[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Notices]
[Pages 34839-34841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16974]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
National Science Foundation
Frequently Asked Questions Concerning the Department of Health
and Human Services Objectivity in Research Regulations and the National
Science Foundation Investigator Financial Disclosure Policy
AGENCIES: Public Health Service, and Office of the Secretary, HHS;
National Science Foundation.
ACTION: Responses to questions.
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SUMMARY: This document responds to frequently asked questions regarding
PHS' and NSF's recently-issued rules on investigator conflicts of
interest. This guidance document is intended to help institutions
implement conflict of interest policies that comply with both PHS and
NSF requirements.
FOR FURTHER INFORMATION CONTACT: For PHS: Geoffrey Grant, Acting
Director, Office of Policy for Extramural Research Administration,
National Institutes of Health, Room 2192, 6701 Rockledge Drive, MSC
7730, Bethesda MD 20817, (301) 435-0949. For NSF: Christopher L.
Ashley, Assistant General Counsel, National Science Foundation, 4201
Wilson Boulevard, Room 1265, Arlington, VA 22230, (703) 306-1060.
SUPPLEMENTARY INFORMATION: On July 11, 1995, the Public Health Service
(PHS) and the Office of the Secretary of the Department of Health and
Human Services (HHS) and the National Science Foundation (NSF) issued
rules regarding investigator conflict of interest. As explained in the
preambles to those rules, PHS and NSF have been working together to
ensure that the rules impose consistent obligations on institutions
receiving PHS and NSF funding. To that end, PHS and NSF announced that
the agencies would be developing a set of questions and answers (Q&As)
to help institutions implement conflict of interest policies that
comply with both PHS and NSF requirements. This set of Q&As provides
answers to frequently asked questions received by both agencies. Where
there are minor differences between the PHS and NSF rules, they are
clearly noted.
Q1: Does NSF or PHS have a suggested format for investigator
disclosures?
A1: No. The rules are designed to defer to the expertise of grantee
institutions in developing policies and supporting documentation.
Q2: May an institution have different conflict of interest policies
that vary among departments or professional schools?
A2: Yes, as long as all policies meet the minimum requirements of
the NSF and PHS rules.
Q3: Which offices within an institution should be involved in
administering the conflict of interest rules?
A3: An institution is free to administer its policy through
whatever office or structure it wishes, as long as the policy reaches
all investigators on NSF- and PHS-funded projects and the requirements
of the PHS and NSF rules are met.
Q4: Must institutions routinely require financial disclosures from
graduate students working on NSF- or PHS-sponsored research?
A4: The term ``investigator'' is defined to encompass individuals
``responsible for the design, conduct or reporting'' of NSF- or PHS-
funded research. It is up to the institution to decide whether graduate
student co-authors are ``responsible for reporting'' the research.
Q5: Will a proposal be processed if it does not contain the new
certification required by the NSF and PHS rules?
A5: NSF will not process a proposal in the absence of the new
certification, but in most cases the institution will not be required
to re-submit the entire proposal. An addendum page to the Cover Sheet
to the National Science Foundation (NSF Form 1207) has been developed
that contains the required certification. The NSF administrative
officer typically will forward a new certification page to the
institution, and will process the proposal upon receipt of a completed
and executed new page. The PHS would process the application without
the proper certification but no award would be made until the awarding
component received the certification in the form of a signed, revised
application face page.
Q6: Do the PHS and NSF conflict of interest rules apply to all
researchers and faculty members at institutions that receive NSF or PHS
support?
A6. No. The NSF policy applies only to grantee institutions that
employ more than fifty persons and the PHS rule exempts Small Business
Innovation Research (SBIR) and Small Business Technology Transfer
(STTR) Phase I applications. In those institutions subject to the NSF
policy and/or the PHS rule, only persons involved in PHS- or NSF-funded
research are subject to the rules. However, institutions may choose to
cover other researchers or faculty members under their policies for
institution-specific reasons.
[[Page 34840]]
Q7: Do the PHS or NSF rules apply to subgrantees of PHS or NSF
grantees?
A7: Consistent with current regulations and policies, the PHS rule
applies to subgrants; the NSF Policy does not. Accordingly,
institutions conducting PHS-funded research through subgrantees,
contractors, or collaborators must take reasonable steps to ensure that
investigators working for such entities comply with the regulations (42
C.F.R. Sec. 50.604(a)) either by requiring the investigators to comply
with the grantee institution's policy or by requiring the entities to
provide appropriate assurances to the grantee institution. An
institution conducting NSF-funded research through subgrantees must
certify that the institution itself has in place a written, enforced
policy on investigator conflicts of interest, but is not required to
ensure that subgrantees comply with the NSF Policy. However, the Policy
may apply to a subgrantee employing investigators who collaborate on
NSF-sponsored research (see Q&A 14).
