[Federal Register Volume 70, Number 22 (Thursday, February 3, 2005)]
[Rules and Regulations]
[Pages 5543-5565]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-2029]
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Rules and Regulations
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Federal Register / Vol. 70, No. 22 / Thursday, February 3, 2005 /
Rules and Regulations
[[Page 5543]]
DEPARTMENT OF HEALTH AND HUMAN SERVICES
5 CFR Parts 5501 and 5502
RIN 3209-AA15
Supplemental Standards of Ethical Conduct and Financial
Disclosure Requirements for Employees of the Department of Health and
Human Services
AGENCY: Department of Health and Human Services (HHS).
ACTION: Interim final rule with request for comments.
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SUMMARY: The Department of Health and Human Services, with the
concurrence of the Office of Government Ethics (OGE), is amending the
HHS regulation that supplements the OGE Standards of Ethical Conduct.
This interim final rule specifies additional procedural and substantive
requirements that are necessary to address ethical issues at the
National Institutes of Health (NIH) and updates nomenclature,
definitions, and procedures applicable to other components of the
Department. The rule: Revises the definition of a significantly
regulated organization for the Food and Drug Administration (FDA);
Updates the organization titles of designated separate agencies; Amends
the gift exception for native artwork and craft items received from
Indian tribes or Alaska Native organizations; Aligns the FDA prohibited
holdings limit with the de minimis holdings exemption in OGE
regulations; Revises prior approval procedures for outside activities;
and, subject to certain exceptions: Prohibits NIH employees from
engaging in certain outside activities with supported research
institutions, health care providers or insurers, health-related trade
or professional associations, and biotechnology, pharmaceutical,
medical device, and other companies substantially affected by the
programs, policies, or operations of the NIH; Bars NIH employees who
file a public or confidential financial disclosure report from holding
financial interests in substantially affected organizations; Subjects
NIH non-filer employees to a monetary cap on holdings in such
organizations; Specifies for NIH employees prior approval procedures
for and limitations on the receipt of certain awards from outside
sources; and Imposes a one-year disqualification period during which
NIH employees are precluded from official actions involving an award
donor. In addition, the Department is adding a new supplemental part to
expand financial disclosure reporting requirements for certain outside
activities and to ensure that prohibited financial interests are
identified.
DATES: This interim rule is effective February 3, 2005. Comments
received by April 4, 2005, will be considered prior to issuance of a
final rule.
ADDRESSES: Send comments in writing to the Office of the General
Counsel, Ethics Division, Department of Health and Human Services, Room
700-E, Hubert H. Humphrey Building, 200 Independence Avenue, SW,
Washington, DC 20201, Attention: Linda L. Conte. Comments also may be
sent electronically to the following e-mail address: [email protected].
For e-mail messages, the subject line should include the following
reference: ``Comments on Interim Final HHS Supplemental Ethics Rule.''
FOR FURTHER INFORMATION CONTACT: Edgar M. Swindell, Associate General
Counsel, Office of the General Counsel, Ethics Division, Department of
Health and Human Services, telephone (202) 690-7258, fax (202) 205-
9752.
SUPPLEMENTARY INFORMATION:
I. Background
The Standards of Ethical Conduct for Employees of the Executive
Branch, 5 CFR part 2635, establish uniform rules of ethical conduct
applicable to all executive branch personnel. Pursuant to 5 CFR
2635.105, an agency may, with the approval of the Office of Government
Ethics, supplement those standards with additional rules that the
agency determines are necessary and appropriate, in view of its
programs and operations, to fulfill the purposes of part 2635. On July
30, 1996, with the concurrence and co-signature of the OGE Director,
HHS published at 61 FR 39755 a final rule establishing supplemental
standards of ethical conduct for its employees. This interim final rule
amends that final rule codified at 5 CFR part 5501.
In addition to several changes with respect to rules applicable to
employees of the National Institutes of Health related to outside
activities, financial holdings, and awards, this interim final rule
makes several changes to the HHS Supplemental Standards of Ethical
Conduct applicable to all Department employees. These changes are based
on the experience that has been garnered by the Department in
implementing the regulation since it was issued in 1996. The interim
final rule establishes more specific requirements with respect to
requests for approval of outside activities and imposes an annual
reauthorization process.
Although immediately effective, this is as an interim rule. HHS
intends to evaluate certain provisions in the rule, particularly on
outside activities and financial holdings, within the next year. During
this time, HHS also will: (1) Complete a review of existing outside
activities that is presently ongoing; (2) evaluate possible effects on
hiring and retention that may result from the imposition of outside
activity and financial holdings prohibitions; and (3) develop a
comprehensive oversight system to address concerns raised about the NIH
ethics program.
In addition, the Executive Branch Financial Disclosure Regulation,
5 CFR part 2634, specifies uniform rules governing the public and
confidential financial disclosure systems established under the Ethics
in Government Act. Pursuant to 5 CFR 2634.103, an agency may, subject
to the prior written approval of the Office of Government Ethics, issue
supplemental financial disclosure regulations that are necessary to
address special or unique circumstances. This interim final rule amends
chapter XLV of title 5 by adding new part 5502 to provide for an annual
reporting by all employees of financial and other information
concerning outside activities and a supplemental disclosure by all FDA
and NIH employees with respect to prohibited financial interests.
Post-promulgation comments on this interim final rule are
requested. Those comments and experience under the
[[Page 5544]]
interim rule will inform the development of a final permanent rule, in
consultation with OGE.
II. Analysis of the Amendments
A. Supplemental Standards of Ethical Conduct
Section 5501.101 General
The definition of a ``significantly regulated organization'' found
at Sec. 5501.101(c)(2) is amended to make clear that for entities that
do not have a record of sales of FDA-regulated products, and which have
not yet commenced operations in a field regulated by FDA, an entity
will nonetheless be deemed significantly regulated if its research,
development, or other business activities are reasonably expected to
result in the development of products that are regulated by FDA.
Since the issuance of the HHS Supplement, the existing language of
the regulation has suggested to some employees that until a company
submits an investigational new drug application and begins conducting
clinical trials, the company is not significantly regulated (assuming
there is no record of prior sales of FDA-regulated products). Because
FDA does not have a generalized authority to regulate the ``field'' of
scientific research, some employees have interpreted the existing
regulation as permitting employment with a company that is thus far
only conducting preliminary research, even when it is reasonable to
conclude that the research is conducted with the aim of developing FDA-
regulated products.
Accordingly, this amendment ensures that newly-formed business
entities that do not yet have products that are approved for sale, and
which have not yet undertaken operations that bring them within FDA's
regulatory jurisdiction, will be understood to fall within the
definition of significantly regulated if their research, development,
or other business activities are reasonably expected to result in the
development of products that are regulated by FDA. It also makes clear
that where a company's operations are regulated by FDA, to fall within
the definition, the operations need not be entirely in areas regulated
by FDA as long as they are primarily in such areas.
Section 5501.102 Designation of HHS Components as Separate Agencies
The changes to this section reflect the name change of two HHS
agencies, the Agency for Healthcare Research and Quality, previously
known as the Agency for Health Care Policy and Research, and the
Centers for Medicare and Medicaid Services, previously known as the
Health Care Financing Administration. The Office of Consumer Affairs
was abolished in 1998 and is deleted from the list. In addition, the
amendment specifies that the designation of separate agencies will
apply in defining a prohibited source for purposes of the new awards
rule in Sec. 5501.111 for NIH employees.
Section 5501.103 Gifts From Federally Recognized Indian tribes or
Alaska Native Villages or Regional or Village Corporations
The change to this section clarifies that items representative of
traditional native culture from federally recognized Indian tribes or
Alaska Native villages, or regional or village corporations, fall
within the previously established rule permitting HHS employees to
accept gifts of native artwork and crafts, provided that the aggregate
market value of individual gifts received from any one tribe or village
does not exceed $200 per year and other criteria are satisfied. The
amendment permits gifts that, while representative of traditional
native culture, were not necessarily produced or manufactured by the
donor entity.
Section 5501.104 Prohibited Financial Interests Applicable to Employees
of the Food and Drug Administration
The section heading and text have been revised to delete redundant
references to the ``FDA Office of the Chief Counsel.'' Section
5501.102(b)(1) already specifies that any section in part 5501 that is
made applicable to employees of an identified component that is
designated as a separate agency is applicable, in addition to employees
actually working within a component, to employees in a division or
region of the Office of the General Counsel (OGC) that principally
advises or represents that component.
Section 5501.104(a) prohibits FDA employees from holding financial
interests in significantly regulated organizations, subject to certain
exceptions in Sec. 5501.104(b). The change in paragraph (b)(1)
broadens the scope of the exception, which previously covered only
pension interests, such as those arising from participation in defined
benefit or defined contribution plans. Experience since the issuance of
the supplemental regulation indicates that many incoming employees hold
financial interests which, like a pension interest, were acquired as a
form of compensation from a significantly regulated organization, but
which do not qualify as a pension. For example, a recent report by the
National Academy of Sciences found that stock and stock options are
common employee benefits in small, private technology firms in the
fields of engineering and health care, and the report recommended
against forced divestiture of such employee benefits for scientists
entering public service, as such requirements may unreasonably hamper
the recruitment of talented and experienced scientific personnel.
National Academy of Sciences, Science and Technology in the National
Interest: Ensuring the Best Presidential and Federal Advisory Committee
Science and Technology Appointments 199-201 (2004). Therefore, the
exception has been amended to include not only pensions but other
employee benefits.
This exception is not intended to permit retention of financial
interests merely because the interest was purchased by an employee
contemporaneously with employment in private industry through a broker,
financial advisor, or other source not acting as part of the private
employer's compensation system.
In addition, like all the exceptions in this section, the provision
merely permits retention of a financial interest notwithstanding the
prohibited financial holdings provision of this section. The recusal
requirements of 18 U.S.C. 208 apply to all financial interests,
including those covered by the exceptions in this section. (References
to Sec. 208 within this regulation are descriptive and not intended to
interpret or expand upon the text of the statute.) Moreover, all
financial interests are subject to directed divestiture pursuant to 5
CFR 2635.403(b), when there has been a determination by the agency that
holding the particular financial interest, or a class of financial
interests, will require the employee's disqualification from matters so
central or critical to the performance of his official duties that the
employee's ability to perform the duties of his office would be
materially impaired, or will adversely affect the efficient
accomplishment of the agency's mission because another employee cannot
readily be assigned to perform the work from which the employee is
recused by reason of the financial interest.
Section 5501.104(b)(2) contains an exception to the prohibited
holdings rule for employees who are not required to file a public or
confidential financial disclosure report. Non-filers have been
permitted to have a financial interest not exceeding $5,000 in
significantly regulated organizations. The amendment raises the amount
of the allowable holding to $15,000. The change parallels the increase
from
[[Page 5545]]
$5,000 to $15,000 in the OGE regulatory exemption for matters involving
parties, found at 5 CFR 2640.202(a), that occurred after the original
issuance of the HHS supplemental provision. The OGE exemption allows an
employee to participate in any particular matter involving specific
parties in which the disqualifying financial interest does not exceed
$15,000 in publicly traded securities or long-term Federal Government
or municipal securities. Because the allowable holding amount in the
HHS Supplement corresponded to the OGE de minimis amount, an increase
in the latter justifies an increase in the allowable holding limit in
the HHS Supplement. Further, the section will track any future change
in the OGE de minimis amount.
Although the dollar amounts are identical, the two provisions
substantively are not coextensive. Not all financial interests that may
be covered by the FDA exception will be covered by the OGE regulatory
exemption. For example, the FDA exception permits a non-filer to hold a
financial interest in a non-publicly traded company (assuming all the
other criteria in the section are also satisfied), but the OGE
regulatory exemption only applies when the corporate securities are
publicly traded. Therefore, the financial interest may still be
problematic under 18 U.S.C. 208 and require a recusal, a divestiture,
or an individual waiver, even though Sec. 5501.104(b)(2) excepts the
holding from the FDA automatic divestiture requirement.
In applying the allowable holding amount, the existing section
specifies that the asset value is to be measured ``at the time of
acquisition.'' The amendment to this section now defines that phrase.
This change is intended to obviate the possibility of unintended
situations which, depending on the interpretation of that phrase, could
lead to treatment for some employees that is inconsistent with
treatment of similarly-situated employees, and lead to results that are
inconsistent with the intent of the provision. Specifically, there
could be scenarios in which an employee who recently joined the agency,
and who had acquired an asset in the distant past, could be permitted
to retain an asset, now valued well over $15,000, because it had been
valued under $15,000 ``at the time of acquisition,'' while other new
employees who acquired an asset more recently, but at a level above
$15,000, are required to divest a much lower valued financial interest
in the same or other significantly regulated organizations. Such
inconsistent results in the implementation of the regulation could
undermine the very purpose of the provision (i.e., that only de minimis
holdings should be permitted) and undermine employee confidence that
the regulation is being applied fairly and uniformly. Accordingly, this
change is intended to make clear that for assets that were acquired
prior to joining FDA, the ``time of acquisition'' will be deemed to be
the date of the employee's entrance on duty at the agency. The change
will prevent unfair and unwarranted inconsistencies in how the
prohibited holding regulation is applied and will prevent situations in
which employees are treated disparately, as a consequence of investment
decisions made prior to their entrance on duty.
New Sec. 5501.104(c) provides that, for purposes of determining
the divestiture period specified in 5 CFR 2635.403(d), an employee is
not considered to have been directed to divest a financial interest
prohibited under paragraph (a) of this section until the due date for
disclosure of such interests. For new entrant employees, this
disclosure would be submitted on either a public or confidential
financial disclosure report or the supplemental report required by new
Sec. 5502.106(c), depending upon their filing status. For incumbent
employees, the due date of the report required by Sec. 5502.106(c)
would be determinative. This rule allows the agency to analyze an
employee's holdings and make a determination as to whether a particular
financial interest is covered by the prohibition before the requirement
to divest becomes applicable. The text codifies existing agency
practice and parallels a similar provision in the Department of Housing
and Urban Development supplemental ethics regulations at 5 CFR
7501.104(c) which prescribes a divestiture period of 90 days from the
date a prohibited financial interest is reported.
Section 5501.106 Outside Employment and Other Outside Activities
The paragraph heading and introductory text of paragraph (c)(3)
have been revised to delete redundant references to the FDA ``Office of
the Chief Counsel.'' Section 5501.102(b)(1) already specifies that any
section in part 5501 that is made applicable to employees of an
identified component that is designated as a separate agency is
applicable, in addition to employees actually working within a
component, to employees in a division or region of the Office of the
General Counsel that principally advises or represents that component.
The amended paragraph (c)(4) provides that the attorneys in the
Office of the Counsel to the Inspector General are subject to the same
outside activities restrictions as those in the Office of the General
Counsel.
The amended paragraph (d)(2)(i) adds employees of the NIH to the
prior approval requirement, currently applicable to employees of the
FDA, for any outside employment, whether or not for compensation, or
any self-employed business activity.
The amended paragraph (d)(3) requires an employee's supervisor to
review the request for approval of an outside activity and provide a
statement addressing the extent to which the employee's duties are
related to the proposed outside activity. This information shall then
be forwarded to an agency designee to make a final determination with
respect to the request. The amendment also specifies that the following
information be included with the request: the employee's step within a
grade, appointment type, and financial disclosure filing status; a
description of how the employee's official duties will affect the
interests of the outside employer; whether stock or other remuneration
in cash or in-kind will be received in connection with the activity;
the amount of compensation to be received in connection with the
activity; the amount and date of compensation received, or due for
services performed, within the prior six years; a syllabus, outline,
summary, synopsis, draft, or similar description of content and subject
matter if the activity involves teaching, speaking, or writing; and
other information as determined by the designated agency ethics
official, or the HHS component with the concurrence of the designated
agency ethics official, to be necessary or appropriate to evaluate
whether the request is prohibited by statute or regulation. Should
other types of information be routinely required of all employees,
general notice of such requirements will be disseminated through
instructions or manual issuances and revisions to the forms that are
utilized for these purposes.
