[Title 45 CFR ]
[Code of Federal Regulations (annual edition) - October 1, 2021 Edition]
[From the U.S. Government Publishing Office]



[[Page i]]

          
          
          Title 45

Public Welfare


________________________

Parts 1 to 139

                         Revised as of October 1, 2021

          Containing a codification of documents of general 
          applicability and future effect

          As of October 1, 2021
                    Published by the Office of the Federal National 
                    Archives and Records Administration as a Special 
                    Edition of the Federal Register

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                            Table of Contents



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

  Title 45:
          SUBTITLE A--Department of Health and Human Services        3
  Finding Aids:
      Table of CFR Titles and Chapters........................     831
      Alphabetical List of Agencies Appearing in the CFR......     851
      List of CFR Sections Affected...........................     861

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

                     Cite this Code: CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 45 CFR 1.1 refers to 
                       title 45, part 1, section 
                       1.

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

[[Page v]]



                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, October 1, 2021), consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
exercised by the user in determining the actual effective date. In 
instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

[[Page vi]]

Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

PAST PROVISIONS OF THE CODE

    Provisions of the Code that are no longer in force and effect as of 
the revision date stated on the cover of each volume are not carried. 
Code users may find the text of provisions in effect on any given date 
in the past by using the appropriate List of CFR Sections Affected 
(LSA). For the convenience of the reader, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume. For changes to 
the Code prior to the LSA listings at the end of the volume, consult 
previous annual editions of the LSA. For changes to the Code prior to 
2001, consult the List of CFR Sections Affected compilations, published 
for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

``[RESERVED]'' TERMINOLOGY

    The term ``[Reserved]'' is used as a place holder within the Code of 
Federal Regulations. An agency may add regulatory information at a 
``[Reserved]'' location at any time. Occasionally ``[Reserved]'' is used 
editorially to indicate that a portion of the CFR was left vacant and 
not dropped in error.

INCORPORATION BY REFERENCE

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

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Authorities 
and Rules. A list of CFR titles, chapters, subchapters, and parts and an 
alphabetical list of agencies publishing in the CFR are also included in 
this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.

[[Page vii]]

    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

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in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-741-6000 
or write to the Director, Office of the Federal Register, National 
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Connect to NARA's website at www.archives.gov/federal-register.
    The e-CFR is a regularly updated, unofficial editorial compilation 
of CFR material and Federal Register amendments, produced by the Office 
of the Federal Register and the Government Publishing Office. It is 
available at www.ecfr.gov.

    Oliver A. Potts,
    Director,
    Office of the Federal Register
    October 1, 2021







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                               THIS TITLE

    Title 45--Public Welfare is composed of five volumes. The parts in 
these volumes are arranged in the following order: Parts 1-139, 140-199, 
200-499, 500-1199, and 1200 to end. Volumes one and two (parts 1-139 and 
parts 140-199) contain all current regulations issued under subtitle A--
Department of Health and Human Services. Volume three (parts 200-499) 
contains all current regulations issued under subtitle B--Regulations 
Relating to Public Welfare, chapter II--Office of Family Assistance 
(Assistance Programs), Administration for Children and Families, 
Department of Health and Human Services, chapter III--Office of Child 
Support Enforcement (Child Support Enforcement Program), Administration 
for Children and Families, Department of Health and Human Services, and 
chapter IV--Office of Refugee Resettlement, Administration for Children 
and Families, Department of Health and Human Services. Volume four 
(parts 500-1199) contains all current regulations issued under chapter 
V--Foreign Claims Settlement Commission of the United States, Department 
of Justice, chapter VI--National Science Foundation, chapter VII--
Commission on Civil Rights, chapter VIII--Office of Personnel 
Management, chapter IX--Denali Commission, chapter X--Office of 
Community Services, Administration for Children and Families, Department 
of Health and Human Services, and chapter XI--National Foundation on the 
Arts and the Humanities. Volume five (part 1200 to end) contains all 
current regulations issued under chapter XII--Corporation for National 
and Community Service, chapter XIII--Administration for Children and 
Families, Department of Health and Human Services, chapter XVI--Legal 
Services Corporation, chapter XVII--National Commission on Libraries and 
Information Science, chapter XVIII--Harry S. Truman Scholarship 
Foundation, chapter XXI--Commission of Fine Arts, chapter XXIII--Arctic 
Research Commission, chapter XXIV--James Madison Memorial Fellowship 
Foundation, and chapter XXV--Corporation for National and Community 
Service. The contents of these volumes represent all of the current 
regulations codified under this title of the CFR as of October 1, 2021.

    For this volume, Ann Worley was Chief Editor. The Code of Federal 
Regulations publication program is under the direction of John Hyrum 
Martinez, assisted by Stephen J. Frattini.

[[Page 1]]



                        TITLE 45--PUBLIC WELFARE




                   (This book contains parts 1 to 139)

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

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

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           Subtitle A--Department of Health and Human Services




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


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

                  SUBCHAPTER A--GENERAL ADMINISTRATION
Part                                                                Page
1               Good guidance practices.....................           7
2               Testimony by employees and production of 
                    documents in proceedings where the 
                    United States is not a party............          12
3               Conduct of persons and traffic on the 
                    National Institutes of Health Federal 
                    enclave.................................          15
4               Service of process..........................          21
5               Freedom of Information regulations..........          23
5a

[Reserved]

5b              Privacy Act regulations.....................          40
6

[Reserved]

7               Employee inventions.........................          53
8               Review of regulations (Eff. 3-22-22)........          55
9               Use of HHS research facilities by academic 
                    scientists, engineers, and students.....          58
12              Disposal and utilization of surplus real 
                    property for public health purposes.....          59
12a             Use of Federal real property to assist the 
                    homeless................................          66
13              Implementation of the Equal Access to 
                    Justice Act in agency proceedings.......          75
15              Uniform relocation assistance and real 
                    property acquisition for Federal and 
                    federally assisted programs.............          84
16              Procedures of the Departmental Grant Appeals 
                    Board...................................          84
17              Release of adverse information to news media          93
18              Official symbol, logo, and seal.............          94
30              Claims collection...........................          95
31              Tax refund offset...........................         114
32              Administrative wage garnishment.............         117
33              Salary offset...............................         123

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34              Claims filed under the Military Personnel 
                    and Civilian Employees Act..............         132
35              Tort claims against the Government..........         136
36              Indemnification of HHS employees............         139
46              Protection of human subjects................         140
50              U.S. Exchange Visitor Program--request for 
                    waiver of the two-year foreign residence 
                    requirement.............................         167
51              Criteria for evaluating comprehensive plan 
                    to reduce reliance on alien physicians..         171
57              Volunteer services..........................         173
60              National Practitioner Data Bank.............         173
63              Grant programs administered by the Office of 
                    the Assistant Secretary for Planning and 
                    Evaluation..............................         194
73              Standards of conduct........................         202
73a             Standards of conduct: Food and Drug 
                    Administration supplement...............         235
73b             Debarment or suspension of former employees.         240
74

[Reserved]

75              Uniform administrative requirements, cost 
                    principles, and audit requirements for 
                    HHS awards..............................         242
77              Remedial actions applicable to letter of 
                    credit administration...................         410
78              Conditions for waiver of denial of Federal 
                    benefits................................         412
79              Program fraud civil remedies................         412
80              Nondiscrimination under programs receiving 
                    Federal assistance through the 
                    Department of Health and Human Services 
                    effectuation of Title VI of the Civil 
                    Rights Act of 1964......................         428
81              Practice and procedure for hearings under 
                    part 80 of this title...................         453
83              Regulation for the administration and 
                    enforcement of sections 799A and 845 of 
                    the Public Health Service Act...........         464
84              Nondiscrimination on the basis of handicap 
                    in programs or activities receiving 
                    Federal financial assistance............         470
85              Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Department 
                    of Health and Human Services............         511
86              Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving Federal financial assistance..         527
87              Equal treatment for faith-based 
                    organizations...........................         546
88              Protecting statutory conscience rights in 
                    health care; delegations of authority...         551

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89              Organizational integrity of entities 
                    implementing programs and activities 
                    under the Leadership Act................         568
90              Nondiscrimination on the basis of age in 
                    programs or activities receiving Federal 
                    financial assistance....................         569
91              Nondiscrimination on the basis of age in 
                    programs or activities receiving Federal 
                    financial assistance from HHS...........         577
92              Nondiscrimination on the basis of race, 
                    color, national origin, sex, age, or 
                    disability in health programs or 
                    activities receiving Federal financial 
                    assistance and programs or activities 
                    administered by the Department of Health 
                    and Human Services under Title I of the 
                    Patient Protection and Affordable Care 
                    Act or by entities established under 
                    such title..............................         584
93              New restrictions on lobbying................         590
94              Responsible prospective contractors.........         601
95              General administration--grant programs 
                    (public assistance, medical assistance 
                    and State children's health insurance 
                    programs)...............................         610
96              Block grants................................         632
97              Consolidation of grants to the insular areas         690
98              Child care and development fund.............         691
99              Procedure for hearings for the child care 
                    and development fund....................         749
100             Intergovernmental review of Department of 
                    Health and Human Services programs and 
                    activities..............................         754
101             Describing agency needs.....................         757
102             Adjustment of civil monetary penalties for 
                    inflation...............................         775

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                   SUBCHAPTER A_GENERAL ADMINISTRATION





PART 1_GOOD GUIDANCE PRACTICES--Table of Contents



Sec.
1.1 Scope.
1.2 Definitions.
1.3 Requirements for Department issuance and use of guidance documents.
1.4 Guidance repository.
1.5 Procedure to petition for review of guidance.
1.6 Proper Department reliance on guidance documents.
1.7 Fairness and notice in civil enforcement actions and administrative 
          inspections.
1.8 Fairness and notice in jurisdictional determinations.
1.9 Opportunity to contest agency determination.

    Authority: 42 U.S.C. 1302; 5 U.S.C. 301, 551 et seq.

    Source: 85 FR 78785, Dec. 7, 2020, unless otherwise noted.



Sec.  1.1  Scope.

    Sections 1.2(a) and 1.3 through 1.5 of this part shall apply to 
guidance documents issued by all components of the Department, until the 
Secretary amends the Food and Drug Administration's good guidance 
regulations at 21 CFR 10.115 to bring them into conformance with the 
requirements of this part, at which point, such amended regulations 
shall apply to the Food and Drug Administration, and Sec. Sec.  1.2(a) 
and 1.3 through 1.5 shall apply to all divisions of the Department 
except the Food and Drug Administration. Sections 1.2(b) and 1.6 through 
1.9 of this part shall apply to all components of the Department.

[86 FR 3014, Jan. 14, 2021]



Sec.  1.2  Definitions.

    (a) The following definitions apply to all components of the 
Department until the Secretary amends the Food and Drug Administration's 
good guidance regulations at 21 CFR 10.115 to bring them into 
conformance with the requirements of Sec. Sec.  1.3 through 1.5 of this 
part:
    Guidance document means any Department statement of general 
applicability, intended to have future effect on the behavior of 
regulated parties and which sets forth a policy on a statutory, 
regulatory, or technical or scientific issue, or an interpretation of a 
statute or regulation. The term ``guidance document'' does not include 
rules promulgated pursuant to notice and comment under 5 U.S.C. 553, or 
similar statutory provisions; rules exempt from rulemaking requirements 
under 5 U.S.C. 553(a); rules of agency organization, procedure, or 
practice; decisions of agency adjudications under 5 U.S.C. 554, or 
similar statutory provisions; internal guidance directed to the 
Department or other agencies that is not intended to have substantial 
future effect on the behavior of regulated parties; internal executive 
branch legal advice or legal opinions addressed to executive branch 
officials; legal briefs and other court filings; grant solicitations and 
awards; or contract solicitations and awards. Pre-enforcement rulings, 
i.e., communications with a person that interpret or apply the law to a 
specific set of facts, such as letter rulings, advisory opinions, no-
action letters, and notices of noncompliance, do not constitute guidance 
documents. If, however, the Department issues such a document that on 
its face is directed to a particular party, but the content of the 
document is designed to guide the conduct of other regulated parties, 
such a document would qualify as guidance.
    Guidance repository means an online database containing or linking 
to guidance documents.
    Issued means the Department initiated or sponsored distribution of 
information to the public. ``Issued'' does not include distribution 
intended to be limited to government employees or agency contractors, or 
distribution required under law or agency disclosure policies.
    Significant guidance document means a guidance document that may 
reasonably be anticipated to lead to an annual effect on the economy of 
$100 million or more, or adversely affect in a material way the economy, 
a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or

[[Page 8]]

tribal governments or communities; create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights or obligations of recipients 
thereof; or raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles of Executive 
Order 12866. The term ``significant guidance document'' does not include 
the categories of documents exempted in writing by the Office of 
Management and Budget's (``OMB'') Office of Information and Regulatory 
Affairs (``OIRA'').
    (b) The following definitions apply to all components of the 
Department:
    Civil enforcement action means an action with legal consequence 
taken by the Department based on an alleged violation of the law. Such 
actions include administrative enforcement proceedings and enforcement 
adjudication (which is the administrative process undertaken by any 
component of the Department to resolve the legal rights and obligations 
of specific parties with regard to a particular enforcement issue 
pending before it) but do not include actions taken in the normal course 
of the Department's regulatory communications or decision-making, for 
example, decisions on product applications (such as approvals, denials, 
or withdrawals of approval), claims authorizations, citizen petitions, 
food or color additive petitions, or public health notifications.
    Legal consequence means the result of an action that directly or 
indirectly affects substantive legal rights or obligations, including by 
subjecting a regulated party to potential liability in an enforcement 
action. This includes agency letters or orders establishing greater 
liability for regulated parties in a subsequent enforcement action, but 
excludes communications that have no immediate regulatory implications 
for a person or entity, such as letters (e.g., warning letters) or 
inspectional observations that serve as an interim step in the agency's 
compliance communications with a person or entity or that are intended 
to encourage voluntary compliance.
    Unfair surprise means a lack of reasonable certainty or fair 
warning, from the perspective of a reasonably prudent member of 
regulated industry, of what a legal standard administered by an agency 
requires.

[85 FR 78785, Dec. 7, 2020, as amended at 86 FR 3014, Jan. 14, 2021]



Sec.  1.3  Requirements for Department issuance and use of guidance documents.

    (a) Guidance documents. (1) Under the Administrative Procedure Act, 
the Department may not issue any guidance document that establishes a 
legal obligation that is not reflected in a duly enacted statute or in a 
regulation lawfully promulgated under a statute.
    (2) The Department may not use any guidance document for purposes of 
requiring a person or entity outside the Department to take any action, 
or refrain from taking any action, beyond what is required by the terms 
of an applicable statute or regulation.
    (3) Each guidance document issued by the Department must:
    (i) Identify itself as ``guidance'' (by using the term ``guidance'') 
and include the following language, unless the guidance is authorized by 
law to be binding: ``The contents of this document do not have the force 
and effect of law and are not meant to bind the public in any way, 
unless specifically incorporated into a contract. This document is 
intended only to provide clarity to the public regarding existing 
requirements under the law.'';
    (ii) Not direct parties outside the Federal Government to take or 
refrain from taking action, except when restating--with citations to 
statutes, regulations, or binding judicial precedent--clear mandates 
contained in a statute or regulation; and
    (iii) Include the following information:
    (A) The activities to which and the persons to whom the document 
applies;
    (B) The date of issuance;
    (C) Unique agency identifier;
    (D) Whether the guidance document replaces or revises a previously 
issued guidance document and, if so, identify the guidance document that 
it replaces or revises;

[[Page 9]]

    (E) Citation to the statutory provision(s) and/or regulation(s) (in 
Code of Federal Regulations format) that the guidance document is 
interpreting or applying; and
    (F) A short summary of the subject matter covered in the guidance 
document.
    (4) The Secretary must approve, on a non-delegable basis, all non-
significant guidance documents that the Secretary determines will either
    (i) Implicate, including potentially impede, any policy matter of 
priority to the Secretary, or
    (ii) Potentially create a serious inconsistency, or otherwise 
interfere, with an action taken or planned by another operating division 
or the Office of the Secretary.
    (b) Significant guidance documents. (1) Before the Department issues 
any significant guidance document, it must be approved, on a non-
delegable basis, by the Secretary.
    (2) Before issuing any significant guidance document, the Department 
must:
    (i) Submit the significant guidance document to OIRA for review 
under Executive Order 12866 prior to issuance.
    (ii) Provide at least a 30-day public notice and comment period on 
the proposed significant guidance document, unless the Department for 
good cause finds (and incorporates such finding and a brief statement of 
reasons therefor into the guidance document) that notice and public 
comment are impracticable, unnecessary, or contrary to the public 
interest. If no such good cause exists, the public notice (which must be 
published in the Federal Register and posted in the guidance repository) 
shall include all of the following information:
    (A) Information as to where the public may access a copy of the 
proposed significant guidance document;
    (B) Information as to where written comments may be sent, and an 
internet website where those comments may be reviewed by the public; and
    (C) The time period during which comments will be accepted.
    (iii) Publish a public response to the major concerns raised during 
the comment period.
    (3) Significant guidance documents must comply with applicable 
requirements for significant regulatory actions, as set forth in 
Executive Orders, except that only economically significant guidance 
documents require a separate Regulatory Impact Analysis.
    (4) A significant guidance document may be exempted from any 
requirement otherwise applicable to significant guidance documents if 
the Secretary and the Administrator of OIRA agree that exigency, safety, 
health, or other compelling cause warrants the exemption. The Secretary 
must make this finding, and the significant guidance document must 
incorporate the finding and a brief statement of reasons in support.
    (5) The Department shall seek from OIRA, as appropriate, categorical 
determinations that classes of guidance presumptively do not qualify as 
significant. Any guidance satisfying such a categorical exemption 
presumptively need not comply with the requirements of this paragraph 
(b) but must comply with all other requirements applicable to guidance 
documents. OIRA may determine that a particular guidance document within 
a categorical exemption is nonetheless significant.



Sec.  1.4  Guidance repository.

    (a) Existing guidance. By January 6, 2021, the Department shall 
maintain a guidance repository on its website at www.hhs.gov/guidance.
    (1) The guidance repository shall be fully text searchable and 
contain or link to all guidance documents in effect that have been 
issued by any component of the Department.
    (2) If the Department does not include a guidance document in the 
guidance repository by January 6, 2021, the guidance document shall be 
considered rescinded.
    (3) Any web page in the guidance repository that contains or links 
to guidance documents must state:
    (i) That the guidance documents contained therein:
    (A) ``Lack the force and effect of law, except as authorized by law 
or as specifically incorporated into a contract.''; and
    (B) ``The Department may not cite, use, or rely on any guidance that 
is not

[[Page 10]]

posted on the guidance repository, except to establish historical 
facts.''
    (ii) That any guidance document previously issued by the Department 
is no longer in effect, and will be considered rescinded, if it is not 
included in the guidance repository.
    (4) If the Department wishes to reinstate a rescinded guidance 
document, the Department may do so only by complying with all of the 
requirements applicable to guidance documents issued after January 6, 
2021.
    (b) Guidance issued after January 6, 2021. (1) For all guidance 
documents issued after January 6, 2021, the Department must post each 
guidance document to the Department's guidance repository within three 
business days of the date on which that guidance document was issued.
    (2) For significant guidance documents issued after January 6, 2021, 
the Department shall post proposed new significant guidance to the 
guidance repository as part of the notice-and-comment process.
    (i) The posting shall clearly indicate the end of each significant 
guidance document's comment period and provide a means for members of 
the public to submit comments.
    (ii) The Department shall also post online all responses to major 
public comments.



