as providing such training 
or experience are those in general practice, family practice, general 
internal medicine, general pediatrics and general obstetrics and 
gynecology; Provided, That such residencies are approved or 
provisionally approved by the Council on Medical Education of the 
American Medical Association or the Board of Trustees of the American 
Osteopathic Association.
    (f) No individual who has received a scholarship grant under this 
subpart may enter into an agreement with the Secretary pursuant to 
section 741(f) of the Act until either (1) such individual has completed 
the practice required by paragraph (a) of this section, or (2) the 
Secretary has determined that the United States is entitled to recover 
from such individual an amount determined in accordance with Sec. 
57.2210. In no case, however, shall a scholarship grant under this 
subpart be considered an educational loan for purposes of section 741(f) 
of the Act.

[39 FR 28730, Aug. 9, 1974, as amended at 41 FR 26685, June 29, 1976]



Sec. 57.2210  Failure to comply.

    (a) Subject to the provision of Sec. 57.2211, if any individual 
fails to complete the course of study or fails, within the time period 
set forth in Sec. 57.2209(b), to meet the applicable conditions of 
practice imposed by receipt of a scholarship grant for the full number 
of months to which such condition is applicable, the United States shall 
be entitled to recover from such individual an amount determined in 
accordance with section 784(c)(3) of the Act; Provided however, That no 
interest shall accrue on any amount due the United States during any 
period for which the Secretary has suspended the obligation to repay 
pursuant to Sec. 57.2211(b).



Sec. 57.2211  Waiver or suspension.

    (a) Any obligation of any individual under this subpart will be 
cancelled upon the death of such individual as documented by a 
certification of death, or such other official proof as is conclusive 
under State law, and submitted to the Secretary.
    (b) Subject to the provision of paragraph (f) of this section, where 
an individual fails to complete the practice required by Sec. 
57.2209(a) within the period prescribed in Sec. 57.2209(b), the 
Secretary may waive or suspend for such period as determined by the 
Secretary the obligation of such individual to repay pursuant to Sec. 
57.2210 where the Secretary determines that compliance by such 
individual with such obligation (1) is impossible, or (2) would involve 
extreme hardship to such individual and enforcement of such obligation 
with respect to such individual would be against equity and good 
conscience.
    (c) For purposes of paragraph (b)(1) of this section, compliance by 
an individual will be deemed impossible where the Secretary determines, 
on the basis of such information and documentation as he may require, 
that the individual is permanently and totally disabled.
    (d) For purposes of paragraph (b)(2) of this section, in determining 
whether compliance by an individual would involve extreme hardship to 
such individual and would be against equity and good conscience, the 
Secretary will take into consideration the following:
    (1) The individual's present financial resources and obligations;
    (2) The individual's estimated future financial resources and 
obligations;
    (3) The reasons for the individual's failure to complete such 
practice within the prescribed period, such as problems of a personal 
nature; and
    (4) The extent to which the individual is practicing his profession 
in a manner consistent with the purposes of section 784 of the Act.
    (e) Where the Secretary determines that compliance by an individual 
with his obligation to engage in the practice of primary care in a 
specified shortage area pursuant to Sec. 57.2209(a) is impossible or 
would involve extreme hardship to such individual and enforcement of 
such obligation with respect to

[[Page 304]]

such individual would be against equity and good conscience, the 
Secretary may waive such obligation and permit the individual at his 
option to practice either in any then current physician shortage area, 
or in such place or places, facility or facilities, and in such manner 
as the Secretary finds necessary to assure that, of the patients 
receiving medical care in such practice, a substantial portion will 
consist of persons who are migratory agricultural workers or members of 
their families. The Secretary will take into consideration in 
determining whether to grant a waiver under this paragraph the extent to 
which the individual has problems of a personal nature, e.g., physical 
or mental disability, terminal illness in the family, or need for 
financial support that cannot be supplied by the required service, which 
intrude upon the individual's ability to perform the required service in 
the specified shortage area.
    (f) The Secretary may extend the period (prescribed in Sec. 
57.2209(b)) within which an individual must complete the practice 
required pursuant to Sec. 57.2209(a) for a period not to exceed one 
year where the Secretary finds that (1) such individual is unable to 
complete such practice within such period because of a temporary 
physical or mental disability, or (2) completion by such individual of 
such practice within such period would involve extreme hardship to such 
individual and that failure to so extend such period would be against 
equity and good conscience.

Subparts AA-FF [Reserved]



       Subpart GG_Payment for Tuition and Other Educational Costs

    Authority: Sec. 215, Public Health Service Act, 58 Stat. 690, as 
amended by 63 Stat. 35 (42 U.S.C. 216); sec. 711, Public Health Service 
Act, 90 Stat. 2253; section 710, PHS Act, as redesignated by Pub. L. 97-
35, 95 Stat. 915 (42 U.S.C. 292k).



Sec. 57.3201  To which programs do these regulations apply?

    The regulations in this subpart establish the criteria to be used in 
determining allowable increases in tuition and other educational costs 
for which the Secretary is responsible for payment under the following 
sections of the Public Health Service Act: The National Health Service 
Corps Scholarship Program (sec. 338A) (42 U.S.C. 254l) and the Indian 
Health Scholarship Program (awarded pursuant to sec. 338A-339G of the 
PHS Act) (25 U.S.C. 1613a). These programs are referred to herein as the 
``scholarship programs.'' The regulations apply to increases in tuition 
and other educational costs occurring after the school year beginning 
immediately before October 1, 1981.

[57 FR 45745, Oct. 5, 1992]



Sec. 57.3202  How will allowable increases be determined?

    (a) The Secretary is responsible for increases in tuition and other 
educational costs only if the same increase is charged to all students 
in the same category (for example, the same class year or place of 
residence) and without regard to whether the student is receiving 
support under the scholarship programs. A student participating in the 
scholarship programs may not be denied eligibility because of this 
participation for any discounts or rebates in tuition or other 
educational costs given to all other students in the same category at 
the institution.
    (b) Institutions whose enrollment contains 25 percent or more 
students participating in the scholarship programs, and whose percentage 
increase in tuition and other educational costs in any school year 
exceeds the previous calendar year's average inflation rate as indicated 
by the Consumer Price Index for All Urban Areas, may be requested to 
provide the Secretary with detailed cost breakdowns justifying the 
increase.
    (c) In the case of a school which is requested to provide the 
Secretary with cost increase justification under paragraph (b) of this 
section, the Secretary will be responsible for increases in tuition and 
other educational costs charged to students participating in the 
scholarship programs over the amount charged for the school year 
immediately preceding the increase only to the extent that they are: (1) 
Attributable to uncontrollable costs, such as fuel costs, mandated cost-
of-living increases in wages, salaries and fringe

[[Page 305]]

benefits, (2) attributable to costs of maintaining and improving the 
quality of the health professions education provided by the institution, 
such as hiring additional faculty to improve the faculty-student ratio, 
costs incurred in off-site training of students, and necessary 
improvements in teaching equipment. Increases in patient care and 
research costs are allowable as part of an increase in tuition and other 
educational costs only to the extent that they can be documented as 
clearly necessary to maintain and improve the quality of the education 
being supported; or (3) attributable to loss of revenue from other 
sources which was used solely for the maintenance and improvement of the 
educational system.

These three categories of valid escalators of tuition and other 
educational costs are exclusive. However, the examples within each 
category are merely illustrative and not meant to be inclusive.
    (d) If the Secretary, after reviewing all available data, 
information, and justifications submitted by an institution, determines 
that an increase in tuition and other educational costs is not allowable 
under the criteria described in paragraph (a) or (c) of this section, 
the Secretary will provide the affected institution a detailed written 
explanation of the basis of that determination. The Secretary will be 
responsible for that portion of tuition and other educational costs the 
Secretary determines to be allowable.

[45 FR 71568, Oct. 29, 1980]

Subparts HH-PP [Reserved]



PART 58_GRANTS FOR TRAINING OF PUBLIC HEALTH AND ALLIED HEALTH PERSONNEL--

Table of Contents




Subparts A-F [Reserved]



PART 59_GRANTS FOR FAMILY PLANNING SERVICES--Table of Contents




          Subpart A_Project Grants for Family Planning Services

Sec.
59.1 To what programs do these regulations apply?
59.2 Definitions.
59.3 Who is eligible to apply for a family planning services grant?
59.4 How does one apply for a family planning services grant?
59.5 What requirements must be met by a family planning project?
59.6 What procedures apply to assure the suitability of informational 
          and educational material?
59.7 What criteria will the Department of Health and Human Services use 
          to decide which family planning services projects to fund and 
          in what amount?
59.8 How is a grant awarded?
59.9 For what purposes may grant funds be used?
59.10 What other HHS regulations apply to grants under this subpart?
59.11 Confidentiality.
59.12 Additional conditions.

Subpart B [Reserved]

          Subpart C_Grants for Family Planning Service Training

59.201 Applicability.
59.202 Definitions.
59.203 Eligibility.
59.204 Application for a grant.
59.205 Project requirements.
59.206 Evaluation and grant award.
59.207 Payments.
59.208 Use of project funds.
59.209 Civil rights.
59.210 Inventions or discoveries.
59.211 Publications and copyright.
59.212 Grantee accountability.
59.213 [Reserved]
59.214 Additional conditions.
59.215 Applicability of 45 CFR part 74.



          Subpart A_Project Grants for Family Planning Services

    Authority: 42 U.S.C. 300a-4.

    Source: 65 FR 41278, July 3, 2000, unless otherwise noted.



Sec. 59.1  To what programs do these regulations apply?

    The regulations of this subpart are applicable to the award of 
grants under

[[Page 306]]

section 1001 of the Public Health Service Act (42 U.S.C. 300) to assist 
in the establishment and operation of voluntary family planning 
projects. These projects shall consist of the educational, comprehensive 
medical, and social services necessary to aid individuals to determine 
freely the number and spacing of their children.

[65 FR 41278, July 3, 2000; 65 FR 49057, Aug. 10, 2000]



Sec. 59.2  Definitions.

    As used in this subpart:
    Act means the Public Health Service Act, as amended.
    Family means a social unit composed of one person, or two or more 
persons living together, as a household.
    Low income family means a family whose total annual income does not 
exceed 100 percent of the most recent Poverty Guidelines issued pursuant 
to 42 U.S.C. 9902(2). ``Low-income family'' also includes members of 
families whose annual family income exceeds this amount, but who, as 
determined by the project director, are unable, for good reasons, to pay 
for family planning services. For example, unemancipated minors who wish 
to receive services on a confidential basis must be considered on the 
basis of their own resources.
    Nonprofit, as applied to any private agency, institution, or 
organization, means that no part of the entity's net earnings benefit, 
or may lawfully benefit, any private shareholder or individual.
    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 includes, in addition to the several States, the District of 
Columbia, Guam, the Commonwealth of Puerto Rico, the Northern Mariana 
Islands, the U.S. Virgin Islands, American Samoa, the U.S. Outlying 
Islands (Midway, Wake, et al.), the Marshall Islands, the Federated 
State of Micronesia and the Republic of Palau.

[65 FR 41278, July 3, 2000; 65 FR 49057, Aug. 10, 2000]



Sec. 59.3  Who is eligible to apply for a family planning services grant?

    Any public or nonprofit private entity in a State may apply for a 
grant under this subpart.



Sec. 59.4  How does one apply for a family planning services grant?

    (a) Application for a grant under this subpart shall be made on an 
authorized form.
    (b) An individual authorized to act for the applicant and to assume 
on behalf of the applicant the obligations imposed by the terms and 
conditions of the grant, including the regulations of this subpart, must 
sign the application.
    (c) The application shall contain--
    (1) A description, satisfactory to the Secretary, of the project and 
how it will meet the requirements of this subpart;
    (2) A budget and justification of the amount of grant funds 
requested;
    (3) A description of the standards and qualifications which will be 
required for all personnel and for all facilities to be used by the 
project; and
    (4) Such other pertinent information as the Secretary may require.



Sec. 59.5  What requirements must be met by a family planning project?

    (a) Each project supported under this part must:
    (1) Provide a broad range of acceptable and effective medically 
approved family planning methods (including natural family planning 
methods) and services (including infertility services and services for 
adolescents). If an organization offers only a single method of family 
planning, it may participate as part of a project as long as the entire 
project offers a broad range of family planning services.
    (2) Provide services without subjecting individuals to any coercion 
to accept services or to employ or not to employ any particular methods 
of family planning. Acceptance of services must be solely on a voluntary 
basis and may not be made a prerequisite to eligibility for, or receipt 
of, any other

[[Page 307]]

services, assistance from or participation in any other program of the 
applicant.\1\
---------------------------------------------------------------------------

    \1\ Section 205 of Pub. L. 94-63 states: ``Any (1) officer or 
employee of the United States, (2) officer or employee of any State, 
political subdivision of a State, or any other entity, which administers 
or supervises the administration of any program receiving Federal 
financial assistance, or (3) person who receives, under any program 
receiving Federal assistance, compensation for services, who coerces or 
endeavors to coerce any person to undergo an abortion or sterilization 
procedure by threatening such person with the loss of, or 
disqualification for the receipt of, any benefit or service under a 
program receiving Federal financial assistance shall be fined not more 
than $1,000 or imprisoned for not more than one year, or both.''
---------------------------------------------------------------------------

    (3) Provide services in a manner which protects the dignity of the 
individual.
    (4) Provide services without regard to religion, race, color, 
national origin, handicapping condition, age, sex, number of 
pregnancies, or marital status.
    (5) Not provide abortion as a method of family planning. A project 
must:
    (i) Offer pregnant women the opportunity to be provided information 
and counseling regarding each of the following options:
    (A) Prenatal care and delivery;
    (B) Infant care, foster care, or adoption; and
    (C) Pregnancy termination.
    (ii) If requested to provide such information and counseling, 
provide neutral, factual information and nondirective counseling on each 
of the options, and referral upon request, except with respect to any 
option(s) about which the pregnant woman indicates she does not wish to 
receive such information and counseling.
    (6) Provide that priority in the provision of services will be given 
to persons from low-income families.
    (7) Provide that no charge will be made for services provided to any 
persons from a low-income family except to the extent that payment will 
be made by a third party (including a government agency) which is 
authorized to or is under legal obligation to pay this charge.
    (8) Provide that charges will be made for services to persons other 
than those from low-income families in accordance with a schedule of 
discounts based on ability to pay, except that charges to persons from 
families whose annual income exceeds 250 percent of the levels set forth 
in the most recent Poverty Guidelines issued pursuant to 42 U.S.C. 
9902(2) will be made in accordance with a schedule of fees designed to 
recover the reasonable cost of providing services.
    (9) If a third party (including a Government agency) is authorized 
or legally obligated to pay for services, all reasonable efforts must be 
made to obtain the third-party payment without application of any 
discounts. Where the cost of services is to be reimbursed under title 
XIX, XX, or XXI of the Social Security Act, a written agreement with the 
title XIX, XX or XXI agency is required.
    (10)(i) Provide that if an application relates to consolidation of 
service areas or health resources or would otherwise affect the 
operations of local or regional entities, the applicant must document 
that these entities have been given, to the maximum feasible extent, an 
opportunity to participate in the development of the application. Local 
and regional entities include existing or potential subgrantees which 
have previously provided or propose to provide family planning services 
to the area proposed to be served by the applicant.
    (ii) Provide an opportunity for maximum participation by existing or 
potential subgrantees in the ongoing policy decisionmaking of the 
project.
    (11) Provide for an Advisory Committee as required by Sec. 59.6.
    (b) In addition to the requirements of paragraph (a) of this 
section, each project must meet each of the following requirements 
unless the Secretary determines that the project has established good 
cause for its omission. Each project must:
    (1) Provide for medical services related to family planning 
(including physician's consultation, examination prescription, and 
continuing supervision, laboratory examination, contraceptive supplies) 
and necessary referral to other medical facilities when medically 
indicated, and provide for the effective usage of contraceptive devices 
and practices.

[[Page 308]]

    (2) Provide for social services related to family planning, 
including counseling, referral to and from other social and medical 
services agencies, and any ancillary services which may be necessary to 
facilitate clinic attendance.
    (3) Provide for informational and educational programs designed to--
    (i) Achieve community understanding of the objectives of the 
program;
    (ii) Inform the community of the availability of services; and
    (iii) Promote continued participation in the project by persons to 
whom family planning services may be beneficial.
    (4) Provide for orientation and in-service training for all project 
personnel.
    (5) Provide services without the imposition of any durational 
residency requirement or requirement that the patient be referred by a 
physician.
    (6) Provide that family planning medical services will be performed 
under the direction of a physician with special training or experience 
in family planning.
    (7) Provide that all services purchased for project participants 
will be authorized by the project director or his designee on the 
project staff.
    (8) Provide for coordination and use of referral arrangements with 
other providers of health care services, local health and welfare 
departments, hospitals, voluntary agencies, and health services projects 
supported by other federal programs.
    (9) Provide that if family planning services are provided by 
contract or other similar arrangements with actual providers of 
services, services will be provided in accordance with a plan which 
establishes rates and method of payment for medical care. These payments 
must be made under agreements with a schedule of rates and payment 
procedures maintained by the grantee. The grantee must be prepared to 
substantiate, that these rates are reasonable and necessary.
    (10) Provide, to the maximum feasible extent, an opportunity for 
participation in the development, implementation, and evaluation of the 
project by persons broadly representative of all significant elements of 
the population to be served, and by others in the community 
knowledgeable about the community's needs for family planning services.

[65 FR 41278, July 3, 2000; 65 FR 49057, Aug. 10, 2000]



Sec. 59.6  What procedures apply to assure the suitability of informational 

and educational material?

    (a) A grant under this section may be made only upon assurance 
satisfactory to the Secretary that the project shall provide for the 
review and approval of informational and educational materials developed 
or made available under the project by an Advisory Committee prior to 
their distribution, to assure that the materials are suitable for the 
population or community to which they are to be made available and the 
purposes of title X of the Act. The project shall not disseminate any 
such materials which are not approved by the Advisory Committee.
    (b) The Advisory Committee referred to in paragraph (a) of this 
section shall be established as follows:
    (1) Size. The Committee shall consist of no fewer than five but not 
more than nine members, except that this provision may be waived by the 
Secretary for good cause shown.
    (2) Composition. The Committee shall include individuals broadly 
representative (in terms of demographic factors such as race, color, 
national origin, handicapped condition, sex, and age) of the population 
or community for which the materials are intended.
    (3) Function. In reviewing materials, the Advisory Committee shall:
    (i) Consider the educational and cultural backgrounds of individuals 
to whom the materials are addressed;
    (ii) Consider the standards of the population or community to be 
served with respect to such materials;
    (iii) Review the content of the material to assure that the 
information is factually correct;
    (iv) Determine whether the material is suitable for the population 
or community to which is to be made available; and
    (v) Establish a written record of its determinations.

[[Page 309]]



Sec. 59.7  What criteria will the Department of Health and Human Services use 

to decide which family planning services projects to fund and in what amount?