The amendment to paragraph (d)(4) clarifies that a request for
approval of outside employment or other outside activity may not be
granted unless there is an affirmative determination that the
employment or other activity is not expected to involve conduct
prohibited by statute or regulation.
Existing paragraph (d)(5) has been renumbered as paragraph (d)(6).
New paragraph (d)(5) specifies that approval of an outside activity is
effective for one year only. Employees must renew their request for
approval annually if they
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desire to continue any long term outside activity. In addition,
employees must submit a revised request for approval if they change
positions within the agency or if a significant change occurs in the
nature of the outside activity or in the scope of the employees'
duties.
Paragraph (e) incorporates a waiver provision to be used where,
under the particular circumstances, application of the prohibited
outside activity rules for FDA, OGC, or NIH employees is not necessary
to ensure confidence in the impartiality and objectivity with which
agency programs are administered. The waiver must not be inconsistent
with part 2635 of this title or otherwise prohibited by law. This
standard parallels the waiver provision at 5 CFR 3101.108(g) in the
Department of the Treasury supplemental ethics regulation that imposes
outside activity prohibitions applicable to employees of the Office of
the Comptroller of the Currency. This provision could be applied to
provide some relief, for example, where the prohibition unduly causes
personal or family hardship or, prohibits an employee from completing a
professional obligation entered into prior to Government service, or
restricts the Department from securing necessary and uniquely
specialized services.
Section 5501.109 Prohibited Outside Activities Applicable to Employees
of the National Institutes of Health
Prior to the publication of this interim final rule, the criteria
for approving or disapproving requests for approval of outside
activities of NIH employees were set forth in the OGE regulation at 5
CFR part 2635, subpart H, and the Supplemental Standards of Ethical
Conduct for Employees of HHS at 5 CFR 5501.106. Both the OGE rules and
the HHS provisions in Sec. 5501.106 remain in effect for all NIH
employees. This interim final rule imposes additional, more stringent
requirements, similar to those in 5 CFR 5501.106(c)(3) for employees of
the FDA.
Outside activities with entities substantially affected by NIH
programs, policies, or operations must be further restricted in order
to avoid the potential for real or apparent conflicts of interest that
may threaten the integrity of the critically important research
conducted and sponsored by the NIH. This assessment is informed by
recommendations of the Advisory Committee to the NIH Director that were
presented in the June 22, 2004, Report of the NIH Blue Ribbon Panel on
Conflict of Interest Policies (Blue Ribbon Panel Report), available at
http://www.nih.gov/about/ethics_COI_panelreport.htm, but is
predicated upon a consideration of various outside activities of NIH
employees that have been subject to inquiry and the desire to advance
sound public policy. Many of the panel recommendations and related
issues were highlighted and discussed at Congressional hearings on
outside consulting arrangements by NIH employees. Panel recommendations
to liberalize certain current restrictions were not adopted in this
rule. Additional restrictions are necessary because NIH operations
increasingly require significant interaction with pharmaceutical,
biotechnological, biostatistical, and medical device companies
(referred to within the regulation as ``substantially affected
organizations'') and utilization of their products; the size and scope
of NIH funding of biomedical and behavioral research, research
training, and related activities have grown substantially; and NIH
research findings are broad in range and influence within the health
care sector. Moreover, in light of recent Congressional oversight and
media reports, HHS has determined that the existing rules governing
outside activities have not prevented reasonable public questioning of
the integrity of NIH employees and the impartiality and objectivity
with which agency programs are administered.
Through its approximately 17,500 full-time equivalent employees,
NIH conducts biomedical and behavioral research, research training and
related activities in its intramural program, and its extramural
program funds those activities at universities, medical centers,
research institutes and other nonprofit and for-profit organizations
through grants, cooperative agreements, and contracts. Both the
intramural and extramural programs interact with academic research
institutions and substantially affected organizations in many ways,
both formal (e.g., funding agreements, research agreements,
intellectual property licenses, and research and development contracts)
and informal (e.g., exchange of research materials and other research
collaborations, public and private scientific discussions, and joint
sponsorship of projects). The official actions of many NIH employees
can affect the financial interests of a broad range of businesses and
organizations, including health care providers and health insurers,
often in subtle ways. Informed by recent experience, it is appropriate
to limit broadly employees' outside activities with those entities to
avoid any appearance that official actions may be potentially
influenced by private financial interests or loyalty to an outside
employer.
The current HHS supplemental regulation on outside employment and
other outside activities, 5 CFR 5501.106, prohibits employees of the
NIH and other employees of HHS from providing certain services, for
compensation, in the preparation of grant applications, contract
proposals or other documents to be submitted to HHS, and from
compensated outside employment with respect to a particular activity
funded by an HHS grant, contract, cooperative agreement, or other
funding mechanism authorized by statute, or conducted under a
cooperative research and development agreement (CRADA).
Under Sec. 5501.109(c)(1) of this interim final rule, subject to
certain exceptions, all NIH employees are also prohibited from engaging
in employment (which includes serving as an officer, director, or other
fiduciary board member, serving on a scientific advisory board or
committee, and consulting or providing professional services) and
compensated teaching, speaking, writing, or editing with a
substantially affected organization; a hospital, clinic, health
maintenance organization, or other health care provider (defined
comprehensively to include the types of entities that are eligible to
receive payments under the Medicare program for the provision of health
care items or services); a health insurer; a health, science, or health
research-related trade, professional, consumer, or advocacy
association; or a supported research institution.
A ``substantially affected organization'' is defined in paragraph
(b)(8) to include those entities, irrespective of corporate form, that
are engaged in the research, development, or manufacture of
biotechnological, biostatistical, pharmaceutical, or medical devices,
equipment, preparations, treatments, or products. The term includes
those organizations a majority of whose members are engaged in such
activities.
Section 5501.109(b)(8)(iii) also permits the designated agency
ethics official or, in consultation with the designated agency ethics
official, the NIH Director or the NIH Director's designee to determine
that other entities shall be classified as substantially affected
organizations. These determinations will be based upon whether such
entities are engaged in activities that are substantially affected by
the programs, policies, or operations of the NIH and whether, in view
of the ongoing research conducted or sponsored by the NIH, interests in
these organizations are likely to pose ethics
[[Page 5547]]
concerns for NIH employees similar to those presented by the entities
specifically listed in paragraph (b)(8)(i). This authority might be
used, for example, to cover a food, beverage, or tobacco manufacturer,
if its products became a pervasive subject of NIH research activities
into the health benefits or detriment associated with the product or
its ingredients, and the research activities required a substantial
coordinated effort across institutes and centers, such that it would be
necessary or appropriate to apply a prophylactic rule applicable to all
NIH employees. Lists of organizations designated as substantially
affected organizations under paragraph (b)(8)(iii) will be maintained
by the designated agency ethics official and the NIH deputy ethics
counselor and disseminated to employees through appropriate means,
including website posting.
A ``supported research institution'' is defined in paragraph (b)(9)
as an educational institution or a non-profit independent research
institute that within the last year or currently has applied for,
proposed, or received an NIH grant, cooperative agreement, research and
development contract, or CRADA.
Employees are also prohibited under paragraph (c)(1) from engaging
in any self-employed business activity that involves the sale or
promotion of products or services of a substantially affected
organization or a health care provider or insurer. This section excepts
the ownership of a patent or related commercialization activities
conducted pursuant to Executive Order 10096, the Federal Technology
Transfer Act of 1986 (FTTA), 15 U.S.C. 3710d, or implementing
regulations at 37 CFR 404, as amended. Those activities will continue
to be reviewed and approved on a case-by-case basis in accordance with
existing conflict of interest and other applicable rules and policies.
For example, under the FTTA the NIH might allow an employee inventor to
obtain, or retain, title to an NIH invention, because the NIH has
determined that it does not wish to file for a patent or otherwise
commercialize the invention. The activities of owning that invention in
a personal capacity, seeking and owning patent protection on that
invention in a personal capacity, and engaging in commercialization
activities related to that invention have been encouraged under the
FTTA, and are not automatically prohibited by this regulation. Instead,
these activities will continue to be scrutinized in accordance with the
facts of each situation to determine whether they present a conflict or
potential conflict and the situation should be managed to best serve
the public interest.
These prohibited outside activities rules are applicable to all NIH
employees, but are focused on those types of activities and external
entities that may pose the most significant risk of potential
conflicts. In addition, the need for prophylactic rules barring certain
types of outside activities derives from the considerable complexity of
the current regulatory scheme, the intractable difficulties encountered
at NIH in differentiating scientific work performed as an official duty
from that proposed as an outside activity, and the significant
administrative burden inherent in case-by-case determinations.
The outside activity prior approval process is complicated. The
following discourse describes the analysis required for each potential
outside activity: Approval requires an assessment of whether the
proposed outside activity violates any statute or regulation, including
the OGE Standards of Ethical Conduct for Employees of the Executive
Branch or the HHS Supplemental Ethics Regulation. Included in the OGE
Standards is the requirement that the proposed outside activity cannot
create an actual or apparent conflict that would result in recusals
that would materially impair an employee's ability to do his job.
In evaluating outside activities for conflicts, the reviewer
initially addresses two provisions that form the core of Federal ethics
law. A criminal statute, 18 U.S.C. 208, deals with an ``actual
conflict'' due to the employee's own or imputed financial interest in
the resolution of a government matter. A regulatory provision in the
OGE Standards, 5 CFR 2635.502, principally addresses disqualifications
called for when an ``appearance of a conflict'' arises from a ``covered
relationship.''
Under section 208 of the criminal code, to avoid a conflict of
interest that results from outside employment, among other types of
financial interests, a Federal employee must not participate personally
and substantially in a particular matter that, to his knowledge,
directly and predictably affects his own financial interest in the
employment opportunity or the financial interests of his outside
employer. To prevent an ``appearance of a conflict'' that results from
serving in a role short of employment, for example, as an advisor,
consultant, or other type of independent contractor compensated with
fees and expenses, a different rule applies. Under section 502 of the
regulations, if a reasonable person with knowledge of the relevant
facts would question the Federal employee's impartiality, the employee
must recuse, but only from ``particular matters involving specific
parties,'' such as grants, contracts, applications, clinical trials,
audits, investigations, or lawsuits that involve, as a party or
representative of a party, the company to which the employee is
providing consulting services.
Both sections are disqualification provisions in that they do not
prohibit the acquisition of an employment or consulting relationship,
rather they bar actual ``participation'' in a potentially conflicting
matter, either personally or through the direct and active supervision
of the participation of a subordinate. However, neither section is
triggered by mere knowledge of, or official responsibility for, a
particular matter. In short, if an employee can recuse appropriately
and still be able to perform the duties of his position, then an
outside activity may be approved, provided there are no other statutory
or regulatory impediments.
A number of statutes and regulations preclude certain outside
activities. For example, if an employee seeks approval to be a lobbyist
before the Federal Government, the anti-representation statutes, 18
U.S.C. 203 and 205, would be implicated. If the activity is clearly one
that should be done as an official duty, such as an official speech on
agency programs, then approval would be denied, under 18 U.S.C. 209, as
an improper salary supplementation.
If the circumstances would create an appearance of violating
ethical standards, for example where the employee appears to have used
his official position to obtain an outside compensated business
opportunity or his actions reasonably create the impression of using
his public office for the private gain of the outside company, then
under the principles in the OGE Standards, 5 CFR 2635.101(b), and the
rules governing misuse of position, 5 CFR 2635.702, the outside
activity may be denied. An arrangement for compensation that far
exceeds a market rate or that involves first class or foreign travel or
extravagant accommodations, for example, may create the appearance that
the offer was made or the remuneration was enhanced due to the
employee's official position. Another situation cited in the OGE
Standards in example 2 following 5 CFR 2635.802 would be where an
employee was recently instrumental in formulating industry standards
and will again be so involved. If an affected company offers a
consulting contract to the employee to render advice to the company
about how it can restructure its operations to comply with the very
industry
[[Page 5548]]
standards that the employee has just drafted, the consulting
arrangement should not be approved even though the employee lacks any
current assignments affecting the industry, and even though the outside
consulting can be finished before he again works on such matters.
Another regulation, 5 CFR 2635.807 precludes compensation, subject
to certain exceptions, if an employee wants to teach a course, deliver
a speech, or write a book that relates to his official duties.
(Consulting, technically, is not covered by this section, but the
analysis in section 807 does provide guidance in evaluating many
outside activities.) The ``relatedness'' test evaluates, among other
factors, the subject matter of the activity. For career employees,
compensation is precluded if the teaching, speaking, or writing deals
in significant part with any current assignment (or one completed
within the last year) or any ongoing policy, program, or operation of
the agency. However, in a note following the provision, OGE observes
that a career employee may receive compensation for ``teaching,
speaking, or writing on a subject within the employee's discipline or
inherent area of expertise based on his educational background or
experience even though the [activity] deals generally with a subject
within the agency's areas of responsibility.'' But this textual note
does not lessen the applicability of other requirements of section 807,
notably that the invitation to engage in the activity must not have
been extended to the employee primarily because of his official
position or tendered, directly or indirectly, by a person or entity
that has interests that may be affected substantially by the
performance or nonperformance of the employee's official duties. The
circumstances of the invitation and the identity of the inviter are as
important as the subject matter of the activity.
Determining whether an invitation was prompted by official position
requires an inquiry into whether the invitation to participate in the
outside activity would not have been forthcoming had the employee not
held the status, authority, or duties associated with the employee's
Federal position. Resolving whether the inviter has interests that may
be affected substantially by the performance or nonperformance of the
employee's official duties depends upon whether it is reasonable to
assume that the invitee may become involved in a matter substantially
affecting the inviter, or whether the chance of such intervention is
simply a remote and speculative possibility. These judgments are at
times difficult and capable of reasonable debate.
Ascertaining whether the subject matter of the proposed activity
deals significantly with a current or recent assignment often may be
particularly difficult given the technical scientific nature of the
research conducted or funded by the NIH. For example, only a trained
expert could discern whether a scientist engaged in basic research on
the molecular basis for the development of skin cancer could be
approved to lecture for compensation on the etiology of acute
lymphocytic leukemia. The analysis would focus on whether the
presenter, in discussing the latter subject, would draw substantially
on the knowledge gleaned from the former. Parsing through biomedical
jargon to exclude the possibility of a significant overlap is not a
task to which the current NIH ethics program is well-suited.
This analytical framework is comprised of requirements that apply
across the executive branch. While the framework may be capable of
being applied readily at other agencies, historically NIH has
confronted unique challenges in implementing these executive branch-
wide requirements. In its recent review of the NIH ethics program, OGE
noted that, in examining outside activity requests, its reviewers
generally were not in a position to identify potential conflict of
interest situations because a lack of scientific expertise prevented
them from determining how the employees' official duties may have
related to their outside consulting activities. The Office of
Government Ethics observed that a case-by-case approach utilizing the
executive branch-wide standards has not been adequate to protect the
reputation of the NIH and its employees. It strongly recommended that
the Department develop supplemental regulations to address the kinds of
consulting activities that have raised integrity concerns at the NIH.
This rule in fact expands upon that recommendation by addressing
other activities that may pose similar concerns. Compensated teaching,
speaking, and writing activities when performed by an NIH scientist for
a substantially affected organization or a supported research
institution can be no less troubling to the public than employment or
consulting with these entities. Where biomedical research and
publication activities are involved, any financial connection to
affected industries may be perceived adversely. The British charitable
trust, Sense About Science, in a recent working paper on scientific
peer review observed this phenomenon in the context of sponsored
research, stating that often ``critical commentators simply emphasi[z]e
the source of research funding in order to imply that the researcher's
findings may be unreliable in some unspecified way.'' Sense About
Science, Peer Review and the Acceptance of New Scientific Ideas (2004),
p. 18, available at www.senseaboutscience.org.uk/.