Sec.  1.5  Procedure to petition for review of guidance.

    (a) Any interested party may petition the Department to withdraw or 
modify any particular guidance document. Such petitions may include 
requests to determine whether:
    (1) A guidance document, no matter how styled, imposes binding 
obligations on parties beyond what is required by the terms of 
applicable statutes and/or regulations;
    (2) A component of the Department is using a guidance document to 
create additional legal obligations beyond what is required by the terms 
of applicable statutes and/or regulations; or
    (3) The Department is improperly exempting a guidance document from 
the requirements set forth in this part.
    (b) As part of a petition under this section, an interested party 
may ask that the Department modify or withdraw any guidance document in 
effect at the time of the petition.
    (c) Petitions under this section must be addressed to the Department 
in writing. The Department's guidance repository must include clear 
instructions to members of the public regarding how to petition for 
review of guidance, including how such petition can be submitted, and an 
office at the Department responsible for coordinating such requests.
    (d) The Department must respond to all petitions no later than 90 
business days after receipt of the petition. The applicable time period 
for responding is suspended from the time the Department:
    (1) Requests additional information from the requestor, until the 
Department receives the additional information; or
    (2) Notifies the requestor of the need to consult with other 
stakeholders, including but not limited to the Department of Justice or 
the Department's Office of Inspector General, until the Department 
completes consultation with other stakeholders.
    (e) The Department's written response to petitions must state 
whether the Department agrees or disagrees with the petition and the 
Department's rationale. The Department must remedy the substance or use 
of any guidance documents that it determines in a petition response to 
be inconsistent with this part or otherwise unlawful. The Department 
will post all responses to petitions under this section to a designated 
web page on its guidance repository.



Sec.  1.6  Proper Department reliance on guidance documents.

    (a) Overview. A civil enforcement action must have an appropriate 
legal basis. When the Department takes a civil enforcement action or 
makes a determination based on an alleged violation of law that has 
legal consequence for a person or state, it must allege or establish the 
violation of law by applying statutes or regulations.
    (b) Limitations on the use of guidance documents. (1) The Department 
may not use guidance documents to impose binding requirements or 
prohibitions on persons outside the executive

[[Page 11]]

branch except as expressly authorized by law or as expressly 
incorporated into a contract.
    (2) The Department may not treat noncompliance with a standard or 
practice announced solely in a guidance document as itself a violation 
of applicable statutes or regulations except as expressly authorized by 
law.
    (3) If the Department uses a guidance document to explain the legal 
applicability of a statute or regulation, that document can do no more, 
with respect to prohibition of conduct, than articulate the Department's 
understanding of how a statute or regulation applies to particular 
circumstances.
    (4) The Department may cite to a guidance document in a civil 
enforcement action only if it has notified the public of such document 
in advance through publication, in the Department's guidance repository, 
as described in Sec.  1.4.

[86 FR 3014, Jan. 14, 2021]



Sec.  1.7  Fairness and notice in civil enforcement actions 
and administrative inspections.

    (a) When the Department takes a civil enforcement action, the 
Department may only apply standards or practices that have been publicly 
stated in a manner that would not cause unfair surprise.
    (b) The Department must avoid unfair surprise when it imposes 
penalties and whenever it adjudges past conduct to have violated the 
law.
    (c) The Department shall only conduct civil administrative 
inspections according to published rules of agency procedure.

[86 FR 3014, Jan. 14, 2021]



Sec.  1.8  Fairness and notice in jurisdictional determinations.

    (a) If the Department relies on a decision in an agency 
adjudication, administrative order, or agency document to assert a new 
or expanded claim of jurisdiction (e.g., a claim to regulate a new 
subject matter or a new basis for liability, or a relinquishment of a 
claim of jurisdiction), the Department must give fair notice by 
publishing the initial decision before the conduct over which 
jurisdiction is sought occurs. It must publish the initial decision in 
full or by citation, if publicly available, in the Federal Register or 
the Department's guidance repository described in Sec.  1.4. A claim of 
jurisdiction is not ``new or expanded'' simply because it involves a new 
or novel set of facts so long as it is based on an established principle 
of general applicability.
    (b) If the Department intends to rely on a document arising out of 
litigation (other than a publicly published opinion of an adjudicator), 
such as a brief, a consent decree, or a settlement agreement, to 
establish jurisdiction in future civil enforcement actions involving 
persons who were not parties to the litigation, the Department must--
    (1) Publish that document, either in full or by citation if publicly 
available, in the Federal Register or on the Department's guidance 
repository described in Sec.  1.4, and
    (2) Publish an explanation of the document's jurisdictional 
implications.
    (c) Before seeking judicial deference to the Department's 
interpretation of a document arising out of litigation (other than a 
publicly published opinion of an adjudicator) in order to establish a 
new or expanded claim of jurisdiction in a different case, the 
Department must--
    (1) Publish the document or a notice of availability in the Federal 
Register or on the Department's guidance repository described in Sec.  
1.4, and
    (2) Publish an explanation of the document's jurisdictional 
implications.

[86 FR 3014, Jan. 14, 2021]



Sec.  1.9  Opportunity to contest agency determination.

    (a) Departmental overview. Except as provided in paragraph (c) of 
this section, prior to the Department taking any civil enforcement 
action with respect to a particular entity that has legal consequence 
for that entity, including by issuing to such a person a notice of 
noncompliance, or other similar notice that has immediate regulatory 
consequence, but excluding communications that have no immediate 
regulatory implications for the entity, such as those that serve as an 
interim step in the agency's compliance communications with the entity 
or that

[[Page 12]]

are intended to encourage voluntary compliance, the Department shall 
provide--
    (1) Written notice to the affected entity of the initial legal and 
factual determinations underpinning the initial adverse determination;
    (2) An opportunity for the affected entity to respond in writing 
and, if determined appropriate by the Department, orally; and
    (3) A written response from the Department to the affected entity 
after receiving a timely request from the affected entity under 
paragraph (a)(2) of this section.
    (b) Timing and content of written responses. (1) The Department will 
select a meaningful amount of time in which the affected entity must 
submit a written response to the Department. This writing must be 
submitted within the time period specified by the Department, unless the 
Department concludes an extension is warranted, and state the reasons 
for the entity's disagreement with the Department's proposed action for 
purposes of requiring a response in accordance with paragraph (a)(3) of 
this section.
    (2) The Department's written response must respond to the affected 
entity and articulate the basis for its final decision. This written 
response may be issued contemporaneous to the Department taking the 
action with legal consequence.
    (c) Exceptions. The procedures in paragraphs (a) and (b) of this 
section do not apply where the Department, in its discretion, determines 
there is a serious threat to health, safety, or similar emergency, or 
where a statute specifically authorizes proceeding without a prior 
opportunity to be heard. In such event, HHS would still provide an 
affected entity with an opportunity to be heard and a written response 
as soon as practicable. The procedures in paragraphs (a) and (b) do not 
apply to settlement negotiations between agencies and regulated parties, 
to notices of a prospective legal action, to litigation before courts, 
or any action related to a criminal investigation or prosecution, 
including undercover operations that may be used in a criminal 
investigation or prosecution, or any civil enforcement action either 
related to an investigation by the Department of Justice, or referred to 
the Department of Justice.

[86 FR 3015, Jan. 14, 2021]



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



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

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

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



Sec.  2.1  Scope, purpose, and applicability.

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

[[Page 13]]

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

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

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

[[Page 14]]



Sec.  2.2  Definitions.

    Agency head refers to the head of the relevant operating division or 
other major component of the DHHS, or his or her delegatee.
    Agency head for the purposes of this part means the following 
officials for the components indicated:
    (1) Office of the Secretary--Assistant Secretary for Administration 
and Management;
    (2) Administration on Aging--Assistant Secretary for Aging;
    (3) Administration for Children and Families--Assistant Secretary 
for Children and Families;
    (4) Agency for Healthcare Research and Quality--Administrator;
    (5) Agency for Toxic Substances and Disease Registry--Administrator;
    (6) Centers for Disease Control and Prevention--Director;
    (7) Centers for Medicare and Medicaid Services--Administrator;
    (8) Health Resources and Services Administration--Administrator;
    (9) Indian Health Service--Director;
    (10) National Institutes of Health--Director;
    (11) Substance Abuse and Mental Health Services Administration--
Administrator;
    (12) Office of Inspector General--Inspector General.
    Employee of the Department includes current and former:
    (1) Commissioned officers in the Public Health Service Commissioned 
Corps, as well as regular and special DHHS employees (except employees 
of the Food and Drug Administration), when they are performing the 
duties of their regular positions, as well as when they are performing 
duties in a temporary assignment at DHHS or another organization.
    (2) Employees of intermediaries, carriers, Medicare Administrative 
Contractors, Program Safeguard Contractors, and Recovery Audit 
Contractors, and any successor entities, that perform one or more of the 
following functions described in section 1874A or 1893 of the Social 
Security Act relating to the administration of the Medicare program:
    (i) Determination of payment amounts; making payments; beneficiary 
education and assistance; providing consultative services; communication 
with providers; or, provider education and technical assistance; or,
    (ii) Other such functions as are necessary to carry out the Medicare 
program, including any of the following program integrity functions 
under section 1893 of the Social Security Act:
    (A) Review of activities of providers or suppliers, including 
medical and utilization review and fraud review;
    (B) Auditing of cost reports;
    (C) Determinations as to whether payment should not be, or should 
not have been, made because Medicare is the secondary payer, and 
recovery of payments that should not have been made;
    (D) Education of providers, beneficiaries, and other persons with 
respect to payment integrity and benefit quality assurance issues; or,
    (E) Developing (and periodically updating) a list of items of 
durable medical equipment which are subject to prior authorization.
    (3) Employees of a contractor, subcontractor, or state agency 
performing survey, certification, or enforcement functions under title 
XVIII of the Social Security Act or Section 353 of the Public Health 
Service Act but only to the extent the requested information was 
acquired in the course of performing those functions and regardless of 
whether documents are also relevant to the state's activities.
    (4) Employees and qualified contractors of an entity covered under 
the Federally Supported Health Centers Assistance Act of 1992, as 
amended, 42 U.S.C. 233(g)-(n), (FSHCAA), provided that the testimony is 
requested in medical malpractice tort litigation and relates to the 
performance of medical, surgical, dental or related functions which were 
performed by the entity, its employees and qualified contractors at a 
time when the DHHS deemed the entity and its employees and qualified 
contractors to be covered by the FSHCAA.
    Certify means to authenticate under seal, pursuant to 42 U.S.C 3505, 
official documents of the Department.
    Testify and testimony includes both in-person, oral statements 
before a court, legislative or administrative body and

[[Page 15]]

statements made pursuant to depositions, interrogatories, declarations, 
affidavits, or other formal participation.

[68 FR 25839, May 14, 2003, as amended at 73 FR 53150, Sept. 15, 2008]



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

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

[68 FR 25839, May 14, 2003]



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

    (a) All requests for testimony by an employee or former employee of 
the DHHS in his or her official capacity and not subject to the 
exceptions set forth in Sec.  2.1(d) of this part must be addressed to 
the Agency head in writing and must state the nature of the requested 
testimony, why the information sought is unavailable by any other means, 
and the reasons why the testimony would be in the interest of the DHHS 
or the federal government.
    (b) If the Agency head denies approval to comply with a subpoena for 
testimony, or if the Agency head has not acted by the return date, the 
employee will be directed to appear at the stated time and place, unless 
advised by the Office of the General Counsel that responding to the 
subpoena would be inappropriate (in such circumstances as, for example, 
an instance where the subpoena was not validly issued or served, where 
the subpoena has been withdrawn, or where discovery has been stayed), 
produce a copy of these regulations, and respectfully decline to testify 
or produce any documents on the basis of these regulations.

[68 FR 25840, May 14, 2003]



Sec.  2.5  Subpoenas duces tecum.

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

[68 FR 25840, May 14, 2003]



Sec.  2.6  Certification and authentication of records.

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

[68 FR 25840, May 14, 2003]



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



                            Subpart A_General

Sec.
3.1 Definitions.
3.2 Applicability.
3.3 Compliance.

[[Page 16]]

3.4 False reports and reports of injury or damage.
3.5 Lost and found, and abandoned property.
3.6 Nondiscrimination.

                      Subpart B_Traffic Regulations

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

                    Subpart C_Facilities and Grounds

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

                           Subpart D_Penalties

3.61 Penalties.

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

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



                            Subpart A_General



Sec.  3.1  Definitions.

    Director means the Director or Acting Director of the National 
Institutes of Health (NIH), or other officer or employee of NIH to whom 
the authority involved has been delegated.
    Enclave means, unless the context requires a different meaning, the 
area, containing about 318 acres, acquired by the United States in 
several parcels in the years 1935 through 1983, and any further future 
acquisitions, comprising the National Institutes of Health located in 
Montgomery County, Maryland, over which the United States acquired 
exclusive jurisdiction under the Act of March 31, 1953, Chapter 158 
(1953 Maryland Laws 311).
    Police officer means a uniformed or non-uniformed police officer 
appointed under a delegation of authority to the Director under Title 
U.S. Public Law 107-296, Homeland Security Act of 2002; any other 
Federal law enforcement officer; and any other person whose law 
enforcement services are secured by contract, or upon request or 
deputation from a State or local law enforcement agency.

[55 FR 2068, Jan. 22, 1990, as amended at 85 FR 72910, Nov. 16, 2020]



Sec.  3.2  Applicability.

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

[[Page 17]]

statutory provisions and any amendments in effect when the alleged 
offense occurred shall determine the specifics of the offense, 
applicability, and penalty.

----------------------------------------------------------------------------------------------------------------
               Subject                        U.S. Code            Provides generally        Maximum penalty
----------------------------------------------------------------------------------------------------------------
1. By force or threat of force,        18 U.S.C. 245..........  Prohibits..............  Not involving death or
 willful injury, intimidation or                                                          bodily injury:
 interference with, or attempts to                                                        Imprisonment one year
 injure, intimidate or interfere                                                          and/or $1,000 fine.
 with, a person from participating in
 or enjoying any benefit, service,
 privilege, program, facility, or
 activity, provided by or
 administered by the U.S., and
 engaging in certain other Federal
 protected activities.
2. Malicious destruction or damage,    18 U.S.C. 844(f).......  Prohibits..............  First offense not
 by an explosive, to a building or                                                        involving death or
 other property owned, possessed,                                                         personal injury:
 used, or leased by the U.S., U.S.                                                        Imprisonment 10 years
 agency, or any organization                                                              and/or $10,000 fine
 receiving Federal financial                                                              and seizure and
 assistance.                                                                              forfeiture of
                                                                                          explosive materials.
3. Possession of explosive in          18 U.S.C. 844(g).......  Prohibits, except with   Imprisonment one year
 buildings owned, possessed, used, or                            written consent of the   and/or $1,000 fine and
 leased by U.S. or U.S. agency.                                  agency.                  seizure and forfeiture
                                                                                          of explosive
                                                                                          materials.
4. Use of or carrying an explosive to  18 U.S.C. 844(h).......  Prohibits..............  First offense:
 commit, or during commission of, a                                                       Imprisonment 10 years
 felony prosecutable in a U.S. court.                                                     and seizure and
                                                                                          forfeiture of
                                                                                          explosive materials.
5. Use of or carrying a firearm        18 U.S.C. 924(c).......  Prohibits..............  First offense:
 during and in relation to any crime                                                      Imprisonment 5 years
 of violence prosecutable in a U.S.                                                       and $5,000 fine and
 court.                                                                                   seizure and forfeiture
                                                                                          of firearm and
                                                                                          ammunition.
6. Manufacture, distribution,          21 U.S.C. 841, 842,      Prohibits, except as     First offense:
 dispensing, or possession with         843, 845.                authorized by the        Imprisonment 20 years
 intent to do these acts, of                                     Controlled Substances    and/or $250,000 fine
 narcotics and other controlled                                  Act (generally 21        depending on the
 substances and counterfeit                                      U.S.C. 801-904).         amount and kind of
 substances.                                                                              substance (twice the
                                                                                          above penalties for
                                                                                          distribution by a
                                                                                          person at least 18
                                                                                          years of age to one
                                                                                          under age 21).
7. Simple possession of narcotics or   21 U.S.C. 844..........  Prohibits, unless        First offense:
 other controlled substances.                                    substance obtained       Imprisonment 1 year
                                                                 directly, or pursuant    and/or $5,000 fine.
                                                                 to prescription or
                                                                 order, from a
                                                                 practitioner, acting
                                                                 in the course of
                                                                 professional practice,
                                                                 or as otherwise
                                                                 authorized under the
                                                                 Controlled Substances
                                                                 Act.
----------------------------------------------------------------------------------------------------------------

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

[[Page 18]]



----------------------------------------------------------------------------------------------------------------
               Subject                 Maryland code annotated     Provides generally        Maximum penalty
----------------------------------------------------------------------------------------------------------------
1. Pedestrian right-of-way...........  Transportation, Sec. 21- Pedestrians have the     Imprisonment 2 months
                                        502.                     right-of-way in          and/or $500 fine.
                                                                 crosswalks and certain
                                                                 other areas. Subject
                                                                 to certain limitations.
                                       Sec. 21-511............  Blind, partially blind,  $500 fine.
                                                                 or hearing impaired
                                                                 pedestrians have the
                                                                 right-of-way at any
                                                                 crossing or
                                                                 intersection. Subject
                                                                 to certain limitations.
2. Drivers to exercise due care......  Transportation, Sec. 21- Drivers shall exercise   $500 fine.
                                        504.                     due care to avoid
                                                                 colliding with
                                                                 pedestrians, children
                                                                 and incapacitated
                                                                 individuals.
3. Driving while intoxicated, under    Transportation, Sec. 21- Prohibits..............  Sec. 21-902(a) (driving
 the influence of alcohol and/or a      902.                                              while intoxicated,
 drug or controlled substance.                                                            first offense):
                                                                                          Imprisonment 1 year
                                                                                          and/or $1,000 fine.
                                                                                         Sec. 21-902 (b), (c),
                                                                                          (d) (driving under the
                                                                                          influence):
                                                                                          Imprisonment 2 months
                                                                                          and/or $500 fine.
4. Unattended motor vehicles.........  Transportation, Sec. 21- Prohibits leaving motor  $500 fine.
                                        1101.                    vehicles unattended
                                                                 unless certain
                                                                 precautions are taken.
5. Carrying or wearing certain         Sec. 4-202.............  Prohibits, except for    Imprisonment 3 years or
 concealed weapons (other than                                   law enforcement          $1,000 fine.
 handguns) or openly with intent to                              personnel or as a
 injure.                                                         reasonable precaution
                                                                 against apprehended
                                                                 danger.
6. Unlawful wearing, carrying, or      Sec. 4-202.............  Prohibits except by law  First offense and no
 transporting a handgun, whether                                 enforcement personnel    prior related offense:
 concealed or openly.                                            or with permit.          Imprisonment 3 years
                                                                                          and/or $2,500 fine.
7. Use of handgun or concealable       Sec. 4-204.............  Prohibits..............  Imprisonment 20 years.
 antique firearm in commission of
 felony or crime of violence.
8. Disturbance of the peace..........  Sec. 6-409.............  Prohibits acting in a    Imprisonment 30 days
                                                                 disorderly manner in     and/or $500 fine.
                                                                 public places.
9. Gambling..........................  Sec. 12-102............  Prohibits betting,       Sec. 240: Imprisonment
                                                                 wagering and gambling,   one year and/or $1,000
                                                                 and certain games of     fine. Sec. 245:
                                                                 chance (does not apply   Imprisonment 2 years
                                                                 to vending or            and/or $100 fine.
                                                                 purchasing lottery
                                                                 tickets authorized
                                                                 under State law in
                                                                 accordance with
                                                                 approved procedures).
----------------------------------------------------------------------------------------------------------------


[55 FR 2068, Jan. 22, 1990, as amended at 85 FR 72910, Nov. 16, 2020]



Sec.  3.3  Compliance.