    (a) Within the limits of funds available for these purposes, the 
Secretary may award grants for the establishment and operation of those 
projects which will in the Department's judgment best promote the 
purposes of section 1001 of the Act, taking into account:
    (1) The number of patients, and, in particular, the number of low-
income patients to be served;
    (2) The extent to which family planning services are needed locally;
    (3) The relative need of the applicant;
    (4) The capacity of the applicant to make rapid and effective use of 
the federal assistance;
    (5) The adequacy of the applicant's facilities and staff;
    (6) The relative availability of non-federal resources within the 
community to be served and the degree to which those resources are 
committed to the project; and
    (7) The degree to which the project plan adequately provides for the 
requirements set forth in these regulations.
    (b) The Secretary shall determine the amount of any award on the 
basis of his estimate of the sum necessary for the performance of the 
project. No grant may be made for less than 90 percent of the project's 
costs, as so estimated, unless the grant is to be made for a project 
which was supported, under section 1001, for less than 90 percent of its 
costs in fiscal year 1975. In that case, the grant shall not be for less 
than the percentage of costs covered by the grant in fiscal year 1975.
    (c) No grant may be made for an amount equal to 100 percent for the 
project's estimated costs.



Sec. 59.8  How is a grant awarded?

    (a) The notice of grant award specifies how long HHS intends to 
support the project without requiring the project to recompete for 
funds. This period, called the project period, will usually be for three 
to five years.
    (b) Generally the grant will initially be for one year and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit a separate application to have the support continued 
for each subsequent year. Decisions regarding continuation awards and 
the funding level of such awards will be made after consideration of 
such factors as the grantee's progress and management practices, and the 
availability of funds. In all cases, continuation awards require a 
determination by HHS that continued funding is in the best interest of 
the government.
    (c) Neither the approval of any application nor the award of any 
grant commits or obligates the United States in any way to make any 
additional, supplemental, continuation, or other award with respect to 
any approved application or portion of an approved application.



Sec. 59.9  For what purpose may grant funds be used?

    Any funds granted under this subpart shall be expended solely for 
the purpose for which the funds were granted in accordance with the 
approved application and budget, the regulations of this subpart, the 
terms and conditions of the award, and the applicable cost principles 
prescribed in 45 CFR Part 74 or Part 92, as applicable.



Sec. 59.10  What other HHS regulations apply to grants under this subpart?

    Attention is drawn to the following HHS Department-wide regulations 
which apply to grants under this subpart. These include:

37 CFR Part 401--Rights to inventions made by nonprofit organizations 
and small business firms under government grants, contracts, and 
cooperative agreements
42 CFR Part 50, Subpart D--Public Health Service grant appeals procedure
45 CFR Part 16--Procedures of the Departmental Grant Appeals Board
45 CFR Part 74--Uniform administrative requirements for awards and 
subawards to institutions of higher education, hospitals, other 
nonprofit organizations, and commercial organizations; and certain 
grants and agreements with states, local governments and Indian tribal 
governments
45 CFR Part 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

[[Page 310]]

45 CFR Part 81--Practice and procedure for hearings under Part 80 of 
this Title
45 CFR Part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefitting from Federal financial 
assistance
45 CFR Part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR Part 92--Uniform administrative requirements for grants and 
cooperative agreements to state and local governments



Sec. 59.11  Confidentiality.

    All information as to personal facts and circumstances obtained by 
the project staff about individuals receiving services must be held 
confidential and must not be disclosed without the individual's 
documented consent, except as may be necessary to provide services to 
the patient or as required by law, with appropriate safeguards for 
confidentiality. Otherwise, information may be disclosed only in 
summary, statistical, or other form which does not identify particular 
individuals.



Sec. 59.12  Additional conditions.

    The Secretary may, with respect to any grant, impose additional 
conditions prior to or at the time of any award, when in the 
Department's judgment these conditions are necessary to assure or 
protect advancement of the approved program, the interests of public 
health, or the proper use of grant funds.

[65 FR 41278, July 3, 2000; 65 FR 49057, Aug. 10, 2000]

Subpart B [Reserved]



          Subpart C_Grants for Family Planning Service Training

    Authority: Sec. 6(c), 84 Stat. 1507, 42 U.S.C. 300a-4; sec. 6(c), 84 
Stat. 1507, 42 U.S.C. 300a-1.

    Source: 37 FR 7093, Apr. 8, 1972, unless otherwise noted.



Sec. 59.201  Applicability.

    The regulations in this subpart are applicable to the award of 
grants pursuant to section 1003 of the Public Health Service Act (42 
U.S.C. 300a-1) to provide the training for personnel to carry out family 
planning service programs described in sections 1001 and 1002 of the 
Public Health Service Act (42 U.S.C. 300, 300a).



Sec. 59.202  Definitions.

    As used in this subpart:
    (a) Act means the Public Health Service Act.
    (b) State means one of the 50 States, the District of Columbia, 
Puerto Rico, Guam, the Virgin Islands, American Samoa, or the Trust 
Territory of the Pacific Islands.
    (c) Nonprofit private entity means a private entity no part of the 
net earnings of which inures, or may lawfully inure, to the benefit of 
any private shareholder or individual.
    (d) 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.
    (e) Training means job-specific skill development, the purpose of 
which is to promote and improve the delivery of family planning 
services.



Sec. 59.203  Eligibility.

    (a) Eligible applicants. Any public or nonprofit private entity 
located in a State is eligible to apply for a grant under this subpart.
    (b) Eligible projects. Grants pursuant to section 1003 of the Act 
and this subpart may be made to eligible applicants for the purpose of 
providing programs, not to exceed three months in duration, for training 
family planning or other health services delivery personnel in the 
skills, knowledge, and attitudes necessary for the effective delivery of 
family planning services: Provided, That the Secretary may in particular 
cases approve support of a program whose duration is longer than three 
months where he determines (1) that such program is consistent with the 
purposes of this subpart and (2) that the program's objectives cannot be 
accomplished within three months because of the unusually complex or 
specialized nature of the training to be undertaken.

[37 FR 7093, Apr. 8, 1972, as amended at 40 FR 17991, Apr. 24, 1975]

[[Page 311]]



Sec. 59.204  Application for a grant.

    (a) An application for a grant under this subpart shall be submitted 
to the Secretary at such time and in such form and manner as the 
Secretary may prescribe. \1\ The application shall contain a full and 
adequate description of the project and of the manner in which the 
applicant intends to conduct the project and carry out the requirements 
of this subpart, and a budget and justification of the amount of grant 
funds requested, and such other pertinent information as the Secretary 
may require.
---------------------------------------------------------------------------

    \1\ Applications and instructions may be obtained from the Program 
Director, Family Planning Services, at the Regional Office of the 
Department of Health and Human Services for the region in which the 
project is to be conducted, or the Office of Family Planning, Office of 
the Assistant Secretary for Health, Washington, DC 20201.
---------------------------------------------------------------------------

    (b) The application shall be executed by an individual authorized to 
act for the applicant and to assume for the applicant the obligations 
imposed by the regulations of this subpart and any additional conditions 
of the grant.

(Sec. 6(c), Public Health Service Act, 84 Stat. 1506 and 1507 (42 U.S.C. 
300, 300a-1, and 300a-4))

[37 FR 7093, Apr. 8, 1972, as amended at 49 FR 38116, Sept. 27, 1984]



Sec. 59.205  Project requirements.

    An approvable application must contain each of the following unless 
the Secretary determines that the applicant has established good cause 
for its omission:
    (a) Assurances that:
    (1) No portion of the Federal funds will be used to train personnel 
for programs where abortion is a method of family planning.
    (2) No portion of the Federal funds will be used to provide 
professional training to any student as part of his education in pursuit 
of an academic degree.
    (3) No project personnel or trainees shall on the grounds of sex, 
religion, or creed be excluded from participation in, be denied the 
benefits of, or be subjected to discrimination under the project.
    (b) Provision of a methodology to assess the particular training 
(e.g., skills, attitudes, or knowledge) that prospective trainees in the 
area to be served need to improve their delivery of family planning 
services.
    (c) Provision of a methodology to define the objectives of the 
training program in light of the particular needs of trainees defined 
pursuant to paragraph (b) of this section.
    (d) Provision of a method for development of the training curriculum 
and any attendant training materials and resources.
    (e) Provision of a method for implementation of the needed training.
    (f) Provision of an evaluation methodology, including the manner in 
which such methodology will be employed, to measure the achievement of 
the objectives of the training program.
    (g) Provision of a method and criteria by which trainees will be 
selected.



Sec. 59.206  Evaluation and grant award.

    (a) Within the limits of funds available for such purpose, the 
Secretary may award grants to assist in the establishment and operation 
of those projects which will in his judgment best promote the purposes 
of section 1003 of the Act, taking into account:
    (1) The extent to which a training program will increase the 
delivery of services to people, particularly low-income groups, with a 
high percentage of unmet need for family planning services;
    (2) The extent to which the training program promises to fulfill the 
family planning services delivery needs of the area to be served, which 
may include, among other things:
    (i) Development of a capability within family planning service 
projects to provide pre- and in-service training to their own staffs;
    (ii) Improvement of the family planning services delivery skills of 
family planning and health services personnel;
    (iii) Improvement in the utilization and career development of 
paraprofessional and paramedical manpower in family planning services;
    (iv) Expansion of family planning services, particularly in rural 
areas, through new or improved approaches to

[[Page 312]]

program planning and deployment of resources;
    (3) The capacity of the applicant to make rapid and effective use of 
such assistance;
    (4) The administrative and management capability and competence of 
the applicant;
    (5) The competence of the project staff in relation to the services 
to be provided; and
    (6) The degree to which the project plan adequately provides for the 
requirements set forth in Sec. 59.205.
    (b) The amount of any award shall be determined by the Secretary on 
the basis of his estimate of the sum necessary for all or a designated 
portion of direct project costs plus an additional amount for indirect 
costs, if any, which will be calculated by the Secretary either: (1) On 
the basis of his estimate of the actual indirect costs reasonably 
related to the project, or (2) on the basis of a percentage of all, or a 
portion of, the estimated direct costs of the project when there are 
reasonable assurances that the use of such percentage will not exceed 
the approximate actual indirect costs. Such award may include an 
estimated provisional amount for indirect costs or for designated direct 
costs (such as travel or supply costs) subject to upward (within the 
limits of available funds) as well as downward adjustments to actual 
costs when the amount properly expended by the grantee for provisional 
items has been determined by the Secretary.
    (c) Allowability of costs shall be in conformance with the 
applicable cost principles prescribed by Subpart Q of 35 CFR part 74.
    (d) All grant awards shall be in writing, shall set forth the amount 
of funds granted and the period for which support is recommended.
    (e) Neither the approval of any project nor any grant award shall 
commit or obligate the United States in any way to make any additional, 
supplemental, continuation, or other award with respect to any approved 
project or portion thereof. For continuation support, grantees must make 
separate application annually at such times and in such form as the 
Secretary may direct.

[37 FR 7093, Apr. 8, 1972, as amended at 38 FR 26199, Sept. 19, 1973]



Sec. 59.207  Payments.

    The Secretary shall from time to time make payments to a grantee of 
all or a portion of any grant award, either in advance or by way of 
reimbursement for expenses incurred or to be incurred in the performance 
of the project to the extent he determines such payments necessary to 
promote prompt initiation and advancement of the approved project.



Sec. 59.208  Use of project funds.

    (a) Any funds granted pursuant to this subpart as well as other 
funds to be used in performance of the approved project shall be 
expended solely for carrying out the approved project in accordance with 
the statute, the regulations of this subpart, the terms and conditions 
of the award, and, except as may otherwise be provided in this subpart, 
the applicable cost principles prescribed by subpart Q of 45 CFR part 
74.
    (b) Prior approval by the Secretary of revision of the budget and 
project plan is required whenever there is to be a significant change in 
the scope or nature of project activities.
    (c) The Secretary may approve the payment of grant funds to trainees 
for:
    (1) Return travel to the trainee's point of origin.
    (2) Per diem during the training program, and during travel to and 
from the program, at the prevailing institutional or governmental rate, 
whichever is lower.

[37 FR 7093, Apr. 8, 1972, as amended at 38 FR 26199, Sept. 19, 1973]



Sec. 59.209  Civil rights.

    Attention is called to the requirements of Title VI of the Civil 
Rights Act of 1964 (78 Stat. 252, 42 U.S.C. 2000d et seq.) and in 
particular section 601 of such Act which provides that no person in the 
United States shall, on the grounds of race, color, or national origin 
be excluded from participation in,

[[Page 313]]

be denied the benefits of, or be subjected to discrimination under any 
program or activity receiving Federal financial assistance. A regulation 
impelmenting such title VI, which applies to grants made under this 
part, has been issued by the Secretary of Health and Human Services with 
the approval of the President (45 CFR part 80).



Sec. 59.210  Inventions or discoveries.

    Any grant award pursuant to Sec. 59.206 is subject to the 
regulations of the Department of Health and Human Services as set forth 
in 45 CFR parts 6 and 8, as amended. Such regulations shall apply to any 
activity for which grant funds are in fact used whether within the scope 
of the project as approved or otherwise. Appropriate measures shall be 
taken by the grantee and by the Secretary to assure that no contracts, 
assignments or other arrangements inconsistent with the grant obligation 
are continued or entered into and that all personnel involved in the 
supported activity are aware of and comply with such obligations. 
Laboratory notes, related technical data, and information pertaining to 
inventions and discoveries shall be maintained for such periods, and 
filed with or otherwise made available to the Secretary, or those he may 
designate at such times and in such manner, as he may determine 
necessary to carry out such Department regulations.



Sec. 59.211  Publications and copyright.

    Except as may otherwise be provided under the terms and conditions 
of the award, the grantee may copyright without prior approval any 
publications, films or similar materials developed or resulting from a 
project supported by a grant under this part, subject, however, to a 
royalty-free, nonexclusive, and irrevocable license or right in the 
Government to reproduce, translate, publish, use, disseminate, and 
dispose of such materials and to authorize others to do so.



Sec. 59.212  Grantee accountability.

    (a) Accounting for grant award payments. All payments made by the 
Secretary shall be recorded by the grantee in accounting records 
separate from the records of all other grant funds, including funds 
derived from other grant awards. With respect to each approved project 
the grantee shall account for the sum total of all amounts paid by 
presenting or otherwise making available evidence satisfactory to the 
Secretary of expenditures for direct and indirect costs meeting the 
requirements of this part: Provided, however, That when the amount 
awarded for indirect costs was based on a predetermined fixed-percentage 
of estimated direct costs, the amount allowed for indirect costs shall 
be computed on the basis of such predetermined fixed-percentage rates 
applied to the total, or a selected element thereof, of the reimbursable 
direct costs incurred.
    (b) [Reserved]
    (c) Accounting for grant-related income--(1) Interest. Pursuant to 
section 203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 
4213), a State will not be held accountable for interest earned on grant 
funds, pending their disbursement for grant purposes. A State, as 
defined in section 102 of the Intergovernmental Cooperation Act, means 
any one of the several States, the District of Columbia, Puerto Rico, 
any territory or possession of the United States, or any agency or 
instrumentality of a State, but does not include the governments of the 
political subdivisions of the State. All grantees other than a State, as 
defined in this subsection, must return all interest earned on grant 
funds to the Federal Government.
    (d) Grant closeout--(1) Date of final accounting. A grantee shall 
render, with respect to each approved project, a full account, as 
provided herein, as of the date of the termination of grant support. The 
Secretary may require other special and periodic accounting.
    (2) Final settlement. There shall be payable to the Federal 
Government as final settlement with respect to each approved project the 
total sum of:
    (i) Any amount not accounted for pursuant to paragraph (a) of this 
section;
    (ii) Any credits for earned interest pursuant to paragraph (c)(1) of 
this section;

[[Page 314]]

    (iii) Any other amounts due pursuant to subparts F, M, and O of 45 
CFR part 74.

Such total sum shall constitute a debt owed by the grantee to the 
Federal Government and shall be recovered from the grantee or its 
successors or assignees by setoff or other action as provided by law.

[36 FR 18465, Sept. 15, 1971, as amended at 38 FR 26199, Sept. 19, 1973]



Sec. 59.213  [Reserved]



Sec. 59.214  Additional conditions.

    The Secretary may with respect to any grant award impose additional 
conditions prior to or at the time of any award when in his judgment 
such conditions are necessary to assure or protect advancement of the 
approved project, the interests of public health, or the conservation of 
grant funds.



Sec. 59.215  Applicability of 45 CFR part 74.

    The provisions of 45 CFR part 74, establishing uniform 
administrative requirements and cost principles, shall apply to all 
grants under this subpart to State and local governments as those terms 
are defined in subpart A of that part 74. The relevant provisions of the 
following subparts of part 74 shall also apply to grants to all other 
grantee organizations under this subpart.

                             45 CFR Part 74

Subpart:
A General.
B Cash Depositories.
C Bonding and Insurance.
D Retention and Custodial Requirements for Records.
F Grant-Related Income.
G Matching and Cost Sharing.
K Grant Payment Requirements.
L Budget Revision Procedures.
M Grant Closeout, Suspension, and Termination.
O Property.
Q Cost Principles.

[38 FR 26199, Sept. 19, 1973]



PART 59a_NATIONAL LIBRARY OF MEDICINE GRANTS--Table of Contents




   Subpart A_Grants for Establishing, Expanding, and Improving Basic 
                                Resources

Sec.
59a.1 Programs to which these regulations apply.
59a.2 Definitions.
59a.3 Who is eligible for a grant?
59a.4 How are grant applications evaluated?
59a.5 Awards.
59a.6 How may funds or materials be used?
59a.7 Other HHS regulations that apply.

          Subpart B_Establishment of Regional Medical Libraries

59a.11 Programs to which these regulations apply.
59a.12 Definitions.
59a.13 Who is eligible for a grant?
59a.14 How to apply.
59a.15 Awards.
59a.16 What other conditions apply?
59a.17 Other HHS regulations that apply.

    Source: 56 FR 29189, June 26, 1991, unless otherwise noted.



   Subpart A_Grants for Establishing, Expanding, and Improving Basic 
                                Resources

    Authority: 42 U.S.C. 286b-2, 286b-5.



Sec. 59a.1  Programs to which these regulations apply.

    (a) The regulations of this subpart apply to grants of funds, 
materials, or both, for establishing, expanding, and improving basic 
medical library resources as authorized by section 474 of the Act (42 
U.S.C. 286b-5).
    (b) This subpart also applies to cooperative agreements awarded for 
this purpose. In these circumstances, references to ``grant(s)'' shall 
include ``cooperative agreements(s).''



Sec. 59a.2  Definitions.

    Undefined terms have the same meaning as provided in the Act. As 
used in this subpart:
    Act means the Public Health Service Act, as amended (42 U.S.C. 201 
et seq.).
    Project period--See Sec. 59a.5(c).
    Related instrumentality means a public or private institution, 
organization, or agency, other than a medical library,

[[Page 315]]

whose primary function is the acquisition, preservation, dissemination, 
and/or processing of information relating to the health sciences.
    Secretary means the Secretary of Health and Human Services and any 
other official of the Department of Health and Human Services to whom 
the authority involved is delegated.