For the NIH, section 807 does not adequately address this problem.
Steps have been taken to incorporate review by a panel of technical
advisors into the outside activity approval process in order to verify
that the subject matter of a proposed activity is not related to
official duties within the meaning of section 807. Efforts to augment
training and guidance on the section have been initiated, and
additional staff resources have been committed to its implementation.
However, neither the addition of scientific expertise, nor training,
nor improved administration can avoid the result that section 807 at
times permits activities that members of the public might intuitively
suppose are prohibited. For example, under current law, an NIH
intramural researcher who proposes to deliver a paid lecture on general
scientific topics within her inherent area of expertise for a drug
company or a grantee university potentially may be allowed to do so if
the various tests under section 807 and other applicable provisions are
satisfied. Explanations--such as the lecture would not focus on any
current or recent research; or the drug company did not have a product
affected by her research; or although the university received a grant
from her institute, she was not responsible for extramural funding
decisions--may be perceived as legal technicalities.
Section 5501.109(c)(1)(ii) addresses this inherent perception
problem and solves the difficulty of evaluating scientific content
under the ``relatedness'' test by targeting the prohibition to those
sources of compensation for teaching, speaking, and writing activities
that are most directly connected to these identified problems, i.e.,
substantially affected organizations, supported research institutions,
health care providers or insurers, or related trade, professional, or
similar associations. These sources of compensation by definition have
interests that are affected by NIH programs, policies, and operations
and may be perceived as exerting influence on an employee's
governmental actions whenever a financial relationship exists. Recent
press accounts alleging NIH employee participation as compensated
[[Page 5549]]
industry spokespersons or as authors of articles or other presentations
that purport to endorse the benefits of specific products highlight
this concern. Moreover, these entities, whether in industry or
academia, are among those most likely to ask an NIH employee to speak
or write on technical subjects related to their official duties, thus
presenting the analytical quandary previously described when applying
the ``subject matter'' part of the ``relatedness'' test in section 807.
Although stringent limitations on outside activities have been
imposed, the Department is especially mindful of the need for
substantive interaction within the scientific community. As the
National Academy of Sciences has stated:
[S]cience is inherently a social enterprise--in sharp contrast
to a popular stereotype of science as a lonely, isolated search for
the truth. With few exceptions, scientific research cannot be done
without drawing on the work of others or collaborating with others.
... The object of research is to extend human knowledge of the
physical, biological, or social world beyond what is already known.
But an individual's knowledge properly enters the domain of science
only after it is presented to others in such a fashion that they can
independently judge its validity. This process occurs in many
different ways. Researchers talk to their colleagues and supervisors
in laboratories, in hallways, and over the telephone. They trade
data and speculations over computer networks. They give
presentations at seminars and conferences. They write up their
results and send them to scientific journals, which in turn send the
papers to be scrutinized by reviewers. After a paper is published or
a finding is presented, it is judged by other scientists in the
context of what they already know from other sources. Throughout
this continuum of discussion and deliberation the ideas of
individuals are collectively judged, sorted, and selectively
incorporated into the consensual but ever evolving scientific world
view. In the process, individual knowledge is gradually converted
into generally accepted knowledge. * * * The social mechanisms of
science do more than validate what comes to be known as scientific
knowledge. They also help generate and sustain the body of
experimental techniques, social conventions, and other ``methods''
that scientists use in doing and reporting research. * * * Because
they reflect socially accepted standards in science, their
application is a key element of responsible scientific practice.
National Academy of Sciences, On Being a Scientist. (Washington, D.C.:
National Academy Press, 1994). Therefore, it is important to observe
that the impact of the regulatory ban on outside activities is
mitigated in several significant respects, through a transition period,
a waiver provision, textual exceptions, and future actions that the
Department has committed to undertake.
First, the prohibition provides for a grace period to allow
employees responsibly to conclude outstanding obligations. Employees
may continue to engage in outside activities that would otherwise be
prohibited for a period not to exceed 30 days from the effective date
of the rule, and extensions of time for a maximum of 90 days from the
effective date may be granted for good cause.
Second, a process exists under Sec. 5501.106(e) for the designated
agency ethics official to waive the application of the across-the-board
rule in appropriate circumstances.
Third, as to the teaching, speaking, writing, and editing
restrictions, it should be stressed that the ban reaches only
compensated activities; travel reimbursement will be permitted.
Fourth, the NIH has determined that current policies and practices
governing permissible official duty activities involving speaking or
lecturing should be revised. Consequently, the NIH has decided to
develop means to ensure that NIH scientists' knowledge continues to be
conveyed to the scientific community at large. The NIH will act
administratively to accommodate, as official duty activities, those
speaking opportunities that might previously have been considered less
directly connected to agency mission. The NIH will consider expanding
the availability of scientists to appear before relevant audiences and
organizations at government expense, when appropriate, or through
agency acceptance of travel reimbursement from non-Federal sources
under 31 U.S.C. 1353, where permitted.
Fifth, the regulations contain exceptions designed to facilitate
professional obligations and certain academic endeavors. These
exceptions partially lift the absolute bar on outside activities with
supported research institutions and other organizations (except
substantially affected organizations) described in Sec.
5501.109(c)(1), but they do not affirmatively permit an activity that
would otherwise violate Federal law or regulations, including 5 CFR
parts 2635, 2636, and 5501. Specifically, exceptions are provided that
will allow participation in pursuits that are critical to maintaining
technical proficiency, professional licenses, and academic credentials
and disseminating scientific information, such as teaching involving
multiple presentations at academic institutions, providing individual
patient care, moderating or presenting at continuing professional
education programs, and writing or editing scientific articles,
textbooks, and treatises that are subjected to scientific peer review
or a substantially equivalent editorial review process. The rule also
contains exceptions for employment with, providing professional or
consultative services to, or teaching, speaking, writing, or editing
for, a political, religious, social, fraternal, or recreational
organization. The rule also recognizes that individuals may be employed
in non-problematic roles with outside entities such as providing
clerical assistance, janitorial services, or unskilled labor.
The exception for moderating or speaking at continuing professional
education programs extends not only to sessions conducted for members
of professions that impose licensure and program accreditation
requirements, but includes events at which scientists, such as chemists
or microbiologists, gather to share new insights and findings in their
respective fields, provided that the educational events are
substantially equivalent to those frequented by their professionally
licensed colleagues.
The licensing and program accreditation infrastructure established
by certain learned professions generally has not been adopted by
doctorates in scientific research. Most professional groups have
promulgated standards for their educational programs that are designed
to avoid conflicts, commercial promotion, and control by industry
sponsors. See, for example, American College of Surgeons Guidelines for
Collaboration of Industry and Surgical Organizations in Support of
Research and Continuing Education, available at www.facs.org/fellows_info/statements/st-36.html; American Society of Consultant Pharmacists
Guidelines for Industry Support of ASCP Educational Activities,
available at www.ascp.com/public/pr/guidelines/indsupp.shtml; and the
discussion generally in the Food and Drug Administration publication
entitled ``Final Guidance on Industry-Supported Scientific and
Educational Activities; Notice'' at 62 FR 64074, Dec. 3, 1997. These
groups police educational activities at which NIH employees may be
asked to speak through strict policies limiting industry support to
unrestricted educational grants. To provide a similar assurance in all
contexts, including at gatherings convened by scientists and
researchers from various academic disciplines, the regulations
explicitly negate the exception if a substantially affected
organization plays a role other than that of a donor of an unrestricted
educational grant.
[[Page 5550]]
In addition, in order to ensure that the exception is limited to
continuing professional education or similar programs, as intended, and
not interpreted to encompass every speaking occasion that has some
educational content or instructional benefit, the regulation confines
the exception to accredited programs or, in the case of a profession or
academic discipline whose members are not subject to licensure and
which does not have program accreditation requirements, an education
program determined by the designated agency ethics official or his
designee or, in consultation with the designated agency ethics official
or his designee, the NIH Director or the NIH Director's designee to be
substantially equivalent to an accredited continuing professional
education program.
In determining substantial equivalency for these purposes, a number
of factors may be considered. Among them would be whether the education
program is sponsored by a regional, national, or international
organization that serves the interests of scientists or researchers in
a specific discipline (e.g., neuroscientists or experimental
biologists). Another attribute would be whether, as part of its
mission, the program sponsor has a stated goal of ensuring that
audience members remain current with respect to the latest scientific
developments in their field of interest. Also important is the extent
to which the sponsor regularly holds meetings that attract presenters
and panel participants who are renowned for their expertise in the
topics covered. Similarly critical is whether the education program is
characterized by sufficient academic rigor and known within the
scientific community as a venue that enables scientists to disseminate
and exchange the latest information, particularly, among different sub-
disciplines (e.g., inorganic chemistry as opposed to organic
chemistry). An education program conducted by a well established
sponsor that has a longstanding reputation for presenting refereed
papers and other scientific discourse of high caliber and which
attracts, from around the globe, attendees of diverse viewpoints within
the relevant discipline would be the paradigm.
The regulation includes an exception for writing activities
subjected to scientific peer review or substantially equivalent
editorial processes. Scientific peer review is commonly understood in
principle, with the primary purposes being to ``evaluate scientific and
technical merit,'' ``screen for obvious errors in methodology and
reasoning,'' and ``ensure that the research is novel and ``important'''
within the relevant discipline. Effie J. Chan, Note, The ``Brave New
World'' of Daubert: True Peer Review, Editorial Peer Review, and
Scientific Validity, 70 N.Y.U. L. Rev. 100, 119 n.121 (1995). The
concept of scientific peer review also generally involves the
application of standards governing scientific misconduct and research
integrity. E.g., International Committee of Medical Journal Editors,
Uniform Requirements for Manuscripts Submitted to Biomedical Journals:
Writing and Editing for Biomedical Publication (2004), available at
http://www.icmje.org. HHS recognizes that actual editorial processes
may vary in practice, for example, in terms of number of levels of
review and the extent to which the publisher or journal relies on
outside reviewers. Therefore, the exception is intended to cover
writings subjected to any scientific peer review or substantially
equivalent processes that are designed to ensure that the material
disseminated is scientifically accurate, has technical merit,
demonstrates originality, evinces an important contribution to the body
of knowledge, and adheres to research and scientific conduct standards
generally accepted within the relevant discipline.
Section 5501.110 Prohibited Financial Interests Applicable to Employees
of the National Institutes of Health
New Sec. 5501.110 creates, for employees of the NIH who file
either a public or confidential financial disclosure report, a
prohibited financial holdings regulation that bars owning a financial
interest, such as stock, in substantially affected organizations. In
accordance with 5 CFR 2635.403(a), the Department has determined that
the acquisition or holding of these financial interests would cause a
reasonable person to question the impartiality or objectivity with
which NIH programs are administered.
Public and confidential filers by definition are senior officials
or other employees whose duties involve the exercise of significant
discretion in certain critical areas of agency operations. Section
5501.110 is similar to an existing financial holdings restriction
applied to FDA employees that dates back to 1972. The current version
of the restriction applicable to FDA employees was part of the HHS
Supplemental Ethics Regulation as it was first issued in 1996, and is
found at Sec. 5501.104. Since the enactment of the HHS Supplement, the
work of the NIH has been determined to pose similar unique challenges
for the agency ethics program. NIH employees, like FDA employees,
participate in particular matters that substantially affect significant
sectors of the United States economy, in particular, the
pharmaceutical, medical device, and biotechnology industries. Even the
food and beverage sector that is more associated with the FDA has begun
to come within the NIH sphere through research on obesity and other
diet-related conditions. Many NIH employees have access to confidential
commercial information and trade secrets, the misuse of which can have
serious financial consequences. Unethical conduct in this context,
including misuse of information, could have serious public health
consequences. In sum, the NIH has a compelling need to monitor, and
impose reasonable prophylactic restrictions on, the financial ties
between NIH employees and the vast number of entities that are
substantially affected by NIH programs.
Therefore, Sec. 5501.110 creates a prohibited financial holdings
rule that serves the above-described interests and relieves the NIH of
the significant administrative burden of resolving many conflict of
interest problems on a case-by-case basis. However, Sec. 5501.110 is
narrowly tailored in three important respects. First, Sec. 5501.110
distinguishes between interests in organizations that are substantially
affected by NIH programs, policies, or operations, i.e., those
organizations principally involved in the pharmaceutical and
biotechnology industries, and those interests that are not in such
organizations. Second, Sec. 5501.110 imposes the strictest limitations
on employees whose duties carry the greatest potential for conflict of
interest, i.e., those employees who are required to file either a
public financial disclosure statement or a confidential financial
disclosure statement, pursuant to 5 CFR part 2634. Third, Sec.
5501.110 incorporates a mechanism to exclude certain confidential
filers or classes of confidential filers from the prohibited holdings
requirement if the across-the-board prohibition is deemed unnecessary
to ensure public confidence in the integrity of agency operations and
their positions do not fall in certain enumerated categories nor entail
responsibilities that are likely to pose conflicts related to financial
holdings.
While the new rule prohibits public and confidential filers at the
NIH from holding or acquiring any interest in a substantially affected
organization, all other NIH employees (as well as those confidential
filers excluded from
[[Page 5551]]
coverage by the rule) will be subject to a $15,000 limit on the holding
or acquisition of such interests and certain other restrictions.
Currently, in order to avoid a conflict of interest, these employees
must monitor their work activities and know the identity and value of
their holdings at any given moment. A regulatory exemption at 5 CFR
2640.202 allows employees to work on specific party matters, such as
contracts, grants, investigations, or clinical trials, as long as the
value of the affected stocks does not exceed $15,000, and on a general
matter, such as rulemaking or policy determination, if the value of any
one affected holding does not exceed $25,000, subject to a $50,000 cap
when cumulating all affected interests. However, if the asset value
exceeds these thresholds, employees must recuse from official
participation in particular matters that would have a direct and
predictable effect on the financial interests of the companies in which
they are invested. These monitoring and recusal responsibilities are
exacerbated by the increasing number of mergers, acquisitions, joint
ventures, partnerships, intellectual property licensing agreements, and
even name changes, particularly within the biotechnology and
pharmaceutical industries that, on any given day, may make it difficult
to know whether one has a conflict to avoid. By imposing a $15,000 cap
on such holdings, the employee, the NIH, and the public can be better
assured that the participation by NIH employees in their respective
work assignments, whether specific or general in scope, does not pose a
conflict created by stock holdings. The $15,000 cap will adjust
automatically to any change in the de minimis exemption limit for
matters involving parties at 5 CFR 2640.202(a).
Although the dollar amounts in the two provisions are linked,
substantively they differ in an important respect. Not all financial
interests valued at $15,000 or less will be covered by the OGE
regulatory exemption. For example, although the NIH exception permits a
non-filer to hold a financial interest in a non-publicly traded company
(assuming all the other criteria in the section are also satisfied),
the OGE regulatory exemption only applies to securities in publicly
traded companies or long-term Federal Government or municipal
securities. Accordingly, NIH employees are reminded that even though
Sec. 5501.110 may allow retention of certain assets that would
otherwise be prohibited, the financial interest may nevertheless be
problematic under 18 U.S.C. 208. Absent a regulatory exemption that
specifically addresses the financial interest, a recusal, a
divestiture, or an individual waiver may be required.
The prohibitions relating to financial interests will apply to the
spouses and minor children of NIH employees. Inasmuch as the financial
interests of these relatives are imputed to employees and pose
identical conflicts concerns, the Department has made the
determination, pursuant to 5 CFR 2635.403(a), that there is a direct
and appropriate nexus between this prohibition as applied to spouses
and minor children and the efficiency of the service. It should be
noted, however, that Sec. 5501.110 is not intended to prohibit
employment by spouses and minor children in the affected industry
sectors, although any actual or apparent conflicts of interests created
as to NIH employees by such employment must be resolved under other
applicable provisions of 5 CFR part 2635.