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



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

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



Sec.  3.5  Lost and found, and abandoned property.

    Lost articles which are found on the enclave, including money and 
other personal property, together with any identifying information, must 
be deposited at the Police Office or with an office (such as the place 
where found) which may likely have some knowledge of ownership. If the 
article is deposited

[[Page 19]]

with an office other than the Police Office and the owner does not claim 
it within 30 days, it shall be deposited at the Police Office for 
further disposition in accordance with General Services Administration 
regulations (41 CFR 102). Abandoned, or other unclaimed property and, in 
the absence of specific direction by a court, forfeited property, may be 
so identified by the Police Office and sold and the proceeds deposited 
in accordance with 41 CFR part 102-41.

[57 FR 1874, Jan. 16, 1992, as amended at 85 FR 72910, Nov. 16, 2020]



Sec.  3.6  Nondiscrimination.

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



                      Subpart B_Traffic Regulations



Sec.  3.21  Emergency vehicles.

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



Sec.  3.22  Request for identification.

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



Sec.  3.23  Parking.

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



Sec.  3.24  Parking permits.

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

[[Page 20]]



Sec.  3.25  Servicing of vehicles.

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



Sec.  3.26  Speed limit.

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



Sec.  3.27  Bicycles.

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



                    Subpart C_Facilities and Grounds



Sec.  3.41  Admission to facilities or grounds.

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



Sec.  3.42  Restricted activities.

    (a) Hobbies and sports. A person may undertake hobbies and sports 
only in designated areas or as approved by the Director.
    (b) Pets and other animals. A person may not bring on the enclave 
any cat, dog, or other animal except for authorized purposes. This 
prohibition does not apply to domestic pets at living quarters or to the 
exercise of these pets under leash or other appropriate restraints. The 
use of a dog by a handicapped person to assist that person is 
authorized.
    (c) Photography. A person may take photographs, films or 
audiovisuals, for personal or news purposes on the grounds of the 
enclave or in entrances, lobbies, foyers, corridors, and auditoriums in 
use for public meetings, except when contrary to security regulations or 
Department of Health and Human Services policies, or where prohibited by 
appropriate signs. Photographs and similar activities for advertising or 
commercial purposes may be taken only with the advance written approval 
of the Director. A person may take photographs of a patient only with 
the informed consent of the patient (or the natural or legal guardian) 
and of the Director of the Warren Grant Magnuson Clinical Center or 
delegate.
    (d) Intoxicating beverages, narcotics, and other controlled 
substances. A person may not possess, sell, consume, or use alcohol or 
other intoxicating beverages, except in connection with official duties, 
as part of authorized research, or as otherwise authorized by the 
Director, or, in the case of possession, consumption or use only, in 
living quarters. (The sale, consumption, use, or possession of narcotics 
and other controlled substances is prohibited and shall be governed by 
the Controlled Substances Act (21 U.S.C. 841-845); driving under the 
influence of an alcoholic beverage, drug or controlled substance is 
prohibited and shall be governed by the Maryland Transportation Code 
Annotated section 21-902.)
    (e) Nuisances and disturbances. The following acts by a person are 
prohibited: Unwarranted loitering, disorderly conduct (acting in a 
disorderly manner to the disturbance of the public peace is prohibited 
and shall be governed by Maryland Code Annotated, Article 27, section 
122); littering or disposal of rubbish in an unauthorized manner, the 
creation of any hazard to persons or property; the throwing of articles 
of any kind from or at a building; the climbing upon any part of a 
building for other than an authorized purpose; the loud playing of 
radios or other

[[Page 21]]

similar devices; and rollerskating, skateboarding, sledding or similar 
activities, except in officially designated areas.
    (f) Smoking. Except as part of an approved medical research 
protocol, a person may not smoke in any building on the enclave.
    (g) Firearms, explosive, and other weapons. No person other than a 
specifically authorized police officer shall possess firearms, 
explosives, or other dangerous or deadly weapons or dangerous materials 
intended to be used as weapons either openly or concealed. Upon written 
request, the Director may permit possession in living quarters of 
antique firearms held for collection purposes, if the Director finds 
that the collection does not present any risk of harm.

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



Sec.  3.43  Removal of property.

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



Sec.  3.44  Solicitation.

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



                           Subpart D_Penalties



Sec.  3.61  Penalties.

    (a) A person found guilty of violating any provision of the 
regulations in this part is subject to a fine of not more than $50 or 
imprisonment of not more than thirty days or both, for each violation 
(U.S. Public Law 107-296, Homeland Security Act of 2002).
    (b) Penalties for violation of offenses proscribed by Federal 
statutes (generally codified in title 18 of the United States Code) and 
Maryland criminal statutes which are made Federal offenses under the 
Assimilative Crimes Act and are prescribed in the applicable provisions 
of those statutes.

[55 FR 2068, Jan. 22, 1990, as amended at 85 FR 72910, Nov. 16, 2020]



PART 4_SERVICE OF PROCESS--Table of Contents



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

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

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

[[Page 22]]



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

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



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

    Subpoenas and other process (other than summonses and complaints) 
that are required to be served on the Department of Health and Human 
Services or the Secretary of Health and Human Services in his official 
capacity should be served as follows:
    (a) If authorized by law to be served by mail, any mailed process 
should be sent to the General Counsel, Department of Health and Human 
Services, 200 Independence, S.W., Washington, DC 20201.
    (b) If served by an individual, the process should be delivered to 
the staff in the Office of Legal Resources, Office of the General 
Counsel, Room 700E, 200 Independence Avenue, SW., Washington, DC 20201, 
or in the absence of that staff, to any staff member of or individual 
assigned to the Immediate Office of the General Counsel, up to and 
including any Deputy General Counsel.

[48 FR 24079, May 31, 1983,as amended at 73 FR 48151, Aug. 18, 2008]



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

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



Sec.  4.4  Acknowledgement of mailed process.

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



Sec.  4.5  Effect of regulations.

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



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

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

[67 FR 78990, Dec. 27, 2002]



Sec.  4.7  Congressional subpoenas directed to the Department or Secretary.

    Notwithstanding the provisions of Sec. Sec.  4.1, 4.2, and 4.3, 
service of Congressional subpoenas shall be delivered to the staff in 
the Office of the Assistant Secretary for Legislation, Department of 
Health and Human Services, 200 Independence Avenue, SW., Washington, DC 
20201.

[73 FR 48151, Aug. 18, 2008]

[[Page 23]]



PART 5_FREEDOM OF INFORMATION REGULATIONS--Table of Contents



 Subpart A_General Information About Freedom of Information Act Requests

Sec.
5.1 Purpose.
5.2 Presumption of openness and proactive disclosures.
5.3 Definitions.
5.4 Regulatory scope.
5.5 Interrelationship between the FOIA and the Privacy Act of 1974.

               Subpart B_How to Request Records under FOIA

5.21 Who can file a FOIA request?
5.22 What do I include in my FOIA request?
5.23 Where do I send my FOIA request?
5.24 How does HHS process my FOIA request?
5.25 How does HHS handle requests that involve more than one OpDiv, 
          StaffDiv, or Federal agency?
5.26 How does HHS determine estimated completion dates for FOIA 
          requests?
5.27 How do I request expedited processing?
5.28 How does HHS respond to my request?
5.29 How may I request assistance with the FOIA process?

                   Subpart C _Exemptions to Disclosure

5.31 What are the reasons records may be withheld?
5.32 Records not subject to the requirements of the FOIA--law 
          enforcement exclusions.

              Subpart D_Confidential Commercial Information

5.41 How does a submitter identify records containing confidential 
          commercial information?
5.42 How does HHS process FOIA requests for confidential commercial 
          information?

                             Subpart E_Fees

5.51 General information on fees for all FOIA requests.
5.52 What is the FOIA fee schedule for obtaining records?
5.53 How does HHS calculate FOIA fees for different categories of 
          requesters?
5.54 How may I request a fee waiver?

                            Subpart F_Appeals

5.61 When may I appeal HHS's FOIA determination?
5.62 How do I file an appeal?
5.63 How does HHS process appeals?
5.64 What avenues are available to me if I disagree with HHS's appeal 
          decision?

                       Subpart G_Records Retention

5.71 How does HHS retain FOIA records?

    Authority: 5 U.S.C. 552, 18 U.S.C. 1905, 31 U.S.C. 9701, 42 U.S.C. 
1306(c), E.O. 12600, E.O.13392

    Source: 81 FR 74939, Oct. 28, 2016, unless otherwise noted.



 Subpart A_General Information About Freedom of Information Act Requests



Sec.  5.1  Purpose.

    This part implements the provisions of the Freedom of Information 
Act (FOIA), 5 U.S.C. 552, as amended, for Department of Health and Human 
Services (HHS) records that are subject to the FOIA. This part should be 
read in conjunction with the text of the FOIA and the Uniform Freedom of 
Information Fee Schedule and Guidelines published by the Office of 
Management and Budget. This part contains the rules that we follow to 
process FOIA requests, such as the amount of time we have to make a 
determination regarding the release of records, who can decide to 
release records and who can decide not to release them, the fees we may 
charge, if applicable, the reasons why some records are exempt from 
disclosure under the FOIA, and the administrative and legal remedies 
available should a requester disagree with our initial disclosure 
determination.
    (a) The FOIA provides a right of access to agency records, except to 
the extent that any portions of the records are protected from public 
disclosure by an exemption or exclusion in the statute. The FOIA does 
not require us to perform research for you or to answer your questions. 
The FOIA does not require agencies to create new records or to perform 
analysis of existing records; for example, by extrapolating information 
from existing agency records, reformatting publicly available 
information, preparing new electronic programs or databases, or creating 
data through calculations of ratios, proportions, percentages, trends, 
frequency distributions, correlations, or comparisons. However, at our 
discretion and if

[[Page 24]]

it would conserve government resources, we may decide to supply 
requested information by consolidating information from various records.
    (b) This part does not apply to data generated by an agency grant 
recipient under the provisions of 45 CFR part 75 to the extent the 
requirements of 45 CFR 75.322(e) do not apply to the data. We will not 
process your request under the FOIA or these regulations if that data is 
already available to the public through an archive or other source. In 
that situation, we will refer you to that other source. The procedures 
for requesting research data made available under the provisions of 45 
CFR 75.322(e) are referenced in Sec.  5.23(a).



Sec.  5.2  Presumption of openness and proactive disclosures.

    (a) We will administer the FOIA with a presumption of openness. In 
accordance with 5 U.S.C. 552(a)(8) we will disclose records or 
information exempt from disclosure under the FOIA whenever disclosure 
would not foreseeably harm an interest protected by a FOIA exemption and 
disclosure is not prohibited by law. We also will consider whether 
partial disclosure of information is possible whenever we determine that 
a full disclosure of a requested record is not possible. This includes 
taking reasonable steps to segregate and release nonexempt information.
    (b) Records that the FOIA requires agencies to make available for 
public inspection in an electronic format may be accessed through each 
OpDiv's and Staff Div's Web site. Each OpDiv and StaffDiv is responsible 
for determining which of its records must be made publicly available 
(including frequently requested records), for identifying additional 
records of interest to the public that are appropriate for public 
disclosure, and for posting and indexing such records. Each OpDiv and 
StaffDiv must ensure that its Web site of posted records and indices is 
reviewed and updated on an ongoing basis. Each OpDiv and StaffDiv has a 
FOIA Requester Service Center or FOIA Public Liaison who can assist 
individuals in locating records. A list of agency FOIA Public Liaisons 
is available at http://www.foia.gov/report- makerequest.html.



Sec.  5.3  Definitions.

    The following definitions apply to this part:
    Agency is defined at 5 U.S.C. 551(1). HHS is an agency. Private 
entities performing work under a contractual agreement with the 
government are not agencies for the purpose of this definition. However, 
information maintained on behalf of an agency under Government contract, 
for the purposes of records management, is considered an agency record.
    Chief FOIA Officer means a senior official of HHS, at the Assistant 
Secretary or equivalent level, who has agency-wide responsibility for 
ensuring efficient and appropriate compliance with the FOIA, monitoring 
implementation of the FOIA throughout the agency, and making 
recommendations to the head of the agency to improve the agency's 
implementation of the FOIA. The Secretary of HHS has designated the 
Assistant Secretary, Office of the Assistant Secretary for Public 
Affairs (ASPA), as the Agency Chief FOIA Officer (ACFO); that official 
may be contacted at [email protected].
    Commercial use means a use or purpose that furthers a commercial, 
trade, or profit interest of the requester or the person or entity on 
whose behalf the request is made.
    Department or HHS means the U.S. Department of Health and Human 
Services.
    Deputy Agency Chief FOIA Officer (DACFO) means a designated official 
within the Office of the Assistant Secretary for Public Affairs, who has 
been authorized by the Chief FOIA Officer to act upon their behalf to 
implement compliance with the FOIA, as described above. This official is 
also the approving review authority for FOIA administrative appeals.
    Direct costs mean those expenses that an agency incurs in searching 
for and duplicating (and, in the case of commercial use requests, 
reviewing) records in order to respond to a FOIA request. For example, 
direct costs include the salary of the employee performing the work 
(i.e., the basic rate of pay for the employee, plus 16 percent of that 
rate to cover benefits) and the cost of operating computers and other

[[Page 25]]

electronic equipment, such as photocopiers and scanners. Direct costs do 
not include overhead expenses such as the costs of space, and of heating 
or lighting a facility.
    Duplication means the process of making a copy of a record and 
sending it to the requester, to the extent necessary to respond to the 
request. Such copies include both paper copies and electronic records. 
Fees for duplication are further explained within Sec.  5.52.
    Educational institution means any school that operates a program of 
scholarly research. A requester in this fee category must show that the 
request is made in connection with his or her role at the educational 
institution. Agencies may seek assurance from the requester that the 
request is in furtherance of scholarly research.

    Example 1. A request from a professor of geology at a university for 
records relating to soil erosion, written on letterhead of the 
Department of Geology, would be presumed to be from an educational 
institution.
    Example 2. A request from the same professor of geology seeking drug 
information from the Food and Drug Administration in furtherance of a 
murder mystery he is writing would not be presumed to be an 
institutional request, regardless of whether it was written on 
institutional stationery.
    Example 3. A student who makes a request in furtherance of their 
coursework or other school-sponsored activities and provides a copy of a 
course syllabus or other reasonable documentation to indicate the 
research purpose for the request, would qualify as part of this fee 
category.

    Expedited processing means the process set forth in the FOIA that 
allows requesters to request faster processing of their FOIA request, if 
they can demonstrate a specific compelling need.
    Fee category means one of the four categories established by the 
FOIA to determine whether a requester will be charged fees for search, 
review, and duplication. The categories are: commercial use requests; 
non-commercial scientific or educational institutions requests; news 
media requests; and all other requests. Fee categories are further 
explained within Sec.  5.53.
    Fee waiver means the waiver or reduction of fees if a requester is 
able to demonstrate that certain standards set forth in the FOIA and 
this part are satisfied, including that disclosure of the records is in 
the public interest because it is likely to contribute significantly to 
public understanding of the operations or activities of the government 
and is not primarily in the commercial interest of the requester.
    First-party request means a request by an individual for records 
pertaining to that individual, or an authorized representative acting on 
such an individual's behalf.
    FOIA Public Liaison means an agency official who reports to the 
agency Chief FOIA Officer and serves as a supervisory official to whom a 
requester can raise concerns about the service the requester has 
received from the FOIA Requester Service Center. This individual is 
responsible for assisting in reducing delays, increasing transparency 
and understanding of the status of requests, and assisting in the 
resolution of disputes.
    FOIA request means a written request that reasonably describes the 
records sought.
    FOIA library records are records that are required to be made 
available to the public without a specific request under 5 U.S.C. 
552(a)(2). We make FOIA library records available to the public 
electronically through our Web pages (http://www.hhs.gov/foia/reading/
index.html) and at certain physical locations. A list of the physical 
locations is available at http://www.hhs.gov/foia/contacts/index.html. 
Other records may also be made available at our discretion through our 
Web pages (http://www.hhs.gov).
    Freedom of Information Act (FOIA) means the law codified at 5 U.S.C. 
552 that provides the public with the right to request agency records 
from Federal executive branch agencies. A link to the text of the FOIA 
is at https://www.justice.gov/oip/freedom- information-act-5-usc-552.
    Freedom of Information Act (FOIA) Officer means an HHS official who 
has been delegated the authority to release or withhold records; to 
assess, waive, or reduce fees in response to FOIA requests; and to 
determine whether to grant expedited processing. In that capacity, the 
Freedom of Information Act (FOIA) Officer has the authority to task 
agency organizational components to search for records in response

[[Page 26]]

to a FOIA request, and to provide records located in their offices. 
Apart from records subject to proactive disclosure pursuant to 
subsection (a)(2) of the FOIA, only FOIA Officers have the authority to 
release or withhold records or to waive fees in response to a FOIA 
request. Our FOIA operations are decentralized, and each FOIA Requester 
Service Center has a designated official with this authority; the 
contact information for each FOIA Requester Service Center is available 
at http://www.hhs.gov/foia/contacts /index.html.
    (1) The HHS Freedom of Information Act (FOIA) Officer in the Office 
of the Secretary means the HHS official who in addition to overseeing 
the daily operations of the FOIA program in that office and having the 
authority of a Freedom of Information Act (FOIA) Officer, is also 
responsible for the Department-wide administration and coordination of 
the FOIA and its implementing regulations and policies as they pertain 
to the programs and activities of the Department. This individual serves 
as the principal resource with respect to the articulation of procedures 
designed to implement and ensure compliance with the FOIA and its 
implementing regulations and policies as they pertain to the Department. 
This individual reports through the DACFO to the ACFO to support 
oversight and compliance with the OPEN Government Act.
    (2) [Reserved]
    Frequently requested records means records, regardless of form or 
format, that have been released to any person under the FOIA and that 
have been requested 3 or more times or because of the nature of their 
subject matter, the agency determines have become or are likely to 
become the subject of subsequent requests for substantially the same 
records.
    Immediate Office of the Secretary (IOS) means offices within the 
Office of the Secretary, responsible for operations and work of the 
Secretary. It includes the Office of the Deputy Secretary, Office of the 
Chief of Staff, the Secretary's Counselors, the Executive Secretariat, 
the Office of Health Reform, and the Office of Intergovernmental and 
External Affairs.
    Non-commercial scientific institution means an institution that is 
not operated to further a commercial, trade, or profit interest and that 
is operated solely for the purpose of conducting scientific research the 
results of which are not intended to promote any particular product or 
industry. A requester in this category must show that the request is 
authorized by and is made under the auspices of a qualifying institution 
and that the records are sought to further scientific research and are 
not for a commercial use.
    Office of the Inspector General (OIG) means the Staff Division 
within the Office of the Secretary (OS), which is responsible for 
protecting the integrity of HHS programs and the health and welfare of 
the beneficiaries of those programs. OIG is responsible for processing 
FOIA requests for the records it maintains.
    Office of the Secretary (OS) means the HHS's chief policy officer 
and general manager, who administers and oversees the organization, its 
programs and activities. The Deputy Secretary and a number of Assistant 
Secretaries and Staff Divisions support OS. The HHS FOIA Office within 
ASPA processes FOIA requests for records maintained by OS Staff 
Divisions other than the OIG. In certain circumstances and at the HHS 
FOIA Office's discretion, the HHS FOIA office may also process FOIA 
requests involving other HHS OpDivs, as further described in Sec.  
5.28(a).
    Operating Division (OpDiv) means any of the following divisions 
within HHS which are subject to this regulation:

Office of the Secretary (OS)
Administration for Children and Families (ACF) Administration for 
Community Living (ACL)
Agency for Healthcare Research and Quality (AHRQ)
Agency for Toxic Substances and Disease Registry
(ATSDR) Centers for Disease Control and Prevention (CDC)
Centers for Medicare & Medicaid Services (CMS)
Food and Drug Administration (FDA)
Health Resources and Services Administration (HRSA)
Indian Health Service (IHS)
National Institutes of Health (NIH)
Substance Abuse and Mental Health Services Administration (SAMHSA).