Sec. 59a.3  Who is eligible for a grant?

    Except as otherwise prohibited by law, any public or private 
nonprofit institution, organization, or agency authorized or qualified 
to carry on the functions of a medical library, and any public or 
private related instrumentality, is eligible for a grant under this 
subpart.



Sec. 59a.4  How are grant applications evaluated?

    The Secretary shall evaluate grant applications using the officers 
and employees, and experts, consultants, or groups engaged by the 
Secretary for that purpose. The Secretary's evaluation shall consider 
the scope of library or related services for the population and purposes 
served by the applicant. This evaluation shall include consideration of 
the following information which must be set forth in the grant 
application and such other information the Secretary considers 
pertinent:
    (a) Evidence of the applicant's efficiency in providing services,
    (b) Amount of available equipment and other resources on hand to 
satisfy the needs of the area served by the facility,
    (c) Extent of coordination with other libraries and related 
facilities, and
    (d) Potential for testing or demonstration of new or improved 
techniques in health-sciences informational services.

(Approved by the Office of Management and Budget under control number 
0925-0276)



Sec. 59a.5  Awards.

    (a) General. Within the limits of funds available, the Secretary may 
award grants to those applicants whose proposals for establishments, 
expansion, or improvement will, in the Secretary's judgment, best 
promote the purposes of section 474 of the Act (42 U.S.C. 286b-5).
    (b) Determination of award amount. An Award may not exceed 
$1,000,000 or other amount established by law for any fiscal year.
    (1) The scope of medical-library or related services provided by the 
applicant for the population and purposes it serves considering:
    (i) The number of graduate and undergraduate students, and 
physicians and other practitioners in health-related sciences making use 
of the applicant's library resources;
    (ii) The type and availability of library support staff;
    (iii) The type, size, and qualifications of the faculty of any 
school with which the applicant is affiliated;
    (iv) The staff of any hospitals or clinics with which the 
applicant's library is affiliated;
    (v) The geographic area served and, within that area, the medical-
library or related services otherwise available; and
    (2) The amount adequate to insure continuing financial support from 
non-Federal sources of the applicant's proposed activity during and 
after the period of award. The Secretary shall consider the level of 
non-Federal support for the proposed activity for periods prior to the 
fiscal year in which a grant is made. The Secretary shall require the 
applicant's assurance that non-Federal support will not be diminished as 
a result of the award and that adequate support for this activity will 
be continued during and after the period of Federal assistance.
    (c) Project period. (1) the notice of grant award specifies how long 
the Secretary intends to support the project without requiring the 
project to recompete for funds. This period, called the project period, 
will usually be for one to five years.
    (2) Generally, the grant will initially be for one year at a time 
and subsequent continuation awards will also be for one year at a time. 
A grantee must submit a separate application to have the support 
continued for each subsequent year. Decisions regarding continuation 
awards and the funding level of these awards will be made after 
consideration of such factors as the grantee's progress and management 
practices, and the availability of funds. In

[[Page 316]]

all cases, continuation awards require a determination by the Secretary 
that continued funding is in the best interest of the Federal 
Government.
    (3) Neither the approval of any application nor the award of any 
grant commits or obligates the Federal Government in any way to make any 
additional, supplemental, continuation, or other award for any approved 
application or portion of an approved application.

[56 FR 29189, June 26, 1991, as amended at 59 FR 59168, Nov. 16, 1994]



Sec. 59a.6  How may funds or materials be used?

    The grantee shall expend funds or use materials provided by a grant 
under this subpart solely for the purposes for which the funds or 
materials were granted, in accordance with the pertinent provisions of 
the approved application and budget, the regulations of this subpart, 
the terms and conditions of the award, and the applicable cost 
principles in subpart Q of 45 CFR part 74.



Sec. 59a.7  Other HHS regulations that apply.

    Several other regulations apply to grants under this subpart. These 
include, but are not necessarily limited to:

42 CFR part 50, subpart D--Public Health Service grant appeals procedure
45 CFR parts 6 and 8--Inventions and patents
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76 subparts A-F--Governmentwide debarment and suspension 
(nonprocurement) and requirements for drug-free workplace (grants)
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to state and local governments



          Subpart B_Establishment of Regional Medical Libraries

    Authority: 42 U.S.C. 286b-2, 286b-6.



Sec. 59a.11  Programs to which these regulations apply.

    (a) This subpart applies to grants made under section 475 of the Act 
(42 U.S.C. 286b-6). Grants are awarded to medical libraries to enable 
them to serve as regional medical libraries for their geographic areas. 
The purpose of the program is to develop a national system of regional 
medical libraries, each of which would have sufficient facilities to 
supplement the services of other medical libraries in its region.
    (b) The purpose of the program may also be supported by contracts. 
Since the primary purpose of these contracts is to assist regional 
libraries and is not for the purpose of acquiring supplies or services 
for use of the Federal Government, the provisions of the Federal 
Acquisition Regulation (48 CFR chapter 1) do not apply. Any contract 
awarded pursuant to section 475 of the Act shall be subject to the 
applicable provisions of this subpart.



Sec. 59a.12  Definitions.

    Underfined terms have the same meaning as provided in the Act.
    As used in this subpart:
    Act means the Public Health Service Act, as amended (42 U.S.C. 201 
et seq.).
    Annual operating expenses means the average annual operating 
expenses for the actual years of operation or an estimated amount based 
on the expenses of libraries or institutions of similar size and 
function.
    Board means the Board of Regents of the National Library of Medicine 
established by section 466 of the Act (42 U.S.C. 286a).
    Geographic area means an area that forms an academically and 
professionally integrated region. Factors

[[Page 317]]

considered are location and extent of communication facilities and 
systems, presence and distribution of educational and medical and health 
facilities and programs and other activities which, in the Secretary's 
opinion, justify the establishment and operation of a regional medical 
library.
    Modify and increase means the use of Federal funds or materials to 
supplement rather than supplant non-Federal funds available for library 
resources and services.
    Project period--See Sec. 59a.15(b).
    Secretary means the Secretary of Health and Human Services and any 
other official of the Department of Health and Human Services to whom 
the authority involved is delegated.



Sec. 59a.13  Who is eligible for a grant?

    Except as otherwise prohibited by law, any public or private 
nonprofit organization which is authorized and qualified to operate a 
medical library is eligible for a grant under this subpart.



Sec. 59a.14  How to apply.

    In addition to any other pertinent information which the Secretary 
may require, the applicant shall submit a grant application containing a 
detailed description of a program to provide health-sciences 
informational services for the geographic area in which it is located. 
The description shall include:
    (a) The need for services;
    (b) The adequacy of the applicant's existing or proposed facilities 
and resources to attain the purposes stated in the application;
    (c) The size and nature of the population to be served;
    (d) The region to be served;
    (e) Cooperative arrangements in effect, or proposed, with other 
qualified organizations; and
    (f) The justification for the funds requested.

(Approved by the Office of Management and Budget under control number 
0925-0276)



Sec. 59a.15  Awards.

    (a) General. The Secretary, with the advice of the Board in each 
case, shall award grants to those applicants whose arrangements and 
proposed services will, in the Secretary's judgment, have the greatest 
potential for fulfilling the need for a regional medical library. The 
Secretary, in determining the priority assigned an applicant, must 
consider:
    (1) The adequacy of the applicant's library in terms of collections, 
personnel, equipment, and other facilities; and
    (2) The size and nature of the population to be served in the 
applicant's region.
    (b) Project period. (1) The notice of grant award specifies how long 
the Secretary intends to support the project without requiring the 
project to recompete for funds. This period, called the project period, 
will usually be for one to five years.
    (2) Generally, the grant will initially be for one year and 
subsequent continuation awards will also be for one year at a time. A 
grantee must submit a separate application to have the support continued 
for each subsequent year. Decisions regarding continuation awards and 
the funding level of these awards will be made after consideration of 
such factors as the grantee's progress and management practices, and the 
availability of funds. In all cases, continuation awards require a 
determination by the Secretary that continued funding is in the best 
interest of the Federal Government.
    (3) Neither the approval of any application nor the award of any 
grant commits or obligates the Federal Government in any way to make any 
additional, supplemental, continuation, or other award for any approved 
application or portion of an approved application.



Sec. 59a.16  What other conditions apply?

    Although the Secretary may approve exceptions which are consistent 
with program purposes, in addition to other terms, conditions, and 
assurances required by law, each grantee must meet the following 
requirements:
    (a) Use of funds. Any funds granted under this subpart shall be 
expended solely for the purpose for which the funds were granted in 
accordance with the approved application and budget, the regulations of 
this subpart, the terms and conditions of the award, and

[[Page 318]]

the applicable cost principles in subpart Q of 45 CFR part 74.
    (b) Library resources--(1) Provision of services. The grantee shall 
modify and increase its library resources to provide supportive services 
to other health-sciences informational activities.
    (2) Access to and fees for services. The grantee shall provide free 
loan services to qualified users or, in lieu of loans, make available 
photoduplicated or facsimile copies of biomedical materials which 
qualified requesters may retain. Reasonable fees may be charged for 
copies or other services (other than free loan services) provided by a 
grantee under this subpart: Provided, That equal access to the health-
information resources of the region or of the national network is 
assured. These fees shall be designed to recover expenses. The grantee's 
access policies shall determine the qualifications of individuals or 
organizations for access to the services provided under the grant, so 
long as those policies are consistent with the mandatory service 
undertakings of the program. The Secretary may review the grantee's 
access policies to assure compliance with this requirement.

(Approved by the Office of Management and Budget under control number 
0925-0276)



Sec. 59a.17  Other HHS regulations that apply.

    Several other regulations apply to grants under this subpart. These 
include, but are not necessarily limited to:

42 CFR part 50, subpart A--Responsibilities of PHS awardee and applicant 
institutions for dealing with and reporting possible misconduct in 
science
42 CFR part 50, subpart D--Public Health Service grant appeals procedure
45 CFR parts 6 and 8--Inventions and patents
45 CFR part 16--Procedures of the Departmental Grant Appeals Board
45 CFR part 74--Administration of grants
45 CFR part 75--Informal grant appeals procedures
45 CFR part 76, subparts A-F--Governmentwide debarment and suspension 
(nonprocurement) and requirements for drug-free workplace (grants)
45 CFR part 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
45 CFR part 81--Practice and procedure for hearings under part 80 of 
this title
45 CFR part 84--Nondiscrimination on the basis of handicap in programs 
and activities receiving or benefiting from Federal financial assistance
45 CFR part 86--Nondiscrimination on the basis of sex in education 
programs and activities receiving or benefiting from Federal financial 
assistance
45 CFR part 91--Nondiscrimination on the basis of age in HHS programs or 
activities receiving Federal financial assistance
45 CFR part 92--Uniform administrative requirements for grants and 
cooperative agreements to state and local governments



PART 60_HEALTH EDUCATION ASSISTANCE LOAN PROGRAM--Table of Contents




                  Subpart A_General Program Description

Sec.
60.1 What is the HEAL program?

                         Subpart B_The Borrower

60.5 Who is an eligible student borrower?
60.6 Who is an eligible nonstudent borrower?
60.7 The loan application process.
60.8 What are the borrower's major rights and responsibilities?

                           Subpart C_The Loan

60.10 How much can be borrowed?
60.11 Terms of repayment.
60.12 Deferment.
60.13 Interest.
60.14 The insurance premium.
60.15 Other charges to the borrower.
60.16 Power of attorney.
60.17 Security and endorsement.
60.18 Consolidation of HEAL loans.
60.19 Forms.
60.20 The Secretary's collection efforts after payment of a default 
          claim.
60.21 Refunds.

                     Subpart D_The Lender and Holder

60.30 Which organizations are eligible to apply to be HEAL lenders and 
          holders?
60.31 The application to be a HEAL lender or holder.
60.32 The HEAL lender or holder insurance contract.
60.33 Making a HEAL loan.
60.34 HEAL loan account servicing.
60.35 HEAL loan collection.
60.36 Consequence of using an agent.
60.37 Forbearance.
60.38 Assignment of a HEAL loan.
60.39 Death and disability claims.

[[Page 319]]

60.40 Procedures for filing claims.
60.41 Determination of amount of loss on claims.
60.42 Records, reports, inspection, and audit requirements for HEAL 
          lenders and holders.
60.43 Limitation, suspension, or termination of the eligibility of a 
          HEAL lender or holder.

                          Subpart E_The School

60.50 Which schools are eligible to be HEAL schools?
60.51 The student loan application.
60.52 The student's loan check.
60.53 Notification to lender or holder of change in enrollment status.
60.54 Payment of refunds by schools.
60.55 Administrative and fiscal procedures.
60.56 Records.
60.57 Reports.
60.58 Federal access to school records.
60.59 Records and Federal access after a school is no longer a HEAL 
          school.
60.60 Limitation, suspension, or termination of the eligibility of a 
          HEAL school.
60.61 Responsibilities of a HEAL school.

    Authority: Sec. 215, of the Public Health Service Act, 58 Stat. 690, 
as amended, 63 Stat. 35 (42 U.S.C. 216); secs. 727-739A of the Public 
Health Service Act, 90 Stat. 2243, as amended, 93 Stat. 582, 99 Stat. 
529-532, 102 Stat. 3122-3125 (42 U.S.C. 294-294l-1); renumbered as secs. 
701-720, as amended by 106 Stat. 1994-2011 (42 U.S.C. 292-292p).

    Source: 48 FR 38988, Aug. 26, 1983, unless otherwise noted.



                  Subpart A_General Program Description



Sec. 60.1  What is the HEAL program?

    (a) The Health Education Assistance Loan (HEAL) program is a program 
of Federal insurance of educational loans to graduate students in the 
fields of medicine, osteopathic medicine, dentistry, veterinary 
medicine, optometry, podiatric medicine, pharmacy, public health, 
chiropractic, health administration and clinical psychology. The basic 
purpose of the program is to encourage lenders to make loans to students 
in these fields who desire to borrow money to pay for their educational 
costs. In addition, certain nonstudents (such as doctors serving as 
interns or residents) can borrow in order to pay the current interest 
charges accruing on earlier HEAL loans. By taking a HEAL loan, the 
borrower is obligated to repay the lender or holder the full amount of 
the money borrowed, plus all interest which accrues on the loan.
    (b) HEAL loans may be made by schools, banks, credit unions, State 
agencies, and other institutions eligible as lenders under Sec. 60.30. 
HEAL school eligibility is described in Sec. 60.50.
    (c) The Secretary insures each lender or holder for the losses of 
principal and interest it may incur in the event that a borrower dies; 
becomes totally and permanently disabled; files for bankruptcy under 
chapter 11 or 13 of the Bankruptcy Act; files for bankruptcy under 
chapter 7 of the Bankruptcy Act and files a compliant to determine the 
dischargeability of the HEAL loan; or defaults on his or her loan. In 
these instances, if the lender or holder has complied with all HEAL 
statutes and regulations, and with the lender's or holder's insurance 
contract, and the Secretary pays the amount of the loss to the lender or 
holder, the borrower's loan is then assigned to the Secretary. Only at 
that time, the United States Government becomes the borrower's direct 
creditor and will actively pursue the borrower for repayment of the 
debt, including reporting the borrower's default on the loan to consumer 
credit reporting agencies or to the Internal Revenue Service for 
purposes of locating such taxpayer or for income tax refund offset, and 
referral to the Department of Justice for litigation.
    (d) Any person who knowingly makes a false statement or 
misrepresentation in a HEAL loan transaction, bribes or attempts to 
bribe a Federal official, fraudulently obtains a HEAL loan, or commits 
any other illegal action in connection with a HEAL loan is subject to 
possible fine and imprisonment under Federal statute.
    (e) Calculating time periods. In counting the number of days allowed 
to comply with any provisions of these regulations, Saturdays, Sundays, 
and holidays are to be included. However, if a due date falls on a 
Saturday, Sunday, or Federal holiday, the due date is the next Federal 
work day.

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 745, Jan. 8, 1987; 56 
FR 42700, Aug. 29, 1991; 57 FR 28793, June 29, 1992]

[[Page 320]]



                         Subpart B_The Borrower



Sec. 60.5  Who is an eligible student borrower?

    To receive a HEAL loan, a student must satisfy the following 
requirements:
    (a) He or she must be a citizen, national, or lawful permanent 
resident of the United States, permanent resident of the Trust Territory 
of the Pacific Islands (the Republic of Palau), the Republic of the 
Marshall Islands, the Federated States of Micronesia, the Commonwealth 
of the Northern Mariana Islands, or American Samoa, or lawful permanent 
resident of the Commonwealth of Puerto Rico, the Virgin Islands or Guam;
    (b) He or she must be enrolled or accepted for enrollment at a HEAL 
school in a course of study that leads to one of the following degrees:

Doctor of Medicine
Doctor of Osteopathic Medicine
Doctor of Dentistry or equivalent degree
Doctor of Veterinary Medicine or equivalent degree
Doctor of Optometry or equivalent degree
Doctor of Podiatric Medicine or equivalent degree
Bachelor or Master of Science in Pharmacy or equivalent degree
Graduate or equivalent degree in Public Health
Doctor of Chiropractic or equivalent degree
Doctoral degree in Clinical Psychology
Masters or doctoral degree in Health Administration

    (c) He or she must be carrying or plan to carry, during the period 
for which the loan is intended, the normal work load of a full-time 
student, as determined by the school. The student's work load may 
include any combination of courses, work experience, research or special 
studies that the school considers sufficient to classify the student as 
full time.
    (d) If currently enrolled in school, he or she must be in good 
standing, as determined by the school.
    (e)(1) In the case of a pharmacy student, he or she must have 
satisfactorily completed 3 years of training toward the pharmacy degree. 
These 3 years of training may have been taken at the pharmacy school or 
at a different school whose credits are accepted on transfer by the 
pharmacy school.
    (2) The Doctor of Pharmacy degree is considered to be an equivalent 
degree if it is taken in a school that does not require the Bachelor or 
Master of Science in pharmacy as a prerequisite for the Doctor of 
Pharmacy degree.
    (f) In the case of a medical, dental or osteopathic student enrolled 
in a 6-year program that the student may enter directly from secondary 
school, the student must be enrolled in the last 4 years of the program.
    (g) He or she must agree that all funds received under the proposed 
loan will be used solely for tuition, other reasonable educational 
expenses, including fees, books, supplies and equipment, and laboratory 
expenses, reasonable living expenses, reasonable transportation costs 
(only to the extent that they are directly related to the borrower's 
education), and the HEAL insurance premium.
    (h) He or she must require the loan to pursue the course of study at 
the school. This determination of the maximum amount of the loan will be 
made by the school, applying the considerations in Sec. 60.51(f).
    (i) If required under section 3 of the Military Selective Service 
Act to present himself for and submit to registration under such 
section, he must have presented himself and submitted to registration 
under such section.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 
52 FR 745, Jan. 8, 1987; 57 FR 28793, June 29, 1992]



Sec. 60.6  Who is an eligible nonstudent borrower?