Section 5501.110(e)(1) permits the holding of financial interests
acquired through employment with a substantially affected organization.
This exception is intended to parallel the FDA provision at amended
Sec. 5501.104(b)(1) that excepts pensions or other employee benefits
derived from employment with a significantly regulated organization.
This exception is necessary to facilitate recruitment of qualified
scientific and professional personnel, many of whom may have begun
their careers in industry. Because NIH employees, as opposed to spouses
and minor children of employees, are generally prohibited under Sec.
5501.109 from engaging in current employment with a substantially
affected organization, the provision will primarily apply to financial
interests acquired through employment prior to joining the agency.
However, it may apply in the limited number of instances in which NIH
employees are permitted to have a concurrent employment relationship
with a substantially affected organization, such as a clerical position
excepted by Sec. 5501.109(c)(3)(iii), that may provide a pension or
other employee benefits.
Section 5501.110(e)(2) excepts financial interests in substantially
affected organizations that result from holding an interest in certain
publicly traded or publicly available investment funds or a widely held
pension or similar fund. To qualify for this exception, the fund must
not be self-directed and must not have an express policy or practice of
concentrating its investments in substantially affected organizations.
For example, a widely diversified mutual fund generally would be a
permissible holding, even though the fund holds some stocks of
substantially affected organizations whereas a sector fund that focuses
on the pharmaceutical industry would not.
Furthermore, Sec. 5501.110(e)(3) provides NIH employees with the
opportunity to request an individual exception for certain financial
interests. Where the employee can demonstrate exceptional
circumstances, the NIH may allow an individual to hold a financial
interest in a substantially affected organization, provided that the
application of the financial interest prohibition is not necessary to
ensure public confidence in the impartiality or objectivity with which
NIH programs are administered or to avoid a violation of 5 CFR part
2635.
Pursuant to 5 CFR 2635.403(d), an employee shall be given a
reasonable period of time, considering the nature of the employee's
particular duties and the nature and marketability of the interest, to
divest a financial interest prohibited by paragraphs (c) and (d) of
this section. Except in cases of unusual hardship, as determined by the
NIH deputy ethics counselor in consultation with the designated agency
ethics official or his designee, a reasonable period shall not exceed
90 days from the date divestiture is first required. For those current
employees who will be affected immediately by the promulgation of this
rule, it is anticipated that individual requests for divestiture
periods of up to 180 days will be granted upon an adequate showing of
good cause, such as difficulties in disposing of non-publicly traded
assets or a significant adverse financial impact on the employee, the
company, or the securities market. During any period in which the
employee continues to hold the prohibited financial interest, the
employee remains subject to the restrictions imposed by subpart D of 5
CFR part 2635.
As specified in 5 CFR 2635.403(e), an employee who is required to
sell or otherwise divest a financial interest and thereby incurs a
capital gain may be eligible to defer the tax consequences of
divestiture under subpart J of 5 CFR part 2634. This special tax
treatment is unavailable if the employee fails to comply with the
requisite procedures and disposes of the financial interest prior to
receiving a certificate of divestiture from the Director of the Office
of Government Ethics.
Section 5501.110(g), for the reasons discussed previously in
connection with the FDA provision at Sec. 5501.104(c), specifies that
the requirement to divest a financial interest prohibited by
[[Page 5552]]
paragraphs (c) and (d) of this section is not triggered until the due
date for reporting prohibited financial interests under the applicable
financial disclosure rules in parts 2634 and 5502 of this title.
Section 5501.111 Awards Tendered to Employees of the National
Institutes of Health
Section 5501.111 prohibits senior NIH employees and other employees
with official responsibility for matters affecting donor organizations
from accepting certain awards from outside sources. For these purposes,
the term ``senior employee'' includes, among others, the NIH Director
and Deputy Director and the Director, Deputy Director, Scientific
Director, and Clinical Director of each Institute and Center within
NIH. Other employees of equivalent levels of responsibility will be
subject to the award prohibition if their positions are comparable in
terms of authority or influence over agency programs and operations,
and they receive written notification of their designation as a
``senior employee'' by the designated agency ethics official or the NIH
Director. (A list of ``senior employees'' so designated will be
maintained by the designated agency ethics official and the NIH and
disseminated through program instructions or manual issuances.)
Further, any award permitted under 5 CFR 2635.204(d) that is not
prohibited by this section cannot be accepted without prior written
approval.
Section 5501.111 will have no impact on any employee's ability to
receive an award that consists only of a plaque or certificate or other
item with little intrinsic value that is intended solely for
presentation purposes. Such items are not deemed to constitute a gift
for purposes of the Standards of Ethical Conduct, 5 CFR part 2635.
Likewise, an employee would be permitted to accept free attendance and
food and other refreshments at an event in which the employee is
presented a plaque or certificate or other item with little intrinsic
value under circumstances permitted by 5 CFR 2635.204, such as a
speaking engagement or widely attended gathering. Moreover, under
certain circumstances, an employee may be permitted by the agency to
travel at the award donor's expense to an event at which the employee
is to be honored. If travel reimbursement is accepted from a non-
Federal source by the employee's agency, under the authority of 31
U.S.C. 1353 and 41 CFR chapter 304, in conjunction with the employee's
receipt of an award in recognition of meritorious public service that
is related to the employee's official duties, the reimbursement of such
expenses to the agency is not a personal gift to the employee and hence
not an award or incident of an award for purposes of 5 CFR 2635.204 or
this section.
Specifically, Sec. 5501.111(b) mandates that a senior employee
will not be permitted to accept a gift with an aggregate market value
of more than $200, or that is cash or an investment interest, that is
an award or incident to an award given because of the employee's
official position or from a prohibited source. Moreover, it provides
that an employee, other than a senior employee, cannot accept such a
gift from a person, organization, or other donor that: Is seeking
official action from the employee, any subordinate of the employee, or
any agency component or subcomponent under the employee's official
responsibility; does business or seeks to do business with any agency
component or subcomponent under the employee's official responsibility;
conducts activities substantially affected by any agency component or
subcomponent under the employee's official responsibility; or is an
organization a majority of whose members fall into one of the above
categories. In other words, an NIH employee may not accept a cash award
or one valued at more than $200 that is tendered by a donor that has
matters pending under the employee's official responsibility, either
individually or before subordinates in the employee's chain of command,
irrespective of whether the matter would ever reach the employee for
advice or decision. Thus, as a practical matter, the rule would not
affect the ability of a non-supervisory employee to accept gifts under
5 CFR 2635.204(d), except for the requirement of prior approval. In
addition, a supervisor who is not a senior employee would be permitted
to accept gifts allowed under 5 CFR 2635.204(d) that are either given
to the supervisor because of official position or from a prohibited
source of the NIH that has no matters under the supervisor's official
responsibility.
Section 5501.111(b) departs from executive branch uniformity with
respect to the treatment of awards. It imposes a stricter gift standard
by partially limiting the applicability of an exception to the gift
restrictions in subpart B of part 2635 of this title. In the preamble
to the final rule that established the Standards of Ethical Conduct for
Employees of the Executive Branch, OGE expressed concern about using
the supplemental ethics regulation process as a means for one agency,
for example, to bar all its employees, without regard to the nature of
their duties, from accepting anything from a regulated entity.
Permitting agencies to change the basic rules would ``portend * * * an
ethics program destined to fall short of meeting the President's goal
of a uniform set of standards of conduct for all executive branch
employees.'' 57 FR 35012, Aug. 7, 1992. Specifically, OGE stated as
follows:
Section 2635.105 [of title 5] permits supplemental regulations
``which the agency determines are necessary and appropriate, in view
of its programs and operations, to fulfill the purposes of this
part'' and that are ``(1) in the form of a supplement * * * and (2)
in addition to the substantive provisions of this part.'' The
requirement that they be ``in addition'' means that the basic
provisions will apply and that a supplemental regulation can add
something more, such as an additional gift exception, but cannot be
used to negate or revoke the provisions of this part. The uniformity
required by the Executive order cannot be achieved if agencies can
pick and choose which provisions they adopt or override.
57 FR 35010, Aug. 7, 1992.
As a result of the high profile research activities conducted and
supported by the NIH and the significant contributions by NIH
scientists and administrators in their respective fields, these
employees are considered for awards by philanthropic foundations,
professional associations, industry, academia and others with some
frequency. The Blue Ribbon Panel, in particular, observed an increasing
number of awards established by universities that have received grants
from family funds for this purpose, stating:
The growth in the number of these awards has been attributed to
many factors, including the wish to honor worthy scientists in new
and emerging fields and the goal of individuals and charitable
organizations to boost their scientific credentials by identifying
themselves with and rewarding first-class scientists. Scientists who
receive these awards are frequently required to prepare a lecture as
an ``acceptance speech.'' The cash prizes for these awards can range
from a few hundred to thousands of dollars.
Blue Ribbon Panel Report, p. 51.
Reviewing these awards on a case-by-case basis presents a number of
difficulties. Individual award determinations currently require the
agency to evaluate the extent to which the award donor has interests
that may be substantially affected by the performance or nonperformance
of the honoree's official duties. The Acting Director of OGE in a
statement on May 18, 2004, before the House Committee on Energy and
Commerce Subcommittee on Oversight and Investigations (OGE
[[Page 5553]]
Statement) established a list of factors for agency officials to
consider when providing advice on acceptance of awards, including
factors related to whether an office head is likely to become involved
in matters substantially affecting the interests of the particular
source, and whether the primary purpose of a payment is to honor the
employee for meritorious public service or achievement, or to
compensate the employee for services as a speaker. See Statement of
Marilyn L. Glynn, Acting Director, OGE, on NIH Ethics Concerns:
Consulting Arrangements and Outside Awards Before the Committee on
Energy and Commerce Subcommittee on Oversight and Investigations,
United States House of Representatives on May 18, 2004, available on
the OGE Web site as an attachment to DAEOGram DO-04-011 at http://www.usoge.gov/pages/daeograms/dgr_files/2004/do04011.html. The
reviewer must inquire whether it is reasonable to assume that the
honoree may become involved in a matter substantially affecting the
interests of the donor, or whether the chance of such intervention is
simply a remote and speculative possibility. Moreover, as recognized in
the OGE Statement on awards:
[I]t may not always be immediately apparent to employees and
agency officials whether a particular offer from an outside source
should be viewed as a gift subject to the awards exception or as
compensation for a speaking activity. This is especially true where
an employee is offered something of value in connection with a
``lectureship'' or ``lecture award'' sponsored by an outside
organization. In some instances, it may not be clear whether the
real intent of the payment is to honor the employee for meritorious
public service or achievement, or to compensate the employee for
providing a speech on a subject of interest to the sponsor or the
intended audience.
OGE Statement, p. 7.
Although OGE has provided a number of evaluative factors to
consider in making these determinations, a bright-line rule relieves
the NIH of the significant administrative burden of resolving these
issues on a case-by-case basis and avoids the potential for adverse
public perception that may arise when civil servants receive payments
from outside sources. The Government generally has a legitimate
interest in avoiding even the perception that its decisions are
influenced by outside interests. As indicated by recent experience,
this interest is particularly acute in an agency that is the
``principal steward'' of the national investment in biomedical
research.
The Department is also mindful of the need to attract and retain
preeminent scientists and administrators. As stated by the Blue Ribbon
Panel:
Recognition is a critical incentive for motivating scientists.
Awards resulting from the critical evaluation and assessment of an
individual's or group's work or career by peers, including
distinguished scientists, hold considerable value to the recipients.
Awards not only raise the visibility of the scientist, but also
enhance the reputation of his or her institution and research area.
Blue Ribbon Panel Report, p. 51. It is important, therefore, to note
that the rule bars only the receipt of a gift with an aggregate market
value of more than $200, or that is cash or an investment interest,
tendered as an award or incident to an award. The intangible honor that
inheres in the recognition as an award recipient, where unaccompanied
by gifts having a market value or involving cash or cash equivalents,
remains an achievable goal unaffected by the prohibition in Sec.
5501.111(b).
Moreover, under Sec. 5501.111(c), the NIH Director (or the
Secretary, with respect to awards offered to the NIH Director), with
the approval of the designated agency ethics official, may grant a
written exception to the prohibition in Sec. 5501.111(b) to permit an
employee to accept an award if: (1) The NIH Director determines that
acceptance of the gift will further an agency interest because it
confers an exceptionally high honor in the fields of medicine or
scientific research, for example, the Nobel Prize in Physiology or
Medicine or the Lasker Medical Research Award; (2) absent the
prohibition, the employee would have been permitted to accept the gift
under 5 CFR part 2635; and (3) the designated agency ethics official
determines that the application of the prohibition is not necessary to
ensure public confidence in the impartiality or objectivity of NIH
programs or to avoid a violation of 5 CFR part 2635.
The rule also specifies that no NIH employee shall accept an award
under 5 CFR 2635.204(d) or Sec. 5501.111 unless prior written approval
has been granted. The approval must be in accordance with procedures
specified by the designated agency ethics official, or with the
concurrence of the designated agency ethics official, the NIH Director
or the NIH Director's designee. These procedures are not specified in
the regulation because the requirements for issuing supplemental
standards of conduct do not apply to internal agency procedures for
documenting or processing any determination, approval, or other action
required by supplemental regulations. 5 CFR 2635.105(c)(2)(ii).
Nevertheless, HHS anticipates that such procedures will prescribe a
number of steps of review and may take the following form.
First, the award would be pre-screened and evaluated by an
independent advisory committee, which would advise on whether the award
constitutes a bona fide award given for meritorious public service or
achievement as part of an established program of recognition under the
criteria specified in the Standards of Ethical Conduct, 5 CFR
2635.204(d)(1)(i) and (ii). In advising whether an award is bona fide
for these purposes, the advisory committee would evaluate whether,
under all the circumstances, an award program is constituted by the
donor primarily to provide gratuitous honorific recognition of
achievement or whether it is primarily compensatory in nature, for
example, to obtain a speaker for a lecture, a teacher for a seminar, or
a presenter or panelist for a symposium.
Second, if the independent advisory committee advises that the
award is part of a bona fide program of recognition for meritorious
public service or achievement, the receipt of the award by an
individual employee would be submitted for internal peer review by the
NIH Ethics Advisory Committee (NEAC) (or other successor body
designated by the NIH Director) for its recommendation to the NIH
deputy ethics counselor. To be accepted, the award would have to
receive an affirmative recommendation by the NEAC. In the case of an
award offered to the NIH Director, the Director of the National Cancer
Institute, or other political appointee, the recommendation of the NEAC
would be forwarded to the designated agency ethics official.
Third, if the independent advisory committee advises that the award
is part of a bona fide program of recognition for meritorious public
service or achievement and the receipt of the award by an individual
employee has been recommended by the NEAC, the NIH deputy ethics
counselor (or the designated agency ethics official in the case of an
award to the NIH Director, the Director of the National Cancer
Institute, or other political appointee) would review the
recommendations and could approve the receipt of the award, if it is
determined that acceptance of the award is not prohibited by statute or
Federal regulation, including 5 CFR part 2635 and this part. The
approving official could determine that even where an award meets the
above-described criteria, it is in the agency's interest to impose
conditions on the employee's
[[Page 5554]]
acceptance of the award to ensure public confidence in the impartiality
or objectivity of agency programs. Such conditions could include
limiting the type, character, or amount of the award or incidents of
the award and imposing a period of disqualification greater than the
12-month period described at Sec. 5501.112.
