[Federal Register Volume 74, Number 224 (Monday, November 23, 2009)]
[Proposed Rules]
[Pages 61096-61100]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28127]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 89

RIN 0991-AB60


Organizational Integrity of Entities Implementing Leadership Act 
Programs and Activities

AGENCY: U.S. Department of Health and Human Services.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Health and Human Services (HHS) is issuing 
this Notice of Proposed Rulemaking (NPRM) to obtain input from 
stakeholders and other interested parties. This is a proposal to amend 
the rule governing the separation that must exist between a recipient 
of HHS funds to implement HIV/AIDS programs and activities under the 
United States Leadership Against HIV/AIDS, Tuberculosis and Malaria Act 
of 2003 and an affiliate organization that engages in activities that 
are not consistent with a policy opposing prostitution and sex 
trafficking. The proposed rule relaxes the criteria for recipient--
affiliate separation, and simplifies the process for compliance with 
the statutory requirement that recipients of HHS Leadership Act HIV/
AIDS funds have a policy explicitly opposing prostitution and sex

[[Page 61097]]

trafficking. This proposal eliminates the requirement that recipients 
prepare and file additional documentation specifically to demonstrate 
adherence to this policy. The documentation will instead consist of a 
statement in the awarding document to which the prime recipient must 
agree in order to receive Leadership Act HIV/AIDS funds.

DATES: To be assured consideration, submit electronic comments on or 
before December 23, 2009 via the Internet at http://www.regulations.gov.

ADDRESSES: You may submit comments, identified by RIN 0991-AB60, 
through the Federal eRulemaking Portal: http://www.regulations.gov.
    Instructions: For detailed information on submitting comments and 
additional information on the rulemaking process, visit http://www.regulations.gov. All submissions must include the agency name and 
docket number or Regulatory Information Number (RIN) for this 
rulemaking. All comments received will be posted to http://www.regulations.gov, including any personal information provided.

FOR FURTHER INFORMATION CONTACT: Diana Perez-Rivera or Natarsha Wright, 
Office of Global Health Affairs, Hubert H. Humphrey Building, Room 
639H, 200 Independence Avenue, SW., Washington, DC 20201, Tel: 202-690-
6174, E-mail: [email protected].

SUPPLEMENTARY INFORMATION: The Preamble to this NPRM is organized as 
follows:

I. Public Participation
II. Summary
III. Background
IV. Discussion of the Proposed Rule
V. Impact Analysis

I. Public Participation

    Comments will be available for public inspection at http://www.regulations.gov.
    Electronic Access: You can download an electronic version of the 
NPRM at http://www.regulations.gov. HHS/OGHA has also posted the NPRM 
and related materials to its Web site at the following Internet 
address: http://www.globalhealth.gov/.

II. Summary

Statutory Authority

    This proposal would amend the ``Regulation on the Organizational 
Integrity of Entities That Are Implementing Programs and Activities 
Under the Leadership Act,'' 73 FR 78997 (Dec. 24, 2008), which 
implements subsection 7631(f) of the United States Leadership Against 
HIV/AIDS, Tuberculosis and Malaria Act (``Leadership Act''), Public Law 
108-25 (May 27, 2003), as amended, 22 U.S.C. 7631(f).