[[Page 27]]


    Operating Division and Staff Division Freedom of Information Act 
(FOIA) Officers means the officials who are responsible for overseeing 
the daily operations of their FOIA programs in their respective 
Operating Divisions or Staff Divisions, with the full authority as 
described in the definition of Freedom of Information Act (FOIA) 
Officer. These individuals serve as the principal resource and authority 
for FOIA operations and implementation within their respective Operating 
Divisions or Staff Divisions.
    Other requester means any individual or organization whose request 
does not qualify as a commercial-use request, representative of the news 
media request (including a request made by a freelance journalist), or 
an educational or non-commercial scientific institution request.
    Record means any information that would be an agency record when 
maintained by an agency in any format, including an electronic format; 
and any information that is maintained for an agency by an entity under 
Government contract, for the purposes of records management.
    Redact means delete or mark over.
    Representative of the news media means any person or entity that 
actively gathers information of potential interest to a segment of the 
public, uses its editorial skills to turn raw materials into a distinct 
work, and distributes that work to an audience. The term ``news'' means 
information that is about current events or that would be of current 
interest to the public. Examples of news media entities include 
television or radio stations that broadcast news to the public at large 
and publishers of periodicals, including print and online publications 
that disseminate news and make their products available through a 
variety of means to the general public. We do not consider requests for 
records that support the news-dissemination function of the requester to 
be a commercial use. We consider ``freelance'' journalists who 
demonstrate a solid basis for expecting publication through a news media 
entity as working for that entity. A publishing contract provides the 
clearest evidence that a journalist expects publication; however, we 
also consider a requester's past publication record.
    Review means examining records responsive to a request to determine 
whether any portions are exempt from disclosure. Review time includes 
processing a record for disclosure (i.e., doing all that is necessary to 
prepare the record for disclosure), including redacting the record and 
marking the appropriate FOIA exemptions.
    Search means the process of identifying, locating, and retrieving 
records to find records responsive to a request, whether in hard copy or 
in electronic form or format.
    Staff Division (StaffDiv) means an organization component that 
provides leadership, direction, and policy and management guidance to 
the Office of the Secretary and the Department. The following StaffDivs 
are subject to the regulations in this part:

Immediate Office of the Secretary (IOS)
Assistant Secretary for Administration (ASA)
Assistant Secretary for Financial Resources (ASFR)
Assistant Secretary for Health (OASH)
Assistant Secretary for Legislation (ASL)
Assistant Secretary for Planning and Evaluation (ASPE) Assistant 
Secretary for Public Affairs (ASPA)
Assistant Secretary for Preparedness and Response (ASPR)
Departmental Appeals Board (DAB)
Office for Civil Rights (OCR)
Office of the General Counsel (OGC) Office of Global Affairs (OGA)
Office of the Inspector General (OIG)
Office of Medicare Hearings and Appeals (OMHA)
Office of the National Coordinator for Health Information Technology 
(ONC)

    Submitter means any person or entity, including a corporation, 
State, or foreign government, but not including another Federal 
Government entity, that provides commercial or financial information, 
either directly or indirectly to the Federal Government.
    Tolling means temporarily stopping the running of a time limit. We 
may toll a request to seek clarification or to address fee issues, as 
further described in Sec.  5.24.



Sec.  5.4  Regulatory scope.

    The requirements in this part apply to all OpDivs and StaffDivs of 
HHS.

[[Page 28]]

Some OpDivs and StaffDivs may establish or continue to maintain 
additional rules because of unique program requirements, but such rules 
must be consistent with this part and the FOIA. If additional rules are 
issued, they must be published in the Federal Register and you may get 
copies online at https://www.federalregister.gov/, http://
www.regulations.gov/or by contacting one of our FOIA Requester Service 
Centers.



Sec.  5.5  Interrelationship between the FOIA and the Privacy Act of 1974.

    The FOIA allows any person (whether an individual or entity) to 
request access to records. The Privacy Act, at 5 U.S.C. 552a(d), 
provides an additional right of access, allowing individuals to request 
records about themselves, if the records are maintained in a system of 
records (defined in 5 U.S.C. 552a(a)(5)).
    (a) Requesting records about you. If any part of your request 
includes records about yourself that are maintained within a system of 
records as defined by the Privacy Act at 5 U.S.C. 552a(a)(5), you should 
make your request in accordance with the Privacy Act and the 
Department's implementing regulations at 45 CFR part 5b. This includes 
requirements to verify your identity. We will process the request under 
the Privacy Act and, if it is not fully granted under the Privacy Act, 
we will process it under the FOIA. You may obtain, under the FOIA, 
information that is exempt from access under the Privacy Act, if the 
information is not excluded or exempt under the FOIA. If you request 
records about yourself that are not maintained within a system of 
records, we will process your request under the FOIA only.
    (b) Requesting records about another individual. If you request 
records about another individual, we will process your request under the 
FOIA. You may receive greater access by following the procedures 
described in Sec.  5.22(g).



               Subpart B_How to Request Records under FOIA



Sec.  5.21  Who can file a FOIA request?

    Any individual, partnership, corporation, association, or public or 
private organization other than a Federal agency, regardless of 
nationality, may submit a FOIA request to us. This includes state and 
local governments.



Sec.  5.22  What do I include in my FOIA request?

    In your FOIA request:
    (a) Provide a written description of the records you seek in 
sufficient detail to enable our staff to locate them with a reasonable 
amount of effort. The more information you provide, the better 
possibility we have of finding the records you are seeking. Information 
that will help us find the records would include:
    (1) The agencies, offices, or individuals involved;
    (2) The approximate date(s) when the records were created;
    (3) The subject, title, or description of the records sought; and
    (4) Author, recipient, case number, file designation, or other 
reference number, if available.
    (b) Include your name, full mailing address, and phone number and if 
available, your email address. This information allows us to reach you 
faster if we have any questions about your request. It is your 
responsibility to keep your current mailing address up to date with the 
office where you have filed the FOIA request.
    (c) State your willingness to pay all fees, or the maximum amount of 
fees you are willing to pay, and/or include a request for a fee waiver/
reduction.
    (d) Mark both your letter and envelope, or the subject line of your 
email, with the words ``FOIA Request.''
    (e) If you are unable to submit a written request to us due to 
circumstances such as disability or literacy, you may make a request 
orally to a FOIA Officer. FOIA Officers will put in writing an oral 
request made directly to them.
    (f) If you are making a first-party request, you must comply with 
the verification of identity procedures set forth in 45 CFR part 5b.
    (g) Where your request for records pertains to another individual, 
you may receive greater access by submitting either a notarized 
authorization

[[Page 29]]

signed by that individual or a declaration made in compliance with the 
requirements set forth in 28 U.S.C. 1746 by that individual authorizing 
disclosure of the records to the requester, or by submitting proof that 
the individual is deceased (e.g., a copy of a death certificate or an 
obituary). At our discretion, we may require you to supply additional 
information if necessary to verify that a particular individual has 
consented to disclosure of records about them.
    (h) If you are requesting the medical records of an individual other 
than yourself from a government program that pays or provides for health 
care (e.g. Medicare, Indian Health Service) and you are not that 
individual's legally authorized representative, you should submit a 
Health Insurance Portability and Accountability Act (HIPAA) compliant 
release authorization form signed by the subject of records or the 
individual's legally authorized representative. The HIPAA Privacy Rule 
requires that an authorization form contain certain core elements and 
statements which are described in the Privacy Rule's requirements at 45 
CFR 164.508. If you are submitting a request for Medicare records to 
CMS, CMS has a release authorization form at the following link: ttps://
www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS10106.pdf.
    (i) Before filing your request, you may find it helpful to consult 
the HHS FOIA Requester Service Centers online at http://www.hhs.gov/
foia/contacts /index.html, which provides additional guidance to assist 
in submitting a FOIA request to a specific OpDiv or StaffDiv or to 
regional offices or divisions within an OpDiv or StaffDiv. You may also 
wish to check in the agency's electronic FOIA libraries available online 
at http://www.hhs.gov/foia/reading /index.html, to see if the 
information you wish to obtain is already available.



Sec.  5.23  Where do I send my FOIA request?

    We have several FOIA Requester Service Centers (FOIA offices) that 
process FOIA requests. You should send your FOIA request to the 
appropriate FOIA Requester Service Center that you believe would have 
the records you seek. An up-to-date listing is maintained online at 
http://www.hhs.gov/foia/contacts /index.html. You also may submit your 
request electronically by emailing it to the appropriate FOIA Requester 
Service Center or by submitting it to the Department's web portal 
located at https://requests.publiclink.hhs.gov /palMain.aspx.
    (a) If you are requesting research data made available under the 
provisions of 45 CFR 75.322(e), requests for such data should be 
addressed to the OpDiv that made the award under which the data were 
first produced. That OpDiv will process your request in accordance with 
established procedures consistent with the FOIA and 45 CFR 75.322(e).
    (b) We officially receive your request when it reaches the FOIA 
Requester Service Center with responsibility for the OpDiv or StaffDiv 
where requested records are likely to be located, but no later than 10 
working days after the request first arrives at any of our FOIA 
Requester Service Centers.
    (c) If you have questions concerning the processing of your FOIA 
request, you may contact the FOIA Requester Service Center processing 
your request. If that initial contact does not resolve your concerns, 
you may wish to contact the designated FOIA Public Liaison for the OpDiv 
or StaffDiv processing your request. You can find a list of our FOIA 
Requester Service Centers and Public Liaisons at http://www.hhs.gov/
foia/contacts /index.html.



Sec.  5.24  How does HHS process my FOIA request?

    (a) Acknowledgement. We acknowledge all FOIA requests in writing 
within 10 working days after receipt by the appropriate office. The 
acknowledgement letter or email informs you of your request tracking 
number, provides contact information, and informs you of any complexity 
we are aware of in processing that may lengthen the time required to 
reach a final decision on the release of the records. In addition, the 
acknowledgement letter or email or a subsequent communication may also 
seek additional information to clarify your request.
    (b) Perfected requests. (1) A request is considered to be perfected 
(i.e., the 20

[[Page 30]]

working day statutory response time begins to run) when--
    (i) The request either has been received by the responsible FOIA 
office, or, in any event, not later than 10 working days after the 
request has been received by any HHS FOIA office;
    (ii) The requested records are reasonably described; and
    (iii) The request contains sufficient information to enable the FOIA 
office to contact you and transmit records to you.
    (2) We provide at least 20 working days for you to respond to a 
request to perfect your request, after notification. Requests must 
reasonably describe the records sought and contain sufficient 
information to enable the FOIA office to contact you and transmit 
records to you. If we determine that a request does not meet these 
requirements, we will attempt to contact you if possible. Should you not 
answer any correspondence, or should the correspondence be returned as 
undeliverable, we reserve the right to administratively close the FOIA 
request.
    (c) Stops in processing time (tolling). We may stop the processing 
of your request one time if we require additional information regarding 
the specifics of the request. The processing time resumes upon our 
receipt of your response. We also may stop the processing of your 
request if we require clarification regarding fee assessments. If 
additional information or clarification is required, we will attempt to 
contact you using the contact information you have provided. The 
processing time will resume upon our receipt of your response. We will 
provide at least 20 working days after notification for you to respond 
to a request for additional information or clarification regarding the 
specifics of your request or fee assessment. Should you not answer any 
correspondence, or should the correspondence be returned as 
undeliverable, we may administratively close the FOIA request.
    (d) Search cut-off date. As the end or cut-off date for a records 
search, we use the date on which we first begin our search for documents 
responsive to your request, unless you specify an earlier cut-off date, 
or a specific date range for the records search. We will use the date of 
the first search in those cases when you request records ``through the 
present,'' ``through today,'' or similar language. The FOIA allows you 
to request existing agency records. The FOIA cannot be used to request 
records which the agency may create in the future in the course of 
carrying out its mission.
    (e) Processing queues. We place FOIA requests in simple or complex 
processing queues to be processed in the order received, on a first-in, 
first-out basis, absent approval for expedited processing based upon a 
compelling need, as further explained and defined in Sec.  5.27. We will 
place your request in the simple or complex processing queue based on 
the estimated amount of work or time needed to process the request. 
Among the factors we may consider are the number of records requested, 
the number of pages involved in processing the request, and the need for 
consultations or referrals. We will advise requesters of potential 
complicating factors in our acknowledgement letter or email, or in 
subsequent communications regarding your request and, when appropriate, 
we will offer requesters an opportunity to narrow or modify their 
request so that it can be placed in the simple processing track.
    (f) Unusual Circumstances. Whenever we cannot meet the statutory 
time limit for processing a request because of ``unusual 
circumstances,'' as defined in the FOIA, and we extend the time limit on 
that basis, we will notify you, before expiration of the 20-day period 
to respond and in writing of the unusual circumstances involved and of 
the date by which we estimate processing of the request will be 
completed. Where the extension exceeds 10 working days, we will provide 
you, as described by the FOIA, with an opportunity to modify the request 
or arrange an alternative time period for processing the original or 
modified request. We will make available a designated FOIA contact in 
the appropriate FOIA Requester Service Center or the appropriate FOIA 
Public Liaison for this purpose. In addition, we will inform you of the 
right to seek dispute resolution services from the Office of Government 
Information Services (OGIS).

[[Page 31]]

    (g) Aggregating requests. For the purposes of satisfying unusual 
circumstances, we may aggregate requests in cases where it reasonably 
appears that multiple requests, submitted either by a requester or by a 
group of requesters acting in concert, constitute a single request, 
involving clearly related matters, that would otherwise involve unusual 
circumstances. In the event that requests are aggregated, they will be 
treated as one request for the purposes of calculating both response 
time and fees.



Sec.  5.25  How does HHS handle requests that involve more than one OpDiv, 
StaffDiv, or Federal agency?

    (a) Re-routing of misdirected requests. When a FOIA Requester 
Service Center determines that a request was misdirected within HHS, the 
receiving FOIA Requester Service Center must route the request to the 
FOIA Requester Service Center of the proper OpDiv or StaffDiv within 
HHS.
    (b) Consultation, referral, and coordination. When reviewing records 
located by an OpDiv or StaffDiv in response to a request, the OpDiv or 
StaffDiv will determine whether another agency of the Federal Government 
is better able to determine whether the record is exempt from disclosure 
under the FOIA. As to any such record, the OpDiv or StaffDiv must 
proceed in one of the following ways:
    (1) Consultation. When records originated with an OpDiv or StaffDiv 
processing the request, but contain within them information of interest 
to another OpDiv, StaffDiv, agency or other Federal Government office, 
the OpDiv or StaffDiv processing the request should typically consult 
with that other entity prior to making a release determination.
    (2) Referral. (i) When the OpDiv or StaffDiv processing the request 
believes that a different OpDiv, StaffDiv, or agency is best able to 
determine whether to disclose the record, the OpDiv or StaffDiv 
typically should refer the responsibility for responding to the request 
regarding that record to that other entity. Ordinarily, the entity that 
originated the record is presumed to be the best entity to make the 
disclosure determination. However, if the OpDiv or StaffDiv processing 
the request and the originating entity jointly agree that the OpDiv or 
StaffDiv processing the request is in the best position to respond 
regarding the record, then the record may be handled as a consultation.
    (ii) Whenever an OpDiv or StaffDiv refers any part of the 
responsibility for responding to a request to another OpDiv, StaffDiv, 
or federal agency, it must document the referral, maintain a copy of the 
record that it refers, and notify the requester of the referral; 
informing the requester of the name(s) of the entity to which the record 
was referred, including that entity's FOIA contact information.
    (3) Coordination. The standard referral procedure is not appropriate 
where disclosure of the identity of the OpDiv, StaffDiv, or federal 
agency to which the referral would be made could harm an interest 
protected by an applicable exemption, such as the exemptions that 
protect personal privacy or national security interests. In such 
instances, in order to avoid harm to an interest protected by an 
applicable exemption, the OpDiv or StaffDiv that received the request 
should coordinate with the originating entity to seek its views on the 
disclosability of the record. The release determination for the record 
that is the subject of the coordination should then be conveyed to the 
requester by the OpDiv or StaffDiv that originally received the request.
    (c) Classified information. On receipt of any request involving 
classified information, the OpDiv or StaffDiv must determine whether the 
information is currently and properly classified in accordance with 
applicable classification rules. Whenever a request involves a record 
containing information that has been classified or may be appropriate 
for classification by another agency under any applicable executive 
order concerning the classification of records, the OpDiv or StaffDiv 
must refer the responsibility for responding to the request regarding 
that information to the agency that classified the information, or which 
should consider the information for classification. Whenever an OpDiv's 
or StaffDiv's record contains information that has

[[Page 32]]

been derivatively classified (for example, when it contains information 
classified by another agency), the OpDiv or StaffDiv must refer the 
responsibility for responding to that portion of the request to the 
agency that classified the underlying information.
    (d) Timing of responses to consultations and referrals. All 
consultations and referrals received by the Department will be handled 
according to the date that the FOIA request initially was received by 
the first OpDiv, StaffDiv, or federal agency.
    (e) Agreements regarding consultations and referrals. OpDivs or 
StaffDivs may establish agreements with other OpDivs, StaffDivs, or 
federal agencies to eliminate the need for consultations or referrals 
with respect to particular types of records.