Section 5501.111(d) provides that if an employee accepts an award
without prior approval as required by this section, the employee may be
required, in addition to any penalty provided by law and applicable
regulations, to forfeit the award by returning it to the donor. If an
employee accepts a prohibited award, the employee shall be required, in
addition to any penalty provided by law and applicable regulations, to:
reject the award and instruct the donor to strike the honoree's name
from any list of award recipients; remove the recognition from the
employee's r[eacute]sum[eacute] or curriculum vitae; return any
tangible indicia of the recognition to the donor; and forfeit the award
by returning it to the donor.
Section 5501.112 One-Year Disqualification of Employees of the National
Institutes of Health From Certain Matters Involving an Award Donor
Section 5501.112 bars any employee who has, within the last year,
accepted an award permitted under 5 CFR 2635.204(d) or Sec. 5501.111
from participating in any particular matter involving specific parties
in which the donor is or represents a party unless authorized to do so
under 5 CFR 2635.502(d). This provision is necessary to protect the
public's confidence in the agency's programs by ensuring that agency
employees do not participate officially in specific party matters
involving any person or entity that has in the recent past given an
award to the employee.
B. Supplemental Financial Disclosure Regulations
New part 5502 reinstates an annual reporting requirement for
employees with approved outside activities. Its primary purpose is to
allow agency management to review an array of approved activities to
ensure that employees have complied with applicable laws and
regulations, and to ensure that an approved activity continues to meet
the standard for approval. For example, where an employee's official
duties have changed since an activity was originally approved, or where
a company with which an employee has an outside activity has merged
with, or been acquired by, another company that can be affected by the
employee's official duties, the agency would need to reevaluate a
previously approved activity. The annual reporting requirement is
intended to facilitate that review and ensure that changed
circumstances do not render a previously approved activity improper.
Prior to 1996, the Department, pursuant to 45 CFR 73.735-709,
required employees to submit a report of outside activities on an HHS
Form 521 by September 10 of each year with respect to the previous 12
months ending August 31. The HHS Standards of Conduct Regulations at 45
CFR part 73 were largely superseded by the OGE executive branch-wide
rules on financial disclosure, 5 CFR part 2634, and employee conduct, 5
CFR part 2635. The OGE regulations permitted agencies to promulgate
regulations that would supplement each part, pursuant to 5 CFR 2634.103
and 2635.105. However, at the time the HHS Supplemental Ethics
Regulation was issued, the Department did not draft a supplemental
provision to carry forward the annual outside activity reporting
requirement. The submission of one outside activity request form, HHS
Form 520, was considered sufficient to screen for conflicts and to
educate the employee about potential ethical concerns. To meet
paperwork reduction goals, the annual filing of an outside activity
report was discontinued.
In the preamble discussion of the outside activity prior approval
requirement in 5 CFR 5501.106(d), the Department stated as follows:
The Department will continue to employ HHS Form 520 as both a
prior approval request form and a record of the disposition by the
approval official. * * * No provision is made in these regulations,
however, for an annual reporting of outside activities submitted on
HHS Form 521, as previously required by 45 CFR 73.735-709. That
section elicited an annual written verification whether the work or
activity described in the original request was actually performed
and required the employee to specify the amount of time spent and
whether the activity would continue unchanged. Because the HHS Form
520 contains a blank for specifying duration and any substantive
change in the scope of the approved activity would constitute a new
activity requiring submission of another HHS Form 520, the annual
report appears to be unnecessarily duplicative. Moreover, the
information requested would, in any event, form the basis of a
responsible dialogue between employees and supervisors concerning
workload allocation and the avoidance of conflicts. The minimal
benefit to be derived from an annual report does not outweigh the
considerable burden involved in collecting, tracking, and reviewing
the forms. Accordingly, the requirement for filing an annual HHS
Form 521 expires upon the effective date of this rule.
61 FR 39762 (July 30, 1996).
Developments, both technological and otherwise, since that time now
tip the scale of burdens and benefits differently. Although the burden
on both the agency and its employees remains significant, advances in
computer software have reduced this concern considerably.
Electronically fillable forms and document tracking programs facilitate
the process to a degree not previously attainable. Given the nature of
any cumulative list, it remains true that the HHS Form 521 annual
report of outside activities may duplicate in certain respects the
information collected in an employee's original request for prior
approval on an HHS Form 520 or listed on a public (SF 278) or
confidential (OGE Form 450) financial disclosure report. Moreover,
because approval of an outside activity will be effective for only one
year under new Sec. 5501.106(d)(5), employees will be required to
renew long term activities on an annual basis. Nevertheless, despite
the potential for overlap in some cases, a number of compelling reasons
support the decision to reinstate the HHS Form 521.
First, not all employees who perform approved outside activities
are public or confidential report filers. For these non-filers, the
annual report may provide the agency the only opportunity to verify
whether and on what terms the employee actually undertook the activity
for which approval was requested.
Second, after the HHS 521 was discontinued, the system relied on
each employee to file a new approval request whenever a substantive
change occurred in the employee's duties or the scope of the approved
activity. This expectation may have been unrealistic, especially in
light of recent allegations that a number of NIH employees may have
failed to submit even initial approval forms for their outside
consulting activities. Accordingly, enforcement of the ethics
requirements would be improved considerably by placing an annual focus
on outside activities where each employee would be individually
notified of the outside activity rules, provided blank forms (or
directed to an electronic version), and required to submit the
necessary information by a date certain, and each supervisor would be
engaged actively in the effort.
Third, in a rapidly changing economy, every opportunity to assist
employees in screening for potential conflicts is valuable. Employees
may have undertaken activities that were
[[Page 5555]]
approved based on information that subsequently changed in a material
way and which may call into question the continuing appropriateness of
the activity. For example, due to mergers, acquisitions, and changed
business plans, companies not previously engaged in certain activities
related to an employee's official duties may become engaged in such
activities. Likewise, an employee's official duties change over time,
potentially creating a conflict with an outside activity that did not
previously exist at the time of the initial request.
Fourth, the information requested on, as well as the statistical
data derived from, the annual report will assist the Department in
meeting its obligation to evaluate periodically the adequacy and
effectiveness of the agency's conduct regulations, financial disclosure
systems, and enforcement efforts and to take prompt corrective action
to remedy actual or potential conflict of interest situations. See 5
CFR 2638.203(b)(10) and (11).
Section 5502.101 General
Section 5502.101 explains that the regulations in part 5502 apply
to all employees of the Department of Health and Human Services and
supplement the Executive Branch Financial Disclosure Regulations
contained in 5 CFR part 2634. Although the annual report of outside
activities required by Sec. 5502.102 excludes special Government
employees from its coverage, the part as a whole is intended to apply
to all employees, unless otherwise noted. The section is drafted in
this manner to accommodate any subsequent supplemental financial
disclosure requirements that may be promulgated.
In addition, any regulation in part 5502 that is made applicable to
employees of an HHS component designated as a separate agency under
Sec. 5501.102(a) applies to employees in a division or region of the
Office of the General Counsel that principally advises or represents
that component.
Section 5502.102 Annual Supplemental Report of Outside Employment or
Activities
Section 5502.102 requires that employees, other than special
Government employees, must file an annual report on or before February
28 of each year with respect to all outside activities that were
approved during the prior calendar year (including activities
originally undertaken in prior years and reapproved in the preceding
calendar year). The report also solicits information of employees who
have actually performed an outside activity for which prior approval is
required under part 5501, regardless of whether the employees actually
obtained such approval.
Section 5502.103 Content of Supplemental Reports
Section 5502.103 specifies that, in addition to basic identifying
information, the annual report must include: a list of all outside
activities for which prior approval is required under part 5501 that
were approved pursuant to 5 CFR 5501.106(d) or undertaken within the
reporting period; a statement as to whether the anticipated work
described in a previously approved activity request was actually
performed for the person or organization named in the request; for each
outside activity actually performed, the beginning date of the
relationship, the date(s) personal services were provided, the total
number of hours spent and leave used on the activity, and the ending
date of the activity; for ongoing activities, a statement as to how
long the activity is anticipated to continue; the type and amount of
income and/or reimbursements actually received during the reporting
period and the date paid, or which were not received during the
reporting period and remain due; a statement as to whether any changes
occurred or are anticipated with respect to information supplied in the
original outside activity request; a description of any change in the
nature, scope or subject matter of any approved activity; and a
description of any change in the employee's job, duties, or
responsibilities that occurred after the outside activity was approved.
5502.104 Confidentiality of Reports
Pursuant to Sec. 107(a)(2) of the Ethics in Government Act, the
reports filed pursuant to this part are confidential and any
information required to be provided shall not be disclosed to the
public. The OGE implementing regulations at 5 CFR 2634.901 specify that
this requirement applies to supplemental financial information
requested of individuals who file public financial disclosure reports,
as well as the information supplied by confidential filers and non-
filers. Section 2634.901(d) further states that the statute leaves no
discretion on this issue with the agencies. These reports are covered
under the OGE/GOVT-2 Government-wide executive branch Privacy Act
system of records, as well as any applicable agency records system.
5502.105 Agency Procedures
Implementing procedures for the submission and review of any report
filed under this part may be prescribed by the designated agency ethics
official or, with the concurrence of the designated agency ethics
official, any HHS component. These procedures may provide for an
extension or several extensions of the due date for any report filed
under this part, for good cause shown, totaling not more than 90 days.
5502.106 Supplemental Disclosure of Prohibited Financial Interests
Applicable to Employees of the Food and Drug Administration and the
National Institutes of Health
Section 5502.106 requires FDA and NIH employees to report
prohibited financial interests, including those interests that are
covered by an applicable exception, within 30 days of joining the
agency, being reassigned from another part of HHS, or acquiring such
interests, for example, through marriage, gift, or inheritance. New
entrant public and confidential filers who report such interests on
their initial SF 278 or OGE 450 financial disclosure forms are not
required to submit an additional report under this section. Incumbent
public and confidential filers and non-filers are subject to the 30-day
reporting requirement whenever a triggering event occurs. Current NIH
employees newly subject to this requirement initially will have 60 days
from the effective date of the rule to file.
This section is intended to implement the prohibited financial
interest provisions applicable to FDA and NIH employees in 5 CFR
5501.104(a), 5501.110(c), and 5501.110(d), by requiring immediate
disclosure of these holdings. Absent such reports, prohibited financial
interests involuntarily acquired by incumbent public and confidential
filers or held by filers transferred from other components may not be
identified until they are disclosed in the annual reporting cycles,
after several months or a year or more has passed. The prohibited
financial interests of non-filers would escape detection altogether,
thus making the $15,000 cap on such holdings largely unenforceable.
Prior to the issuance of the HHS Supplemental Ethics Regulation in
1996, the FDA required non-filers to certify that no prohibited
financial interests above the de minimis amount were held. Since that
time, non-filers sometimes have been in violation of the prohibited
holdings regulation because they are not subject to a specific
reporting requirement.
[[Page 5556]]
At the same time, the agency recognizes that employees, especially
in the case of new entrant employees, need a 30-day period in which to
investigate their financial holdings and determine which of their
interests are prohibited by the agency. The need for such a 30-day
period is implicit in the regulations at 5 CFR 2634.201 and 2634.903,
which provide new entrant public or confidential filers 30 days in
which to submit their financial disclosure reports.
III. Matters of Regulatory Procedure
Administrative Procedure Act
These amendments prescribe rules of agency management or personnel
that are exempt under 5 U.S.C. 553(a)(2) from the requirement for
notice and comment rulemaking. These amendments also prescribe rules of
agency practice and procedure governing employee conduct that are
exempt under 5 U.S.C. 553(b) from the requirement of public notice and
comment prior to promulgation of a final rule. In addition, with
respect to NIH employees newly subject to restrictions on outside
activities, financial holdings, and awards, the persons subject thereto
have been provided actual notice of the substance of the rule or a
description of the subjects and issues involved. The steps taken that
apprise these employees are recounted below.
The need for supplemental regulations to address NIH ethics issues
was discussed in public hearings before the United States Senate,
Committee on Appropriations, Subcommittee on Labor, Health and Human
Services, Education and Related Agencies on January 22, 2004. The NIH
Director convened a Blue Ribbon Panel (BRP) in March 2004 and charged
the panel to review the existing laws, regulations, policies, and
procedures under which the NIH currently operates regarding: (1) Real
and apparent financial conflicts of interest of NIH staff where
compensation or financial benefit from outside sources is received,
including consulting arrangements and outside awards; and (2)
requirements and policies for the reporting of NIH staff's financial
interests, including which interests are subject to public disclosure,
and what portion of NIH staff file public disclosures. The BRP was
directed to make recommendations for improving existing laws,
regulations, policies, and procedures, as appropriate, to the Advisory
Committee to the Director, NIH, for deliberation and final
recommendations to the NIH Director.
NIH employees were invited to give testimony to the panel, and on
March 12, 13 and April 1, 5, 2004, the BRP received such oral and
written testimony. Also, an electronic forum was establish in March
2004 to collect input from intramural scientists for the BRP's
consideration. In the end, over 300 NIH employees gave comments to the
BRP from March to April, 2004.
The BRP presented its findings to the Advisory Committee to the
Director at an open meeting on May 6, 2004. In addition, the BRP Co-
Chairs presented the panel's findings to the United States House of
Representatives, Committee on Energy and Commerce, Subcommittee on
Oversight and Investigations, on May 12, 2004.
At the June 22, 2004, hearing of the Oversight and Investigations
Subcommittee, the NIH Director announced his intention to seek
supplemental ethics regulations in three areas: outside activities,
prohibited financial holdings, and awards. These proposals were
developed after intensive internal reviews of NIH's ethics rules and
procedures, and based, in part, on recommendations from the BRP.
Immediately following the hearing, on June 23, 2004, the NIH produced
talking points summarizing the NIH Director's testimony which were
circulated to the Directors of the 27 institutes and centers (ICs) that
comprise the NIH and to the IC Deputy Ethics Counselors. The talking
points equipped NIH leadership to answer inquiries from NIH employees
regarding the proposed changes.
The ICs also took action to educate their employees about the
proposed changes. On July 20, 2004, the National Cancer Institute, the
largest IC, held an all-hands meeting where the Director of the NIH
Ethics Office (NEO) presented the proposed changes and answered
employees' questions. On July 28, 2004, the Clinical Center held a
briefing for its management on the proposed changes where the NEO
Director again led the discussion and answered questions.
Starting in early September 2004, the NIH Ethics Advisory
Committee, the group established by the NIH Director in January 2004 to
provide peer review of outside activity and award approval requests
from certain NIH employees, began notifying employees that the proposed
changes may affect their recently approved outside activities. The NEAC
notification stated:
As you know, the NIH is making changes in its ethics program.
Some changes, such as the creation of the NIH Ethics Advisory
Committee (NEAC), have already been made. Other changes have been
proposed.
In this interim period, the current rules still apply, and
requests to conduct outside activities are being approved based on
these rules. You should note that after the new rules are adopted
and take effect, certain types of outside activities, which may
currently be approved, may be limited, if not prohibited altogether.
For example, in contrast to the current rules, the NIH is
considering prohibiting consulting arrangements with grantees for
all employees, and not permitting such arrangements with
pharmaceuticals and biotechnology companies. Membership on corporate
boards and scientific advisory boards may also be banned.
Furthermore, compensation in the form of stock or stock options may
well be prohibited.
We are giving you this information for planning purposes only.
If you receive permission to engage in an outside activity and to
receive the corresponding compensation from that activity, you may,
of course, proceed with that activity. However, be aware that the
rules [with respect] to that activity may change in the near future
and that you will be required to change or adapt your activity to
those new rules. Please be assured we will do everything we can to
keep you apprised of changes to policies and procedures as they
occur during this interim period.
On September 24, 2004, the NIH Deputy Director sent an all-employee
memorandum via e-mail to notify NIH employees of the agency's plan to
seek in effect a one-year moratorium on consulting with pharmaceutical
and biotechnology companies. The memorandum explained that this step
was being taken to give the NIH ``time to complete [its] review of
specific cases, develop effective information systems to track outside
activities, and develop more effective ethics training programs for
staff before a final policy is put in place.''