III. Background

    Congress enacted the United States Leadership Against HIV/AIDS, 
Tuberculosis and Malaria Act of 2003, 22 U.S.C. Sec. Sec.  7601-7682, 
(``Leadership Act'') in May 2003. The Leadership Act contains 
limitations on the use of funds provided to carry out HIV/AIDS 
activities under the Act (``Leadership Act HIV/AIDS funds''). 
Subsection 7631(f) prohibits the use of Leadership Act HIV/AIDS funds 
``to provide assistance to any group or organization that does not have 
a policy explicitly opposing prostitution and sex trafficking.'' 
(Subsection 7631(f) of the Leadership Act was amended in 2004 to exempt 
certain public international organizations. Consolidated Appropriations 
Act of 2004 and 2005, Division D--Foreign Operations, Export Financing, 
and Related Programs Appropriations (``FY 04 and FY 05 Appropriations 
Act''), Title II--Bilateral Economic Assistance, United States Agency 
for International Development, Child Survival Health Programs Fund. 
Reauthorization of the Leadership Act in 2008 did not amend Subsection 
7631(f)). Tom Lantos and Henry J. Hyde United States Global Leadership 
Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 
2008, Public Law 110-293 (July 30, 2008).
    During legislative debate on the Leadership Act, in response to a 
question from Senator Leahy on the Senate floor regarding subsection 
7631(f), Senator Frist stated that ``a statement in the contract or 
grant agreement between the U.S. Government and such organization that 
the organization is opposed to the practices of prostitution and sex 
trafficking because of the psychological and physical risks they pose 
for women * * * would satisfy the intent of the provision.'' 149 Cong. 
Rec. S6457 (daily ed. May 15, 2003) (statement of Sen. Frist).
    By December, 2003, HHS had begun including a requirement in all of 
its grant and cooperative agreement funding announcements that required 
all recipients under the Leadership Act of HIV/AIDS funds to have a 
policy explicitly opposing prostitution and sex trafficking. In March, 
2004, HHS exempted domestic U.S. recipients from this restriction, but 
withdrew the exemption in May, 2005. On July 23, 2007, HHS published 
sub-regulatory ``Organizational Integrity Guidance'' in the Federal 
Register to clarify the scope of the policy requirement by stating that 
Leadership Act HIV/AIDS funding recipients may have affiliates that do 
not have a policy against prostitution and sex trafficking. HHS 
followed the issuance of this guidance with a notice of proposed 
rulemaking (NPRM) on April 17, 2008, 73 FR 29096, which initiated the 
notice-and-comment rulemaking process. The final rule was published on 
December 24, 2008, 73 FR 78997, corrected on January 16, 2009, 74 FR 
2888 (codified at 45 CFR part 89), and took effect on January 20, 2009. 
The final rule established the legal, financial, and organizational 
standards for determining whether a funding recipient had objective 
integrity and independence from an affiliated organization that engaged 
in activities inconsistent with a policy opposing prostitution and sex 
trafficking. The final rule also required all Leadership Act HIV/AIDS 
funding recipients, including sub-recipients, to certify compliance 
with the rule.
    The proposed amendment to the present rule modifies the criteria 
for evaluating the separation between recipients and affiliated 
organizations, while complying with the statutory requirement regarding 
opposition to prostitution and sex trafficking. It is important to 
implementation of the Leadership Act that recipients of Leadership Act 
funds to implement HIV/AIDS programs and activities not confuse the 
U.S. Government's message opposing prostitution and sex trafficking by 
undertaking activities or advocating positions that conflict with this 
policy. However, HHS has determined after further study that the 
objectives of the Leadership Act can be effectuated through the 
application of standards that are less burdensome for funding 
recipients than the standards set out in the present rule.
    HHS is working in coordination with USAID to ensure consistent 
administration of these programs for recipients and subrecipients.
    Nothing in the proposed amendment is intended to lessen or relieve 
relevant prohibitions on Federal Government funding under other 
applicable Federal laws.

IV. Discussion of the Proposed Rule

    These sections discuss the proposed amendment to the rule, 
including changes to the regulatory separation requirements and 
deletion of the requirement for certification.