Sec.  5.26  How does HHS determine estimated completion dates 
for FOIA requests?

    (a) When we provide an estimated completion date, in accordance with 
Sec.  5.24(f) and upon request, for the processing of records that do 
not require consultation with another agency, we estimate the completion 
date on the basis of our reasonable judgment as to how long it will take 
to complete the request. Given the uncertainty inherent in establishing 
any estimate, the estimated completion date is subject to change at any 
time.
    (b) When we provide an estimated completion date, in accordance with 
Sec.  5.24(f) and upon request, for records that must be reviewed by 
another agency, our estimate may also be based on information from the 
other agency.



Sec.  5.27  How do I request expedited processing?

    (a) To request expedited processing, you must submit a statement, 
certified to be true and correct, explaining the basis for your need for 
expedited processing. You must send the request to the appropriate FOIA 
Officer at the address listed at http://www.hhs.gov/foia/contacts /
index.html. You may request expedited processing when you first request 
records or at any time during our processing of your request or appeal.
    (b) We process requests on an expedited basis whenever we determine 
that one or more of the following criteria exist:
    (1) That a failure to obtain requested records on an expedited basis 
could reasonably be expected to pose an imminent threat to the life or 
physical safety of an individual; or
    (2) There is an urgent need to inform the public about an actual or 
alleged Federal Government activity (this criterion applies only to 
those requests made by a person primarily engaged in disseminating 
information to the public).
    (c) We will respond to your request for expedited processing within 
10 calendar days of our receipt of your request to expedite. If we grant 
your request, the OpDiv or StaffDiv responsible for the review of the 
requested records will process your request as a priority, and it will 
be processed as soon as practicable. We will inform you if we deny your 
request for expedited processing and provide you with appeal rights. If 
you decide to appeal that denial, we will expedite our review of your 
appeal.
    (d) If we must refer records to another agency, we will inform you 
and suggest that you seek expedited review from that agency.



Sec.  5.28  How does HHS respond to my request?

    (a) The appropriate FOIA Officer will send you a response informing 
you of our release determination, including whether any responsive 
records were located, how much responsive material was located, whether 
the records are being released in full or withheld in full or in part, 
any fees you must pay for processing of the request, and your right to 
seek assistance from the appropriate FOIA Public Liaison.
    (b) If we deny any part of your request, our response will explain 
the reasons for the denial, which FOIA exemptions apply to the withheld 
records, your right to appeal that determination, and your right to seek 
dispute resolution services from the appropriate FOIA Public Liaison or 
the Office of Government Information Services (OGIS). We will advise you 
of the number of pages withheld or the estimated volume of withheld 
records, unless providing such information

[[Page 33]]

would harm an interest protected by an applicable FOIA exemption.
    (c) Records may be withheld in full or in part if any of the nine 
FOIA exemptions apply. If we determine to withhold part of a record 
pursuant to an exemption, we will provide access to reasonably 
segregable non-exempt information contained in the record. On the 
released portion of the record, we indicate where the information has 
been redacted and the exemption(s) we applied, unless including that 
indication would harm an interest the exemption protects. In Subpart C 
of this part, we list the exemptions to disclosure that may apply to 
agency records.
    (d) We also may deny your request for other reasons, including that 
a request does not reasonably describe the records sought; the 
information requested is not a record subject to the FOIA; the requested 
records do not exist, cannot be located, or have been destroyed; or that 
the requested records are not readily reproducible in the form or format 
requested.
    (e) If a request involves a voluminous amount of material or 
searches in multiple locations, we may provide you with interim 
responses if feasible and reasonably possible, releasing the records on 
a rolling basis.
    (f) Copies of records in the format you request will be provided if 
the records already exist in that format or if they are reasonably and 
readily reproducible in the format you request.



Sec.  5.29  How may I request assistance with the FOIA process?

    (a) If you have questions concerning the processing of your FOIA 
request, you should first contact the FOIA Requester Service Center 
processing your request. Additionally, for assistance at any point in 
the FOIA process, you may contact the FOIA Public Liaison at the FOIA 
Requester Service Center processing your request. The FOIA Public 
Liaison is responsible for assisting you to reduce delays, increasing 
transparency and understanding of the status of requests, and assisting 
to resolve any FOIA disputes. Some FOIA Requester Service Centers allow 
you to check the status of your request online. You can find a list of 
our FOIA Requester Service Centers and Public Liaisons at http://
www.hhs.gov/foia/contacts /index.html.
    (b) The Office of Government Information Services (OGIS), which is 
part of the National Archives and Records Administration, serves as the 
Federal FOIA ombudsman and assists requesters and agencies to prevent 
and resolve FOIA disputes through mediation. Mediation is a voluntary 
process. If we participate in the dispute resolution services provided 
by OGIS, we will actively engage as a partner to the process in an 
attempt to resolve the dispute and will follow the principles of 
confidentiality in accordance with the Administrative Dispute Resolution 
Act, 5 U.S.C. 571-8. You may contact OGIS at the following address: 
National Archives and Records Administration, Office of Government 
Information Services, 8601 Adelphi Road--OGIS, College Park, MD 20740-
6001, or by email at [email protected], or by telephone at 202-741-5770 or 
1-877-684-6448 (toll free).



                   Subpart C_Exemptions to Disclosure



Sec.  5.31  What are the reasons records may be withheld?

    While we are committed to providing public access to as many of our 
records as possible, there are instances in which information falls 
within one or more of the FOIA's nine exemptions and disclosure would 
either foreseeably harm an interest protected by a FOIA exemption or 
disclosure is prohibited by law. We review all records and weigh and 
assess all legal and policy requirements prior to making a final 
disclosure determination. A description of the nine FOIA exemptions is 
provided in paragraphs (a) through (i) of this section.
    (a) Exemption 1. Exemption 1 protects from disclosure information 
specifically authorized under criteria established by an Executive order 
to be kept secret in the interest of national defense or foreign policy 
and are in fact properly classified pursuant to such Executive order.
    (b) Exemption 2. Exemption 2 authorizes our agency to withhold 
records that are related solely to the internal personnel rules and 
practices of an agency.

[[Page 34]]

    (c) Exemption 3. Exemption 3 authorizes our agency to withhold 
records which are specifically exempted from disclosure by statute 
(other than 5 U.S.C. 552(b)) provided that such statute requires that 
the matters be withheld from the public in such a manner as to leave no 
discretion on the issue; or establishes particular criteria for 
withholding or refers to particular types of matters to be withheld; and 
if enacted after the date of enactment of the OPEN FOIA Act of 2009, 
October 28, 2009, specifically cites to 5 U.S.C. 552(b)(3).
    (d) Exemption 4. Exemption 4 authorizes our agency to withhold trade 
secrets and commercial or financial information obtained from a person 
and privileged or confidential.
    (e) Exemption 5. Exemption 5 authorizes our agency to withhold 
inter-agency or intra agency memorandums or letters that would not be 
available by law to a party other than an agency in litigation with the 
agency, provided that the deliberative process privilege shall not apply 
to records created 25 years or more before the date on which the records 
were requested.
    (f) Exemption 6. Exemption 6 authorizes our agency to protect 
information in personnel and medical files and similar files when the 
disclosure of such information would constitute a clearly unwarranted 
invasion of personal privacy.
    (g) Exemption 7. Exemption 7 authorizes our agency to withhold 
records or information compiled for law enforcement purposes, but only 
to the extent that the production of such law enforcement records or 
information would cause the following harm(s):
    (1) Could reasonably be expected to interfere with enforcement 
proceedings;
    (2) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (3) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (4) Could reasonably be expected to disclose the identity of a 
confidential source, including a state, local, or foreign agency or 
authority, or any private institution which furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation, or by an agency conducting lawful national security 
intelligence investigation, information furnished by a confidential 
source;
    (5) Would disclose techniques and procedures for law enforcement 
investigations or prosecutions, or would disclose guidelines for law 
enforcement investigations or prosecutions, if such disclosure could 
reasonably be expected to risk circumvention of the law; or
    (6) Could reasonably be expected to endanger the life or physical 
safety of any individual.
    (h) Exemption 8. Exemption 8 authorizes our agency to withhold 
records that are contained in or related to examination, operating, or 
condition reports prepared by, on behalf of, or for the use of an agency 
responsible for the regulation or supervision of financial institutions.
    (i) Exemption 9. Exemption 9 authorizes our agency to withhold 
geological and geophysical information and data, including maps, 
concerning wells.



Sec.  5.32  Records not subject to the requirements of the FOIA--
law enforcement exclusions.

    Under the FOIA, there is special protection for narrow categories of 
law enforcement and national security records. The provisions protecting 
those records are known as ``exclusions'' and are described in 5 U.S.C. 
552(c). These exclusions expressly authorize Federal law enforcement 
agencies, under these exceptional circumstances, to treat the records as 
not subject to the requirements of the FOIA.
    (a) Should an HHS OpDiv or StaffDiv maintain records which are 
subject to a FOIA exclusion, and consider employing an exclusion or have 
a question as to the implementation of an exclusion, the OpDiv or 
StaffDiv will consult with the Office of Information Policy, U.S. 
Department of Justice.
    (b) Because records falling within an exclusion are not subject to 
the requirements of the FOIA, should any HHS OpDiv or StaffDiv maintain 
such excluded records, the OpDiv or StaffDiv

[[Page 35]]

will limit its response to those records that are subject to the FOIA.



              Subpart D_Confidential Commercial Information



Sec.  5.41  How does a submitter identify records containing 
confidential commercial information?

    A person who submits records to the government may designate part or 
all of the information in such records that they may consider to be 
exempt from disclosure under Exemption 4 of the FOIA. The person may 
make this designation either at the time the records are submitted to 
the government or within a reasonable time thereafter. The designation 
must be in writing. Any such designation will expire 10 years after the 
records were submitted to the government.



Sec.  5.42  How does HHS process FOIA requests for confidential 
commercial information?

    (a) Predisclosure notification. The procedures in this section apply 
to records on which the submitter has designated information as provided 
in Sec.  5.41. They also apply to records that were submitted to the 
government where we have substantial reason to believe that information 
in the records could reasonably be considered exempt under Exemption 4. 
Certain exceptions to these procedures are stated in paragraph (b) of 
this section.
    (1) When we receive a request for such records, and we determine 
that we may be required to disclose them, we will make reasonable 
efforts to notify the submitter about these facts. The notice will 
include a copy of the request, and it will inform the submitter about 
the procedures and time limits for submission and consideration of 
objections to disclosure. If we must notify a large number of 
submitters, we may do this by posting or publishing a notice in a place 
where the submitters are reasonably likely to become aware of it.
    (2) The submitter has 10 working days from the date of the notice to 
object to disclosure of any part of the records and to state all bases 
for its objections. FOIA Offices in HHS and its organizational 
components may extend this period as appropriate and necessary.
    (3) We review and consider all objections to release that we receive 
within the time limit. If a submitter fails to respond within the time 
period specified in the notice, we will consider the submitter to have 
no objection to disclosure of the information. If we decide to release 
the records, we inform the submitter in writing, along with our reasons 
for the decision to release. We include with the notice a description of 
the information to be disclosed or copies of the records as we intend to 
release them. We also provide the submitter with a specific date that we 
intend to disclose the records, which must be at least 5 working days 
after the date of the notice. We do not consider any information we 
receive after the date of a disclosure decision.
    (4) If the requester files a lawsuit under the FOIA for access to 
records submitted to HHS, we promptly notify the submitter.
    (5) We will notify the requester in these circumstances:
    (i) When we notify a submitter that we may be required to disclose 
information under the FOIA, we will also notify the requester that 
notice and opportunity to comment are being provided to the submitter;
    (ii) When the agency notifies a submitter of a final disclosure 
decision under the FOIA,
    and;
    (iii) When a submitter files a lawsuit to prevent the disclosure of 
the information.
    (b) Exceptions to predisclosure notification. The notice 
requirements in paragraph (a) of this section do not apply in the 
following situations:
    (1) We determine that we should withhold the information under a 
FOIA exemption;
    (2) The information has been lawfully published or made available to 
the public
    (3) We are required by a statute (other than the FOIA), or by a 
regulation issued in accordance with the requirements of Executive Order 
12600, to disclose the information; or
    (4) The designation made by the submitter appears obviously 
frivolous. However, in such a case, the agency

[[Page 36]]

must provide the submitter with written notice of any final disclosure 
determination and intent to release, at least 5 working days prior to 
the specified disclosure date. We will notify the submitter as 
referenced in Sec.  5.42(a)(3).



                             Subpart E_Fees



Sec.  5.51  General information on fees for all FOIA requests.

    (a) We generally assume that when you request records you are 
willing to pay the fees we charge for services associated with your 
request. You may specify a limit on the amount you are willing to spend. 
We will notify you if it appears that the fees will exceed $25.00 or 
your specified limit and ask whether you nevertheless want us to proceed 
with the search.
    (b) If you have failed to pay FOIA fees in the past, we will require 
you to pay your past due bill and we may also require you to pay the 
anticipated fee before we begin processing your current request. If we 
estimate that your fees may be greater than $250.00, we also may require 
advance payment or a deposit before we begin processing your request. If 
you fail to make an advance payment within 20 working days after the 
date of our fee letter, we will close the request.
    (c) We may charge interest on unpaid bills beginning on the 31st 
calendar day following the day the FOIA fee invoice was sent. We may 
assess interest, administrative costs, and penalties for overdue FOIA 
fee costs.
    (d) If we determine that you (either acting alone or with a group of 
requesters) are breaking down a single request into a series of requests 
in order to avoid or reduce fees, we may aggregate all of these requests 
when calculating the fees. In aggregating requests, we may consider the 
subject matter of the requests and whether the requests were filed close 
in time to one another.
    (e) If, in the course of negotiating fees, you do not respond to the 
agency within 20 working days of our last communication, your request 
will be closed.
    (f) We may stop the processing of your request, if necessary, to 
clarify fee issues with you, and to confirm your willingness to pay 
applicable fees. Fee related issues may arise sequentially over the 
course of processing a request, and the FOIA allows agencies to stop the 
processing time as many times as necessary in order to clarify issues 
regarding fee assessment and willingness to pay fees.
    (g) We may charge search fees even if the records are exempt from 
disclosure, or if we do not find any responsive records during our 
search.
    (h) We do not send an invoice to requesters if assessable processing 
fees are less than $25.00.



Sec.  5.52  What is the FOIA fee schedule for obtaining records?

    In responding to FOIA requests for records, we charge the following 
fees, where applicable, unless we have given you a reduction or waiver 
of fees. The fees we charge for search and review are three-tiered, and 
the hourly charge is determined by the classification and grade level of 
the employee performing the search or review. When the search or review 
is performed by employees at grade GS-1 through GS-8 (or equivalent), an 
hourly rate will be charged based on the salary of a GS-5, step 7, 
employee; when done by a GS-9 through GS-14 (or equivalent), an hourly 
rate will be charged based on the salary of a GS-12, step 4,employee; 
and when done by a GS-15 or above (or equivalent), an hourly rate will 
be charged based on the salary of a GS-15, step 7, employee. In each 
case, the hourly rate will be computed by taking the current hourly rate 
listed for the specified grade and step in the General Schedule Locality 
Pay Table for the Locality of Washington-Baltimore-Northern Virginia, 
DC-MD-VA-WV-PA, adding 16% of that rate to cover benefits, and rounding 
to the nearest whole dollar.
    (a) Search fees--(1) Manual searches. Fees will be assessed to 
search agency files and records in both hardcopy and electronic format. 
Such fees will be at the rate or rates for the classification of the 
employee(s) performing the search, as established in this section.
    (2) Computer searches. We base the fees for computer searches on the 
actual cost to our agency of operating the computer and the salary of 
the operator.

[[Page 37]]

    (b) Review fees. (1) We charge review fees for time we spend 
examining documents that are responsive to a request to determine 
whether we must apply any FOIA exemptions to withhold information. 
Review time includes processing any record for disclosure (i.e., doing 
all that is necessary to prepare the record for disclosure), including 
redacting the record and marking the appropriate FOIA exemptions. We 
charge review fees even if we ultimately are unable to disclose a 
record.
    (2) We do not charge review fees for time we spend resolving general 
legal or policy issues regarding the application of exemptions. However, 
we do charge review fees for time we spend obtaining and considering any 
formal objection to disclosure made by a confidential commercial 
information submitter.
    (c) Duplication fees--(1) Photocopying standard-sized pages. The 
current charge for photocopying records is $0.10 per page.
    (2) Reproduction of electronic records. We will attempt to provide 
records in the format you sought, if the records are reasonably and 
readily reproducible in the requested format. We charge you for our 
direct costs for staff time and to organize, convert, and format data 
for release, per requester instructions, and for printouts or electronic 
media necessary to reproduce electronic records requested under the 
FOIA.
    (3) Copying other media. We will charge you the direct cost of 
copying other media.
    (d) Mailing and special delivery fees. We release records by United 
States Postal Service or, when appropriate, by electronic means, such as 
electronic mail or web portal. If a requester seeks special delivery, 
such as overnight shipping, we reserve the right to pass on the actual 
costs of special delivery to the requester. Requesters may provide their 
mailing account and billing information to the agency, so that they may 
pay directly for special delivery options.
    (e) Certification of records. The FOIA does not require agencies to 
certify records as true copies. We may elect, as a matter of 
administrative discretion, to certify records upon request; however, 
such a request must be submitted in writing. Further, we will only 
certify as true copies records that have not left the agency's chain of 
custody. The charge for certification is $25.00 per record certified.
    (f) Other statutes specifically providing for fees. The fee schedule 
of this section does not apply to fees charged under any statute that 
specifically requires an OpDiv or StaffDiv to set and collect fees for 
particular types of records. In instances where records responsive to a 
request are subject to a statutorily-based fee schedule program, the 
OpDiv or StaffDiv must inform the requester of the contact information 
for that program.



Sec.  5.53  How does HHS calculate FOIA fees for different categories 
of requesters?

    (a) If you are a commercial use requester, we charge you fees for 
searching, reviewing, and duplicating responsive records.
    (b) If you are an educational or noncommercial scientific 
institution requester, or a member of the news media, you are entitled 
to search time, review time, and up to 100 pages of duplication (or the 
cost equivalent for other media) without charge. We charge duplication 
fees after the first 100 pages (or its cost equivalent).
    (c) If you do not fall into either of the categories in paragraphs 
(a) and (b) of this section (i.e. you are an ``other requester''), you 
are entitled to two hours of free search time, up to 100 pages of 
duplication (or the cost equivalent of other media) without charge, and 
you will not be charged for review time. We may charge for search time 
beyond the first two hours and for duplication beyond the first 100 
pages (or its cost equivalent).
    (d)(1) If we fail to comply with the FOIA's time limits in which to 
respond to a request, we may not charge search fees, or, in the 
instances of the requester categories referenced in paragraph (b) of 
this section, may not charge duplication fees, except as described in 
(d)(2)-(4).
    (2) If we have determined that unusual circumstances as defined by 
the FOIA apply and we provided timely

[[Page 38]]

written notice to the requester in accordance with the FOIA, a failure 
to comply with the time limit shall be excused for an additional 10 
days.
    (3) If we have determined that unusual circumstances, as defined by 
the FOIA, apply and more than 5,000 pages are necessary to respond to 
the request, we may charge search fees, or, in the instances of requests 
from requesters described in paragraph (b) of this section, may charge 
duplication fees if the following steps are taken: we must have provided 
timely written notice to the requester in accordance with the FOIA and 
must have discussed with the requester via written mail, email, or 
telephone (or made not less than three good-faith attempts to do so) how 
the requester could effectively limit the scope of the request in 
accordance with 5. U.S.C. 552(a)(6)(B)(ii). If this exception is 
satisfied, we may charge all applicable fees incurred in the processing 
of the request.
    (4) If a court has determined that exceptional circumstances exist, 
as defined by the FOIA, a failure to comply with the time limits shall 
be excused for the length of time provided by the court order.