On November 29, 2004, the NIH Director held a town hall meeting for
over 180 intramural scientists. At the meeting, the NIH Deputy Director
gave an overview of the various steps that the NIH has taken to revise
its ethics program, including a discussion of the proposed regulatory
changes.
In addition to the above described steps taken by management to
keep NIH employees apprised of the proposed changes to the ethics
program, the NIH in March 2004 created a conflict of interest section
on its homepage. Employees were notified that up-to-date information on
the proposed changes to the ethics program would be posted periodically
on the Web site. Among other informative documents, the NIH posted the
BRP's report, the NIH Director's June 22 Subcommittee testimony, and
the September 24 notification. Furthermore, the proposed changes
received extensive and
[[Page 5557]]
continuous coverage in various daily newspapers and scientific trade
and professional magazines and journals.
To the extent that these internal agency regulations governing
employee conduct have an extra-agency impact, the Department of Health
and Human Services, pursuant to 5 U.S.C. 553(b)(B), for good cause,
finds that providing notice and utilizing public comment procedures
prior to promulgation of this interim rule are unnecessary and contrary
to the public interest. The issues involved in this rulemaking
primarily affect Federal employees. Those external entities that may
have an indirect interest in hiring Federal employees, having them own
stock, or giving them monetary awards are affected marginally. The
primary effect of the prohibitions contained in these regulations is to
establish prophylactic rules that preclude certain outside activities,
financial holdings, and gifts on a uniform basis where many would have
been prohibited as well under a case-by-case determination process.
As noted previously, the ethics issues that have engendered these
regulations have been described extensively in many fora. The
deliberative process in developing this interim rule has already been
informed by input from employees, agency management, and members of the
public in hearings before the NIH Blue Ribbon Panel on Conflict of
Interest Policies and in testimony before the Senate Committee on
Appropriations, Subcommittee on Labor, Health and Human Services,
Education and Related Agencies, and the House Committee on Energy and
Commerce, Subcommittee on Oversight and Investigations. The public
through press accounts and the employees through agency notice have
been well aware that Federal regulation on these matters was impending,
and an opportunity for their involvement has occurred. NIH employees
for nearly a year have faced considerable uncertainty and may have
deferred commitments pending the issuance of an anticipated rule.
Addressing at this time the ethics issues at the National Institutes of
Health is of paramount importance to ensure public confidence in the
scientific and health research conducted and funded by that agency and
to resolve immediately the uncertainty surrounding employee decisions
in these matters. In sum, employing the notice and comment procedures
is unnecessary and contrary to the public interest, in part, because
equivalent actions have already been taken to inform and involve
interested parties and further process would not contribute
substantially to the development of the regulation when balanced
against the harm that may result from further delay and uncertainty.
Pursuant to 5 U.S.C. 553(d)(3), the Department of Health and Human
Services also has determined, for the reasons discussed, that good
cause exists for dispensing with the requirement of a 30-day delayed
effective date. Those NIH employees who will be required to terminate
their existing outside activities or divest currently held financial
interests are provided transitional periods within which to comply.
Because the interim revisions predominately affect the NIH ethics
program and are critically necessary to preserve the integrity of NIH
programs and operations, a delay in the effective date would be
contrary to the public interest.
The public interest is instead served by making additional
restrictions on the outside activities, financial holdings, and awards
of NIH employees effective immediately upon publication (with the
exception of transitional grace periods). The integrity of NIH programs
has been potentially called into question by public examples of
employees' outside activities and other financial ties to industry and
grantee institutions. The Department and NIH are committed to
correcting these problems through more careful oversight and
restrictions that will lessen the potential that real or apparent
conflicts may arise from unanticipated or undetected relationships with
external organizations. Given that commitment, and the importance of
implementing the restrictions as promptly as possible, the best
interests of the NIH, the employees, and the public will be served by
the immediate effectiveness of this rule.
Those provisions that apply to allowable holdings of FDA employees
or gifts received from Indian tribes or Alaska Native villages
recognize exemptions or relieve restrictions under current law and thus
are effective upon publication pursuant to 5 U.S.C. 553(d)(1). As to
other provisions that clarify or update the existing supplemental
regulation with respect to nomenclature, agency organization, or
procedure, or that document longstanding or other authoritative
interpretations, no useful purpose would be served by delaying the
effective date for those changes.
Interested persons may submit written comments on this interim
final rule. The Department of Health and Human Services will review all
comments that are received on or before April 4, 2005, and consider any
modifications to this interim rule that appear warranted before
adopting a permanent final rule on this matter.
Regulatory Flexibility Act
The Department of Health and Human Services has determined under
the Regulatory Flexibility Act, 5 U.S.C. chapter 6, that this rule will
not have a significant economic impact on a substantial number of small
entities because the rule prescribes personnel provisions that
primarily affect HHS employees.
Paperwork Reduction Act
The Paperwork Reduction Act, 44 U.S.C. chapter 35, does not apply
to these final rule amendments because they do not contain information
collection requirements that are subject to approval by the Office of
Management and Budget.
Congressional Review Act
The Department of Health and Human Services has determined that
this rulemaking is not a rule as defined in 5 U.S.C. 804, and, thus,
does not require review by Congress. This rulemaking is related to HHS
personnel.
Executive Orders 12866 and 12988
Because this rule relates to HHS personnel, it is exempt from the
provisions of Executive Orders 12866 and 12988.
List of Subjects
5 CFR Part 5501
Conflict of interests, Ethics, Executive branch standards of
conduct, Financial interests, Government employees, Outside activities.
5 CFR Part 5502
Conflict of interests, Ethics, Government employees, Outside
activities, Reporting and record keeping requirements.
Dated: January 25, 2005.
Edgar M. Swindell,
Designated Agency Ethics Official, Department of Health and Human
Services.
Dated: January 26, 2005.
Wade F. Horn,
Acting Secretary, Department of Health and Human Services.
Approved: January 26, 2005.
Marilyn L. Glynn,
Acting Director, Office of Government Ethics.
0
For the reasons discussed in the preamble, the Department of Health and
Human Services, with the concurrence of the Office of Government
Ethics, amends chapter XLV of title 5 of the Code of Federal
Regulations as follows:
[[Page 5558]]
TITLE 5--[AMENDED]
CHAPTER XLV--DEPARTMENT OF HEALTH AND HUMAN SERVICES
PART 5501-SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
0
1. The authority citation for part 5501 continues to read as follows:
Authority: 5 U.S.C. 301, 7301, 7353; 5 U.S.C. App. (Ethics in
Government Act of 1978); 25 U.S.C. 450i(f); 42 U.S.C. 216; E.O.
12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O.
12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306; 5 CFR 2635.105,
2635.203, 2635.403, 2635.802, 2635.803.
0
2. Amend Sec. 5501.101 by revising paragraph (c)(2) to read as
follows:
Sec. 5501.101 General.
* * * * *
(c) * * *
(2) Significantly regulated organization means an organization for
which the sales of products regulated by the Food and Drug
Administration (FDA) constitute ten percent or more of annual gross
sales in the organization's previous fiscal year; where an organization
does not have a record of sales of FDA-regulated products, it will be
deemed to be significantly regulated if its operations are
predominately in fields regulated by FDA, or if its research,
development, or other business activities are reasonably expected to
result in the development of products that are regulated by FDA.
0
3. Amend Sec. 5501.103 as follows:
0
A. Revise the first sentence of paragraph (a) introductory text to read
as set forth below:
0
B. Revise paragraph (a)(3) to read as set forth below;
0
C. Remove paragraph (a)(7) and redesignate paragraph (a)(6) and (a)(7);
0
D. Add new paragraph (a)(6) to read as set forth below;
0
E. Remove paragraph (a)(11) and redesignate paragraphs (a)(12) and
(a)(13) as paragraphs (a)(11) and (a)(12);
0
F. In paragraph (b)(2), remove the word ``13'' and add in its place the
word ``12'';
0
G. Add new paragraph (c)(1)(iii) to read as set forth below.
The additions and revisions read as follows:
Sec. 5501.102 Designation of HHS components as separate agencies.
(a) Separate agency components of HHS. Pursuant to 5 CFR
2635.203(a), each of the twelve components of HHS listed below is
designated as an agency separate from each of the other eleven listed
components and, for employees of that component, as an agency distinct
from the remainder of HHS. * * *
* * * * *
(3) Agency for Healthcare Research and Quality;
* * * * *
(6) Centers for Medicare and Medicaid Services;
* * * * *
(c) * * *
(1) * * *
(iii) The regulations at Sec. 5501.111 governing the receipt of
awards by employees of the National Institutes of Health; and
* * * * *
0
4. Amend Sec. 5501.103 by revising paragraph (a) to read as follows:
Sec. 5501.103 Gifts from federally recognized Indian tribes or Alaska
Native villages or regional or village corporations.
(a) Tribal or Alaska Native gifts. In addition to the gifts which
come within the exceptions set forth in 5 CFR 2635.204, and subject to
all provisions of 5 CFR 2635.201 through 2635.205, an employee may
accept unsolicited gifts of native artwork, crafts, or other items
representative of traditional native culture from federally recognized
Indian tribes or Alaska Native villages or regional or village
corporations, provided that the aggregate market value of individual
gifts received from any one tribe or village under the authority of
this paragraph shall not exceed $200 in a calendar year.
* * * * *
0
5. Amend Sec. 5501.104 by revising the section heading, paragraphs
(a), (b)(1), and (b)(2)(i), and designating the note following
paragraph (b)(4) as note to paragraph (b) and revising it and adding
new paragraph (c) to read as follows:
Sec. 5501.104 Prohibited financial interests applicable to employees
of the Food and Drug Administration.
(a) General prohibition. Except as permitted by paragraph (b) of
this section, no employee or spouse or minor child of an employee,
other than a special Government employee or the spouse or minor child
of a special Government employee, of the Food and Drug Administration
shall have a financial interest in a significantly regulated
organization.
(b) * * *
(1) An employee or spouse or minor child of an employee may have a
financial interest, such as a pension or other employee benefit,
arising from employment with a significantly regulated organization.
Note to paragraph (b)(1): FDA employees who file public or
confidential financial disclosure reports pursuant to 5 CFR part
2634, as opposed to spouses and minor children of such employees,
are generally prohibited under Sec. 5501.106(c)(3) from engaging in
current employment with a significantly regulated organization.
(2) * * *
(i) The total cost or value, measured at the time of acquisition,
of the combined interests of the employee and the employee's spouse and
minor children in the regulated organization is equal to or less than
the de minimis exemption limit for matters involving parties
established by 5 CFR 2640.202(a) or $15,000, whichever is greater (the
phrase ``time of acquisition'' shall mean the date on which the
employee actually acquired the financial interest--or on which the
financial interest became imputed to the employee under 18 U.S.C. 208--
whether by purchase, gift, bequest, marriage, or otherwise, except that
with respect to a financial interest that was acquired prior to the
employee's entrance on duty as an employee of the Food and Drug
Administration, the ``time of acquisition'' shall be deemed to be the
date on which the employee entered on duty);
* * * * *
Note to paragraph (b): With respect to any excepted financial
interest, employees are reminded of their obligations under 5 CFR
part 2635, and specifically their obligation under subpart D of part
5501 to disqualify themselves from participating in any particular
matter in which they, their spouses or minor children have a
financial interest arising from publicly traded securities that
exceeds the de minimis thresholds specified in the regulatory
exemption at 5 CFR 2640.202 or from non-publicly traded securities
that are not covered by the regulatory exemption. Furthermore, the
agency may prohibit or restrict an individual employee from
acquiring or holding any financial interest or a class of financial
interests based on the agency's determination that the interest
creates a substantial conflict with the employee's duties, within
the meaning of 5 CFR 2635.403.
(c) Reporting and divestiture. For purposes of determining the
divestiture period specified in 5 CFR 2635.403(d), as applied to
financial interests prohibited under paragraph (a) of this section, the
``date divestiture is first directed'' means the date on which the new
entrant public or confidential financial disclosure report required by
part 2634 of this title or any report required by Sec. 5502.106(c) of
this chapter is due.
0
6. Amend Sec. 5501.106 as follows:
0
A. Revise paragraph (c)(3) heading and introductory text, paragraphs
(c)(4)(i) introductory text and (d)(1) introductory text, and
paragraphs (d)(2) heading,
[[Page 5559]]
(d)(2)(i), (d)(2)(iii), (d)(3), and (d)(4) to read as set forth below:
0
B. In the first sentence of the note following paragraph (d)(4), remove
the duplicate second occurence of the words ``granting of'';
0
C. Redesignate paragraph (d)(5) as paragraph (d)(6) and add new
paragraph (d)(5) to read as set forth below: and
0
D. Add new paragraph (e) to read as set forth below:
The revisions and additions read as follows:
Sec. 5501.106 Outside employment and other outside activities.
* * * * *
(c) * * *
(3) Prohibited outside activities applicable to employees of the
Food and Drug Administration. An employee of the Food and Drug
Administration who is required to file a public or confidential
financial disclosure report pursuant to 5 CFR part 2634 shall not: * *
*
(4) * * *
(i) An employee who serves as an attorney in or under the
supervision of the Office of the General Counsel or the Office of
Counsel to the Inspector General shall not engage in any outside
practice of law that might require the attorney to: * * *
* * * * *
(d) Prior approval for outside employment and other outside
activities--(1) General approval requirement. Except to the extent that
an employment or other activity has been exempted under paragraph
(d)(6) of this section, an employee shall obtain written approval prior
to engaging, with or without compensation, in the following outside
employment or activities: * * *
(2) Additional approval requirement for employees of the Food and
Drug Administration and the National Institutes of Health.
(i) In addition to the general approval requirements set forth in
paragraph (d)(1) of this section, an employee of the Food and Drug
Administration or the National Institutes of Health shall obtain
written approval prior to engaging in any outside employment, as
defined in 5 CFR 2635.603(a), whether or not for compensation, or any
self-employed business activity.
* * * * *
(iii) The requirement of paragraph (d)(2)(i) of this section shall
not apply to the extent that an employment activity has been exempted,
pursuant to paragraph (d)(6) of this section.
(3) Submission of requests for approval. (i) An employee seeking to
engage in any of the activities for which advance approval is required
shall make a written request for approval a reasonable time before
beginning the activity. This request shall be directed to the
employee's supervisor. The supervisor shall submit the request and a
statement addressing the extent to which the employee's duties are
related to the proposed outside activity to an agency designee, who
shall make a final determination with respect to the request.
(ii) All requests for prior approval shall include the following
information:
(A) The employee's name, contact information, organizational
location, occupational title, grade, step, salary, appointment type,
and financial disclosure filing status;
(B) The nature of the proposed outside employment or other outside
activity, including a full description of the specific duties or
services to be performed;
(C) A description of the employee's official duties that relate to
the proposed activity;
(D) A description of how the employee's official duties will affect
the interests of the person for whom the proposed activity will be
performed;
(E) The name and address of the person or organization for whom or
with which the work or activity will be done, including the location
where the services will be performed;
(F) The estimated total time that will be devoted to the activity.