    To receive a HEAL loan, a person who is not a student must satisfy 
all of the following requirements:
    (a) He or she must have received a HEAL loan prior to August 13, 
1981, for which he or she is required to make payments of interest, but 
not principal, during the period for which the new loan is intended. 
This may be the grace period or a period of internship, residency or 
deferment.
    (b) He or she must continue to meet the citizenship, nationality, or 
residency qualifications required of student borrowers.
    (c) He or she must agree that all funds received under the proposed 
loan

[[Page 321]]

will be used solely for payment of currently accruing interest on HEAL 
loans and the HEAL insurance premium.
    (d) If required under section 3 of the Military Selective Service 
Act to present himself for and submit to registration under such 
section, he must have presented himself and submitted to registration 
under such section.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986]



Sec. 60.7  The loan application process.

    (a)(1)(i) A student seeking a HEAL loan applies to a participating 
lender for a HEAL loan by submitting an application form supplied by the 
school.
    (ii) The applicant must fill out the applicant sections of the form 
completely and accurately.
    (2) The student applicant must be informed of the Federal debt 
collection policies and procedures in accordance with the Department's 
Claims Collection Regulation (45 CFR part 30) prior to the student 
receiving the loan. The applicant must sign a certification statement 
attesting that the applicant has been notified of the actions the 
Federal Government can take in the event that the applicant fails to 
meet the scheduled payments. This signed statement must be maintained by 
the school and the lender or holder as part of the borrower's official 
record.
    (3) A student applicant must have his or her school complete a 
portion of the application providing information relating to:
    (i) The applicant's eligibility for the loan.
    (ii) The cost of his or her education; and
    (iii) The total financial resources that are actually available to 
the applicant for his or her costs of education for the period covered 
by the proposed HEAL loan, as determined in accordance with Sec. 
60.51(f), and other student aid that the applicant has received or will 
receive for the period covered by the proposed HEAL loan.
    (4) The student applicant must certify on the application that the 
information provided reflects the applicant's total financial resources 
actually available for his or her costs of education for the period 
covered by the proposed HEAL loan and the applicant's total 
indebtedness, and that the applicant has no other financial resources 
that are available to the applicant or that the applicant will receive 
for the period covered by the proposed HEAL loan.
    (5) A student applicant must certify on the application that if 
required under section 3 of the Military Selective Service Act to 
present himself for and submit to registration under such section, he 
has presented himself and submitted to registration under such section.
    (b) The applicant pursuing a full-time course of study at an 
institution of higher education that is a ``participating school'' in 
the Guaranteed Student Loan Program but is not pursuing a course of 
study listed in Sec. 60.5(b), applies for a HEAL loan as a nonstudent 
under paragraph (c) of this section.
    (c)(1)(i) A nonstudent seeking a HEAL loan applies to a 
participating lender for a HEAL loan by submitting an application form 
supplied by the lender.
    (ii) The applicant must fill out the applicant sections of the form 
completely and accurately.
    (2) The nonstudent applicant must be informed of the Federal debt 
collection policies and procedures in accordance with the Department's 
Claims Collection Regulation (45 CFR part 30) prior to the nonstudent 
receiving the loan. The applicant must sign a certification statement 
attesting that the applicant has been notified of the actions the 
Federal Government can take in the event that the applicant fails to 
meet the scheduled payments. This signed statement will be maintained by 
the lender or holder as part of the borrower's official record.
    (3) A nonstudent applicant must have his or her employer or 
institution, whichever is relevant, certify on the application that the 
applicant is:
    (i) Enrolled as a full-time student in an eligible school, as 
described in Sec. 60.12;
    (ii) A participant in an accredited internship or residency program, 
as described in Sec. 60.11(a);
    (iii) A member of the Armed Forces of the United States;
    (iv) A Peace Corps volunteer;

[[Page 322]]

    (v) A member of the National Health Service Corps; or
    (vi) A full-time VISTA volunteer under Title I of the Domestic 
Volunteer Service Act of 1973.
    (4) The nonstudent applicant seeking a HEAL loan during the grace 
period applies to the lender directly.
    (5) A nonstudent applicant must certify on the application that if 
required under section 3 of the Military Selective Service Act to 
present himself for and submit to registration under such section, he 
has presented himself and submitted to registration under such section.
    (6) The nonstudent applicant must certify on the application that 
the information provided reflects the applicant's total financial 
resources and indebtedness.

(Approved by the Office of Management and Budget under control numbers 
0915-0038 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 
52 FR 746, Jan. 8, 1987; 57 FR 28794, June 29, 1992]



Sec. 60.8  What are the borrower's major rights and responsibilities?

    (a) The borrower's rights. (1) Once the terms of the HEAL loan have 
been established, the lender or holder may not change them without the 
borrower's consent.
    (2) The lender must provide the borrower with a copy of the 
completed promissory note when the loan is made. The lender or holder 
must return the original note to the borrower when the loan is paid in 
full.
    (3) A lender must disburse HEAL loan proceeds as described in Sec. 
60.33(f).
    (4) The lender or holder must provide the borrower with a copy of 
the repayment schedule before repayment begins.
    (5) If the loan is sold from one lender or holder to another lender 
or holder, or if the loan is serviced by a party other than the lender 
or holder, the buyer must notify the borrower within 30 days of the 
transaction.
    (6) The borrower does not have to begin repayment until 9 full 
months after leaving school or an accredited internship or residency 
program as described in Sec. 60.11.
    (7) The borrower is entitled to deferment from repayment of the 
principal and interest installments during periods described in Sec. 
60.12.
    (8) The borrower may prepay the whole or any portion of the loan at 
any time without penalty.
    (9) The lender or holder must allow the borrower to repay a HEAL 
loan according to a graduated repayment schedule.
    (10) The borrower's total loan obligation is cancelled in the event 
of death or total and permanent disability.
    (11) To assist the borrower in avoiding default, the lender or 
holder may grant the borrower forbearance. Forbearance, including 
circumstances in which the lender or holder must grant forbearance, is 
more fully described in Sec. 60.37.
    (12) Any borrower who received a fixed interest rate HEAL loan in 
excess of 12 percent per year may enter into an agreement with the 
lender which made this loan for the reissuance of the loan in accordance 
with section 739A of the Public Health Service Act.
    (b) The borrower's responsibilities. (1) The borrower must pay any 
insurance premium that the lender may require as more fully described in 
Sec. 60.14.
    (2) The borrower must pay all interest charges on the loan as 
required by the lender or holder.
    (3) The borrower must immediately notify the lender or holder in 
writing in the event of:
    (i) Change of address;
    (ii) Change of name;
    (iii) Failure to enroll in a HEAL school for the period for which 
the loan is intended;
    (iv) Transfer to another school;
    (v) Withdrawal from a HEAL school or change in status to less than 
full-time attendance at a HEAL school;
    (vi) Graduation;
    (vii) Failure to enter into or interruption in an internship or 
residency program; or
    (viii) Change of status that authorizes deferment.
    (4) The borrower must repay the loan in accordance with the 
repayment schedule.
    (5) A borrower may not have a HEAL loan discharged in bankruptcy 
during

[[Page 323]]

the first 5 years of the repayment period. This prohibition against the 
discharge of a HEAL loan applies to bankruptcy under any chapter of the 
Bankruptcy Act, including Chapter 13. A borrower may have a HEAL loan 
discharged in bankruptcy after the first 5 years of the repayment period 
only upon a finding by the Bankruptcy Court that the non-discharge of 
such debt would be unconscionable and upon the condition that the 
Secretary shall not have waived his or her rights to reduce any Federal 
reimbursements or Federal payments for health services under any Federal 
law in amounts up to the balance of the loan.
    (6) If the borrower fails to make payments on the loan on time, the 
total amount to be repaid by the borrower may be increased by additional 
interest, late charges, attorney's fees, court costs, and other 
collection charges. In addition, the Secretary may offset amounts 
attributable to an unpaid loan from reimbursements or payment for health 
services provided under any Federal law to a defaulted borrower 
practicing his or her profession.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 746, Jan. 8, 1987; 57 
FR 28794, June 29, 1992]



                           Subpart C_The Loan



Sec. 60.10  How much can be borrowed?

    (a) Student borrower. An eligible student may borrow an amount to be 
used solely for expenses, as described in Sec. 60.5(g), incurred or to 
be incurred over a period of up to an academic year and disbursed in 
accordance with Sec. 60.33(f). The maximum amount he or she may receive 
for that period shall be determined by the school in accordance with 
Sec. 60.51(f) within the following limitations:
    (1) A student enrolled in a school of medicine, osteopathic 
medicine, dentistry, veterinary medicine, optometry or podiatric 
medicine may borrow up to $80,000 under this part. The amount received 
may not exceed $20,000 in any academic year.
    (2) A student enrolled in a school of public health, pharmacy, 
chiropractic, or a graduate program in health administration, clinical 
psychology, or allied health may borrow up to $50,000 under this part. 
The amount received may not exceed $12,500 per academic year.
    (3) For purposes of this paragraph, an academic year means the 
traditional approximately 9-month September-to-June annual session. For 
the purpose of computing academic year equivalents for students who, 
during a 12-month period, attend for a longer period than the 
traditional academic year, the academic year will be considered to be 9 
months in length.
    (4) The student's estimated cost of attendance shall not exceed the 
estimated cost of attendance of all students in like circumstances 
pursuing a similar curriculum at that school.
    (b) Non-student borrower. An eligible nonstudent may borrow amounts 
under this authority with the following restrictions:
    (1) In no case may an eligible nonstudent borrower receive a loan 
that is greater than the sum of the HEAL insurance premium plus the 
interest that is expected to accrue and must be paid on the borrower's 
HEAL loans during the period for which the new loan is intended.
    (2) An eligible nonstudent in the field of medicine, ostepathic 
medicine, dentistry, veterinary medicine, optometry, or podiatric 
medicine may borrow up to $80,000 under this part including loans 
obtained while the borrower was a student. The loan amount may not 
exceed $20,000 in any 12-month period.
    (3) An eligible nonstudent in the field of pharmacy, public health, 
chiropractic, health administration, or clinical psychology may borrow 
up to $50,000 under this part including loans obtained while the 
borrower was a student. The loan amount received under this part may not 
exceed $12,500 in any 12-month period.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 
52 FR 746, Jan. 8, 1987; 57 FR 28794, June 29, 1992]



Sec. 60.11  Terms of repayment.

    (a) Commencement of repayment. (1) The borrower's repayment period 
must begin the first day of the 10th month after the month he or she 
ceases to be a full-time student at a HEAL school.

[[Page 324]]

The 9-month period before the repayment period begins is popularly 
called the ``grace period.''
    (i) Postponement for internship or residency program. However, if 
the borrower becomes an intern or resident in an accredited program 
within 9 full months after leaving school, then the borrower's repayment 
period must begin the first day of the 10th month after the month he or 
she ceases to be an intern or resident. For a borrower who receives his 
or her first HEAL loan on or after October 22, 1985, this postponement 
of the beginning of the repayment period for participation in an 
internship or residency program is limited to 4 years.
    (ii) Postponement for fellowship training or educational activity. 
For any HEAL loan received on or after October 22, 1985, if the borrower 
becomes an intern or resident in an accredited program within 9 full 
months after leaving school, and subsequently enters into a fellowship 
training program or an educational activity, as described in Sec. 
60.12(b)(1) and (2), within 9 months after the completion of the 
accredited internship or residency program or prior to the completion of 
such program, the borrower's repayment period begins on the first day of 
the 10th month after the month he or she ceases to be a participant in 
the fellowship training program or educational activity. Postponement of 
the commencement of the repayment period for either activity is limited 
to 2 years.
    (iii) Non-student borrower. If a nonstudent borrower obtains another 
HEAL loan during the grace period or period of internship, residency, or 
deferment (as defined in Sec. 60.12), the borrower must begin to repay 
this loan when repayment on the borrower's other HEAL loans begins or 
resumes.
    (2) An accredited internship or residency program must be approved 
by one of the following accrediting agencies:
    (i) Accreditation Council for Graduate Medical Education.
    (ii) Council on Optometric Education.
    (iii) Commission on Accreditation of Dental and Dental Auxiliary 
Programs.
    (iv) American Osteopathic Association.
    (v) Council on Podiatry Education.
    (vi) American Council on Pharmaceutical Education.
    (vii) Council on Education for Public Health.
    (viii) American College of Veterinary Surgeons.
    (ix) Council on Chiropractic Education.
    (b) Length of repayment period. In general, a lender or holder must 
allow a borrower at least 10 years, but not more than 25 years, to repay 
a loan calculated from the beginning of the repayment period. A borrower 
must fully repay a loan within 33 years from the date that the loan is 
made.
    (1) For a HEAL borrower who received any HEAL loan prior to October 
22, 1985, periods of deferment (as described in Sec. 60.12) are not 
included when calculating the 10 to 25 or 33 year limitations.
    (2) For a borrower who receives his or her first HEAL loan on or 
after October 22, 1985, periods of deferment (as described in Sec. 
60.12) are included when calculating the 33 year limitation, but are not 
included when calculating the 10 to 25 year limitation.
    (c) Prepayment. The borrower may prepay the whole or any part of the 
loan at any time without penalty.
    (d) Minimum annual payment. During each year of repayment, a 
borrower's payments to all holders of his or her HEAL loans must total 
the interest that accrues during the year on all of the loans, unless 
the borrower, in the promissory note or other written agreement, agrees 
to make payments during any year or any repayment period in a lesser 
amount.
    (e) Repayment schedule agreement. At least 30 and not more than 60 
days before the commencement of the repayment period, a borrower must 
contact the holder of the loan to establish the precise terms of 
repayment. The borrower may select a monthly repayment schedule with 
substantially equal installment payments or a monthly repayment schedule 
with graduated installment payments that increase in amount over the 
repayment period. If the borrower does not contact the lender or holder 
and does not respond to contacts from the lender or holder, the lender 
or holder may establish a

[[Page 325]]

monthly repayment schedule with substantially equal installment 
payments, subject to the terms of the borrower's HEAL note.
    (f) Supplemental repayment agreement. (1) A lender or holder and a 
borrower may enter into an agreement supplementing the regular repayment 
schedule agreement. Under a supplemental repayment agreement, the lender 
or holder agrees to consider that the borrower has met the terms of the 
regular repayment schedule as long as the borrower makes payments in 
accordance with the supplemental schedule.
    (2) The purpose of a supplemental repayment agreement is to permit a 
lender or holder, at its option, to offer a borrower a repayment 
schedule based on other than equal or graduated payments. (For example, 
a supplemental repayment agreement may base the amount of the borrower's 
payments on his or her income.)
    (3) The supplemental schedule must contain terms which, according to 
the Secretary, do not unduly burden the borrower and do not extend the 
Secretary's insurance liability beyond the number of years specified in 
paragraph (b) of this section. The supplemental schedule must be 
approved by the Secretary prior to the start of repayment.
    (4) The lender or holder may establish a supplemental repayment 
agreement over the borrower's objection only if the borrower's written 
consent to enter into a supplemental agreement was obtained by the 
lender at the time the loan was made.
    (5) A lender or holder may assign a loan subject to a supplemental 
repayment agreement only if it specifically notifies the buyer of the 
terms of the supplemental agreement. In such cases, the loan and the 
supplemental agreement must be assigned together.

(Approved by the Office of Management and Budget under control numbers 
0915-0043 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 
53 FR 6097, Feb. 29, 1988; 57 FR 28794, June 29, 1992]



Sec. 60.12  Deferment.

    (a) After the repayment period has commenced, installments of 
principal and interest need not be paid during any period:
    (1) During which the borrower is pursuing a full-time course of 
study at a HEAL school or at an institution of higher education that is 
a ``participating school'' in the Guaranteed Student Loan Program;
    (2) Up to 4 years during which the borrower is a participant in an 
accredited internship or residency program, as described in Sec. 
60.11(a)(2). For a borrower who receives his or her first HEAL loan on 
or after October 22, 1985, this total of 4 years for an internship or 
residency program includes any period of postponement of the repayment 
period, as described in Sec. 60.11(a)(1);
    (3) Up to 3 years during which the borrower is a member of the Armed 
Forces of the United States;
    (4) Up to 3 years during which the borrower is in service as a 
volunteer under the Peace Corps Act;
    (5) Up to 3 years during which the borrower is a member of the 
National Health Service Corps; or
    (6) Up to 3 years during which the borrower is a full-time volunteer 
under title I of the Domestic Volunteer Service Act of 1973.
    (b) For any HEAL loan received on or after October 22, 1985, after 
the repayment period has commenced, installments of principal and 
interest need not be paid during any period for up to 2 years during 
which the borrower is a participant in:
    (1) A fellowship training program, which:
    (i) Is directly related to the discipline for which the borrower 
received the HEAL loan;
    (ii) Begins within 12 months after the borrower ceases to be a 
participant in an accredited internship or residency program, as 
described in Sec. 60.11(a)(2), or prior to the completion of the 
borrower's participation in such program;
    (iii) Is a full-time activity in reasearch or reserch training or 
health care policy;
    (iv) Is not a part of, an extension of, or associated with an 
internship or residency program, as described in Sec. 60.11(a)(2);
    (v) Pays no stipend or one which is not more than the annual stipend 
level

[[Page 326]]

established by the Public Health Service for the payment of uniform 
levels of financial support for trainees receiving graduate and 
professional training under Public Health Service grants, as in effect 
at the time the borrower requests the deferment; and
    (vi) Is a formally established fellowship program which was not 
created for a specific individual; or
    (2) A full-time educational activity at an institution defined by 
section 435(b) of the Higher Education Act of 1965 which:
    (i) Is directly related to the discipline for which the borrower 
received the HEAL loan;
    (ii) Begins within 12 months after the borrower ceases to be a 
participant in an accredited internship or residency program, as 
described in Sec. 60.11(a)(2), or prior to the completion of the 
borrower's participation in such program;
    (iii) Is not a part of, an extension of, or associated with an 
internship or residency program, as described in Sec. 60.11(a)(2); and
    (iv) Is required for licensure, registration, or certification in 
the State in which the borrower intends to practice the discipline for 
which the borrower received the HEAL program loan.
    (c) (1) To receive a deferment, including a deferral of the onset of 
the repayment period (see Sec. 60.11(a)), a borrower must at least 30 
days prior to, but not more than 60 days prior to, the onset of the 
activity and annually thereafter, submit to the lender or holder 
evidence of his or her status in the deferment activity and evidence 
that verifies deferment eligibility of the activity (with the full 
expectation that the borrower will begin the activity). It is the 
responsibility of the borrower to provide the lender or holder with all 
required information or other information regarding the requested 
deferment. If written evidence that verifies eligibility of the activity 
and the borrower for the deferment, including a certification from an 
authorized official (e.g., the director of the fellowship activity, the 
dean of the school, etc.), is received by the lender or holder within 
the required time limit, the lender or holder must approve the 
deferment. The lender or holder may rely in good faith upon statements 
of the borrower and the authorized official, except where those 
statements or other information conflict with information available to 
the lender or holder. When those verification statements or other 
information conflict with information available to the lender or holder, 
to indicate that the applicant fails to meet the requirements for 
deferment, the lender or holder may not approve the deferment until 
those conflicts are resolved.
    (2) For those activities described in paragraphs (b)(1) or (b)(2) of 
this section, the borrower may request that the Secretary review a 
decision by the lender or holder denying the deferment by sending to the 
Secretary copies of the application for deferment and the lender's or 
holder's denial of the request. However, if information submitted to the 
lender or holder conflicts with other information available to the 
lender or holder, to indicate that the borrower fails to meet the 
requirements for deferment, the borrower may not request a review until 
such conflicts have been resolved. During the review process, the lender 
or holder must comply with any requests for information made by the 
Secretary. If the Secretary determines that the fellowship or 
educational activity is eligible for deferment and so notifies the 
lender or holder, the lender or holder must approve the deferment.