Sec.  5.54  How may I request a fee waiver?

    (a) Requesters may seek a waiver of fees by submitting a written 
application demonstrating how disclosure of the requested information is 
in the public interest because it is likely to contribute significantly 
to public understanding of the operations or activities of the 
government and is not primarily in the commercial interest of the 
requester.
    (b) We must furnish records responsive to a request without charge 
or at a reduced rate when we determine, based on all available 
information, that the following three factors are satisfied:
    (1) Disclosure of the requested information would shed light on the 
operations or activities of the government. The subject of the request 
must concern identifiable operations or activities of the Federal 
Government with a connection that is direct and clear, not remote or 
attenuated.
    (2) Disclosure of the requested information would be likely to 
contribute significantly to public understanding of those operations or 
activities. This factor is satisfied when the following criteria are 
met:
    (i) Disclosure of the requested records must be meaningfully 
informative about government operations or activities. The disclosure of 
information that already is in the public domain, in either the same or 
a substantially identical form, would not be meaningfully informative if 
nothing new would be added to the public's understanding.
    (ii) The disclosure must contribute to the understanding of a 
reasonably broad audience of persons interested in the subject, as 
opposed to the individual understanding of the requester. A requester's 
expertise in the subject area as well as the requester's ability and 
intention to effectively convey information to the public must be 
considered. We will presume that a representative of the news media will 
satisfy this consideration.
    (3) The disclosure must not be primarily in the commercial interest 
of the requester. To determine whether disclosure of the requested 
information is primarily in the commercial interest of the requester, we 
will consider the following criteria:
    (i) We will identify whether the requester has any commercial 
interest that would be furthered by the requested disclosure. A 
commercial interest includes any commercial, trade, or profit interest. 
Requesters will be given an opportunity to provide explanatory 
information regarding this consideration.
    (ii) If there is an identified commercial interest, we will 
determine whether that is the primary interest furthered by the request. 
A waiver or reduction of fees is justified when the requirements of 
paragraphs (b)(1) and (2) of this section are satisfied and any 
commercial interest is not the primary interest furthered by the 
request. We ordinarily will presume that when a news media requester has 
satisfied factors (b)(1) and (2) of this section, the request is not 
primarily in the commercial interest of the requester. Disclosure to 
data brokers or others who merely compile and market government 
information for direct economic

[[Page 39]]

return will not be presumed to primarily serve the public interest.
    (c) You should ask for waiver or reduction of fees when you first 
submit your request to HHS, and should address the criteria referenced 
in this section.



                            Subpart F_Appeals



Sec.  5.61  When may I appeal HHS's FOIA determination?

    In order to fully exhaust all of your administrative remedies, you 
must file an appeal of an adverse agency determination in writing, and 
to be considered timely it must be postmarked, or in the case of 
electronic submissions, transmitted within 90 calendar days from the 
date of such determination. Any electronic transmission made after 
normal business hours will be considered to have been transmitted on the 
next calendar day. If a postmark is not legible, the timeliness of a 
submission will be based on the date that we receive the appeal. Adverse 
determinations include:
    (a) Refusal to release a record, either in whole or in part;
    (b) Determination that a record does not exist or cannot be found;
    (c) Determination that a request does not reasonably describe the 
records sought;
    (d) Determination that the record you sought was not subject to the 
FOIA;
    (e) Denial of a request for expedited processing;
    (f) Denial of a fee waiver request; or
    (g) Fee category determination.



Sec.  5.62  How do I file an appeal?

    (a) You have the right to appeal an adverse agency determination of 
your FOIA request.
    (b) You may submit your appeal via mail or electronically.
    (1) Please send your appeal to the review official at the address 
provided in your denial letter. If you are unsure who is the appropriate 
review official, please contact the FOIA Requester Service Center that 
processed your request to obtain that information.
    (2) The addresses to mail FOIA appeals for CMS and OS are, 
respectively: Centers for Medicare & Medicaid Services, Attn: Principal 
Deputy Administrator, Room C5-16- 03, 7500 Security Boulevard, 
Baltimore, MD 21244; and U.S. Department of Health and Human Services, 
Deputy Agency Chief FOIA Officer, Office of the Assistant Secretary for 
Public Affairs, Room 729H, 200 Independence Avenue SW., Washington, DC 
20201. Additionally, information, including how to submit a FOIA appeal 
electronically, can be found at the following online locations for CMS 
and OS: https://www.cms.gov/Regulations-and- Guidance/Legislation/FOIA/
filehow.html and https://requests.publiclink.hhs.gov /palMain.aspx.
    (3) When submitting an appeal, you should mark both your letter and 
envelope with the words ``FOIA Appeal'' or include the words ``FOIA 
Appeal'' in the subject line of your email. You should also include your 
FOIA request tracking number, a copy of your initial request, and a copy 
of our final determination letter.
    (c) Your appeal should clearly identify the agency determination 
that is being appealed. It would be helpful if you provide specific 
reasons explaining why you believe the agency's adverse determination 
should be reconsidered.



Sec.  5.63  How does HHS process appeals?

    (a) We respond to your appeal within 20 working days after the 
appeal official designated in your appeal letter receives it. If, 
however, your appeal is based on a denial of a request for expedited 
processing, we will act on your appeal of that decision expeditiously. 
Before making a decision on an appeal of an adverse determination, the 
designated review official will consult with the Office of the General 
Counsel. Also, the concurrence of the Office of the Assistant Secretary 
for Public Affairs is required in all appeal decisions, including those 
on fees. When the review official responds to an appeal, that 
constitutes the Department's final action on the request.
    (b) If we reverse or modify the initial decision, we will inform you 
in writing and, if applicable, reprocess your request. If we do not 
change our initial decision, we will respond in writing to you, explain 
the reasons for the decision, set out any FOIA exemptions that apply, 
and inform you of the provisions

[[Page 40]]

for judicial review. If a requester files a FOIA lawsuit in reference to 
an appeal, we will cease processing the appeal.



Sec.  5.64  What avenues are available to me if I disagree 
with HHS's appeal decision?

    (a) In our response letter, we notify you of your right to seek 
judicial review of an adverse determination as set forth in the FOIA at 
5 U.S.C. 552(a)(4)(B). Before seeking review by a court of an adverse 
determination, you generally must first submit a timely administrative 
appeal.
    (b) We also inform you that the Office of Government Information 
Services (OGIS) offers mediation services to resolve disputes between 
FOIA requesters and Federal agencies as a non-exclusive alternative to 
litigation. As referenced in Sec.  5.29(b) you may contact OGIS via 
mail, email, or telephone for assistance.



                       Subpart G_Records Retention



Sec.  5.71  How does HHS retain FOIA records?

    We will preserve records created in administering the Department's 
Freedom of Information program until disposition is authorized under an 
applicable General Records Schedule or other records schedule duly 
approved by the Archivist of the United States.

                           PART 5a [RESERVED]



PART 5b_PRIVACY ACT REGULATIONS--Table of Contents



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

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

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

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



Sec.  5b.1  Definitions.

    As used in this part:
    (a) Access means availability of a record to a subject individual.
    (b) Agency means the Department of Health and Human Services.
    (c) Department means the Department of Health and Human Services.
    (d) Disclosure means the availability or release of a record to 
anyone other than the subject individual.
    (e) Individual means a living person who is a citizen of the United 
States or an alien lawfully admitted for permanent residence. It does 
not include persons such as sole proprietorships, partnerships, or 
corporations. A business firm which is identified by the name of one or 
more persons is not an individual within the meaning of this part.
    (f) Maintain means to maintain, collect, use, or disseminate when 
used in connection with the term ``record''; and, to have control over 
or responsibility for a system of records when used in connection with 
the term ``system of records.''
    (g) Notification means communication to an individual whether he is 
a subject individual.
    (h) Record means any item, collection, or grouping of information 
about an individual that is maintained by the Department, including but 
not limited to the individual's education, financial transactions, 
medical history, and criminal or employment history and that contains 
his name, or an identifying number, symbol, or other identifying 
particular assigned to the individual, such as a finger or voice print 
or a photograph. When used in this part, record means only a record 
which is in a system of records.
    (i) Responsible Department official means that officer who is listed 
in a notice of a system of records as the system manager for a given 
system of

[[Page 41]]

records or another individual listed in the notice of a system of 
records to whom requests may be made, or the designee of either such 
officer or individual.
    (j) Routine use means the disclosure of a record outside the 
Department, without the consent of the subject individual, for a purpose 
which is compatible with the purpose for which the record was collected. 
It includes disclosures required to be made by statute other than the 
Freedom of Information Act, 5 U.S.C. 552. It does not include 
disclosures which are permitted to be made without the consent of the 
subject individual which are not compatible with the purpose for which 
it was collected such as disclosures to the Bureau of the Census, the 
General Accounting Office, or to Congress.
    (k) Secretary means the Secretary of Health and Human Services, or 
his designee.
    (l) Statistical record means a record maintained for statistical 
research or reporting purposes only and not maintained to make 
determinations about a particular subject individual.
    (m) Subject individual means that individual to whom a record 
pertains.
    (n) System of records means any group of records under the control 
of the Department from which a record is retrieved by personal 
identifier such as the name of the individual, number, symbol or other 
unique retriever assigned to the individual. Single records or groups of 
records which are not retrieved by a personal identifier are not part of 
a system of records. Papers maintained by individual employees of the 
Department which are prepared, maintained, or discarded at the 
discretion of the employee and which are not subject to the Federal 
Records Act, 44 U.S.C. 2901, are not part of a system of records; 
Provided, That such personal papers are not used by the employee or the 
Department to determine any rights, benefits, or privileges of 
individuals.



Sec.  5b.2  Purpose and scope.

    (a) This part implements section 3 of the Privacy Act of 1974, 5 
U.S.C. 552a (hereinafter referred to as the Act), by establishing agency 
policies and procedures for the maintenance of records. This part also 
establishes agency policies and procedures under which a subject 
individual may be given notification of or access to a record pertaining 
to him and policies and procedures under which a subject individual may 
have his record corrected or amended if he believes that his record is 
not accurate, timely, complete, or relevant or necessary to accomplish a 
Department function.
    (b) All components of the Department are governed by the provisions 
of this part. Also governed by the provisions of this part are:
    (1) Certain non-Federal entities which operate as agents of the 
Department for purposes of carrying out Federal functions, such as 
intermediaries and carriers performing functions under contracts and 
agreements entered into pursuant to sections 1816 and 1842 of the Social 
Security Act, 42 U.S.C. 1395h and 1395u.
    (2) Advisory committees and councils within the meaning of the 
Federal Advisory Committee Act which provide advice to (i) any official 
or component of the Department or (ii) the President and for which the 
Department has been delegated responsibility for providing services.
    (c) Employees of the Department governed by this part include all 
regular and special government employees of the Department; members of 
the Public Health Service Commissioned Corps; experts and consultants 
whose temporary (not in excess of 1 year) or intermittent services have 
been procured by the Department by contract pursuant to 3109 of Title 5, 
United States Code; volunteers where acceptance of their services are 
authorized by law; those individuals performing gratuitous services as 
permitted under conditions prescribed by the Civil Service Commission; 
and, participants in work-study or training programs.
    (d) Where other statutes mandate procedures which are inconsistent 
with the procedures set forth in this part, components of the Department 
may issue supplementary regulations containing procedures necessary to 
comply with such statutes. In addition, components of the Department may 
supplement by regulation the policies and procedures set forth in this 
part to

[[Page 42]]

meet particular needs of the programs administered by such components.
    (e) This part does not:
    (1) Make available to a subject individual records which are not 
retrieved by that individual's name or other personal identifier.
    (2) Make available to the general public records which are retrieved 
by a subject individual's name or other personal identifier or make 
available to the general public records which would otherwise not be 
available to the general public under the Freedom of Information Act, 5 
U.S.C. 552, and part 5 of this title.
    (3) Govern the maintenance or disclosure of, notification of or 
access to, records in the possession of the Department which are subject 
to regulations of another agency, such as personnel records subject to 
the regulations of the Civil Service Commission.
    (4) Apply to grantees, including State and local governments or 
subdivisions thereof, administering federally funded programs.
    (5) Make available records compiled by the Department in reasonable 
anticipation of court litigation or formal administrative proceedings. 
The availability of such records to the general public or to any subject 
individual or party to such litigation or proceedings shall be governed 
by applicable constitutional principles, rules of discovery, and 
applicable regulations of the Department and any of its components.



Sec.  5b.3  Policy.

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



Sec.  5b.4  Maintenance of records.

    (a) No record will be maintained by the Department unless:
    (1) It is relevant and necessary to accomplish a Department function 
required to be accomplished by statute or Executive Order;
    (2) It is acquired to the greatest extent practicable from the 
subject individual when maintenance of the record may result in a 
determination about the subject individual's rights, benefits or 
privileges under Federal programs;
    (3) The individual providing the record is informed of the authority 
for providing the record (including whether the providing of the record 
is mandatory or voluntary, the principal purpose for maintaining the 
record, the routine uses for the record, what effect his refusal to 
provide the record may have on him), and if the record is not required 
by statute or Executive Order to be provided by the individual, he 
agrees to provide the record.
    (b) No record will be maintained by the Department which describes 
how an individual exercises rights guaranteed by the First Amendment 
unless expressly authorized (1) by statute, or (2) by the subject 
individual, or (3) unless pertinent to and within the scope of an 
authorized law enforcement activity.



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

    (a) Times, places, and manner of requesting notification of or 
access to a record. (1) Subject to the provisions governing medical 
records in Sec.  5b.6 of this part, any individual may request 
notification of a record. He may at the same time request access to any 
record pertaining to him. An individual may be accompanied by another 
individual of his choice when he requests access to a record in person; 
Provided, That he affirmatively authorizes the presence of such other 
individual during any discussion of a record to which access is 
requested.
    (2) An individual making a request for notification of or access to 
a record shall address his request to the responsible Department 
official and shall verify his identity when required in accordance with 
paragraph (b)(2) of this section. At the time the request is made, the 
individual shall specify which systems of records he wishes to have 
searched and the records to which he wishes to have access. He may also 
request that copies be made of all or

[[Page 43]]

any such records. An individual shall also provide the responsible 
Department official with sufficient particulars to enable such official 
to distinguish between records on subject individuals with the same 
name. The necessary particulars are set forth in the notices of systems 
of records.
    (3) An individual who makes a request in person may leave with any 
responsible Department official a request for notification of or access 
to a record under the control of another responsible Department 
official; Provided, That the request is addressed in writing to the 
appropriate responsible Department official.
    (b) Verification of identity--(1) When required. Unless an 
individual, who is making a request for notification of or access to a 
record in person, is personally known to the responsible Department 
official, he shall be required to verify his identity in accordance with 
paragraph (b)(2) of this section if:
    (i) He makes a request for notification of a record and the 
responsible Department official determines that the mere disclosure of 
the existence of the record would be a clearly unwarranted invasion of 
privacy if disclosed to someone other than the subject individual; or,
    (ii) He makes a request for access to a record which is not required 
to be disclosed to the general public under the Freedom of Information 
Act, 5 U.S.C. 552, and part 5 of this title.
    (2) Manner of verifying identity. (i) An individual who makes a 
request in person shall provide to the responsible Department official 
at least one piece of tangible identification such as a driver's 
license, passport, alien or voter registration card, or union card to 
verify his identity. If an individual does not have identification 
papers to verify his identity, he shall certify in writing that he is 
the individual who he claims to be and that he understands that the 
knowing and willful request for or acquisition of a record pertaining to 
an individual under false pretenses is a criminal offense under the Act 
subject to a $5,000 fine.
    (ii) Except as provided in paragraph (b)(2)(v) of this section, an 
individual who does not make a request in person shall submit a 
notarized request to the responsible Department official to verify his 
identity or shall certify in his request that he is the individual who 
he claims to be and that he understands that the knowing and willful 
request for or acquisition of a record pertaining to an individual under 
false pretenses is a criminal offense under the Act subject to a $5,000 
fine.
    (iii) An individual who makes a request on behalf of a minor or 
legal incompetent as authorized under Sec.  5b.10 of this part shall 
verify his relationship to the minor or legal incompetent, in addition 
to verifying his own identity, by providing a copy of the minor's birth 
certificate, a court order, or other competent evidence of guardianship 
to the responsible Department official; except that, an individual is 
not required to verify his relationship to the minor or legal 
incompetent when he is not required to verify his own identity or when 
evidence of his relationship to the minor or legal incompetent has been 
previously given to the responsible Department official.
    (iv) An individual shall further verify his identity if he is 
requesting notification of or access to sensitive records such as 
medical records. Any further verification shall parallel the record to 
which notification or access is being sought. Such further verification 
may include such particulars as the individual's years of attendance at 
a particular educational institution, rank attained in the uniformed 
services, date or place of birth, names of parents, an occupation or the 
specific times the individual received medical treatment.
    (v) An individual who makes a request by telephone shall verify his 
identity by providing to the responsible Department official identifying 
particulars which parallel the record to which notification or access is 
being sought. If the responsible Department official determines that the 
particulars provided by telephone are insufficient, the requester will 
be required to submit the request in writing or in person. Telephone 
requests will not be accepted where an individual is requesting 
notification of or access to sensitive records such as medical records.
    (c) Granting notification of or access to a record. (1) Subject to 
the provisions

[[Page 44]]

governing medical records in Sec.  5b.6 of this part and the provisions 
governing exempt systems in Sec.  5b.11 of this part, a responsible 
Department official, who receives a request for notification of or 
access to a record and, if required, verification of an individual's 
identity, will review the request and grant notification or access to a 
record, if the individual requesting access to the record is the subject 
individual.
    (2) If the responsible Department official determines that there 
will be a delay in responding to a request because of the number of 
requests being processed, a breakdown of equipment, shortage of 
personnel, storage of records in other locations, etc., he will so 
inform the individual and indicate when notification or access will be 
granted.
    (3) Prior to granting notification of or access to a record, the 
responsible Department official may at his discretion require an 
individual making a request in person to reduce his request to writing 
if the individual has not already done so at the time the request is 
made.