Q8: Do the NSF or PHS rules apply to post-doctoral fellowships?
A8: Not in most cases. The NSF policy applies only to grantee
institutions that employ more than 50 persons and therefore would not
apply to post-doctoral fellowships awarded to individuals. The PHS rule
applies to PHS-funded research and to any person who is responsible for
the design, conduct or reporting of research funded by the PHS. Thus,
if a post-doctoral fellow served in such a capacity in PHS-funded
research he or she would be subject to the rule. The PHS rule would
apply to a postdoctoral fellowship application to the PHS only if the
funding would be used for research and the fellow served in one of the
research capacities described above.
Q9: Are investigators required to disclose interests in mutual
funds?
A9: An interest in a pooled fund such as a diversified mutual fund
may be sufficiently remote that it would not reasonably be expected to
create a conflict of interest for a NSF- or PHS-funded investigator.
For example, an investigator may own an interest in a diversified
mutual fund which has assets placed in many securities. It is possible
that certain of the securities held by the mutual fund were issued by
an entity whose interests would reasonably appear to be affected by
activities proposed for funding by NSF or PHS. However, because it is
likely that an investigator's interest in a mutual fund is only a small
portion of the fund's total assets and because only a limited portion
of the fund's assets are placed in the securities of a single issuer,
it is unlikely that an investigator's activities on an NSF or PHS award
would affect his or her interest in the mutual fund. Institutions
therefore may determine that certain interests in a diversified mutual
fund could never directly and significantly affect the design, conduct
or reporting of PHS- or NSF-funded research and exempt such interests
from disclosure by the investigator on that basis.
The federal government's Office of Government Ethics has detailed
regulations regarding the treatment of diversified mutual funds under
the government's conflict of interest rules. 5 C.F.R. Sec. 2634.310(c);
see also 60 Fed. Reg. 47,208 (Sept. 11, 1995) (proposed rule).
Institutions may consult these regulations for guidance on how they
might wish to treat interests in mutual funds under their policies.
Q10: Are investigators required to disclose interests in ``blind
trusts''?
A10: Institutions may determine that the research will not be
affected by qualified blind trust assets not known to the investigator
that are managed by an independent fiduciary. Because such assets would
not be known to an investigator, they could not directly and
significantly affect the design, conduct or reporting of the research.
Of course, an investigator is aware of the assets originally placed in
the trust at the time of its formation and would be required to
disclose any such assets that would reasonably appear to be affected by
NSF- or PHS-funded research. Only new assets purchased with the
proceeds from the original assets would be unknown to the investigator.
As with diversified mutual funds, the Office of Government Ethics
has detailed regulations describing the type of trusts that qualify for
the ``blind trust'' exception to the government's conflict of interest
rules. 5 C.F.R. Part 2634 Subpart D. Institutions may consult these
guidelines in determining how they wish to treat certain trusts under
their policies.
Q11: Are foreign investments (e.g., shares in a foreign
corporation) covered by the financial disclosure requirement.
A11: Yes, if they would reasonably appear to be affected by NSF- or
PHS- funded research and do not fall within one of the exceptions to
the definition of ``significant financial interest.''
Q12: Which conflicts of interest must be reported to the federal
government?
A12: Neither the PHS nor NSF rules require any institution to
report to the federal government the details of any conflict of
interest that has been resolved pursuant to the institution's Policy.
Consistent with the statute authorizing its conflict of interest rule,
the PHS requires institutions, prior to the institution's expenditure
of any funds under an award, to report to the PHS Awarding Component
the existence of any conflicting interests and assure that the interest
has been managed, reduced or eliminated in accordance with PHS
regulations. NSF requires that only conflicts that have not been
managed, reduced or eliminated prior to the expenditure of funds under
an award be reported to NSF.
Q13: Will investigator financial records be subject to public
disclosure?
A13: No. Normally, neither PHS nor NSF would possess records of the
financial interests of investigators, because institutions are not
required to submit those records. However, in the event NSF or PHS had
such information either as a result of an audit or compliance review or
in connection with a conflict of interest that cannot be managed
satisfactorily under the institution's policy, it would not be
disclosed to the public. Where a member of the public submits a request
under the federal Freedom of Information Act (FOIA) for financial
information in the possession of NSF or PHS, the agencies would assert
all applicable FOIA exemptions in response to such a request.