(Approved by the Office of Management and Budget under control numbers 
0915-0034 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 
53 FR 6097, Feb. 29, 1988; 57 FR 28795, June 29, 1992]



Sec. 60.13  Interest.

    (a) Rate. At the lender's option, the interest rate on the HEAL loan 
may be calculated on a fixed rate or on a variable rate basis. However, 
whichever method is selected must continue over the life of the loan, 
except where the loan is consolidated with another HEAL loan.
    (1) For all loans made on or after October 22, 1985, for each 
calendar quarter, the Secretary determines the maximum annual HEAL 
interest rate by determining the average of the bond equivalent rates 
reported for the 91-day

[[Page 327]]

U.S. Treasury bills auctioned for the preceding calendar quarter, adding 
3 percentage points, and rounding that amount to the next higher one-
eighth of 1 percent.
    (2) Interest that is calculated on a fixed rate basis is determined 
for the life of the loan during the calendar quarter in which the loan 
is executed. It may not exceed the rate determined for that quarter by 
the Secretary under paragraph (a)(1) of this section.
    (3) Interest that is calculated on a variable rate basis varies 
every calendar quarter throughout the life of the loan as the market 
price of U.S. Treasury bills changes. For any quarter it may not exceed 
the rate determined by the Secretary under paragraph (a)(1) of this 
section.
    (4) The Secretary announces the rate determined under paragraph 
(a)(1) of this section on a quarterly basis through a notice published 
in the Federal Register.
    (b) Compounding of interest. Interest accrues from the date the loan 
is disbursed until the loan is paid in full. Unpaid accrued interest 
shall be compounded not more frequently than semiannually and added to 
principal. However, a lender or holder may postpone the compounding of 
interest before the beginning of the repayment period or during periods 
of deferment or forbearance and add interest to principal at the time 
repayment of principal begins or resumes.
    (c) Payment. Repayment of principal and interest is due when the 
repayment period begins. A lender or holder must permit a borrower to 
postpone paying interest before the beginning of the repayment period or 
during a period of deferment or forbearance. In these cases, payment of 
interest begins or resumes on the date repayment of principal begins or 
resumes.
    (d) Usury laws. No provision of any Federal or State law that limits 
the rate or amount of interest payable on loans shall apply to a HEAL 
loan.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644, Aug. 28, 1986; 
57 FR 28795, June 29, 1992]



Sec. 60.14  The insurance premium.

    (a) General. (1) The Secretary insures each lender or holder for the 
losses of principal and interest it may incur in the event that a 
borrower dies; becomes totally and permanently disabled; files for 
bankruptcy under chapter 11 or 13 of the Bankruptcy Act; files for 
bankruptcy under chapter 7 of the Bankruptcy Act and files a complaint 
to determine the dischargeability of the HEAL loan; or defaults on his 
or her loan. For this insurance, the Secretary charges the lender an 
insurance premium. The insurance premium is due to the Secretary on the 
date of disbursement of the HEAL loan.
    (2) The lender may charge the borrower an amount equal to the cost 
of the insurance premium. The cost of the insurance premium may be 
charged to the borrower by the lender in the form of a one-time special 
charge with no subsequent adjustments required. The lender may bill the 
borrower separately for the insurance premium or may deduct an amount 
attributable to it from the loan proceeds before the loan is disbursed. 
In either case, the lender must clearly identify to the borrower the 
amount of the insurance premium and the method of calculation.
    (3) If the lender does not pay the insurance premium on or before 30 
days after disbursement of the loan, a late fee will be charged on a 
daily basis at the same rate as the interest rate that the lender 
charges for the HEAL loan for which the insurance premium is past due. 
The lender may not pass on this late fee to the borrower.
    (4) HEAL insurance coverage ceases to be effective if the insurance 
premium is not paid within 60 days of the disbursement of the loan.
    (5) Except in cases of error, premiums are not refundable by the 
Secretary, and need not be refunded by the lender to the borrower, even 
if the borrower graduates or withdraws from the school, defaults, dies 
or becomes totally and permanently disabled.
    (b) Rate. The rate of the insurance premium shall not exceed the 
statutory maximum. The Secretary announces changes in the rate of the 
insurance premium through a notice published in the Federal Register.
    (c) Method of calculation--(1) Student borrowers. For loans 
disbursed prior to July 22, 1986, the lender must calculate the 
insurance premium on the basis of

[[Page 328]]

the number of months beginning with the month following the month in 
which the loan proceeds are disbursed to the student borrower and ending 
9 full months after the month of the student's anticipated date of 
graduation. For loans disbursed on or after July 22, 1986, the insurance 
premium shall be calculated as a one-time flat rate on the principal of 
the loan at the time of disbursement.
    (2) Non-student borrowers. For loans disbursed prior to July 22, 
1986, the lender must calculate the insurance premium for nonstudent 
borrowers on the basis of the number of months beginning with the month 
following the month in which the loan proceeds are disbursed to the 
borrower and ending at the conclusion of the month preceding the month 
in which repayment of principal is expected to begin or resume on the 
borrower's previous HEAL loans. For loans disbursed on or after July 22, 
1986, the insurance premium shall be calculated as a one-time flat rate 
on the principal of the loan at the time of disbursement.
    (3) Multiple installments. In cases where the lender disburses the 
loan in multiple installments, the insurance premium is calculated for 
each disbursement.

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30644 Aug. 28, 1986; 52 
FR 746, Jan. 8, 1987; 56 FR 42700, Aug. 29, 1991; 57 FR 28795, June 29, 
1992]



Sec. 60.15  Other charges to the borrower.

    (a) Late charges. If the borrower fails to pay all of a required 
installment payment or fails to provide written evidence that verifies 
eligibility for the deferment of the payment within 30 days after the 
payment's due date, the lender or holder will require that the borrower 
pay a late charge. A late charge must be equal to 5 percent of the 
unpaid portion of the payment due.
    (b) Collection charges. The lender or holder may also require that 
the borrower pay the holder of the note for reasonable costs incurred by 
the holder or its agent in collecting any installment not paid when due. 
These costs may include attorney's fees, court costs, telegrams, and 
long-distance phone calls. The holder may not charge the borrower for 
the normal costs associated with preparing letters and making personal 
and local telephone contacts with the borrower. A service agency's fee 
for normal servicing of a loan may not be passed on to the borrower, 
either directly or indirectly. No charges, other than those authorized 
by this section, may be passed on to the borrower, either directly or 
indirectly, without prior approval of the Secretary.
    (c) Other loan making costs. A lender may not pass on to the 
borrower any cost of making a HEAL loan other than the costs of the 
insurance premium.

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 747, Jan. 8, 1987; 57 
FR 28795, June 29, 1992]



Sec. 60.16  Power of attorney.

    Neither a lender nor a school may obtain a borrower's power of 
attorney or other authorization to endorse a disbursement check on 
behalf of a borrower. The borrower must personally endorse the check and 
may not authorize anyone else to endorse it on his or her behalf.



Sec. 60.17  Security and endorsement.

    (a) A HEAL loan must be made without security.
    (b) With one exception, it must also be made without endorsement. If 
a borrower is a minor and cannot under State law create a legally 
binding obligation by his or her own signature, a lender may require an 
endorsement by another person on the borrower's HEAL note. For purposes 
of this paragraph, an ``endorsement'' means a signature of anyone other 
than the borrower who is to assume either primary or secondary liability 
on the note.



Sec. 60.18  Consolidation of HEAL loans.

    HEAL loans may be consolidated as follows provided that the lender 
or holder must first inform the borrower of the effect of the 
consolidation on the interest rate and explain to the borrower that he 
or she is not required to agree to the consolidation:
    (a) If a lender or holder holds two or more HEAL loans made to the 
same borrower, the lender or holder and the borrower may agree to 
consolidate the loans into a single HEAL loan obligation evidenced by 
one promissory note.

[[Page 329]]

    (b) A HEAL loan may be consolidated with any other loan only if:
    (1) The consolidation will not result in terms less favorable to the 
borrower than if no consolidation had occurred, and
    (2) The Federal Government does not, as a result of the 
consolidation, become liable for any payment of principal or interest 
for a Guaranteed Student Loan under the provisions of section 439(o) of 
the Higher Education Act of 1965.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 57 FR 28795, June 29, 1992]



Sec. 60.19  Forms.

    All HEAL forms are approved by the Secretary and may not be changed 
without prior approval by the Secretary. HEAL forms shall not be signed 
in blank by a borrower, a school, a lender or holder, or an agent of any 
of these. The Secretary may prescribe who must complete the forms, and 
when and to whom the forms must be sent. All HEAL forms must contain a 
statement that any person who knowingly makes a false statement or 
misrepresentation in a HEAL loan transaction, bribes or attempts to 
bribe a Federal official, fraudulently obtains a HEAL loan, or commits 
any other illegal action in connection with a HEAL loan is subject to 
possible fine and imprisonment under Federal statute.

[52 FR 747, Jan. 8, 1987, as amended at 57 FR 28795, June 29, 1992]



Sec. 60.20  The Secretary's collection efforts after payment of a default 

claim.

    After paying a default claim on a HEAL loan, the Secretary attempts 
to collect from the borrower and any valid endorser in accordance with 
the Federal Claims Collection Standards (4 CFR parts 101 through 105), 
the Office of Management and Budget Circular A-129, issued May 9, 1985, 
and the Department's Claims Collection Regulation (45 CFR part 30). The 
Secretary attempts collection of all unpaid principal, interest, 
penalties, administrative costs, and other charges or fees, except in 
the following situations:
    (a) The borrower has a valid defense on the loan. The Secretary 
refrains from collection against the borrower or endorser to the extent 
of any defense that the Secretary concludes is valid. Examples of a 
valid defense include expiration of the statute of limitations and 
infancy.
    (b) A school owes the borrower a refund for the period covered by 
the loan. In this situation, the Secretary refrains from collection to 
the extent of the unpaid refund if the borrower assigns to the Secretary 
the right to receive the refund.
    (c) The school or lender or holder is the subject of a lawsuit or 
Federal administrative proceeding. In this situation, if the Secretary 
determines that the proceeding involves allegations that, if proven, 
would provide the borrower with a full or partial defense on the loan, 
then the Secretary may suspend collection activity on all or part of a 
loan until the proceeding ends. The Secretary suspends collection 
activity only for so long as the proceeding is being energetically 
prosecuted in good faith and the allegations that relate to the 
borrower's defense are reasonably likely to be proven.
    (d) The borrower dies or becomes totally and permanently disabled. 
In this situation, the Secretary terminates all collection activity 
against the borrower. If the borrower dies or becomes totally and 
permanently disabled, the Secretary also terminates all collection 
activity against any endorser.

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 747, Jan. 8, 1987; 57 
FR 28795, June 29, 1992]



Sec. 60.21  Refunds.

    (a) Student authorization. By applying for a HEAL loan, a student 
authorizes a participating school to make payment of a refund that is 
allocable to a HEAL loan directly to the original lender (or to a 
subsequent holder of the loan note, if the school has knowledge of the 
holder's identity).
    (b) Treatment by lenders or holders. (1) A holder of a HEAL loan 
must treat a refund payment received from a HEAL school as a downward 
adjustment in the principal amount of the loan.
    (2) When a lender receives a school refund check for a loan it no 
longer holds, the lender must transfer that

[[Page 330]]

payment to the holder of the loan and either inform the borrower about 
the refund check and where it was sent or, if the borrower's address is 
unknown, notify the current holder that the borrower was not informed. 
The current holder must provide the borrower with a written notice of 
the refund payment.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 57 FR 28795, June 29, 1992]



                     Subpart D_The Lender and Holder



Sec. 60.30  Which organizations are eligible to apply to be HEAL lenders and 

holders?

    (a) A HEAL lender may make and hold loans under the HEAL program.
    (b) The following types of organizations are eligible to apply to 
the Secretary to be HEAL lenders:
    (1) A financial or credit institution (including a bank, savings and 
loan association, credit union, or insurance company) which is subject 
to examination and supervision in its capacity as a lender by an agency 
of the United States or of the State in which it has its principal place 
of business;
    (2) A pension fund approved by the Secretary;
    (3) An agency or instrumentality of a State;
    (4) A HEAL school; and
    (5) A private nonprofit entity, designated by the State, regulated 
by the State, and approved by the Secretary.
    (c) The following types of organizations are eligible to apply to 
the Secretary to be HEAL holders:
    (1) Public entities in the business of purchasing student loans;
    (2) The Student Loan Marketing Association (popularly known as 
``Sallie Mae''); and
    (3) Other eligible lenders.
    (d) HEAL holders must comply with any provisions in the regulations 
required of HEAL lenders including, but not limited to, provisions 
regarding applications, contracts, and due diligence.

[48 FR 38988, Aug. 26, 1983, as amended at 57 FR 28795, June 29, 1992]



Sec. 60.31  The application to be a HEAL lender or holder.

    (a) In order to be a HEAL lender or holder, an eligible organization 
must submit an application to the Secretary annually.
    (b) In determining whether to enter into an insurance contract with 
an applicant and what the terms of that contract should be, the 
Secretary may consider the following criteria:
    (1) Whether the applicant is capable of complying with the 
requirements in the HEAL regulations applicable to lenders and holders;
    (2) The amount and rate of loans which are currently delinquent or 
in default, if the applicant has had prior experience with similar 
Federal or State student loan programs; and
    (3) The financial resources of the applicant.
    (c) The applicant must develop and follow written procedures for 
making, servicing and collecting HEAL loans. These procedures must be 
reviewed during the biennial audit required by Sec. 60.42(d). If the 
applicant uses procedures more stringent than those required by 
Sec. Sec. 60.34 and 60.35 for its other loans of comparable dollar 
value, on which it has no Federal, State, or other third party 
guarantee, it must include those more stringent procedures in its 
written procedures for servicing and collecting its HEAL loans.
    (d) The applicant must submit sufficient materials with his or her 
application to enable the Secretary to fairly evaluate the application 
in accordance with these criteria.

(Approved by the Office of Management and Budget under control numbers 
0915-0034 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 747, Jan. 8, 1987; 57 
FR 28796, June 29, 1992]



Sec. 60.32  The HEAL lender or holder insurance contract.

    (a)(1) If the Secretary approves an application to be a HEAL lender 
or holder, the Secretary and the lender or holder must sign an insurance 
contract. Under this contract, the lender or holder agrees to comply 
with all the laws, regulations, and other requirements applicable to its 
participation in the HEAL program and the Secretary

[[Page 331]]

agrees to insure each eligible HEAL loan held by the lender or holder 
against the borrower's default, death, total and permanent disability, 
bankruptcy under chapter 11 or 13 of the Bankruptcy Act, or bankruptcy 
under chapter 7 of the Bankruptcy Act when the borrower files a 
complaint to determine the dischargeability of the HEAL loan. The 
Secretary's insurance covers 100 percent of the lender's or holder's 
losses on both unpaid principal and interest, except to the extent that 
a borrower may have a defense on the loan other than infancy.
    (2) HEAL insurance, however, is not unconditional. The Secretary 
issues HEAL insurance on the implied representations of the lender that 
all the requirements for the initial insurability of the loan have been 
met. HEAL insurance is further conditioned upon compliance by the holder 
of the loan with the HEAL statute and regulations, the lender's or 
holder's insurance contract, and its own loan management procedures set 
forth in writing pursuant to Sec. 60.31(c). The contract may contain a 
limit on the duration of the contract and the number or amount of HEAL 
loans a lender may make or hold. Each HEAL lender has either a standard 
insurance contract or a comprehensive insurance contract with the 
Secretary, as described below.
    (b) Standard insurance contract. A lender with a standard insurance 
contract must submit to the Secretary a borrower's loan application for 
HEAL insurance on each loan that the lender determines to be eligible. 
The Secretary notifies the lender whether the loan is or is not 
insurable, the amount of the insurance, and the expiration date of the 
insurance commitment. A loan which has been disbursed under a standard 
contract of insurance prior to the Secretary's approval of the 
application is considered not to have been insured.
    (c)(1) Comprehensive insurance contract. A lender with a 
comprehensive insurance contract may disburse a loan without submitting 
an individual borrower's loan application to the Secretary for approval. 
All eligible loans made by a lender with this type of contract are 
insured immediately upon disbursement.
    (2) The Secretary will revoke the comprehensive contract of any 
lender who utilizes procedures which are inconsistent with the HEAL 
statute and regulations, the lender's insurance contract, or its own 
loan management procedures set forth in writing pursuant to Sec. 
60.31(c), and require that such lenders disburse HEAL loans only under a 
standard contract. When the Secretary determines that the lender is in 
compliance with the HEAL statute and regulations and its own loan 
management procedures set forth in writing pursuant to Sec. 60.31(c), 
the lender may reapply for a comprehensive contract.
    (3) In providing comprehensive contracts, the Secretary shall give 
priority to eligible lenders that:
    (i) Make loans to students at interest rates below the rates 
prevailing during the period involved; or
    (ii) Make loans under terms that are otherwise favorable to the 
student relative to the terms under which eligible lenders are generally 
making loans during the period involved.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 747, Jan. 8, 1987; 56 
FR 42701, Aug. 29, 1991; 57 FR 28796, June 29, 1992]



Sec. 60.33  Making a HEAL loan.