If the proposed outside activity is to be performed on a continuing
basis, a statement of the estimated number of hours per year; for other
employment, a statement of the anticipated beginning and ending date;
(G) A statement as to whether the work can be performed entirely
outside of the employee's regular duty hours and, if not, the estimated
number of hours and type of leave that will be required;
(H) The method or basis of any compensation to be received (e.g.,
fee, per diem, honorarium, advance, royalties, stock, stock options,
travel and expenses, or other form of remuneration tendered in cash or
in-kind in connection with the proposed activity) from the person or
organization for whom or with which the work or activity will be done;
(I) The amount of any compensation to be received from the person
or organization for whom or with which the work or activity will be
done;
(J) The amount and date of any compensation received, or due for
services performed, within the six-year period immediately preceding
the submission of the request for approval from the person or
organization for whom or with which the work or activity will be done
(including any amount received or due from an agent, affiliate, parent,
subsidiary, or predecessor of the proposed payor);
(K) A statement as to whether the compensation is derived from an
HHS grant, contract, cooperative agreement, or other source of HHS
funding or attributed to services related to an activity funded by HHS,
regardless of the specific source of the compensation;
(L) For activities involving the provision of consultative or
professional services, a statement indicating whether the client,
employer, or other person on whose behalf the services are performed is
receiving, or intends to seek, an HHS grant, contract, cooperative
agreement, or other funding relationship;
(M) For activities involving teaching, speaking, or writing, a
syllabus, outline, summary, synopsis, draft or similar description of
the content and subject matter involved in the course, speech, or
written product (including, if available, a copy of the text of any
speech) and the proposed text of any disclaimer required by 5 CFR
2635.807(b)(2) or by the instructions or manual issuances authorized
under paragraph (d)(6) of this section; and
(N) Such other relevant information that the designated agency
ethics official or, with the concurrence of the designated agency
ethics official, each of the separate agency components of HHS listed
in Sec. 5501.102(a) determines is necessary or appropriate in order to
evaluate whether a proposed activity is likely to involve conduct
prohibited by statute or Federal regulations, including 5 CFR part 2635
and this part.
(4) Standard for approval. Approval shall be granted only upon a
determination that the outside employment or other outside activity is
not expected to involve conduct prohibited by statute or Federal
regulation, including 5 CFR part 2635 and this part. * * *
* * * * *
(5) Duration of approval. Approval shall be effective for a period
not to exceed one year from the date of approval. Upon a significant
change in the nature of the outside activity or in the employee's
official position or duties, the employee shall submit a revised
request for approval using the procedure in paragraph (d)(3) of this
section. If the outside activity is anticipated to exceed one year from
the date of the most recent approval, the employee shall renew the
request for approval no later than thirty days prior to the expiration
of the period authorized.
[[Page 5560]]
(e) Waivers. The designated agency ethics official may grant a
written waiver from any prohibited outside activity provision in this
section or in Sec. 5501.109 based on a determination that the waiver
is not inconsistent with part 2635 of this title or otherwise
prohibited by law and that, under the particular circumstances,
application of the prohibition is not necessary to avoid the appearance
of misuse of position or loss of impartiality or otherwise to ensure
confidence in the impartiality and objectivity with which agency
programs are administered. A waiver under this paragraph may impose
appropriate conditions, such as requiring execution of a written
disqualification.
0
7. Add new Sec. 5501.109 to read as follows:
Sec. 5501.109 Prohibited outside activities applicable to employees
of the National Institutes of Health.
(a) Applicability. This section does not apply to special
Government employees.
(b) Definitions. For purposes of this section:
(1) Compensation has the meaning set forth in 5 CFR
2635.807(a)(2)(iii).
(2) Continuing professional education means a course, a program, a
series of courses or programs, or other educational activity provided
to members of a profession, as defined in 5 CFR 2636.305(b)(1), or
academic discipline and designed principally to maintain or advance the
skills and competence of practitioners in a field of specialized
knowledge and to expand an appreciation and understanding of the
professional responsibilities, fiduciary obligations, or ethical
aspirations incumbent upon members of the group. For those members of a
profession or academic discipline that does not subject its members to
licensure or continuing education requirements, the term continuing
professional education includes those educational activities that
exemplify a purpose and content similar to those offered to or required
of members of a licensed profession.
(3) Educational activity provider means a supported research
institution, a health care provider or insurer, or a related trade,
professional, or similar association that offers accredited continuing
professional education (or, in the case of a profession or academic
discipline whose members are not subject to licensure and which does
not have program accreditation requirements, an education program
determined by the designated agency ethics official or his designee or,
in consultation with the designated agency ethics official or his
designee, the NIH Director or the NIH Director's designee to be
substantially equivalent to an accredited continuing professional
education program), but does not include a substantially affected
organization.
(4) Employment has the meaning specified in 5 CFR 2635.603(a).
(5) Health care provider or insurer means a hospital, clinic,
skilled nursing facility, rehabilitation facility, durable medical
equipment supplier, home health agency, hospice program, health
maintenance organization, managed care organization, or other provider
of health care items and services as defined in sections 1877(h)(6) or
1903(w)(7) of the Social Security Act (42 U.S.C. 1395(h)(6) or
1396(w)(7)) and any entity organized and licensed as a risk-bearing
entity eligible to offer health insurance or health benefits coverage.
(6) Related trade, professional, or similar association means a
trade, professional, consumer, advocacy, or other organization,
association, society, or similar group that is significantly involved
in advancing the interests of persons or entities engaged in activities
related to or affected by the health, scientific, or health care
research conducted or funded by the NIH.
(7) Scientific peer review is the evaluation of scientific research
findings for competence, significance, and originality by qualified
experts who research and submit work for publication in the same field
and which provides systematized accountability for adherence to ethical
guidelines commonly accepted within the relevant research community for
disseminating scientific information.
(8) Substantially affected organization means:
(i) A biotechnology or pharmaceutical company; a medical device
manufacturer; or a corporation, partnership, or other enterprise or
entity significantly involved, directly or through subsidiaries, in the
research, development, or manufacture of biotechnological,
biostatistical, pharmaceutical, or medical devices, equipment,
preparations, treatments, or products;
(ii) Any organization a majority of whose members are described in
paragraph (b)(8)(i) of this section; and
(iii) Any other organization determined by the designated agency
ethics official or, in consultation with the designated agency ethics
official, by the NIH Director or the NIH Director's designee that is
substantially affected by the programs, policies, or operations of the
NIH.
(9) Supported research institution means any educational
institution or non-profit independent research institute that:
(i) Is, or within the last year has been, an applicant for or
recipient of an NIH grant, cooperative agreement, or research and
development contract;
(ii) Is, or within the last year has been, a proposer of or party
to a cooperative research and development agreement (CRADA) with the
NIH; or
(iii) Any organization a majority of whose members are described in
paragraphs (b)(9)(i) or (ii) of this section.
(10) Unrestricted educational grant means funds received by or
available to an educational activity provider from another source that
are granted without stipulated conditions for their use other than the
limitation that the funds shall be used to advance an educational
program of the grant recipient. For purposes of this section, an
educational grant shall not be considered unrestricted if the funding
source for a continuing professional education program directly or
indirectly:
(i) Selects or recommends the moderators, speakers, or presenters
at the sponsored event;
(ii) Independently provides additional funding to the moderators,
speakers, or presenters in connection with the educational activity;
(iii) Determines or recommends the audience composition;
(iv) Specifies or recommends the topics to be addressed, or
(v) Controls or recommends the planning, content, or implementation
of the program in a manner inconsistent with guidelines established by
a relevant professional association or accrediting organization that
are designed to ensure that such activities are accurate, balanced,
educational, free from commercial bias, nonpromotional, and independent
of the influence of the funding source.
(11) Unrestricted financial contribution means funds received by or
available to a publisher, academic press, editorial board, or other
entity affiliated with or operated by a supported research institution,
a health care provider or insurer, or a related trade, professional, or
similar association from another source that are provided without
stipulated conditions for their use other than the limitation that the
funds shall be used to advance peer-reviewed writing or editing by the
funds recipient. For purposes of this section, a financial contribution
shall not be considered unrestricted if the funding source for peer-
reviewed writing or editing directly or indirectly:
[[Page 5561]]
(i) Selects or recommends the author, reviewer, referee, or editor;
(ii) Independently provides additional funding to the author,
reviewer, referee, or editor in connection with the writing or editing
activity;
(iii) Determines or recommends the targeted audience of the writing
or editing activity;
(iv) Specifies or recommends the topics to be addressed, or
(v) Controls or recommends the planning, content, or distribution
of the written or edited product in a manner inconsistent with ethical
guidelines commonly accepted within the relevant research community for
disseminating scientific information which are designed to ensure that
such writing or editing is accurate, unbiased, nonpromotional,
transparent with respect to disclosure of potential conflicts, and
independent of the influence of the funding source.
(c) Prohibitions--(1) Prohibited outside activities with
substantially affected organizations, supported research institutions,
health care providers or insurers, and related trade, professional, or
similar associations. Except as permitted by paragraph (c)(3) of this
section, an employee of the NIH shall not:
(i) Engage in employment with a substantially affected
organization, a supported research institution, a health care provider
or insurer, or a related trade, professional, or similar association;
(ii) Teach, speak, write, or edit for compensation for any
substantially affected organization, supported research institution,
health care provider or insurer, or related trade, professional, or
similar association; or
(iii) Engage in any self-employed business activity that involves
the sale or promotion of products or services of a substantially
affected organization or a health care provider or insurer, except for
the purpose of commercializing invention rights obtained by the
employee pursuant to Executive Order 10096, 15 U.S.C. 3710d, or
implementing regulations.
(2) General exception. Nothing in paragraph (c)(1) of this section
prevents an employee from engaging in employment with, or teaching,
speaking, writing, or editing for, a political, religious, social,
fraternal, or recreational organization.
(3) Specific exceptions. Notwithstanding the prohibitions in
paragraph (c)(1) of this section:
(i) Teaching. An employee may engage in and accept compensation for
teaching a course requiring multiple presentations as permitted under 5
CFR 2635.807(a)(3).
(ii) Clinical, medical, or health-related professional practice. An
employee may engage in and accept compensation for the outside practice
of medicine, dentistry, pharmacy, nursing, or similar health-related
professional practice that involves the personal provision of care,
treatment, or other health-related professional services to or in
connection with individual patients, provided that:
(A) The provision of health-related professional services to such
individuals is not part of any ongoing research project conducted or
funded by the NIH;
(B) The employee does not establish a private practice relationship
with a current or recently discharged NIH patient or subject of an NIH-
conducted or NIH-funded clinical trial or protocol;
(C) The employee does not personally refer private practice
patients to the NIH; and
(D) The professional practice does not involve substantial
unrelated non-professional duties, such as personnel management,
contracting and purchasing responsibilities (other than ``out-of-
stock'' requisitioning), and does not involve employment by a medical
product manufacturer in the conduct of biomedical research.
(iii) Clerical or similar services. An employee may engage in and
accept compensation for employment that is limited to clerical or
similar services described in Sec. 5501.106(c)(3)(ii)(B).
(iv) Continuing professional education. An employee may engage in
and accept compensation for a teaching, speaking, writing, or editing
activity that is unrelated to the employee's official duties within the
meaning of 5 CFR 2635.807 if the activity is performed as part of a
continuing professional education program conducted by an educational
activity provider. If a substantially affected organization provides
financial support for a continuing professional education program
conducted by an educational activity provider, this exception is
inapplicable unless the substantially affected organization is involved
only as the funding source for an unrestricted educational grant.
(v) Authorship of writings subjected to scientific peer review or a
substantially equivalent editorial review process. An employee may
engage in and accept compensation for a writing or editing activity
that is unrelated to the employee's official duties within the meaning
of 5 CFR 2635.807 if the resulting article, chapter, essay, report,
text, or other writing is submitted to a publisher, academic press,
editorial board, or other entity affiliated with or operated by a
supported research institution, a health care provider or insurer, or a
related trade, professional, or similar association for publication in
a scientific journal, textbook, or similar publication that subjects
manuscripts to scientific peer review or a substantially equivalent
editorial review process. If a substantially affected organization
funds the publishing activities of a supported research institution, a
health care provider or insurer, or a related trade, professional, or
similar association, this exception is inapplicable unless the
substantially affected organization is involved only as an unrestricted
financial contributor and exercises no editorial control.
(4) Transitional grace period. Provided that the activity is not
otherwise prohibited by statute or Federal regulation, including 5 CFR
part 2635 and this part, and the employee has obtained prior written
approval for the outside activity in accordance with the procedures in
Sec. 5501.106(d), an employee may continue to engage in outside
activities that would otherwise be prohibited by paragraph (c)(1) of
this section for a period not to exceed 30 days from the effective date
of this rule. An employee may request additional time up to a maximum
of 90 days from the effective date of this rule if:
(i) The outside activity had been reviewed by the NIH Ethics
Advisory Committee (NEAC) and subsequently approved by the NIH deputy
ethics counselor (DEC) (or, for those activities not within the
jurisdiction of the NEAC, if the outside activity had been reviewed by
the employee's supervisor and subsequently approved by the DEC for the
employee's institute or center) during the period between January 1,
2004, and February 3, 2005, the effective date of this rule;
(ii) The employee submits a written request within 30 days of the
effective date of this rule seeking authorization to continue the
outside activity for such additional time as the employee requests (not
to exceed the maximum 90-day grace period authorized by this section);
(iii) The employee demonstrates that additional time is necessary
to allow the employee to conclude responsibly his outstanding
obligations;
(iv) The NEAC (or, for those activities not within the jurisdiction
of the NEAC, the employee's supervisor) finds that good cause exists
for permitting an extended grace period beyond the initial 30 days
authorized by this section and recommends to the NIH DEC (or the DEC
for the employee's institute or center) that an extension be granted;
and
[[Page 5562]]
(v) The NIH DEC, after consultation with the designated agency
ethics official or his designee (or, for those activities not within
the jurisdiction of the NEAC, the DEC for the employee's institute or
center, after consultation with the NIH DEC or his designee),
determines the length of the extension and grants the employee
additional time to comply with the outside activity prohibitions in
paragraph (c)(1) of this section.
(5) An employee who meets the criteria of paragraphs (c)(4)(i) and
(ii) of this section may continue to engage in the outside activity
pending the final resolution of the request, but in no event shall such
activity continue beyond the 90-day grace period. If the extension
request is denied, the employee shall cease the activity no later than
five days after the employee receives notice of the denial.
0
8. Add new Sec. 5501.110 to read as follows:
Sec. 5501.110 Prohibited financial interests applicable to employees
of the National Institutes of Health.
(a) Applicability. This section does not apply to special
Government employees or the spouse or minor children of a special
Government employee.
(b) Definitions. For purposes of this section:
(1) Confidential filer means an employee of the National Institutes
of Health who meets the criteria in 5 CFR 2634.904 and who has not been
excluded from the requirement of filing a confidential financial
disclosure report under the procedures in 5 CFR 2634.905.
(2) Public filer means an employee of the National Institutes of
Health who meets the criteria in 5 CFR 2634.202 and who has not been
excluded from the requirement of filing a public financial disclosure
report under the procedures in 5 CFR 2634.203.
(3) Substantially affected organization has the meaning set forth
in Sec. 5501.109(b)(8).
(4) Time of acquisition means the date on which the employee
actually acquired the financial interest or on which the financial
interest became imputed to the employee under 18 U.S.C. 208, whether by
purchase, gift, bequest, marriage, or otherwise, except that with
respect to a financial interest that was acquired prior to the
employee's entrance on duty as an employee of the National Institutes
of Health, the ``time of acquisition'' shall be deemed to be the date
on which the employee entered on duty. For assets held as of the
effective date of this section by employees on duty at the National
Institutes of Health at such time, the ``time of acquisition'' will be
deemed to be the effective date of this section.
(c) Prohibition applicable to public and confidential filers.
Except as permitted by paragraph (e) of this section, an employee of
the National Institutes of Health who is required to file a public or
confidential financial disclosure report pursuant to 5 CFR part 2634
and the spouse or minor child of such public or confidential filer
shall not have a financial interest in a substantially affected
organization.
(d) Prohibition applicable to non-filers and excluded positions.