Q14: Is the applicant institution required to obtain financial
disclosures from investigators who are not employed by the applicant
institution?
A14: The PHS rule provides that if the institution carries out the
PHS-funded research through a collaborator, the institution must take
reasonable steps to ensure that investigators working for the
collaborator comply with the rule, either by requiring those
investigators to comply with the applicant institution's policy or by
requiring an assurance from the collaborating institution which will
enable the applicant institution to comply with the rule. NSF would
expect that where an investigator does not work for the applicant
institution, the applicant institution would obtain an assurance from
the institution employing the investigator indicating that the
investigator has complied with the requirements of the policy at that
institution.
Q15: Are all ``senior personnel'' listed in NSF proposals and ``key
personnel'' listed in PHS proposals subject to the financial disclosure
requirements of the conflict of interest rules?
A15: As explained in Q&A 4, the term ``investigator'' is defined
functionally rather than categorically. Although the agencies believe
that senior and key personnel will be ``responsible for the design,
conduct or reporting of research'' under the rules in almost all
[[Page 34841]]
cases, it is possible to conceive situations in which senior or key
personnel might not meet the definition of ``investigator.''
Institutions are also responsible for obtaining financial disclosures
from persons other than senior or key personnel who meet the definition
of ``investigator.''
Q16: How should institutions with fewer than 50 employees complete
the certification page for NSF proposals?
A16: Such institutions should annotate NSF Form 1207 or the
addendum page (See Q&A1 above) to indicate that they have fewer than 50
employees and are therefore exempt from the Investigator Financial
Disclosure Policy. These institutions are not exempt from the PHS
regulations.
Q17: Salary, royalties and other payments that ``are not expected
to exceed $10,000 over the next twelve month period'' are excluded from
the definition of ``significant financial interest.'' How should an
investigator estimate expected income over the next twelve months?
A17: The agencies have no preferred estimation method.
Investigators must make their best reasonable estimates of expected
income in determining whether salary, royalties or other payments
constitute ``significant financial interests.'' This issue is separate
from an investigator's ongoing duty to update financial disclosures
either annually or as new significant financial interests are obtained
throughout the period of the award.
Q18: How can an institution determine that all required disclosures
have been made before submitting a proposal to NSF or PHS?
A18: As part of the institution's routine proposal preparation
procedures institutions should require investigators to ensure that
they have made all required financial disclosures in accord with the
regulations prior to the time the organizational representative makes
the certification in an NSF or PHS proposal. NSF and PHS staff,
auditors and others concerned with the proper implementation of these
regulations would expect such an arrangement at any institution that
certifies to the maintenance of an appropriate written, enforced policy
on conflict of interest.
Q19: Must an investigator report to the institution a single share
of stock?
A19: A single share of stock would have to be reported only if (i)
it is valued at more than $10,000 or represents more than a five
percent ownership interest in the corporation; and (ii) it would
reasonably appear that the value of the stock could be affected by the
research for which funding is sought or that the financial interest of
the corporation would be so affected.
The rules define a significant financial interest as anything of
monetary value including equity interests (e.g., stocks, stock options,
or other ownership interests) but the definition excludes an equity
interest that does not exceed $10,000 in value and represents no more
than a 5% ownership interest in any single entity. This means that,
under the rules, an investigator would never have to report an equity
interest of $10,000 or less which represents 5% or less ownership
interest in any single entity because that combination of value and
ownership is excluded by definition from the term ``significant
financial interest.'' On the other hand, under the rules, an
investigator would always have to report an equity interest exceeding
$10,000 or an ownership interest exceeding 5% in any single entity,
regardless of value, if that equity interest or ownership interest was
held in an entity whose financial interests would reasonably appear to
be affected by the specified activities for which funding is sought.
Q20: When and how will the NSF and PHS rules be reviewed and
revised?
A20: The agencies anticipate that after two or three years of
experience with the rules, they will solicit public comments regarding
whether changes are necessary or appropriate.
Dated: June 13, 1996.
Dr. Harold Varmus, M.D.,
Director, National Institutes of Health.
Lawrence Rudolph,
General Counsel, National Science Foundation.
[FR Doc. 96-16974 Filed 7-2-96; 8:45 am]
BILLING CODE 7555-01-P, 4140-01-P