    The loan-making process includes the processing of necessary forms, 
the approval of a borrower for a loan, determination of a borrower's 
creditworthiness, the determination of the loan amount (not to exceed 
the amount approved by the school), the explanation to a borrower of his 
or her responsibilities under the loan, the execution of the promissory 
note, and the disbursement of the loan proceeds. A lender may rely in 
good faith upon statements of an applicant and the HEAL school contained 
in the loan application papers, except where those statements are in 
conflict with information obtained from the report on the applicant's 
credit history, or other information available to the lender. Except 
where the statements are in conflict with information obtained from the 
applicant's credit history or other information available to the lender, 
a lender making loans to nonstudent borrowers may rely in good faith 
upon

[[Page 332]]

statements by the borrower and authorizing officials of internship, 
residency, or other programs for which a borrower may receive a 
deferment.
    (a) Processing of forms. Before making a HEAL loan, a lender must 
determine that all required forms have been completed by the borrower, 
the HEAL school, the lender, and the authorized official for an 
internship, a residency, or other deferment activity.
    (b) Approval of borrower. A lender may make a HEAL loan only to an 
eligible student or nonstudent borrower.
    (c) Lender determination of the borrower's creditworthiness. The 
lender may make HEAL loans only to an applicant that the lender has 
determined to be creditworthy. This determination must be made at least 
once for each academic year during which the applicant applies for a 
HEAL loan. An applicant will be determined to be ``creditworthy'' if he 
or she has a repayment history that has been satisfactory on any loans 
on which payments have become due. The lender may not determine that an 
applicant is creditworthy if the applicant is currently in default on 
any loan (commercial, consumer, or educational) until the delinquent 
account is made current or satisfactory arrangements are made between 
the affected lender(s) and the HEAL applicant. The lender must obtain 
documentation, such as a letter from the authorized official(s) of the 
affected lender(s) or a corrected credit report indicating that the HEAL 
applicant has taken satisfactory actions to bring the account into good 
standing. It is the responsibility of the HEAL loan applicant to assure 
that the lender receives each such documentation. No loan may be made to 
an applicant who is delinquent on any Federal debt until the delinquent 
account is made current or satisfactory arrangements are made between 
the affected agency and the HEAL applicant. The lender must receive a 
letter from the authorized Federal official of the affected Federal 
agency stating that the borrower has taken satisfactory actions to bring 
the account into good standing. It is the responsibility of the loan 
applicant to assure that the lender has received each such letter. The 
absence of any previous credit, however, is not an indication that the 
applicant is not creditworthy and is not to be used as a reason to deny 
the status of creditworthy to an applicant. The lender must determine 
the creditworthiness of the applicant using, at a minimum, the 
following:
    (1) A report of the applicant's credit history obtained from an 
appropriate consumer credit reporting agency, which must be used in 
making the determinations required by paragraph (c) of this section; and
    (2) For student applicants only, the certification made by the 
applicant's school under Sec. 60.51(e).
    (d) Determination of loan amount. A lender may not make a HEAL loan 
in an amount that exceeds the permissible annual and aggregate maximums 
described in Sec. 60.10.
    (e) Promissory note. (1) Each loan must be evidenced by a promissory 
note approved by the Secretary. A lender must obtain the Secretary's 
prior approval of the note form before it makes a HEAL loan evidenced by 
a promissory note containing any deviation from the provisions of the 
form most currently approved by the Secretary. The lender must give the 
borrower a copy of each executed note.
    (2) The lender must explain to the borrower that the loan must be 
repaid and that the loan proceeds may be applied toward educational 
expenses only.
    (f) Disbursement of HEAL loan. (1) A lender must disburse HEAL loan 
proceeds:
    (i) To a student borrower, by means of a check or draft payable 
jointly to the student borrower and the HEAL school. Except where a 
lender is also a school, a lender must mail the check or draft to the 
school. A lender may not disburse the loan proceeds earlier than is 
reasonably necessary to meet the cost of education for the period for 
which the loan is made.
    (ii) To a nonstudent borrower, by means of a check or draft payable 
to the borrower. However, when a previous loan is held by a different 
lender, the current lender must make the HEAL loan disbursement check or 
draft payable jointly to the borrower and the holder of the previous 
HEAL loan for which interest is payable.

[[Page 333]]

    (2) Effective July 1, 1987, a lender must disburse the HEAL loan 
proceeds in two or more installments unless the loan is intended to 
cover a period of no more than one-half an academic year. The amount 
disbursed at one time must correspond to the borrower's educational 
expenses for the period for which the disbursement is made, and must be 
indicated by the school on the borrower's application. If the loan is 
intended for more than one-half an academic year, the school must 
indicate on the borrower's application both the approximate dates of 
disbursement and the amount the borrower will need on each such date. In 
no case may the lender disburse the proceeds earlier than is reasonably 
necessary to meet the costs of education for the period for which the 
disbursement or the loan is made.
    (g) If the lender determines that the applicant is not creditworthy, 
pursuant to paragraph (c) of this section, the lender must not approve 
the HEAL loan request. If the applicant is a student, the lender must 
notify the applicant and the applicant's school named on the application 
form of the denial of a HEAL loan, stating the reason for the denial.
    (h) The lender must report a borrower's HEAL indebtedness to one or 
more national credit bureaus within 120 days of the date the final 
disbursement on the loan is made.

(Approved by the Office of Management and Budget under control numbers 
0915-0043, 0915-0108, and 0915-0144)

[48 FR 38988, Aug. 26, 1983, as amended at 51 FR 30645, Aug. 28, 1986; 
52 FR 748, Jan. 8, 1987; 57 FR 28796, June 29, 1992; 58 FR 67349, Dec. 
21, 1993]



Sec. 60.34  HEAL loan account servicing.

    HEAL loan account servicing involves the proper maintenance of 
records, and the proper review and management of accounts. Generally 
accepted account servicing standards ensure that collections are 
received and accounted for, delinquent accounts are identified promptly, 
and reports are produced comparing actual results to previously 
established objectives.
    (a) Borrower inquiries. A lender or holder must respond on a timely 
basis to written inquiries and other communications from a borrower and 
any endorser of a HEAL loan.
    (b) Conversion of loan to repayment status. (1) At least 30 and not 
more than 60 days before the commencement of the repayment period, the 
lender or holder must contact the borrower in writing to establish the 
terms of repayment. Lenders or holders may not charge borrowers for the 
additional interest or other charges, penalties, or fees that accrue 
when a lender or holder does not contact the borrower within this time 
period and a late conversion results.
    (2) Terms of repayment are established in a written schedule that is 
made a part of, and subject to the terms of, the borrower's original 
HEAL note.
    (3) The lender or holder may not surrender the original promissory 
note to the borrower until the loan is paid in full. At that time, the 
lender or holder must give the borrower the original promissory note.
    (c) Borrower contacts. The lender or holder must notify each 
borrower by a written contact, which has an address correction request 
on the envelope, of the balance owed for principal, interest, insurance 
premiums, and any other charges or fees owed to the lender, at least 
every 6 months from the time the loan is disbursed. The lender or holder 
must use this notice to remind the borrower of the option, without 
penalty, to pay all or part of the principal and accrued interest at any 
time.
    (d) Skip-tracing. If, at any time, the lender or holder is unable to 
locate a borrower, the lender or holder must initiate skip-tracing 
procedures as described in Sec. 60.35(a)(2).

(Approved by the Office of Management and Budget under control numbers 
0915-0043 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 748, Jan. 8, 1987; 57 
FR 28796, June 29, 1992]



Sec. 60.35  HEAL loan collection.

    A lender or holder must exercise due diligence in the collection of 
a HEAL loan with respect to both a borrower and any endorser. In order 
to exercise due diligence, a lender or holder must implement the 
following procedures when a borrower fails to honor his or her payment 
obligations:

[[Page 334]]

    (a)(1) When a borrower is delinquent in making a payment, the lender 
or holder must remind the borrower within 15 days of the date the 
payment was due by means of a written contact. If payments do not 
resume, the lender or holder must contact both the borrower and any 
endorser at least 3 more times at regular intervals during the 120-day 
delinquent period following the first missed payment of that 120-day 
period. The second demand notice for a delinquent account must inform 
the borrower that the continued delinquent status of the account will be 
reported to consumer credit reporting agencies if payment is not made. 
Each of the required four contacts must consist of at least a written 
contact which has an address correction request on the envelope. The 
last contact must consist of a telephone contact, in addition to the 
required letter, unless the borrower cannot be contacted by telephone. 
The lender or holder may choose to substitute a personal contact for a 
telephone contact. A record must be made of each attempt to contact and 
each actual contact, and that record must be placed in the borrower's 
file. Each contact must become progressively firmer in tone. If the 
lender or holder is unable to locate the borrower and any endorser at 
any time during the period when the borrower is delinquent, the lender 
or holder must initiate the skip-tracing procedures described in 
paragraph (a)(2) of this section.
    (2) If the lender or holder is unable to locate either the borrower 
or the endorser at any time, the lender or holder must initiate and use 
skip-tracing activities which are at least as extensive and effective as 
those it uses to locate borrowers delinquent in the repayment of its 
other loans of comparable dollar value. To determine the correct address 
of the borrower, these skip-tracing procedures should include, but need 
not be limited to, contacting any other individual named on the 
borrower's HEAL application or promissory note, using such sources as 
telephone directories, city directories, postmasters, drivers license 
records in State and local government agencies, records of members of 
professional associations, consumer credit reporting agencies, skip 
locator services, and records at any school attended by the borrower. 
All skip-tracing activities used must be documented. This documentation 
must consist of a written record of the action taken and its date and 
must be presented to the Secretary when requesting preclaim assistance 
or when filing a default claim for HEAL insurance.
    (b) When a borrower is 90 days delinquent in making a payment, the 
lender or holder must immediately request preclaim assistance from the 
Public Health Service. The Secretary does not pay a default claim if the 
lender or holder fails to request preclaim assistance.
    (c) Prior to the filing of a default claim, a lender or holder must 
use, at a minimum, collection practices that are at least as extensive 
and effective as those used by the lender or holder in the collection of 
its other loans. These practices must include, but need not be limited 
to:
    (1) Using collection agents, which may include its own collection 
department or other internal collection agents;
    (2) Immediately notifying an appropriate consumer credit reporting 
agency regarding accounts overdue by more than 60 days; and
    (3) Commencing and prosecuting an action for default unless:
    (i) In the determination of the Secretary that:
    (A) The lender or holder has made reasonable efforts to serve 
process on the borrower involved and has been unsuccessful in these 
efforts; or
    (B) Prosecution of such an action would be fruitless because of the 
financial or other circumstances of the borrower;
    (ii) For loans made before November 4, 1988, the loan involved was 
made in an amount of less than $5,000; or
    (iii) For loans made on or after November 4, 1988, the loan involved 
was made in an amount of less than $2,500.
    (d) If the Secretary's preclaim assistance locates the borrower, the 
lender or holder must implement the loan collection procedures described 
in this section. When the Secretary's preclaim assistance is unable to 
locate the borrower, a default claim may be filed by the lender as 
described in Sec. 60.40. The

[[Page 335]]

Secretary does not pay a default claim if the lender or holder has not 
complied with the HEAL statute and regulations or the lender's or 
holder's insurance contract.
    (e) If a lender or holder does not sue the borrower, it must send a 
final demand letter to the borrower and any endorser at least 30 days 
before a default claim is filed.
    (f) If a lender or holder sues a defaulted borrower or endorser, it 
may first apply the proceeds of any judgment against its reasonable 
attorney's fees and court costs, whether or not the judgment provides 
for these fees and costs.
    (g) Collection of chapter 7 bankruptcies. (1) If a borrower files 
for bankruptcy under chapter 7 of the Bankruptcy Act and does not file a 
complaint to determine the dischargeability of the HEAL loan, the lender 
or holder is responsible for monitoring the bankruptcy case in order to 
pursue collection of the loan after the bankruptcy proceedings have been 
completed.
    (i) For any loan for which the lender or holder had not begun to 
litigate against the borrower prior to the imposition of the automatic 
stay, the period of the automatic stay is to be considered as an 
extended forbearance authorized by the Secretary, in addition to the 2-
year period of forbearance which lenders and holders are authorized to 
grant without prior approval from the Secretary. Only periods of 
delinquency following the date of receipt (as documented by a date 
stamp) of the discharge of debtor notice (or other written notification 
from the court or the borrower's attorney of the end of the automatic 
stay imposed by the Bankruptcy Court) can be included in determining 
default, as described in Sec. 60.40(c)(1)(i). The lender or holder must 
attempt to reestablish repayment terms with the borrower in writing no 
more than 30 days after receipt of the discharge of debtor notice (or 
other written notification from the court or the borrower's attorney of 
the end of the automatic stay imposed by the Bankruptcy Court), in 
accordance with the procedures followed at the end of a forbearance 
period. If the borrower fails to make a payment as scheduled, the lender 
or holder must attempt to obtain repayment through written and telephone 
contacts in accordance with the intervals established in paragraph 
(a)(1) of this section, and must perform the other HEAL loan collection 
activities required in this section, before filing a default claim.
    (ii) For any loan for which the lender or holder had begun to 
litigate against the borrower prior to the imposition of the automatic 
stay, the lender or holder must, upon written notification from the 
court or the borrower's attorney that the bankruptcy proceedings have 
been completed, either resume litigation or treat the loan in accordance 
with paragraph (g)(1)(i) of this section.
    (2) If the lender or holder has not received written notification of 
discharge within 12 months of the date that the borrower filed for 
bankruptcy, the lender or holder must contact the court and the 
borrower's attorney (if known) within 30 days to determine if the 
bankruptcy proceedings have been completed. If no response is received 
within 30 days of the date of these contacts, the lender or holder must 
resume its collection efforts, in accordance with paragraph (g)(1) of 
this section. If a written response from the court or the borrower's 
attorney indicates that the bankruptcy proceedings are still underway, 
the lender or holder is not to pursue further collection efforts until 
receipt of written notice of discharge, except that follow-up in 
accordance with this paragraph must be done at least once every 12 
months until the bankruptcy proceedings have been completed.
    (3) If, despite the lender or holder's compliance with required 
procedures, a loan subject to the requirements of paragraph (g)(1) of 
this section is discharged, the lender or holder must file a claim with 
the Secretary within 10 days of the initial date of receipt (as 
documented by a date stamp) of written notification of the discharge 
from the court or the borrower's attorney, in accordance with the 
procedures set forth in Sec. 60.40(c)(4). The lender or holder also 
must file with the bankruptcy court an objection to the discharge of the 
HEAL loan, and must include with the claim documentation showing that

[[Page 336]]

the bankruptcy proceedings were handled properly and expeditiously 
(e.g., all documents sent to or received from the bankruptcy court, 
including evidence which shows the period of the bankruptcy 
proceedings).

(Approved by the Office of Management and Budget under control numbers 
0915-0100 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 749, Jan. 8, 1987; 57 
FR 28796, June 29, 1992]



Sec. 60.36  Consequence of using an agent.

    The delegation of functions to a servicing agency or other party 
does not relieve a lender or holder of its responsibilities under the 
HEAL program.

[57 FR 28797, June 29, 1992]



Sec. 60.37  Forbearance.

    (a) Forbearance means an extension of time for making loan payments 
or the acceptance of smaller payments than were previously scheduled to 
prevent a borrower from defaulting on his or her payment obligations. A 
lender or holder must notify each borrower of the right to request 
forbearance.
    (1) Except as provided in paragraph (a)(2) of this section, a lender 
or holder must grant forbearance whenever the borrower is temporarily 
unable to make scheduled payments on a HEAL loan and the borrower 
continues to repay the loan in an amount commensurate with his or her 
ability to repay the loan. Any circumstance which affects the borrower's 
ability to repay the loan must be fully documented.
    (2) If the lender or holder determines that the default of the 
borrower is inevitable and that forbearance will be ineffective in 
preventing default, the lender or holder may submit a claim to the 
Secretary rather than grant forbearance. If the Secretary is not in 
agreement with the determination of the lender or holder, the claim will 
be returned to the lender or holder as disapproved and forbearance must 
be granted.
    (b) A lender or holder must exercise forbearance in accordance with 
terms that are consistent with the 25- and 33-year limitations on the 
length of repayment (described in Sec. 60.11) if the lender or holder 
and borrower agree in writing to the new terms. Each forbearance period 
may not exceed 6 months.
    (c) A lender or holder may also exercise forbearance for periods of 
up to 6 months in accordance with terms that are inconsistent with the 
minimum annual payment requirement if the lender or holder complies with 
the requirements listed in paragraphs (c) (1) through (4) of this 
section. Subsequent renewals of the forbearance must also be documented 
in accordance with the following requirements:
    (1) The lender or holder must reasonably believe that the borrower 
intends to repay the loan but is currently unable to make payments in 
accordance with the terms of the loan note. The lender or holder must 
state the basis for its belief in writing and maintain that statement in 
its loan file on that borrower.
    (2) Both the borrower and an authorized official of the lender or 
holder must sign a written agreement of forbearance.
    (3) If the agreement between the borrower and lender or holder 
provides for deferment of all payments, the lender or holder must 
contact the borrower at least every 3 months during the period of 
forbearance in order to remind the borrower of the outstanding 
obligation to repay.
    (4) The total period of forbearance (with or without interruption) 
granted by the lender or holder to any borrower must not exceed 2 years. 
However, when the borrower and the lender or holder believe that there 
are bona fide reasons why this period should be extended, the lender or 
holder may request a reasonable extension beyond the 2-year period from 
the Secretary. This request must document the reasons why the extension 
should be granted. The lender or holder may grant the extension for the 
approved time period if the Secretary approves the extension request.

(Approved by the Office of Management and Budget under control number 
915-0108)

[57 FR 28797, June 29, 1992]



Sec. 60.38  Assignment of a HEAL loan.

    A HEAL note may not be assigned except to another HEAL lender, the 
Student Loan Marketing Association

[[Page 337]]

(popularly known as ``Sallie Mae''), or a public entity in the business 
of purchasing student loans, and except as provided in Sec. 60.40. In 
this section ``seller'' means any kind of assignor and ``buyer'' means 
any kind of assignee.
    (a) Procedure. A HEAL note assigned from one lender or holder to 
another must be subject to a blanket endorsement together with other 
HEAL notes being assigned or must individually bear effective words of 
assignment. Either the blanket endorsement or the HEAL note must be 
signed and dated by an authorized official of the seller. Within 30 days 
of the transaction, the buyer must notify the following parties of the 
assignment:
    (1) The Secretary;
    (2) The borrower. The notice to the borrower must contain a clear 
statement of all the borrower's rights and responsibilities which arise 
from the assignment of the loan, including a statement regarding the 
consequences of making payments to the seller subsequent to receipt of 
the notice; and
    (3) The borrower's school, as shown on the application form 
supporting the loan purchased by the buyer, if the borrower is enrolled 
in school.
    (b) Risks assumed by the buyer. Upon acquiring a HEAL loan, a new 
holder assumes responsibility for the consequences of any previous 
violations of applicable statutes, regulations, or the terms of the note 
except for defects under Sec. 60.41(d). A HEAL note is not a negotiable 
instrument, and a subsequent holder is not a holder in due course. If 
the borrower has a valid legal defense that could be asserted against 
the previous holder, the borrower can also assert the defense against 
the new holder. In this situation, if the new holder files a default 
claim on a loan, the Secretary denies the default claim to the extent of 
the borrower's defense. Furthermore, when a new holder files a claim on 
a HEAL loan, it must provide the Secretary with the same documentation 
that would have been required of the original lender.
    (c) Warranty. Nothing in this section precludes the buyer of a HEAL 
loan from obtaining a warranty from the seller covering certain future 
reductions by the Secretary in computing the amount of insurable loss, 
if any, on a claim filed on the loan. The warranty may only cover 
reductions which are attributable to an act or failure to act of the 
seller or other previous holder. The warranty may not cover matters for 
which the buyer is charged with responsibility under the HEAL 
regulations.
    (d) Bankruptcy. If a lender or holder assigns a HEAL loan to a new 
holder, or a new holder acquires a HEAL loan under 20 U.S.C. 1092a (the 
Combined Payment Plan authority), and the previous holder(s) 
subsequently receives court notice that the borrower has filed for 
bankruptcy, the previous holder(s) must forward the bankruptcy notice to 
the purchaser within 10 days of the initial date of receipt, as 
documented by a date stamp, except that if it is a chapter 7 bankruptcy 
with no complaint for dismissal, the previous holder(s) must file the 
notice with the purchaser within 30 days of the initial date of receipt, 
as documented by a date stamp. The previous holder(s) also must file a 
statement with the court notifying it of the change of ownership. 
Notwithstanding the above, the current holder will not be held 
responsible for any loss due to the failure of the prior holder(s) to 
meet the deadline for giving notice if such failure occurs after the 
current holder purchased the loan.