Except as permitted by paragraph (e) of this section, an employee who
is not required to file a public or confidential financial disclosure
report pursuant to part 2634 of this title, or who is employed in a
confidential filing position excluded from the prohibited holdings
requirement pursuant to paragraph (f) of this section, or the spouse or
minor child of such employee, shall not have a financial interest in a
substantially affected organization unless:
(i) The total cost or value, measured at the time of acquisition,
of the combined interests of the employee and the employee's spouse and
minor children in the affected organization is equal to or less than
the de minimis exemption limit for matters involving parties
established by 5 CFR 2640.202(a) or $15,000, whichever is greater;
(ii) The holding, if it represents an equity interest, constitutes
less than 1 percent of the total outstanding equity of the
organization; and
(iii) The total holdings in substantially affected organizations
account for less than 50 percent of the total value of the combined
investment portfolios of the employee and the employee's spouse and
minor children.
(e) Exceptions for certain financial interests. Notwithstanding the
prohibitions in paragraphs (c) and (d) of this section:
(1) An employee or spouse or minor child of an employee may have a
financial interest, such as a pension or other employee benefit,
arising from employment with a substantially affected organization.
Note to paragraph (e)(1): NIH employees, as opposed to spouses
and minor children of employees, are generally prohibited under
Sec. 5501.109 from engaging in current employment with a
substantially affected organization.
(2) An employee or spouse or minor child of an employee may have an
interest in a substantially affected organization that constitutes any
interest in a publicly traded or publicly available investment fund
(e.g., a mutual fund), or a widely held pension or similar fund, which,
in the literature it distributes to prospective and current investors
or participants, does not indicate the objective or practice of
concentrating its investments in substantially affected organizations,
if the employee neither exercises control nor has the ability to
exercise control over the financial interests held in the fund.
(3) In cases involving exceptional circumstances, the NIH Director
or the NIH Director's designee, with the approval of the designated
agency ethics official or his designee, may grant a written exception
to permit an employee, or the spouse or minor child of an employee, to
hold a financial interest in a substantially affected organization
based upon a determination that the application of the prohibitions in
paragraphs (c) or (d) of this section is not necessary to ensure public
confidence in the impartiality or objectivity with which HHS programs
are administered or to avoid a violation of part 2635 of this title.
(4) An employee may have a financial interest in connection with
the development and commercialization of invention rights obtained by
the employee pursuant to Executive Order 10096, 15 U.S.C. 3710d, or
implementing regulations.
Note to paragraph (e): With respect to any excepted financial
interest, employees are reminded of their obligations under 5 CFR
part 2635, and specifically their obligation under subpart D to
disqualify themselves from participating in any particular matter in
which they, their spouses or minor children have a financial
interest arising from publicly traded securities that exceeds the de
minimis thresholds specified in the regulatory exemption at 5 CFR
2640.202 or from non-publicly traded securities that are not covered
by the regulatory exemption. Furthermore, the agency may prohibit or
restrict an individual employee from acquiring or holding any
financial interest or a class of financial interests based on the
agency's determination that the interest creates a substantial
conflict with the employee's duties, within the meaning of 5 CFR
2635.403.
(f) Exclusion of certain confidential filing positions from
prohibited holdings requirement. Any individual or class of individuals
described in paragraph (b)(1) of this section may be excluded from the
prohibited holdings requirement of paragraph (c) of this section when
the designated agency ethics official, in consultation with the
[[Page 5563]]
NIH Director or the NIH Director's designee, determines that:
(1) The duties of the position make remote the possibility that a
financial interest in a substantially affected organization would
constitute a disqualifying financial interest under 18 U.S.C. 208;
(2) The application of the prohibition in paragraph (c) of this
section is not necessary to ensure public confidence in the
impartiality or objectivity with which HHS programs are administered or
to avoid a violation of part 2635 of this title; and
(3) The individual or class of individuals does not occupy any
position described below:
(i) Any position in the Office of the Director that exercises
broad, agency-wide influence or authority over NIH policies, programs,
or operations;
(ii) Any position in the Office of the Director or in an NIH
institute or center (IC) that is specifically responsible for
negotiating agreements between NIH and any substantially affected
organization;
(iii) Any position involved in extramural funding decisions for
biomedical or behavioral research grants, contracts, or cooperative
agreements;
(iv) Any position the duties and responsibilities of which permit
the employee to exert broad influence over the direction of intramural
science; or
(v) Any position in which the employee is engaged in research that
involves a product or service of a substantially affected organization
or that is likely to have a direct and predictable effect on the
financial interests of a substantially affected organization.
(g) Reporting and divestiture. For purposes of determining the
divestiture period specified in 5 CFR 2635.403(d), as applied to
financial interests prohibited under paragraphs (c) and (d) of this
section, the ``date divestiture is first directed'' means the date on
which the new entrant public or confidential financial disclosure
report required by part 2634 of this title or any report required by
Sec. 5502.106(c) of this chapter is due.
0
9. Add new Sec. 5501.111 to read as follows:
Sec. 5501.111 Awards tendered to employees of the National Institutes
of Health.
(a) Applicability. This section does not apply to special
Government employees.
(b) Additional limitations on awards to employees of the National
Institutes of Health. The following limitations shall apply to the
acceptance by an employee of an award pursuant to 5 CFR 2635.204(d):
(1) Limitations applicable to senior employees.--(i) A senior
employee shall not accept a gift with an aggregate market value of more
than $200, or that is cash or an investment interest, that is an award
or incident to an award given because of the employee's official
position or from a prohibited source.
(ii) For purposes of this section, senior employee means the
Director and the Deputy Director of the National Institutes of Health;
members of the senior staff within the Office of the Director who
report directly to the NIH Director; the Director, the Deputy Director,
Scientific Director, and Clinical Director of each Institute and Center
within NIH; Extramural Program Officials who report directly to an
Institute or Center Director; and any employee of equivalent levels of
responsibility who is designated as a senior employee by the designated
agency ethics official or the NIH Director, in consultation with the
designated agency ethics official.
(2) Limitations applicable to employees with official
responsibility for matters affecting an award donor. An employee, other
than a senior employee, shall not accept a gift with an aggregate
market value of more than $200, or that is cash or an investment
interest, that is an award or incident to an award from a person,
organization, or other donor that:
(i) Is seeking official action from the employee, any subordinate
of the employee, or any agency component or subcomponent under the
employee's official responsibility;
(ii) Does business or seeks to do business with any agency
component or subcomponent under the employee's official responsibility;
(iii) Conducts activities substantially affected by the programs,
policies, or operations of any agency component or subcomponent under
the employee's official responsibility; or
(iv) Is an organization a majority of whose members are described
in paragraphs (b)(2)(i) through (iii) of this section.
(3) Prior approval of awards.--(i) No employee shall accept an
award under 5 CFR 2635.204(d) or this section unless the receipt
thereof has been approved in writing in advance in accordance with
procedures specified by the designated agency ethics official, or with
the concurrence of the designated agency ethics official, the NIH
Director or the NIH Director's designee.
(ii) Approval shall be granted only upon a determination that
acceptance of the award is not prohibited by statute or Federal
regulation, including 5 CFR part 2635 and this part.
Note to paragraph (b): In some circumstances cash and other
things of value provided in connection with the provision of
personal services, including speaking or writing, may be
compensation, not a gift. Other ethics rules governing outside
activities may restrict receipt of such compensation. See, for
example, 5 CFR 2635.807.
(c) Exception. Notwithstanding the prohibition in paragraph (b) of
this section, the NIH Director (or the Secretary, with respect to
awards tendered to the NIH Director), with the approval of the
designated agency ethics official, may grant a written exception to
permit an employee to accept an award otherwise prohibited by this
section under the following conditions:
(1) There is a determination by the NIH Director (or the Secretary,
with respect to awards tendered to the NIH Director) that acceptance of
the gift will further an agency interest because it confers an
exceptionally high honor in the fields of medicine or scientific
research. The following criteria will be considered in making such a
determination:
(i) The identity of the awarding organization;
(ii) The longevity of the awards program;
(iii) The source of award funds;
(iv) The size of the monetary component of the award recognition;
(v) The identity and credentials of past award recipients;
(vi) The degree of publicity attendant to receipt of the award; and
(vii) The impact of the substantive contribution being recognized;
(2) Absent the prohibition in paragraph (b) of this section, the
gift would be permitted under part 2635 of this title; and
(3) The designated agency ethics official shall have determined
that the application of the prohibition in paragraph (b) of this
section is not necessary to ensure public confidence in the
impartiality or objectivity with which NIH programs are administered or
to avoid a violation of part 2635 of this title.
(d) Disposition of improperly accepted awards--(1) Failure to
obtain prior approval. If an employee accepts an award for which
approval is required under paragraph (b)(3) of this section without
obtaining such approval, the employee may be required, in addition to
any penalty provided by law and applicable regulations, to forfeit the
award by returning it to the donor.
(2) Receipt of prohibited award. If an employee accepts an award
prohibited
[[Page 5564]]
by paragraph (b) of this section, the employee shall be required, in
addition to any penalty provided by law and applicable regulations, to:
(i) Reject the award and instruct the donor to strike the honoree's
name from any list of award recipients;
(ii) Remove the recognition from the employee's
r[eacute]sum[eacute] or curriculum vitae;
(iii) Return any tangible indicia of the recognition to the donor;
and
(iv) Forfeit the award by returning it to the donor.
0
10. Add new Sec. 5501.112 to read as follows:
Sec. 5501.112 One-year disqualification of employees of the National
Institutes of Health from certain matters involving an award donor.
An employee, other than a special Government employee, of the
National Institutes of Health who has, within the last year, accepted
an award permitted under 5 CFR 2635.204(d) or Sec. 5501.111 shall not
participate in any particular matter involving specific parties in
which the donor is or represents a party unless authorized to do so
under 5 CFR 2635.502(d).
PART 5502--SUPPLEMENTAL FINANCIAL DISCLOSURE REQUIREMENTS FOR
EMPLOYEES OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
0
11. Add new part 5502 to read as follows:
PART 5502--SUPPLEMENTAL FINANCIAL DISCLOSURE REQUIREMENTS FOR
EMPLOYEES OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES
Sec.
5502.101 General.
5502.102 Annual supplemental report of outside employment or
activities.
5502.103 Content of annual supplemental reports.
5502.104 Confidentiality of reports.
5502.105 Agency procedures.
5502.106 Supplemental disclosure of prohibited financial interests
applicable to employees of the Food and Drug Administration and the
National Institutes of Health.
Authority: 5 U.S.C. 301, 7301; 5 U.S.C. App. (Ethics in
Government Act of 1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp.,
p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp.,
p. 306; 5 CFR 2634.103.
Sec. 5502.101 General.
The regulations in this part apply to employees of the Department
of Health and Human Services and supplement the Executive Branch
Financial Disclosure Regulations in 5 CFR part 2634. Any regulation in
this part made applicable only to the employees of an HHS component
designated as a separate agency under Sec. 5501.102(a) of this chapter
shall apply to the employees of that component as defined in Sec.
5501.102(b)(1) of this chapter.
Sec. 5502.102 Annual supplemental report of outside employment or
activities.
Any employee, other than a special Government employee, for whom an
outside employment or activity has been approved, or who has
participated in any outside employment or activity for which prior
approval is required, under part 5501 of this chapter shall file on or
before February 28 of each year a report concerning all such activities
that were approved or undertaken in the previous calendar year. The
annual report shall be filed with the employee's supervisor who shall
review the form, in consultation with an agency ethics official, and
determine whether the employee has complied with applicable laws and
regulations and whether approval of any ongoing outside activity should
be cancelled because the activity does not meet the standard in Sec.
5501.106(d)(4) of this chapter.
Sec. 5502.103 Content of annual supplemental reports.
The annual supplemental report of outside employment or activities
required by Sec. 5502.102 shall include the following information:
(a) The employee's name, contact information, organizational
location, occupational title, grade, step, salary, appointment type,
and financial disclosure filing status;
(b) A list of all outside activities for which prior approval is
required under part 5501 of this chapter that were approved pursuant to
5 CFR 5501.106(d) or undertaken within the reporting period. The report
must identify the person or organization for whom or with which the
employee was to perform the activity and the approval date;
(c) A statement as to whether the anticipated work described in a
previously approved outside activity was actually performed for the
person or organization named in the request for approval;
(d) For each outside activity actually performed, the beginning
date of the relationship with the outside entity, the date(s) personal
services were provided, the total number of hours spent and leave used
on the activity within the reporting period, and the ending date;
(e) For each outside activity that remains ongoing at the time of
filing the report, a statement as to how long the activity is
anticipated to continue, the date on which prior approval expires, and
whether a request for renewal of approval is anticipated;
(f) For each outside activity actually performed, the type and
amount of any income and/or reimbursements actually received during the
reporting period and the date paid;
(g) For each outside activity actually performed, the type and
amount of any income and/or reimbursements earned during or
attributable to the reporting period that were not in fact received
during the reporting period and remain due;
(h) A statement as to whether any change has occurred or is
anticipated with respect to information supplied in the original
outside activity approval request;
(i) A description of any change in the nature, scope, or subject
matter of any approved activity; and
(j) A description of any change in jobs or in the duties and
responsibilities of the employee's position that occurred after the
outside activity was approved.
Sec. 5502.104 Confidentiality of reports.
Each report filed under this part is confidential and shall not be
disclosed to the public, except as provided under Sec. 2634.604(b) of
this title.
Sec. 5502.105 Agency procedures.
The designated agency ethics official or, with the concurrence of
the designated agency ethics official, each of the separate agency
components of HHS listed in Sec. 5501.102(a) of this chapter may
prescribe procedures for the submission and review of each report filed
under this part. These procedures may provide for filing extensions,
for good cause shown, totaling not more than 90 days.
Sec. 5502.106 Supplemental disclosure of prohibited financial
interests applicable to employees of the Food and Drug Administration
and the National Institutes of Health.
(a) Applicability. This section does not apply to special
Government employees.
(b) Definitions. For purposes of this section:
(1) Confidential filer means an employee who meets the criteria in
5 CFR 2634.904 and who has not been excluded from the requirement of
filing a confidential financial disclosure report under the procedures
in 5 CFR 2634.905.
(2) Prohibited financial interest means a financial interest
prohibited by Sec. 5501.104(a) or Sec. Sec. 5501.110(c) and (d) of
this chapter for FDA or NIH employees respectively, including those
financial interests that are excepted
[[Page 5565]]
under Sec. Sec. 5501.104(b) or 5501.110(e) or permitted under
paragraphs (d)(i) through (d)(iii) of Sec. 5501.110 of this chapter.
(3) Public filer means an employee who meets the criteria in 5 CFR
2634.202 and who has not been excluded from the requirement of filing a
public financial disclosure report under the procedures in 5 CFR
2634.203.
(4) Remainder of HHS has the meaning set forth in Sec.
5501.102(b)(2) of this chapter.
(5) Separate agency component has the meaning set forth in Sec.
5501.102(a) of this chapter.
(c) Report of prohibited financial interests.--(1) New entrant
employees. A new entrant employee, other than a public filer or a
confidential filer, shall report in writing within 30 days after
entering on duty with the FDA or the NIH any prohibited financial
interest held upon commencement of employment with the agency.
(2) Reassigned employees. An employee of a separate agency
component, other than the FDA or the NIH, or of the remainder of HHS
who is reassigned to a position at the FDA or the NIH shall report in
writing within 30 days of entering on duty with the FDA or the NIH any
prohibited financial interest held on the effective date of the
reassignment to the agency.
(3) Incumbent employees. An incumbent employee of the FDA or the
NIH who acquires any prohibited financial interest shall report such
interest in writing within 30 days after acquiring the financial
interest. An employee on duty at the NIH who is subject to Sec.
5501.110(c) of this chapter as of February 3, 2005, the effective date
of this rule, shall report in writing within 60 days after the
effective date any prohibited financial interest held on the effective
date.
[FR Doc. 05-2029 Filed 2-1-05; 2:00 pm]
BILLING CODE 4150-03-P