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

    (a) General. An individual in general has a right to notification of 
or access to his medical records, including psychological records, as 
well as to other records pertaining to him maintained by the Department. 
This section sets forth special procedures as permitted by the Act for 
notification of or access to medical records, including a special 
procedure for notification of or access to medical records of minors. 
The special procedures set forth in paragraph (b) of this section may 
not be suitable for use by every component of the Department. Therefore, 
components may follow the paragraph (b) procedure for notification of or 
access to medical records, or may issue regulations establishing special 
procedures for such purposes. The special procedure set forth in 
paragraph (c) of this section relating to medical records of minors is 
mandatory.
    (b) Medical records procedures--(1) Notification of or access to 
medical records. (i) Any individual may request notification of or 
access to a medical record pertaining to him. Unless the individual is a 
parent or guardian requesting notification of or access to a minor's 
medical record, an individual shall make a request for a medical record 
in accordance with this section and the procedures in Sec.  5b.5 of this 
part.
    (ii) An individual who requests notification of or access to a 
medical record shall, at the time the request is made, designate a 
representative in writing. The representative may be a physician, other 
health professional, or other responsible individual, who would be 
willing to review the record and inform the subject individual of its 
contents at the representative's discretion.
    (2) Utilization of the designated representative. A subject 
individual will be granted direct access to a medical record if the 
responsible official determines that direct access is not likely to have 
an adverse effect on the subject individual. If the responsible 
Department official believes that he is not qualified to determine, or 
if he does determine, that direct access to the subject individual is 
likely to have an adverse effect on the subject individual, the record 
will be sent to the designated representative. The subject individual 
will be informed in writing that the record has been sent.
    (c) Medical records of minors--(1) Requests by minors; notification 
of or access to medical records to minors. A minor may request 
notification of or access to a medical record pertaining to him in 
accordance with paragraph (b) of this section.
    (2) Requests on a minor's behalf; notification of or access to 
medical records to an individual on a minor's behalf. (i) In order to 
protect the privacy of a minor, a parent or guardian, authorized to act 
on a minor's behalf as provided in Sec.  5b.10 of this part, who makes a 
request for notification of or access to a minor's medical record will 
not be given direct notification of or access to such record.
    (ii) A parent or guardian shall make all requests for notification 
of or access to a minor's medical record in accordance with this 
paragraph and the procedures in Sec.  5b.5 of this part. A parent or 
guardian shall at the time he makes a request designate a family 
physician or other health professional

[[Page 45]]

(other than a family member) to whom the record, if any, will be sent.
    (iii) Where a medical record on the minor exists, it will be sent to 
the physician or health professional designated by the parent or 
guardian in all cases. If disclosure of the record would constitute an 
invasion of the minor's privacy, that fact will be brought to the 
attention of the physician or health professional to whom the record is 
sent. The physician or health professional will be asked to consider the 
effect that disclosure of the record to the parent or guardian would 
have on the minor in determining whether the minor's medical record 
should be made available to the parent or guardian. Response to the 
parent or guardian making the request will be made in substantially the 
following form:

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

____________________'s

 (Name of minor)

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


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



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

    (a) Any subject individual may request that his record be corrected 
or amended if he believes that the record is not accurate, timely, 
complete, or relevant or necessary to accomplish a Department function. 
A subject individual making a request to amend or correct his record 
shall address his request to the responsible Department official in 
writing; except that, the request need not be in writing if the subject 
individual makes his request in person and the responsible Department 
official corrects or amends the record at that time. The subject 
individual shall specify in each request:
    (1) The system of records from which the record is retrieved;
    (2) The particular record which he is seeking to correct or amend;
    (3) Whether he is seeking an addition to or a deletion or 
substitution of the record; and,
    (4) His reasons for requesting correction or amendment of the 
record.
    (b) A request for correction or amendment of a record will be 
acknowledged within 10 working days of its receipt unless the request 
can be processed and the subject individual informed of the responsible 
Department official's decision on the request within that 10 day period.
    (c) If the responsible Department official agrees that the record is 
not accurate, timely, or complete based on a preponderance of the 
evidence, the record will be corrected or amended. The record will be 
deleted without regard to its accuracy, if the record is not relevant or 
necessary to accomplish the Department function for which the record was 
provided or is maintained. In either case, the subject individual will 
be informed in writing of the correction, amendment, or deletion and, if 
accounting was made of prior disclosures of the record, all previous 
recipients of the record will be informed of the corrective action 
taken.
    (d) If the responsible Department official does not agree that the 
record should be corrected or amended, the subject individual will be 
informed in writing of the refusal to correct or amend the record. He 
will also be informed that he may appeal the refusal to correct or amend 
his record to the appropriate appeal authority listed in Sec.  5b.8 of 
this part. The appropriate appeal authority will be identified to the 
subject individual by name, title, and business address.
    (e) Requests to correct or amend a record governed by the regulation 
of another government agency, e.g., Civil Service Commission, Federal 
Bureau of Investigation, will be forwarded to such government agency for 
processing and the subject individual will be informed in writing of the 
referral.



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

    (a) Processing the appeal. (1) A subject individual who disagrees 
with a refusal to correct or amend his record may appeal the refusal in 
writing. All appeals

[[Page 46]]

shall be made to the following appeal authorities, or their designees, 
or successors in function:
    (i) Assistant Secretary for Administration and Management for 
records of the Office of the Secretary, or where the initial refusal to 
correct or amend was made by another appeal authority. The appeal 
authority for an initial refusal by the Assistant Secretary for 
Administration and Management is the Under Secretary.
    (ii) Assistant Secretary for Health for records of the Public Health 
Service including Office of Assistant Secretary for Health; Health 
Resources Administration; Health Services Administration; Alcohol, Drug 
Abuse, and Mental Health Administration; Center for Disease Control; 
National Institutes of Health; and Food and Drug Administration.
    (iii) Assistant Secretary for Education for records of the Office of 
the Assistant Secretary for Education, National Center for Education 
Statistics, National Institute of Education, and Office of Education.
    (iv) Assistant Secretary for Human Development for records of the 
Office of Human Development.
    (v) Commissioner of Social Security for records of the Social 
Security Administration.
    (vi) Administrator, Social and Rehabilitation Service for the 
records of the Social and Rehabilitation Service.
    (2) An appeal will be completed within 30 working days from its 
receipt by the appeal authority; except that, the appeal authority may 
for good cause extend this period for an additional 30 days. Should the 
appeal period be extended, the subject individual appealing the refusal 
to correct or amend the record will be informed in writing of the 
extension and the circumstances of the delay. The subject individual's 
request to amend or correct the record, the responsible Department 
official's refusal to correct or amend, and any other pertinent material 
relating to the appeal will be reviewed. No hearing will be held.
    (3) If the appeal authority agrees that the record subject to the 
appeal should be corrected or amended, the record will be amended and 
the subject individual will be informed in writing of the correction or 
amendment. Where an accounting was made of prior disclosures of the 
record, all previous recipients of the record will be informed of the 
corrective action taken.
    (4) If the appeal is denied, the subject individual will be informed 
in writing:
    (i) Of the denial and the reasons for the denial;
    (ii) That he has a right to seek judicial review of the denial; and,
    (iii) That he may submit to the responsible Department official a 
concise statement of disagreement to be associated with the disputed 
record and disclosed whenever the record is disclosed.
    (b) Notation and disclosure of disputed records. Whenever a subject 
individual submits a statement of disagreement to the responsible 
Department official in accordance with paragraph (a)(4)(iii) of this 
section, the record will be noted to indicate that it is disputed. In 
any subsequent disclosure, a copy of the subject individual's statement 
of disagreement will be disclosed with the record. If the responsible 
Department official deems it appropriate, a concise statement of the 
appeal authority's reasons for denying the subject individual's appeal 
may also be disclosed with the record. While the subject individual will 
have access to this statement of reasons, such statement will not be 
subject to correction or amendment. Where an accounting was made of 
prior disclosures of the record, all previous recipients of the record 
will be provided a copy of the subject individual's statement of 
disagreement, as well as the statement, if any, of the appeal 
authority's reasons for denying the subject individual's appeal.



Sec.  5b.9  Disclosure of records.

    (a) Consent to disclosure by a subject individual. (1) Except as 
provided in paragraph (b) of this section authorizing disclosures of 
records without consent, no disclosure of a record will be made without 
the consent of the subject individual. In each case the consent, whether 
obtained from the subject individual at the request of the Department or 
whether provided to the Department by the subject individual on his own 
initiative, shall be in writing. The consent shall specify the 
individual, organizational unit or class of

[[Page 47]]

individuals or organizational units to whom the record may be disclosed, 
which record may be disclosed and, where applicable, during which time 
frame the record may be disclosed (e.g., during the school year, while 
the subject individual is out of the country, whenever the subject 
individual is receiving specific services). A blanket consent to 
disclose all of a subject individual's records to unspecified 
individuals or organizational units will not be honored. The subject 
individual's identity and, where applicable (e.g., where a subject 
individual gives consent to disclosure of a record to a specific 
individual), the identity of the individual to whom the record is to be 
disclosed shall be verified.
    (2) A parent or guardian of any minor is not authorized to give 
consent to a disclosure of the minor's medical record.
    (b) Disclosures without the consent of the subject individual. The 
disclosures listed in this paragraph may be made without the consent of 
the subject individual. Such disclosures are:
    (1) To those officers and employees of the Department who have a 
need for the record in the performance of their duties. The responsible 
Department official may upon request of any officer or employee, or on 
his own initiative, determine what constitutes legitimate need.
    (2) Required to be disclosed under the Freedom of Information Act, 5 
U.S.C. 552, and part 5 of this title.
    (3) For a routine use as defined in paragraph (j) of Sec.  5b.1 of 
this part. Routine uses will be listed in any notice of a system of 
records. Routine uses published in appendix B are applicable to more 
than one system of records. Where applicable, notices of systems of 
records may contain references to the routine uses listed in appendix B. 
Appendix B will be published with any compendium of notices of systems 
of records.
    (4) To the Bureau of the Census for purposes of planning or carrying 
out a census or survey or related activity pursuant to the provisions of 
Title 13 U.S.C.
    (5) To a recipient who has provided the agency with advance written 
assurance that the record will be used solely as a statistical research 
or reporting record; Provided, That, the record is transferred in a form 
that does not identify the subject individual.
    (6) To the National Archives of the United States as a record which 
has sufficient historical or other value to warrant its continued 
preservation by the United States Government, or for evaluation by the 
Administrator of General Services or his designee to determine whether 
the record has such value.
    (7) To another government agency or to an instrumentality of any 
governmental jurisdiction within or under the control of the United 
States for a civil or criminal law enforcement activity if the activity 
is authorized by law, and if the head of such government agency or 
instrumentality has submitted a written request to the Department 
specifying the record desired and the law enforcement activity for which 
the record is sought.
    (8) To an individual pursuant to a showing of compelling 
circumstances affecting the health or safety of any individual if a 
notice of the disclosure is transmitted to the last known address of the 
subject individual.
    (9) To either House of Congress, or to the extent of matter within 
its jurisdiction, any committee or subcommittee thereof, any joint 
committee of Congress or subcommittee of any such joint committee.
    (10) To the Comptroller General, or any of his authorized 
representatives, in the course of the performance of the duties of the 
General Accounting Office.
    (11) Pursuant to the order of a court of competent jurisdiction.
    (c) Accounting of disclosures. (1) An accounting of all disclosures 
of a record will be made and maintained by the Department for 5 years or 
for the life of the record, whichever is longer; except that, such an 
accounting will not be made:
    (i) For disclosures under paragraphs (b) (1) and (2) of this 
section; and,
    (ii) For disclosures made with the written consent of the subject 
individual.
    (2) The accounting will include:
    (i) The date, nature, and purpose of each disclosure; and

[[Page 48]]

    (ii) The name and address of the person or entity to whom the 
disclosure is made.
    (3) Any subject individual may request access to an accounting of 
disclosures of a record. The subject individual shall make a request for 
access to an accounting in accordance with the procedures in Sec.  5b.5 
of this part. A subject individual will be granted access to an 
accounting of the disclosures of a record in accordance with the 
procedures of this part which govern access to the related record. 
Access to an accounting of a disclosure of a record made under paragraph 
(b)(7) of this section may be granted at the discretion of the 
responsible Department official.



Sec.  5b.10  Parents and guardians.

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



Sec.  5b.11  Exempt systems.

    (a) General policy. The Act permits certain types of specific 
systems of records to be exempt from some of its requirements. It is the 
policy of the Department to exercise authority to exempt systems of 
records only in compelling cases.
    (b) Specific systems of records exempted. (1) Those systems of 
records listed in paragraph (b)(2) of this section are exempt from the 
following provisions of the Act and this part:
    (i) 5 U.S.C. 552a(c)(3) and paragraph (c)(2) of Sec.  5b.9 of this 
part which require a subject individual to be granted access to an 
accounting of disclosures of a record.
    (ii) 5 U.S.C. 552a(d) (1) through (4) and (f) and Sec. Sec.  5b.6, 
5b.7, and 5b.8 of this part relating to notification of or access to 
records and correction or amendment of records.
    (iii) 5 U.S.C. 552a(e)(4) (G) and (H) which require inclusion of 
information about Department procedures for notification, access, and 
correction or amendment of records in the notice for the systems of 
records.
    (iv) 5 U.S.C. 552(e)(3) and paragraph (a)(3) of Sec.  5b.4 of this 
part which require that an individual asked to provide a record to the 
Department be informed of the authority for providing the record 
(including whether the providing of the record is mandatory or 
voluntary, the principal purposes for maintaining the record, the 
routine uses for the record, and what effect his refusal to provide the 
record may have on him), and if the record is not required by statute or 
Executive Order to be provided by the individual, he agrees to provide 
the record. This exemption applies only to an investigatory record 
compiled by the Department for criminal law enforcement purposes in a 
system of records exempt under subsection (j)(2) of the Act to the 
extent that these requirements would prejudice the conduct of the 
investigation.
    (2) The following systems of records are exempt from those 
provisions of the Act and this part listed in paragraph (b) (1) of this 
section.
    (i) Pursuant to subsection (j)(2) of the Act:
    (A) The Saint Elizabeths Hospital's Court-Ordered Forensic 
Investigatory Materials Files; and
    (B) The Investigatory Material Compiled for Law Enforcement Purposes 
System, HHS.
    (ii) Pursuant to subsection (k)(2) of the Act:
    (A) The General Criminal Investigation Files, HHS/SSA;
    (B) The Criminal Investigations File, HHS/SSA; and,
    (C) The Program Integrity Case Files, HHS/SSA.
    (D) Civil and Administrative Investigative Files of the Inspector 
General, HHS/OS/OIG.
    (E) Complaint Files and Log. HHS/OS/OCR.
    (F) Investigative materials compiled for law enforcement purposes 
for the Healthcare Integrity and Protection

[[Page 49]]

Data Bank (HIPDB), of the Office of Inspector General. (See Sec.  61.15 
of this title for access and correction rights under the HIPDB by 
subjects of the Data Bank.)
    (G) Investigative materials compiled for law enforcement purposes 
for the Program Information Management System, HHS/OS/OCR.
    (H) Investigative materials compiled for law enforcement purposes 
from the CMS Fraud Investigation Database (FID), HHS/CMS.
    (I) Investigative materials compiled for law enforcement purposes 
from the Automated Survey Processing Environment (ASPEN) Complaints/ 
Incidents Tracking System (ACTS), HHS/CMS.
    (J) Investigative materials compiled for law enforcement purposes 
from the Health Insurance Portability and Accountability Act (HIPAA) 
Information Tracking System (HITS), HHS/CMS.
    (K) Investigative materials compiled for law enforcement purposes 
from the Organ Procurement Organizations System (OPOS), HHS/CMS.
    (L) Investigative materials compiled for law enforcement purposes 
for the National Practitioner Data Bank (NPDB). (See Sec.  60.21 of this 
subchapter for access and correction rights under the NPDB by subjects 
of the Data Bank.)
    (iii) Pursuant to subsection (k)(4) of the Act:
    (A) The Health and Demographic Surveys Conduct in Random Samples of 
the U.S. Population;
    (B) The Health Manpower Inventories and Surveys;
    (C) The Vital Statistics for Births, Deaths, Fetal Deaths, Marriages 
and Divorces Occurring in the U.S. during Each Year; and,
    (D) The Maryland Psychiatric Case Register.
    (E) The Health Resources Utilization Statistics, DHHS/OASH/NCHS.
    (F) National Medical Expenditure Survey Records. HHS/OASH/NCHSR.
    (iv) Pursuant to subsection (k)(5) of the Act:
    (A) The Investigatory Material Compiled for Security and Suitability 
Purposes System, HHS;
    (B) The Suitability for Employment Records, HHS; and
    (C) NIH Electronic Research Administration (eRA) Records, HHS/NIH/
OD/OER, 09-25-0225.
    (v) Pursuant to subsections (j)(2), (k)(2), and (k)(5) of the Act:
    (A) The Clinical Investigatory Records, HHS/FDA;
    (B) The Regulated Industry Employee Enforcement Records, HHS/FDA;
    (C) The Employee Conduct Investigative Records, HHS/FDA; and,
    (D) The Service Contractor Employee Investigative Records, HHS/FDA.
    (vi) Pursuant to subsection (k)(6) of the Act:
    (A) The Personnel Research and Merit Promotion Test Records, HHS/
SSA/OMA.
    (vii) Pursuant to subsections (k)(2) and (k)(5) of the Act:
    (A) Public Health Service Records Related to Investigations of 
Scientific Misconduct, HHS/OASH/ORI.
    (B) Administration: Investigative Records, HHS/NIH/OM/OA/OMA.
    (C) FDA Records Related to Research Misconduct Proceedings, HHS/FDA/
OC, 09-10-0020.
    (D) NIH Records Related to Research Misconduct Proceedings, HHS/NIH, 
09-25-0223.
    (viii)(A) HHS Insider Threat Program Records, 09-90-1701.
    (B) [Reserved]
    (c) Notification of or access to records in exempt systems of 
records. (1) Where a system of records is exempt as provided in 
paragraph (b) of this section, any individual may nonetheless request 
notification of or access to a record in that system. An individual 
shall make requests for notification of or access to a record in an 
exempt system of records in accordance with the procedures of Sec. Sec.  
5b.5 and 5b.6 of this part.
    (2) An individual will be granted notification of or access to a 
record in an exempt system but only to the extent such notification or 
access would not reveal the identity of a source who furnished the 
record to the Department under an express promise, and prior to 
September 27, 1975 an implied promise, that his identity would be held 
in confidence, if:

[[Page 50]]

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

[40 FR 47409, Oct. 8, 1975, as amended at 43 FR 40229, Sept. 11, 1978; 
47 FR 57040, Dec. 22, 1982; 49 FR 14108, Apr. 10, 1984; 51 FR 41352, 
Nov. 14, 1986; 59 FR 36717, July 19, 1994; 65 FR 34988, June 1, 2000; 65 
FR 37289, June 14, 2000; 68 FR 62751, Nov. 6, 2003; 73 FR 55775, Sept. 
26, 2008; 76 FR 72327, Nov. 23, 2011; 78 FR 39186, 39188, July 1, 2013; 
78 FR 47211, Aug. 5, 2013; 83 FR 14185, Apr. 3, 2018; 84 FR 14624, Apr. 
11, 2019]



Sec.  5b.12  Contractors.