(Approved by the Office of Management and Budget under control numbers 
0915-0034 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 749, Jan. 8, 1987; 56 
FR 42701, Aug. 29, 1991; 57 FR 28797, June 29, 1992]



Sec. 60.39  Death and disability claims.

    (a) Death. The Secretary will discharge a borrower's liability on 
the loan in accordance with section 738 of the Act upon the death of the 
borrower. The holder of the loan may not attempt to collect on the loan 
from the borrower's estate or any endorser. The holder must secure a 
certification of death or whatever official proof is conclusive under 
State law. The holder must return to the sender any payments, except for 
refunds under Sec. 60.21, received from the estate of the borrower or 
paid on behalf of the borrower after the date of death.

[[Page 338]]

    (b) Disability. (1) The Secretary will discharge a borrower's 
liability on the loan in accordance with section 738 of the Act if the 
borrower is found to be permanently and totally disabled on 
recommendation of the holder of the loan and as supported by whatever 
medical certification the Secretary may require. A borrower is totally 
and permanently disabled if he or she is unable to engage in any 
substantial gainful activity because of a medically determinable 
impairment, which the Secretary expects to continue for a long and 
indefinite period of time or to result in death.
    (2) After being notified by the borrower or the borrower's 
representative that the borrower claims to be totally and permanently 
disabled, the holder of the loan may not attempt to collect on the loan 
from the borrower or any endorser. The holder must promptly request that 
the Secretary determine whether a borrower has become totally and 
permanently disabled. With its request, the holder must submit medical 
evidence no more than 4 months old that it has obtained from the 
borrower or the borrower's representative.
    (3) If the Secretary determines that the borrower is totally and 
permanently disabled, the lender or holder must return to the borrower 
any payments, except for refunds under Sec. 60.21, that it receives 
after being notified that the borrower claims to be totally and 
permanently disabled.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 57 FR 28797, June 29, 1992]



Sec. 60.40  Procedures for filing claims.

    (a) A lender or holder must file an insurance claim on a form 
approved by the Secretary. The lender or holder must attach to the claim 
all documentation necessary to litigate a default, including any 
documents required to be submitted by the Federal Claims Collection 
Standards, and which the Secretary may require. Failure to submit the 
required documentation and to comply with the HEAL statute and 
regulations or the lender's or holder's insurance contract will result 
in a claim not being honored. The Secretary may deny a claim that is not 
filed within the period specified in this section. The Secretary 
requires for all claims at least the following documentation:
    (1) The original promissory note;
    (2) An assignment to the United States of America of all right, 
title, and interest of the lender or holder in the note;
    (3) The loan application;
    (4) The history of the loan activities from the date of loan 
disbursement through the date of claim, including any payments made; and
    (5) A Borrower Status Form (HRSA-508), documenting each deferment 
granted under Sec. 60.12 or a written statement from an appropriate 
official stating that the borrower was engaged in an activity for which 
he or she was entitled to receive a deferment at the time the deferment 
was granted.
    (b) The Secretary's payment of a claim is contingent upon receipt of 
all required documentation and an assignment to the United States of 
America of all right, title, and interest of the lender or holder in the 
note underlying the claim. The lender or holder must warrant that the 
loan is eligible for HEAL insurance.
    (c) In addition, the lender or holder must comply with the following 
requirements for the filing of default, death, disability, and 
bankruptcy claims:
    (1) Default claims. Default means the persistent failure of the 
borrower to make a payment when due or to comply with other terms of the 
note or other written agreement evidencing a loan under circumstances 
where the Secretary finds it reasonable to conclude that the borrower no 
longer intends to honor the obligation to repay the loan. In the case of 
a loan repayable (or on which interest is payable) in monthly 
installments, this failure must have persisted for 120 days. In the case 
of a loan repayable (or on which interest is payable) in less frequent 
installments, this failure must have persisted for 180 days. If, for a 
particular loan, an automatic stay is imposed on collection activities 
by a Bankruptcy Court, and the lender or holder receives written 
notification of the automatic stay prior to initiating legal proceedings 
against the borrower, the 120-

[[Page 339]]

or 180-day period does not include any period prior to the end of the 
automatic stay.
    (i) If a lender or holder determines that it is not appropriate to 
commence and prosecute an action against a default borrower pursuant to 
Sec. 60.35(c)(3), it must file a default claim with the Secretary 
within 30 days after a loan has been determined to be in default.
    (ii) If a lender files suit against a defaulted borrower and does 
not pursue collection of the judgment obtained as a result of the suit, 
it must file a default claim with the Secretary within 60 days of the 
date of issuance of the judgment. If a lender or holder files suit 
against a defaulted borrower, and pursues collection of the judgment 
obtained as a result of the suit, these collection activities must begin 
within 60 days of the date of issuance of the judgment. If the lender or 
holder is unable to collect the full amount of principal and interest 
owed, a claim must be filed within 30 days of completion of the post-
judgment collection activities. In either case, the lender or holder 
must assign the judgment to the Secretary as part of the default claim.
    (iii) In addition to the documentation required for all claims, the 
lender or holder must submit with its default claim at least the 
following:
    (A) Repayment schedule(s);
    (B) A collection history, if any;
    (C) A final demand letter;
    (D) The original or a copy of all correspondence relevant to the 
HEAL loan to or from the borrower (whether received by the original 
lender, a subsequent holder, or an independent servicing agent);
    (E) A claims collection litigation report; and
    (F) If the defaulted borrower filed for bankruptcy under chapter 7 
of the Bankruptcy Act and did not file a complaint to determine the 
dischargeability of the loan, all documents sent to or received from the 
bankruptcy court, including evidence which shows the period of the 
bankruptcy proceedings.
    (iv) If a lender or holder files a default claim on a loan and 
subsequently receives written notice from the court or the borrower's 
attorney that the borrower has filed for bankruptcy under chapter 11 or 
13 of the Bankruptcy Act, or under chapter 7 with a complaint to 
determine the dischargeability of the loan, the lender or holder must 
file that notice with the Secretary within 10 days of the lender or 
holder's initial date of receipt, as documented by a date stamp. If the 
borrower is declaring bankruptcy under chapter 7 of the Bankruptcy Act, 
and has not filed a complaint to determine the dischargeability of the 
loan, the lender or holder must file the written notice with the 
Secretary within 30 days of the lender's or holder's initial date of 
receipt, as documented by a date stamp. If the Secretary has not paid 
the claim at the time the lender or holder receives that notice, upon 
receipt of the notice, the lender or holder must file with the 
bankruptcy court a proof of claim, if applicable, and an objection to 
the discharge or compromise of the HEAL loan. If the Secretary has paid 
the claim, the lender or holder must file a statement with the court 
notifying it that the loan is owned by the Secretary.
    (2) Death claims. A lender or holder must file a death claim with 
the Secretary within 30 days after the lender or holder obtains 
documentation that a borrower is dead. In addition to the documentation 
required for all claims, the lender or holder must submit with its death 
claim those documents which verify the death, including an official copy 
of the Death Certificate.
    (3) Disability claims. A lender or holder must file a disability 
claim with the Secretary within 30 days after it has been notified that 
the Secretary has determined a borrower to be totally and permanently 
disabled. In addition to the documentation required for all claims, the 
lender or holder must submit with its claim evidence of the Secretary's 
determination that the borrower is totally and permanently disabled.
    (4) Bankruptcy claims. For a bankruptcy under chapter 11 or 13 of 
the Bankruptcy Act, or a bankruptcy under chapter 7 of the Bankruptcy 
Act when the borrower files a complaint to determine the 
dischargeability of the HEAL loan, the current holder must file a claim 
with the Secretary within 10 days of the initial date of receipt of

[[Page 340]]

court notice or written notice from the borrower's attorney that the 
borrower has filed for bankruptcy under chapter 11 or chapter 13, or has 
filed a complaint to determine the dischargeability of the HEAL loan 
under chapter 7. The initial date of receipt of the written notice must 
be documented by a date stamp. The lender or holder must file with the 
bankruptcy court a proof of claim, if applicable, and an objection to 
the discharge or compromise of the HEAL loan. In addition to the 
documentation required for all claims, with its claim the lender or 
holder must submit to the Secretary at least the following:
    (i) Repayment schedule(s);
    (ii) A collection history, if any;
    (iii) A proof of claim, where applicable;
    (iv) An assignment to the United States of America of its proof of 
claim, where applicable;
    (v) All pertinent documents sent to or received from the bankruptcy 
court; and
    (vi) A statement of any facts of which the lender is aware that may 
form the basis for an objection to the bankrupt's discharge or an 
exception to the discharge.
    (vii) The notice of the first meeting or creditors, or an 
explanation as to why this is not included;
    (viii) In cases where there is defective service, a declaration or 
affidavit attesting to the fact that the lender or holder was not 
directly served with the notice of meeting of creditors. This 
declaration or affidavit must also indicate when and how the lender or 
holder learned of the bankruptcy; and
    (ix) In cases where there is defective service due to the borrower's 
failure to list the proper creditor, a copy of the letter sent to the 
borrower at the time of purchase of the HEAL loan by the current holder, 
or a sample letter with documentation indicating when the letter was 
sent to the borrower.

(Approved by the Office of Management and Budget under control numbers 
0915-0036 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 750, Jan. 8, 1987; 56 
FR 42701, Aug. 29, 1991; 57 FR 28798, June 29, 1992]



Sec. 60.41  Determination of amount of loss on claims.

    (a) General rule. HEAL insurance covers the unpaid balance of 
principal and interest on an eligible HEAL loan, less the amount of any 
judgment collected pursuant to default proceedings commenced by the 
eligible lender or holder involved. In determining whether to approve an 
insurance claim for payment, the Secretary considers legal defects 
affecting the initial validity or insurability of the loan. The 
Secretary also deducts from a claim any amount that is not a legally 
enforceable obligation of the borrower except to the extent that the 
defense of infancy applies. The Secretary further considers whether all 
holders of the loan have complied with the requirements of the HEAL 
regulations, including those concerned with the making, servicing, and 
collecting of the loan, the timely filing of claims, and the submission 
of documents with a claim.
    (b) Special rules for loans acquired by assignment. If a claim is 
filed by a lender or holder that obtained a loan by assignment, that 
lender or holder is not entitled to any payment under this section 
greater than that to which a previous holder would have been entitled. 
In particular, the Secretary deducts from the claim any amounts that are 
attributable to payments made by the borrower to a prior holder of the 
loan before the borrower received proper notice of the assignment of the 
loan.
    (c) Special rules for loans made by school lenders. (1) If the loan 
for which a claim is filed was originally made by a school and the claim 
is filed by that school, the Secretary deducts from the claim an amount 
equal to any unpaid refund that the school owes the borrower.
    (2) If the loan for which a claim is filed was originally made by a 
school but the claim is filed by another lender of holder that obtained 
the note by assignment, the Secretary deducts from the claim an amount 
equal to any unpaid refund that the school owed the borrower prior to 
the assignment.
    (d) Circumstances under which defects in claims may be cured or 
excused. The Secretary may permit a lender or holder to cure certain 
defects in a specified manner as a condition for payment of a

[[Page 341]]

default claim. The Secretary may excuse certain defects if the holder 
submitting the default claim satisfies the Secretary that the defect did 
not contribute to the default or prejudice the Secretary's attempt to 
collect the loan from the borrower. The Secretary may also excuse 
certain defects if the defect arose while the loan was held by another 
lender or holder and the holder submitting the default claim satisfies 
the Secretary that the assignment of the loan was an arm's length 
transaction, that the present holder did not know of the defect at the 
time of the sale and that the present holder could not have become aware 
of the defect through an examination of the loan documents.
    (e) Payment of insured interest. The payment on an approved claim 
covers the unpaid principal balance and interest that accrues through 
the date the claim is paid, except:
    (1) If the lender or holder failed to submit a claim within the 
required period after the borrower's default; death; total and permanent 
disability; or filing of a petition in bankrupty under chapter 11 or 13 
of the Bankruptcy Act, or under chapter 7 where the borrower files a 
complaint to determine the dischargeability of the HEAL loan; the 
Secretary does not pay interest that accrued between the end of that 
period and the date the Secretary received the claim.
    (2) If the Secretary returned the claim to the lender or holder for 
additional documentation necessary for the approval of the claim, the 
Secretary pays interest only for the first 30 days following the return 
of the claim to the lender or holder.

[48 FR 38988, Aug. 26, 1983, as amended at 56 FR 42702, Aug. 29, 1991; 
57 FR 28798, June 29, 1992]



Sec. 60.42  Records, reports, inspection, and audit requirements for HEAL 

lenders and holders.

    (a) Records. (1) A lender or holder must keep complete and accurate 
records of each HEAL loan which it holds. The records must be organized 
in a way that permits them to be easily retrievable and allows the ready 
identification of the current status of each loan. The required records 
include:
    (i) The loan application;
    (ii) The original promissory note;
    (iii) The repayment schedule agreement;
    (iv) Evidence of each disbursement of loan proceeds;
    (v) Notices of changes in a borrower's address and status as a full-
time student;
    (vi) Evidence of the borrower's eligibility for a deferment;
    (vii) The borrower's signed statement describing his or her rights 
and responsibilities in connection with a HEAL loan;
    (viii) The documents required for the exercise of forbearance;
    (ix) Documentation of the assignment of the loan; and
    (x) Evidence of a borrower's creditworthiness, including the 
borrower's credit report.
    (2) The lender or holder must maintain for each borrower a payment 
history showing the date and amount of each payment received on the 
borrower's behalf, and the amounts of each payment attributable to 
principal and interest. A lender or holder must also maintain for each 
loan a collection history showing the date and subject of each 
communication with a borrower or endorser for collection of a delinquent 
loan. Furthermore, a lender or holder must keep any additional records 
which are necessary to make any reports required by the Secretary.
    (3) A lender or holder must retain the records required for each 
loan for not less than 5 years following the date the loan is repaid in 
full by the borrower. However, in particular cases the Secretary may 
require the retention of records beyond this minimum period. A lender or 
holder must keep the original copy of an unpaid promissory note, but may 
store all other records in microform or computer format.
    (4) The lender or holder must maintain accurate and complete records 
on each HEAL borrower and related school activities required by the HEAL 
program. All HEAL records shall be maintained under security and 
protected from fire, flood, water leakage, other environmental threats, 
electronic data system failures or power fluctuations, unauthorized 
intrusion for use, and theft.

[[Page 342]]

    (b) Reports. A lender or holder must submit reports to the Secretary 
at the time and in the manner required by the Secretary.
    (c) Inspections. Upon request, a lender or holder must afford the 
Secretary, the Comptroller General of the United States, and any of 
their authorized representatives access to its records in order to 
assure the correctness of its reports.
    (d) The lender or holder must comply with the Department's biennial 
audit requirements of section 705 of the Act.
    (e) Any lender or holder who has information which indicates 
potential or actual commission of fraud or other offenses against the 
United States, involving these loan funds, must promptly provide this 
information to the appropriate Regional Office of Inspector General for 
Investigations.

(Approved by the Office of Management and Budget under control numbers 
0915-0043 and 0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 750, Jan. 8, 1987; 57 
FR 28798, June 29, 1992]



Sec. 60.43  Limitation, suspension, or termination of the eligibility of a 

HEAL lender or holder.

    (a) The Secretary may limit, suspend, or terminate the eligibility 
under the HEAL program of an otherwise eligible lender or holder that 
violates or fails to comply with any provision of title VII, part A, 
subpart I of the Act as amended (42 U.S.C. 292-292p), these regulations, 
or agreements with the Secretary concerning the HEAL program. Prior to 
terminating a lender or holder's participation in the program, the 
Secretary will provide the entity an opportunity for a hearing in 
accordance with the procedures under paragraph (b) of this section.
    (b) The Secretary will provide any lender or holder subject to 
termination with a written notice, sent by certified mail, specifying 
his or her intention to terminate the lender or holder's participation 
in the program and stating that the entity may request, within 30 days 
of the receipt of this notice, a formal hearing. if the entity requests 
a hearing, it must, within 90 days of the receipt of the notice, submit 
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:
    (1) The request for a hearing is untimely (i.e., fails to meet the 
30-day requirement);
    (2) The lender or holder does not provide a statement of material, 
factual issues in dispute within the 90-day required period; or
    (3) 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, by certified mail, to the lender or holder 
setting forth the reasons for denial. If a hearing is denied, or if as a 
result of the hearing, termination is still determined to be necessary, 
the lender or holder will be terminated from participation in the 
program. An entity will be permitted to reapply for participation in the 
program when it demonstrates, and the Secretary agrees, that it is in 
compliance with all HEAL requirements.
    (c) This section does not apply to a determination that a HEAL 
lender fails to meet the statutory definition of an ``eligible lender.''
    (d) This section also does not apply to administrative action by the 
Department of Health and Human Services based on any alleged violation 
of:
    (1) Title VI of the Civil Rights Act of 1964, which is governed by 
45 CFR part 80;
    (2) Title IX of the Education Amendments of 1972, which is governed 
by 45 CFR part 86;
    (3) The Family Educational Rights and Privacy Act of 1974 (section 
438 of the General Education Provisions Act, as amended), which is 
governed by 34 CFR part 99; or
    (4) Title XI of the Right to Financial Privacy Act of 1978, Pub. L. 
95-630 (12 U.S.C. 3401-3422).

(Approved by the Office of Management and Budget under control number 
0915-0144)

[48 FR 38988, Aug. 26, 1983, as amended at 57 FR 28799, June 29, 1992; 
58 FR 67349, Dec. 21, 1993]

[[Page 343]]



                          Subpart E_The School



Sec. 60.50  Which schools are eligible to be HEAL schools?