Section 89.2 Organizational Integrity of Recipients

    This section of the proposed rule describes the separation that 
must exist between a recipient of HHS funds to

[[Page 61098]]

implement HIV/AIDS programs and activities under the Leadership Act and 
an affiliated organization that engages in activities inconsistent with 
a policy opposing prostitution and sex trafficking. Proposed amendments 
to the criteria for evaluating separation are discussed in greater 
detail below. As amended, this section would also provide that 
recipients will no longer be required to submit separate documentation 
certifying that they have a policy explicitly opposing prostitution. 
Rather, the policy requirement will be included in the notices of 
availability of funds and similar announcements, and acknowledged by 
recipients in the documents awarding the funds.
    Paragraph (a) states the policy to which recipients must adhere 
under subsection 7631(f), and identifies the criteria that will be used 
to evaluate the organizational integrity and independence of the 
recipient from affiliated organizations. Under the amendment, the 
recipient would agree that it is opposed to the practices of 
prostitution and sex trafficking because of the psychological and 
physical risks they pose for women, men and children. With respect to 
criteria, the paragraph retains the prohibition against affiliated 
organizations that do not satisfy subsection (f)'s requirement of 
opposing prostitution and sex trafficking from receiving Leadership Act 
HIV/AIDS funds. The paragraph continues to prohibit the use of 
Leadership Act HIV/AIDS funds to subsidize activities inconsistent with 
a policy opposing prostitution and sex trafficking. However, paragraph 
(a) would no longer mandate that the affiliate must be ``a legally 
separate entity,'' but would instead provide that the legal status of 
the affiliate is one of the factors to be considered in deciding 
whether there is adequate separation between the recipient and the 
affiliate. This change recognizes the reported burden on recipients 
operating overseas in satisfying this criterion in certain cases, and 
the difficulty inherent in HHS's analyzing foreign legal requirements. 
A similar change would be made to the factor suggesting evaluation of 
``[t]he existence of separate personnel, management, and governance.'' 
The proposal now refers to ``[t]he existence of separate personnel or 
other allocation of personnel that maintains adequate separation 
between the recipient and affiliate.'' Again, this proposed change 
reflects reported difficulties in meeting a requirement for fully 
separate personnel in some situations. The proposed rule also deletes 
the requirement for consideration of separate ``management'' and 
``governance'' and for separate ``accounts'' because those elements of 
the relationship are not necessary to maintain sufficient separation 
between recipients and affiliated organizations to prevent confusion of 
the Government's message opposing prostitution and sex trafficking. 
Other factors have been simplified and relaxed. Moreover, a further and 
very significant change to paragraph (a) provides that recipients must 
meet the criteria for separation ``to the extent practicable in the 
circumstances,'' which will permit practical factors to be taken into 
account in a specific case. In sum, these changes to paragraph (a) are 
intended to allow a recipient to maintain a relationship with an 
affiliated organization that may engage in restricted activities, 
without jeopardizing the recipient's eligibility for HIV/AIDS funding 
under the Leadership Act.
    Paragraph (b) requires HHS agencies to include in funding notices 
and award instruments a statement that recipients of Leadership Act 
HIV/AIDS funds from HHS agree that they are opposed to the practices of 
prostitution and sex trafficking because of the psychological and 
physical risks they pose for women, men, and children. By entering into 
the award agreement and accepting Leadership Act HIV/AIDS funds, 
recipients acknowledge this opposition, but are relieved from the 
necessity of preparing and submitting additional documentation.
    Paragraph (c) recognizes the statutory exemption for the Global 
Fund to Fight AIDS, Tuberculosis and Malaria, the World Health 
Organization, the International AIDS Vaccine Initiative and any United 
Nations Agency from subsection 7631(f), and is not affected by this 
amendment.

Section 89.3 Certifications

    This proposed amendment to the rule deletes this section requiring 
separate documents certifying compliance with the Leadership Act 
because the materials described in subsection 89.2(b) will provide the 
necessary assurances.