    (a) In order to participate in the HEAL program, a school must enter 
into a written agreement with the Secretary. In the agreement, the 
school promises to comply with provisions of the HEAL law and the HEAL 
regulations. For initial entry into this agreement and for the agreement 
to remain in effect, a school must satisfy the following requirements:
    (1) The school must be legally authorized within a State to conduct 
a course of study leading to one of the following degrees:

Doctor of Medicine
Doctor of Osteopathic Medicine
Doctor of Dentistry or equivalent degree
Bachelor or Master of Science in Pharmacy or equivalent degree
Doctor of Optometry or equivalent degree
Doctor of Veterinary Medicine or equivalent degree
Doctor of Podiatric Medicine or equivalent degree
Graduate or equivalent degree in Public Health
Doctor of Chiropractic or equivalent degree
Doctoral degree of Clinical Psychology
Masters or doctoral degree in Health Administration


For the purposes of this section, the term ``State'' includes, in 
addition to the several States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, the Virgin Islands, Guam, American Samoa, the Trust Territory 
of the Pacific Islands (the Republic of Palau), the Republic of the 
Marshall Islands, and the Federated States of Micronesia.
    (2)(i) The school must be accredited by a recognized agency approved 
for that course of study by the Secretary of Education, as described in 
paragraph (a)(2)(ii) of this section, except where a school is not 
eligible for accreditation solely because it is too new. A new school is 
eligible if the Secretary of Education determines that it can reasonably 
expect to be accredited before the beginning of the academic year 
following the normal graduation date of its first entering class. The 
Secretary of Education makes this determination after consulting with 
the appropriate accrediting agency and receiving reasonable assurance to 
that effect.
    (ii) The approved accrediting agencies are:
    (A) Liaison Committee on Medical Education.
    (B) American Osteopathic Association.
    (C) Commission on Dental Accreditation.
    (D) Council on Education of American Veterinary Medical Association.
    (E) Council on Optometric Education.
    (F) Council on Podiatric Medical Education.
    (G) American Council on Pharmaceutical Education.
    (H) Council on Education for Public Health.
    (I) Council on Chiropractic Education.
    (J) Accrediting Commission on Education for Health Services 
Administration.
    (K) Committee on Accreditation of American Psychological 
Association.
    (b) If a HEAL school undergoes a change of controlling ownership or 
form of control, its agreement automatically expires at the time of that 
change. The school must enter into a new agreement with the Secretary in 
order to continue its participation in the HEAL program.

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 751, Jan. 8, 1987; 57 
FR 28799, June 29, 1992]



Sec. 60.51  The student loan application.

    When the student completes his or her portion of the student loan 
application and submits it to the school, the school must do the 
following:
    (a) Accurately and completely fill out its portion of the HEAL 
application;
    (b) Verify, to the best of its ability, the information provided by 
the student on the HEAL application, including, but not limited to, 
citizenship status and Social Security number. To comply with this 
requirement, the school may request that the student provide a certified 
copy of his or her birth certificate, his or her naturalization papers, 
and an original Social Security card or copy issued by the Federal 
Government, or other documentation that the school may require. The 
school must assure that the applicant's

[[Page 344]]

I-151 or I-551 is attached to the application, if the applicant is 
required to possess such identification by the United States;
    (c) Certify that the student is eligible to receive a HEAL loan, 
according to the requirements of Sec. 60.5;
    (d) Review the financial aid transcript from each institution 
previously attended by the applicant on at least a half-time basis to 
determine whether the applicant is in default on any loans or owes a 
refund on any grants. The school may not approve the HEAL application or 
disburse HEAL funds if the borrower is in default on any loans or owes a 
refund on any educational grants, unless satisfactory arrangements have 
been made between the borrower and the affected lender or school to 
resolve the default or the refund on the grant. If the financial aid 
transcript has been requested, but has not been received at the time the 
applicant submits his or her first HEAL application, the school may 
approve the application and disburse the first HEAL installment prior to 
receipt of the transcript. Each financial aid transcript must include at 
least the following data:
    (1) Student's name;
    (2) Amounts and sources of loans and grants previously received by 
the student for study at an institution of higher education;
    (3) Whether the student is in default on any of these loans, or owes 
a refund on any grants;
    (4) Certification from each institution attended by the student that 
the student has received no financial aid, if applicable; and
    (5) From each institution attended, the signature of an official 
authorized by the institution to sign such transcripts on behalf of the 
institution.
    (e) State that it has no reason to believe that the borrower may not 
be willing to repay the HEAL loan;
    (f) Make reasonable determinations of the maximum loan amount 
approvable, based on the student's circumstances. The student applicant 
determines the amount he or she wishes to borrow, up to this maximum 
amount. Only then may the school certify an eligible application. In 
determining the maximum loan amount approvable, the school will 
calculate the difference between:
    (1) The total financial resources available to the applicant for his 
or her costs of education for the period covered by the proposed HEAL 
loan, and other student aid that the applicant has received or will 
receive during the period covered by the proposed HEAL loan. To 
determine the total financial resources available to the applicant for 
his or her costs of education for the period covered by the proposed 
HEAL loan (including familial, spousal, or personal income or other 
financial assistance that the applicant has received or will receive), 
the school must consider information provided through one of the 
national need analysis systems or any other procedure approved by the 
Secretary of Education, in addition to any other information which the 
school has regarding the student's financial situation. The school may 
make adjustments to the need analysis information only when necessary to 
accurately reflect the applicant's actual resources, and must maintain 
in the borrower's record documentation to support the basis for any 
adjustments to the need analysis information; and
    (2) The costs reasonably necessary for each student to pursue the 
same or similar curriculum or program within the same class year at the 
school for the period covered by the proposed HEAL loan, using a 
standard student budget. The school must maintain in its general office 
records the criteria used to develop each standard student budget. 
Adjustments to the standard student budget may be made only to the 
extent that they are necessary for the student to complete his or her 
education, and documentation must be maintained in the borrower's record 
to support the basis for any adjustments to the standard student budget.
    (g) Comply with the requirements of Sec. 60.61.

(Approved by the Office of Management and Budget under control numbers 
0915-0038 and 0915-0108)

[52 FR 751, Jan. 8, 1987, as amended at 57 FR 28799, June 29, 1992]



Sec. 60.52  The student's loan check.

    (a) When a school receives from a HEAL lender a loan disbursement

[[Page 345]]

check or draft payable jointly to the school and to one of its students, 
it must:
    (1) If the school receives the instrument after the student is 
enrolled, obtain the student's endorsement, retain that portion of funds 
due the school, and disburse the remaining funds to the student.
    (2) If the school receives the instrument before the student is 
enrolled, it must, prior to endorsing the instrument, send the 
instrument to the student to endorse and return to the school. The 
school may then retain that portion of funds then due the school but 
must hold the remaining funds for disbursement to the student at the 
time of enrollment. However, if the student is unable to meet other 
educational expenses due before the time of enrollment, the school may 
obtain the student's endorsement and disburse to the student that 
portion of funds required to meet these other educational expenses.
    (b) If a school determines that a student does not plan to enroll, 
the school must return a loan disbursement check or draft to the lender 
within 30 days of this determination.

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 751, Jan. 8, 1987]



Sec. 60.53  Notification to lender or holder of change in enrollment status.

    Each school must notify the holder of a HEAL loan of any change in 
the student's enrollment status within 30 days following the change in 
status. Each notice must contain the student's full name under which the 
loan was received, the student's current name (if different), the 
student's Social Security number, the date of the change in the 
enrollment status, or failure to enroll as scheduled for any academic 
period as a full-time student, the student's latest known permanent and 
temporary addresses, and other information which the school may decide 
is necessary to identify or locate the student. If the school does not 
know the identity of the current holder of the HEAL loan, it must notify 
the HEAL Program Office of a change in the student's enrollment status. 
This notification is not required for vacation periods and leaves of 
absence or other temporary interruptions which do not exceed one 
academic term.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[52 FR 751, Jan. 8, 1987, as amended at 57 FR 28799, June 29, 1992]



Sec. 60.54  Payment of refunds by schools.

    A participating school must pay that portion of a refund that is 
allocable to a HEAL loan directly to the original lender (or to a 
subsequent holder of the loan note, if the school has knowledge of the 
holder's identity). At the same time, the school must provide to the 
borrower written notice that it is doing so.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 57 FR 28799, June 26, 1992]



Sec. 60.55  Administrative and fiscal procedures.

    Each school must establish and maintain administrative and fiscal 
procedures necessary to achieve the following objectives:
    (a) Proper and efficient administration of the funds received from 
students who have HEAL loans;
    (b) Protection of the rights of students under the HEAL program;
    (c) Protection of the United States from unreasonable risk of loss 
due to defaults; and
    (d) Compliance with applicable requirements for HEAL schools.



Sec. 60.56  Records.

    (a) In addition to complying with the requirements of section 739(b) 
of the Act, each school must maintain an accurate, complete, and easily 
retrievable record with respect to each student who has a HEAL loan. The 
record must contain all of the following information:
    (1) Student's name, address, academic standing and period of 
attendance;
    (2) Name of the HEAL lender, amount of the loan, and the period for 
which the HEAL loan was intended;
    (3) If a noncitizen, documentation of the student's alien 
registration status.
    (4) Amount and source of other financial assistance received by the 
student

[[Page 346]]

during the period for which the HEAL loan was made;
    (5) Date the school receives the HEAL check or draft and the date it 
either gives it to the student or returns it to the lender (if the 
school is not the lender);
    (6) Date the school disburses the loan to a student (if the school 
is the lender);
    (7) Date the school signs the loan check or draft (if the school is 
a copayee);
    (8) Amount of tuition, fees and other charges paid by the student to 
the school for the academic period covered by the loan and the dates of 
payment;
    (9) Photocopy of each HEAL check or draft received by the student;
    (10) Documentation of each entrance interview, including the date of 
the entrance interview and the signature of the borrower indicating that 
the entrance interview was conducted;
    (11) Documentation of the exit interview, including the date of the 
exit interview and the signature of the borrower indicating that the 
exit interview was conducted, or documentation of the date that the 
school mailed exit interview materials to the borrower if the borrower 
failed to report for the exit interview;
    (12) A photocopy made by the school of the borrower's I-151 or I-
551, if the borrower is required to possess such identification by the 
United States, or other documentation, if obtained by the school, to 
verify citizenship status and Social Security number (e.g., a certified 
copy of the borrower's birth certificate or a photocopy made by the 
school of the borrower's original Social Security card or copy issued by 
the Federal government);
    (13) Documentation of the calculations made which compare the 
financial resources of the applicant with the cost of his or her 
education at the school;
    (14) Copy(s) of the borrower's financial aid transcript(s);
    (15) The standard budget used for the student, and documentation to 
support the basis for any deviations made to the standard budget;
    (16) Copies of all correspondence between the school and the 
borrower or between the school and the lender or its assignee regarding 
the loan;
    (17) Copy of each form used by the school in connection with the 
loan; and
    (18) Expected postgraduate destination of borrower.
    (b) The school must maintain the record for not less than 5 years 
following the date the student graduates, withdraws or fails to enroll 
as a full-time student. The school may store the records in microform or 
computer format.
    (c) The school must comply with the Department's biennial audit 
requirements of section 705 of the Act.
    (d) The school must develop and follow written procedures for the 
receipt, verification of amount, and disbursement of HEAL checks or 
drafts. These procedures must be maintained in the school's policies and 
procedures manuals or other general office records.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[48 FR 38988, Aug. 26, 1983, as amended at 52 FR 751, Jan. 8, 1987; 57 
FR 28799, June 29, 1992]



Sec. 60.57  Reports.

    A school must submit reports to the Secretary at the times and in 
the manner the Secretary may reasonably prescribe. The school must 
retain a copy of each report for not less than 5 years following the 
report's completion, unless otherwise directed by the Secretary. A 
school must also make available to a HEAL lender or holder, upon the 
lender's or holder's request, the name, address, postgraduate 
destination and other reasonable identifying information for each of the 
school's students who has a HEAL loan.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[57 FR 28799, June 29, 1992]



Sec. 60.58  Federal access to school records.

    For the purposes of audit and examination, a HEAL school must 
provide the Secretary of Health and Human Services, the Comptroller 
General of the United States, and any of their authorized 
representatives access to the records that the school is required to 
keep and to any documents and records

[[Page 347]]

pertinent to the administration of the HEAL Program.



Sec. 60.59  Records and Federal access after a school is no longer a HEAL 

school.

    In the event a school ceases to participate in the HEAL program, the 
school (or its successor, in the case of a school which undergoes a 
change in ownership) must retain all required HEAL records and provide 
the Secretary of Health and Human Services, the Comptroller General of 
the United States, and any of their authorized representatives access to 
them.



Sec. 60.60  Limitation, suspension, or termination of the eligibility of a 

HEAL school.

    (a) The Secretary may limit, suspend, or terminate the eligibility 
under the HEAL program of an otherwise eligible school that violates or 
fails to comply with any provision of title VII, part A, subpart I of 
the Act as amended (42 U.S.C. 292-292p), these regulations, or 
agreements with the Secretary concerning the HEAL program. Prior to 
terminating a school's participation in the program, the Secretary will 
provide the school an opportunity for a hearing in accordance with the 
procedures under paragraph (b) of this section.
    (b) The Secretary will provide any school subject to termination 
with a written notice, sent by certified mail, specifying his or her 
intention to terminate the school's participation in the program and 
stating that the school may request, within 30 days of the receipt of 
this notice, a formal hearing. If the school requests a hearing, it 
must, within 90 days of the receipt of the notice, submit 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:
    (1) The request for a hearing is untimely (i.e., fails to meet the 
30-day requirement);
    (2) The school does not provide a statement of material, factual 
issues in dispute within the 90-day required period; or
    (3) 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, by certified mail, to the school setting forth 
the reasons for denial. If a hearing is denied, or if as a result of the 
hearing, termination is still determined to be necessary, the school 
will be terminated from participation in the program. A school will be 
permitted to reapply for participation in the program when it 
demonstrates, and the Secretary agrees, that it is in compliance with 
all HEAL requirements.
    (c) This section does not apply to a determination that a HEAL 
school fails to meet the statutory definition of an ``eligible school.''
    (d) This section does not apply to administrative action by the 
Department of Health and Human Services based on any alleged violation 
of The Family Educational Rights and Privacy Act of 1974 (section 438 of 
the General Education Provisions Act, as amended), as governed by 34 CFR 
part 99.

(Approved by the Office of Management and Budget under control number 
0915-0144)

[48 FR 38988, Aug. 26, 1983, as amended at 52 752, Jan. 8, 1987; 58 FR 
67350, Dec. 21, 1993]



Sec. 60.61  Responsibilities of a HEAL school.

    (a) A HEAL school is required to carry out the following activities 
for each HEAL applicant or borrower:
    (1) Conduct and document an entrance interview with each student 
(individually or in groups) no later than prior to the loan recipient's 
first HEAL disbursement in each academic year that the loan recipient 
obtains a HEAL loan. The school must inform the loan recipient during 
the entrance interview of his or her rights and responsibilities under a 
HEAL loan, including the consequences for noncompliance with those 
responsibilities, and must gather personal information which would 
assist in locating the loan recipient should he or she depart from the 
school without receiving an exit interview. A school may meet this 
requirement through correspondence where the

[[Page 348]]

school determines that a face-to-face meeting is impracticable.
    (2) Conduct and document an exit interview with each HEAL loan 
recipient (individually or in groups) within the final academic term of 
the loan recipient's enrollment prior to his or her anticipated 
graduation date or other departure date from the school. The school must 
inform the loan recipient in the exit interview of his or her rights and 
responsibilities under each HEAL loan, including the consequences for 
noncompliance with those responsibilities. The school must also collect 
personal information from the loan recipient which would assist the 
school or the lender or holder in skiptracing activities and to direct 
the loan recipient to contact the lender or holder concerning specific 
repayment terms and options. A copy of the documentation of the exit 
interview, including the personal information collected for skiptracing 
activities, and any other information required by the Secretary 
regarding the exit interview must be sent to the lender or holder of 
each HEAL loan within 30 days of the exit interview. If the loan 
recipient departs from the school prior to the anticipated date or does 
not receive an exit interview, the exit interview information must be 
mailed to the loan recipient by the school within 30 days of the 
school's knowledge of the departure or the anticipated departure date, 
whichever is earlier. The school must request that the loan recipient 
forward any required information (e.g., skiptracing information, request 
for deferment, etc.) to the lender or holder. The school must notify the 
lender or holder of the loan recipient's departure at the same time it 
mails the exit interview material to the loan recipient.
    (3) Verify the accuracy and completeness of information provided by 
each student on the HEAL loan application, particularly in regard to the 
HEAL eligibility requirements, by comparing the information with 
previous loan applications or other records or information provided by 
the student to the school. Notify the potential lender of any 
discrepancies which were not resolved between the school and the 
student.
    (4) Develop and implement procedures relating to check receipt and 
release which keep these functions separate from the application 
preparation and approval process and assure that the amount of the HEAL 
loan check(s) does(do) not exceed the approved total amount of the loan 
and the statutory maximums. Checks must not be cashed without the 
borrower's personal endorsement. Documentation of these procedures and 
their usage shall be maintained by the school.
    (5) Maintain accurate and complete records on each HEAL borrower and 
related school activities required by the HEAL program. All HEAL records 
shall be properly safeguarded and protected from environmental threats 
and unauthorized intrusion for use and theft.
    (6) Maintain documentation of the criteria used to develop the 
school's standard student budgets in the school's general records, 
readily available for audit purposes, and maintain in each HEAL 
borrower's record a copy of the standard budget which was actually used 
in the determination of the maximum loan amount approvable for the 
student, as described in Sec. 60.51.
    (7) Notify the lender or its assignee of any changes in the 
student's name, address, status, or other information pertinent to the 
HEAL loan not more than 30 days after receiving information indicating 
such a change.
    (b) Any school which has information which indicates potential or 
actual commission of fraud or other offenses against the United States 
involving these loan funds must promptly provide this information to the 
appropriate Regional Office of Inspector General for Investigations.
    (c) The school will be considered responsible and the Secretary may 
seek reimbursement from any school for the amount of a loan in default 
on which the Secretary has paid an insurance claim, if the Secretary 
finds that the school did not comply with the applicable HEAL statute 
and regulations, or its written agreement with the Secretary. The 
Secretary may excuse certain defects if the school satisfies the 
Secretary that the defect did not contribute to the default or prejudice 
the Secretary's attempt to collect the loan from the borrower.

[[Page 349]]

    (d) A school is authorized to withhold services from a HEAL borrower 
who is in default on a HEAL loan received while enrolled in that school, 
except in instances where the borrower has filed for bankruptcy. Such 
services may include, but are not limited to academic transcripts and 
alumni services. Defaulted HEAL borrowers who have filed for bankruptcy 
shall provide court documentation that verifies the filing for 
bankruptcy upon the request of the school. Schools will also supply this 
information to the Secretary upon request. All academic and financial 
aid transcripts that are released on a defaulted HEAL borrower must 
indicate on the transcript that the borrower is in default on a HEAL 
loan. It is the responsibility of the borrower to provide the school 
with documentation from the lender, holder, or Department when a default 
has been satisfactorily resolved, in order to obtain access to services 
that are being withheld, or to have the reference to default removed 
from the academic and financial aid transcripts.

(Approved by the Office of Management and Budget under control number 
0915-0108)

[52 FR 752, Jan. 8, 1987, as amended at 57 FR 28799, June 29, 1992; 58 
FR 67350, Dec. 21, 1993]

[[Page 350]]