V. Impact Analysis

Paperwork Reduction Act

    To obtain or retain Leadership Act HIV/AIDS funding, under the 
December 24, 2008 final rule, HHS required recipients to submit 
certifications attesting to their non-involvement in activities 
supporting prostitution and human trafficking and policies to that 
effect. The title of the information collection was ``Certification 
Regarding the Organizational Integrity of Entities Implementing 
Leadership Act Programs and Activities.''
    HHS estimated that 555 respondents had to prepare documents to 
validate that recipients had objective integrity and independence from 
organizations that engage in activities inconsistent with policies 
opposing prostitution and sex trafficking. HHS also estimates that the 
average cost per hour will be $26.44, with a 0.5 hour estimated time 
burden per response. In total, the estimated burden cost is 
approximately $7337.10.
    This proposed rule removes the certification requirements of the 
December 24, 2008 rule. As a result, the burden estimate of 0.5 hours 
per applicant for Leadership Act HIV/AIDS funds is removed along with 
the associated costs.

Executive Order 12866--Regulatory Planning and Review

    HHS has drafted and reviewed this regulation in accordance with 
Executive Order 12866, section (b), Principles of regulation. HHS has 
determined this rule is a ``significant regulatory action'' under 
Executive Order 12866, section 3(f)(4), because it raises novel legal 
or policy issues that arise out of legal mandates and the President's 
priorities, and accordingly, the Office of Management and Budget has 
reviewed it.
    As explained above, this rule modifies a previously issued final 
rule on the same subject, published on December 24, 2008 in the Federal 
Register (P. 78997 to 79002). As explained earlier in this notice, the 
modification does not change policy, but reduces burden in complying 
with the established policy. Policy under the Leadership Act has been 
consistent and clear: The U.S government is opposed to prostitution and 
sex trafficking. Contractors and subcontractors cannot use Leadership 
Act HIV/AIDS funds to carry out activities that call into question the 
anti-trafficking/anti-prostitution policy. Enforcement of this policy 
was originally through language inserted in awards at the time they 
were executed. The December 24, 2008 final rule required further 
statements and formal documentation from recipients before they could 
receive Leadership Act HIV/AIDS funds. The Impact Analysis and the 
Paperwork Reduction Act in the December 24, 2008 final rule estimated 
the burden and cost of writing the additional documentation. This rule 
no longer requires this additional documentation. It reestablishes the 
earlier requirement contained in the funding agreement prohibiting 
activities

[[Page 61099]]

and policies that support prostitution and sex trafficking in human 
beings. As a result, applicants for Leadership Act HIV/AIDS funds will 
no longer have to incur the costs outlined in the December 24, 2008 
impact analysis and paperwork burden analysis.
    The benefits of this rule are the reduction in burden and the 
possible encouragement of additional applicants because of the burden 
reduction.
    The costs of the rule are minimal as there are no changes in policy 
and we have determined that the methods of achieving compliance prior 
to December 24, 2008 are fully compatible with the purposes of the Act.
    We are republishing the impact table from the December 24, 2008 
final rule. The burden estimate was $7337 calculated by assuming an 
additional half hour of clerical work to prepare documentation on 
behalf of 555 grantees at an hourly rate of $26.44.

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                                                                        Number of      Average burden
                    Instrument                         Number of      responses per      hours per       Average cost     Total burden     Total burden
                                                      respondents       respondent        response         per hour          hours             cost
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Certifications....................................             555                1              0.5           $26.44            277.5           $7,337
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Regulatory Flexibility Act

    The Secretary certifies under 5 U.S.C. 605(b), as enacted by the 
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not 
result in a significant impact on a substantial number of small 
entities. Since enactment of the policy requirement in the Leadership 
Act, HHS has required its contract solicitations and grant 
announcements for Leadership Act HIV/AIDS funding to include a section 
regarding ``Prostitution and Related Activities'' Furthermore, the 
proposed rule proposes to remove the requirements for certification 
that were imposed on recipients in the December 24, 2008 final rule.

Executive Order 13132--Federalism

    Executive Order 13132 on Federalism requires Federal Departments 
and agencies to consult with State and local Government officials in 
the development of regulatory policies with implications for 
Federalism. This rule does not have Federalism implications for State 
or local Governments, as defined in the Executive Order.

Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that a covered Federal Department or agency prepare a cost-benefit 
analysis before promulgating a rule that includes any Federal mandate 
that could result in the expenditure by State, local, and tribal 
Governments, in the aggregate, or by the private sector, of $100 
million or more in any one year adjusted for inflation. The current 
threshold for preparing a cost-benefit analysis is $133 million. HHS 
has determined that this rule would not impose a mandate that will 
result in the expenditure by State, local, and Tribal Governments, in 
the aggregate, or by the private sector, of more than $133 million in 
any one year.

Assessment of Federal Regulation and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires Federal Departments and agencies to determine 
whether a final policy or regulation could affect family well-being. If 
the determination is affirmative, then the Department or agency must 
prepare an impact assessment to address criteria specified in the law. 
This rule will not have an impact on family well-being, as defined in 
this legislation.

List of Subjects in 45 CFR Part 89

    Administrative practice and procedure, Federal aid programs, Grant 
programs, Grants administration.

    For the reasons stated in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR Part 89 as follows:

PART 89--ORGANIZATIONAL INTEGRITY OF ENTITIES IMPLEMENTING PROGRAMS 
AND ACTIVITIES UNDER THE LEADERSHIP ACT.

    1. The authority citation for part 89 continues to read as follows:

    Authority:  22 U.S.C. 7631(f) and 5 U.S.C. 301.

    2. Revise Sec.  89.2 to read as follows:


Sec.  89.2  Organizational integrity of recipients.

    (a) A recipient must have objective integrity and independence from 
any affiliated organization that engages in activities inconsistent 
with the recipient's opposition to the practices of prostitution and 
sex trafficking because of the psychological and physical risks they 
pose for women, men, and children (``restricted activities''). A 
recipient will be found to have objective integrity and independence 
from such an organization if:
    (1) The organization receives no transfer of Leadership Act HIV/
AIDS funds, and Leadership Act HIV/AIDS funds do not subsidize 
restricted activities; and
    (2) The recipient is, to the extent practicable in the 
circumstances, legally, physically, and financially separate from the 
affiliated organization. Mere bookkeeping separation of Leadership Act 
HIV/AIDS funds from other funds is not sufficient. HHS will determine, 
on a case-by-case basis and based on the totality of the facts, whether 
sufficient legal, physical, and financial separation exists. The 
presence or absence of any one or more factors will not be 
determinative. Factors relevant to this determination shall include, 
but will not be limited to, the following:
    (i) Whether the organization is a legally separate entity;
    (ii) The existence of separate personnel or other allocation of 
personnel that maintains adequate separation of the activities of the 
affiliated organization from the recipient;
    (iii) The existence of separate accounting and timekeeping records;
    (iv) The degree of separation of the recipient's facilities from 
facilities in which restricted activities occur, and the extent of such 
restricted activities by the affiliated organization; and
    (v) The extent to which signs and other forms of identification 
that distinguish the recipient from the affiliated organization are 
present.
    (b) HHS agencies shall include in the public announcement of the 
availability of the grant, cooperative agreement, contract, or other 
funding instrument involving Leadership Act HIV/AIDS funds the 
requirement that recipients agree that they are opposed to the 
practices of prostitution and sex trafficking because of the 
psychological and physical risks they pose for women, men, and 
children. This statement shall also be included in the award documents 
for any grant, cooperative agreement or other funding instrument

[[Page 61100]]

involving Leadership Act HIV/AIDS funds entered into with the 
recipient.
    (c) This regulation applies to all recipients, including prime 
recipients and sub-recipients, unless they are exempted from the policy 
by statute.


Sec.  89.3  [Removed]

    3. Remove Sec.  89.3.

    Dated: October 29, 2009.
John Monahan,
Interim Director, Office of Global Health Affairs.
    Dated: October 29, 2009.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. E9-28127 Filed 11-19-09; 4:15 pm]
BILLING CODE P