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



Sec.  5b.13  Fees.

    (a) Policy. Where applicable, fees for copying records will be 
charged in accordance with the schedule set forth in this section. Fees 
may only be charged where an individual requests that a copy be made of 
the record to which he is granted access. No fee may be charged for 
making a search of the system of records whether the search is manual, 
mechanical, or electronic. Where a copy of the record must be made in 
order to provide access to the record (e.g., computer printout where no 
screen reading is available), the copy will be made available to the 
individual without cost. Where a medical record is made available to a 
representative designated by the individual or to a physician or health 
professional designated by a parent or guardian under Sec.  5b.6 of this 
part, no fee will be charged.
    (b) Fee schedule. The fee schedule for the Department is as follows:
    (1) Copying of records susceptible to photocopying--$.10 per page.
    (2) Copying records not susceptible to photocopying (e.g., punch 
cards or magnetic tapes)--at actual cost to be determined on a case-by-
case basis.

[[Page 51]]

    (3) No charge will be made if the total amount of copying does not 
exceed $25.



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

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

[[Page 52]]

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



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

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

[[Page 53]]

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



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

                            PART 6 [RESERVED]



PART 7_EMPLOYEE INVENTIONS--Table of Contents



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

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



Sec.  7.0  Who are employees.

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

[[Page 54]]

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

[27 FR 7986, Aug. 10, 1962]



Sec.  7.1  Duty of employee to report inventions.

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

[31 FR 12842, Oct. 1, 1966]



Sec.  7.3  Determination as to domestic rights.

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

[[Page 55]]

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

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



Sec.  7.4  Option to acquire foreign rights.

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

[27 FR 7987, Aug. 10, 1962]



Sec.  7.7  Notice to employee of determination.

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

[31 FR 12842, Oct. 1, 1966]



Sec.  7.8  Employee's right of appeal.

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

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



PART 8_REVIEW OF REGULATIONS (Eff. 3-22-22)--Table of Contents



Sec.
8.1 Retrospective review of existing regulations.
8.2-8.5 [Reserved]

    Authority: 5 U.S.C. 301; 5 U.S.C. 504(c)(1); 5 U.S.C. 552; 5 U.S.C. 
552a; 5 U.S.C. 553; 5 U.S.C. 5514; 5 U.S.C. 7301; 8 U.S.C. 1182(e)); 8 
U.S.C. 1182(j)(2)(A); 18 U.S.C. 207(j); 18 U.S.C. 1905; 20 U.S.C. 91; 20 
U.S.C. 1405; 20 U.S.C. 1681 et seq.; 20 U.S.C. 1681 through 1688; 21 
U.S.C. 1174; 22 U.S.C. 2151b(f) (e.g., Pub. L. 116-6, Div. F, sec. 
7018); 22 U.S.C. 2451 et seq.; 22 U.S.C. 7631(d); 22 U.S.C. 7631(f); 26 
U.S.C. 36B; 26 U.S.C. 5000A(d)(2); 28 U.S.C. 2672; 29 U.S.C. 669(a)(5); 
29 U.S.C. 794; 31 U.S.C. 1243 note; 31 U.S.C. 1352; 31 U.S.C. 3711(d); 
31 U.S.C. 3720A; 31 U.S.C. 3720D; 31 U.S.C. 3721; 31 U.S.C. 3801-3812; 
31 U.S.C. 6506; 31 U.S.C. 7501-7507; 31 U.S.C. 9701; 40 U.S.C. 121(c); 
40 U.S.C. 318-318d; 40 U.S.C. 484; 40 U.S.C. 484(k); 40 U.S.C. 486; 42 
U.S.C. 216; 42 U.S.C. 216(b); 42 U.S.C. 238n; 42 U.S.C. 263a(f)(1)(E); 
42 U.S.C. 280g-1(d); 42 U.S.C. 289(a); 42 U.S.C. 289b-1; 42 U.S.C. 
290bb-36(f); 42 U.S.C. 290dd-2; 42 U.S.C. 299c-4; 42 U.S.C. 300a-7; 42 
U.S.C. 300aa-11; 42 U.S.C. 300gg through 300gg-63; 42 U.S.C. 300gg-1 
through 300gg-5; 42 U.S.C. 300gg-11 through 300gg-23; 42 U.S.C. 300gg-
18; 42 U.S.C. 300gg-91; 42 U.S.C. 300gg-92; 42 U.S.C. 300gg-94; 42 
U.S.C. 300jj-11; 42 U.S.C 300jj-14; 42 U.S.C. 300jj-52; 42 U.S.C. 300w 
et seq.; 42 U.S.C. 300x et seq.; 42 U.S.C. 300y et seq.; 42 U.S.C. 618; 
42 U.S.C. 622(b); 42 U.S.C. 629b(a); 42 U.S.C. 652(a); 42 U.S.C. 652(d); 
42 U.S.C. 654A; 42 U.S.C. 671(a); 42 U.S.C. 701 et seq.; 42 U.S.C. 1302; 
42 U.S.C. 1302(a); 42 U.S.C. 1306(c); 42 U.S.C. 1310; 42 U.S.C. 1315; 42 
U.S.C. 1315a; 42 U.S.C. 1320a-1; 42 U.S.C. 1320a-7e; 42 U.S.C. 1320c-11; 
42 U.S.C. 1395cc(f); 42 U.S.C. 1320d-2 (note); 42 U.S.C. 1320d-1320d-9; 
42 U.S.C. 1395i-3; 42 U.S.C. 1395i-5; 42 U.S.C. 1395w-22(j)(3)(B); 42 
U.S.C. 1395w-26; 42 U.S.C. 1395w-27; 42 U.S.C. 1395x; 42 U.S.C. 1396a; 
42 U.S.C. 1396a(a); 42 U.S.C. 1396a(w)(3); 42 U.S.C. 1396f; 42 U.S.C. 
1396r; 42 U.S.C. 1396r-2; 42 U.S.C. 1396s(c)(2)(B)(ii); 42 U.S.C. 1396u-
2(b)(3)(B); 42 U.S.C. 1397 et seq.; 42 U.S.C. 1397j-1(b); 42 U.S.C. 
2000d et seq.; 42 U.S.C. 2000d-1; 42 U.S.C. 2942; 42 U.S.C. 3334; 42 
U.S.C. 3505; 42 U.S.C. 3535(d); 42 U.S.C. 5106i(a); 42 U.S.C. 6101 et 
seq.; 42 U.S.C. 8621 et seq.; 42 U.S.C.

[[Page 56]]

9858; 42 U.S.C. 9901 et seq.; 42 U.S.C. 11101-11152; 42 U.S.C. 11411; 42 
U.S.C. 14406; 42 U.S.C. 18021-18024; 42 U.S.C. 18031-18033; 42 U.S.C. 
18041(a); 42 U.S.C. 18041-18042; 42 U.S.C. 18044; 42 U.S.C. 18051; 42 
U.S.C. 18054; 42 U.S.C. 18061 through 18063; 42 U.S.C. 18071; 42 U.S.C. 
18081-18083; 42 U.S.C. 18113; 42 U.S.C. 18116; 48 U.S.C. 1469a; 50 
U.S.C. App. 2061-2171; 27 Stat. 395; Sec. 1(a), 80 Stat. 306; secs. 1, 
5, 6, and 7 of Reorganization Plan No. 1 of 1953, 18 FR 2053, 67 Stat. 
631 and authorities cited in the Appendix; Sec. 203, 63 Stat. 385; 
Section 213, Uniform Relocation Assistance and Real Property Acquisition 
Policies Act of 1970, Pub. L. 91-646, 84 Stat. 1894 (42 U.S.C. 4633) as 
amended by the Surface Transportation and Uniform Relocation Assistance 
Act of 1987, Title IV of Pub. L. 100-17, 101 Stat. 246-256 (42 U.S.C. 
4601 note); Sec. 223, 58 Stat. 683, as amended by 81 Stat. 539: 42 
U.S.C. 217b; Sec. 602, 78 Stat. 252; Sec. 501 of Pub. L. 100-77, 101 
Stat. 509-10, 42 U.S.C 11411; Pub. L. 100-259, 102 Stat. 28 (Mar. 22, 
1988); 5 U.S.C. 301, Pub. L. 100-259, 102 Stat. 28 (Mar. 22 1988); 
Public Law 101-410, Sec. 701 of Public Law 114-74, 31 U.S.C. 3801-3812; 
Section 5301 of Pub. L. 100-690, the Anti-Drug Abuse Act of 1988, 102 
Stat. 4310, 21 U.S.C. 853a; secs. 13400-13424, Pub. L. 111-5, 123 Stat. 
258-279; Sec. 1101 of the Patient Protection and Affordable Care Act 
(Pub. L. 111-148); Section 1103 of the Patient Protection and Affordable 
Care Act (Pub. L. 111-148); secs. 1104 and 10109 of Pub. L. 111-148, 124 
Stat. 146-154 and 915-917; Title I of the Affordable Care Act, Sections 
1311, 1312, 1411, 1412, Pub. L. 111-148, 124 Stat. 119; Medicare 
Advantage (e.g., Pub. L. 115-245, Div. B, sec. 209); the Weldon 
Amendment (e.g., Pub. L. 115-245, Div. B, sec. 507(d)); 5 U.S.C. 610.

    Source: 86 FR 5756, Jan. 19, 2021, unless otherwise noted.

    Effective Date Note: At 86 FR 5756, Jan. 19, 2021, part 8 was added, 
and at 86 FR 15404, Mar. 23, 2021, its effective date was delayed until 
Mar. 22, 2022.



Sec.  8.1  Retrospective Review of Existing Regulations.

    (a) This section applies to and shall be deemed to amend all 
regulations issued by the Secretary or his delegates or sub-delegates in 
this subtitle.
    (b) For purposes of this section,
    (1) Assess shall refer to a determination by the Department, in 
consultation with other Federal agencies as appropriate, as to whether 
the Sections issued as part of the same rulemaking (and any amendments 
or additions that may have been added thereafter) currently have a 
significant economic impact upon a substantial number of small entities.
    (2) Review shall refer to a process conducted by the Department, in 
consultation with other Federal agencies as appropriate, the purpose of 
which shall be to determine whether Sections that were issued as part of 
the same rulemaking (and any amendments or additions that may have been 
issued thereafter) should be continued without change, or should be 
amended or rescinded, consistent with the stated objectives of 
applicable statutes, to minimize any significant economic impact of the 
Sections upon a substantial number of small entities.
    (3) Section (when capitalized) shall mean a section of the Code of 
Federal Regulations. For example, 42 CFR 2.13 is a Section, and 42 CFR 
2.14 is another Section (see 1 CFR 21.11).
    (4) Year of the Section's promulgation shall mean the year the 
Section first became effective, irrespective of whether it was 
subsequently amended.
    (5) Significant economic impact upon a substantial number of small 
entities shall have the meaning of that term in section 610 of title 5 
of the United States Code.
    (c)(1) Unless a Section expires earlier or is rescinded, all 
Sections issued by the Secretary or his delegates or sub-delegates in 
this chapter shall expire at the end of:
    (i) Five calendar years after the year that this section first 
becomes effective;
    (ii) Ten calendar years after the year of the Section's 
promulgation; or
    (iii) Ten calendar years after the last year in which the Department 
assessed and (if review of the Section is required pursuant to paragraph 
(d) of this section) reviewed the Section, whichever is latest.
    (2) The last year in which the Department assessed and (if review of 
the Section is required) reviewed the Section shall be the year during 
which the findings of the assessment and (if required) the review of a 
Section are published in the Federal Register pursuant to paragraph (f) 
of this section.
    (3)(i) If, prior to the expiration of a Section under paragraph 
(c)(1) of this section, the Secretary makes a written determination that 
the public interest

[[Page 57]]

requires continuation of the Section in force beyond the date on which 
the Section would otherwise expire under paragraph (c)(1), the Secretary 
may continue the Section in force one time for a period stated in the 
determination, which shall not exceed one calendar year.
    (ii) The Department shall promptly publish in the Federal Register 
any written determination under paragraph (c)(3)(i) of this section.
    (iii) The authority of the Secretary under paragraph (c)(3)(i) of 
this section is not delegable and may be exercised only by the Secretary 
or, when the office of the Secretary is vacant or the Secretary has 
become unable to perform the functions and duties of the office of the 
Secretary, by the individual acting as Secretary in accordance with the 
law.
    (d) The Department is required to review those rulemakings (and any 
amendments or additions that may have been added thereafter) that the 
Department assesses have a significant economic impact upon a 
substantial number of small entities. In reviewing rulemakings to 
minimize any significant economic impact on a substantial number of 
small entities in a manner consistent with the stated objectives of 
applicable statutes, the Department's review shall consider the 
following factors:
    (1) The continued need for the rulemaking, consideration of which 
shall include but not be limited to the extent to which the rulemaking 
defines terms or sets standards used in or otherwise applicable to other 
Federal rules;
    (2) The nature of complaints or comments received concerning the 
rulemaking from the public;
    (3) The complexity of the rulemaking;
    (4) The extent to which the rulemaking overlaps, duplicates or 
conflicts with other Federal rules, and, to the extent feasible, with 
State and local governmental rules;
    (5) The degree to which technology, economic conditions, or other 
factors have changed in the area affected by the rulemaking since the 
rulemaking was promulgated or the last time the rulemaking was reviewed 
by the Department; and
    (6) Whether the rulemaking complies with applicable law.
    (e) If the review concludes the Section should be amended or 
rescinded, the Department shall have two years from the date that the 
findings of the review are published in the Federal Register pursuant to 
paragraph (f) of this section to amend or rescind the Section. If the 
Secretary determines that completion of the amendment or rescission is 
not feasible by the established date, he shall so certify in a statement 
published in the Federal Register and may extend the completion date by 
one year at a time, no more than three times, for a total of not more 
than five years (inclusive of the initial two-year period).
    (f) The results of all assessments and reviews conducted in a 
calendar year, including the full underlying analyses and data used to 
support the results (subject to any applicable privilege, protections 
for confidential business information, or explicit legal prohibition on 
disclosure), shall be published in a single document in the Federal 
Register during that calendar year. The document shall be organized in a 
manner that enables both the Department and the public to readily 
determine which assessments and reviews were conducted during that 
calendar year. The document shall also specify the year by which the 
next assessment (and, if required, the next review) of the Section shall 
be completed.
    (g) Paragraph (c) of this section shall not apply to:
    (1) Sections that are prescribed by Federal law, such that the 
Department exercises no discretion as to whether to promulgate the 
Section and as to what is prescribed by the Section. For Sections 
described in this paragraph (g)(1) that are adopted after the effective 
date of this section, the Federal law described in this paragraph (g)(1) 
shall be cited in the notice of adoption.
    (2) Sections whose expiration pursuant to this section would violate 
any other Federal law.
    (3) This section.
    (4) Sections that involve a military or foreign affairs function of 
the United States.

[[Page 58]]

    (5) Sections addressed solely to internal agency management or 
personnel matters.
    (6) Sections related solely to Federal Government procurement.
    (7) Sections that were issued jointly with other Federal agencies, 
or that were issued in consultation with other agencies because of a 
legal requirement to consult with that other agency.
    (8) The annual Notice of Benefit and Payment Parameters update 
rules.
    (h) When the Department commences the process of performing an 
assessment or review, it shall state on a Department-managed website the 
Section(s) whose assessment or review it is commencing. It shall also 
announce once a month in the Federal Register those new assessments or 
reviews that it has commenced in the last month. The Department will 
create a docket on Regulations.gov for each assessment or review that 
the Department is conducting. The public will be able to submit comments 
to the dockets of each rulemaking being assessed or reviewed. Each 
docket shall specify the date by which comments must be received. There 
shall also be a general docket on Regulations.gov where the public can 
submit comments requesting that the Department assess or review a 
Section.
    (i) Any provision of this section held to be invalid or 
unenforceable by its terms, or as applied to any person or circumstance, 
shall be construed so as to continue to give the maximum effect to the 
provision permitted by law, unless such holding shall be one of utter 
invalidity or unenforceability, in which event the provision shall be 
severable from this section and shall not affect the remainder thereof 
or the application of the provision to persons not similarly situated or 
to dissimilar circumstances.



Sec. Sec.  8.2-8.5  [Reserved]



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



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

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

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



Sec.  9.1  Purpose.

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



Sec.  9.2  Policy.

    It is the policy of the Department of Health and Human Services in 
accordance with the policy of the President announced on February 21, 
1969, to make research and study facilities of the Department readily 
available to the scientific community, especially qualified academic 
scientists and engineers. Unique, unusual, and expensive-to-duplicate 
facilities at laboratories and other study and research facilities of 
the Department will be made available to the national scientific 
community, to the maximum extent practical without serious detriment to 
the missions of those facilities. It is also the policy of the 
Department to permit qualified students and graduates of institutions of 
learning in the several States, and territories, as well as the District 
of Columbia, to use study and research facilities of the Department. 
When such facilities are used by academic scientists, engineers, and 
students, the costs incurred for the operation of the unique or unusual 
research facilities, as well as of the other facilities, should be 
funded by the operating agency responsible for the operation of that 
facility, except for any significant incremental costs incurred in 
support of research not directly related to an HHS mission.



Sec.  9.3  Delegations of authority.

    (a) The heads of operating agencies are delegated authority for 
negotiations and decisions as to the use of Department facilities by 
qualified academic scientists, engineers, and students.
    (b) The heads of operating agencies may (and are encouraged to) 
redelegate to the heads of their respective component organizations, 
with the power to

[[Page 59]]

further redelegate to laboratory directors, the authority for 
negotiations and decisions as to the use of departmental facilities. 
Appropriate use shall be made of advisory groups in formulating their 
decisions.



Sec.  9.4  Criteria.

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



Sec.  9.5  Restrictions.

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



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



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

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

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

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



Sec.  12.1  Definitions.

    (a) Act means the Federal Property and Administrative Services Act 
of 1949, 63 Stat. 377 (40 U.S.C. 471 et seq.). Terms defined in the Act 
and not defined in this section have the meanings given to them in the 
Act.
    (b) Accredited means having the approval of a recognized 
accreditation board or association on a regional, State, or national 
level, such as a State Board of Health. Approval as used above describes 
the formal process carried out by State Agencies and institutions in 
determining that health organizations or programs meet minimum 
acceptance standards.
    (c) Administrator means the Administrator of General Services.
    (d) Assigned property means real and related personal property 
which, in the

[[Page 60]]

discretion of the Administrator or his designee, has been made available 
to the Department for transfer for public health purposes.
    (e) Department means the U.S. Department of Health and Human 
Services.
    (f) Disposal agency means the executive agency of the Government 
which has authority to assign property to the Department for transfer 
for public health purposes.
    (g) Excess means any property under the control of any Federal 
agency which is not required for its needs and the discharge of its 
responsibilities, as determined by the head thereof.
    (h) Fair market value means the highest price which the property 
will bring by sale in the open market by a willing seller to a willing 
buyer.
    (i) Holding agency means the Federal agency which has control over 
and accountability for the property involved.
    (j) Nonprofit institution means any institution, organization, or 
association, whether incorporated or unincorporated, no part of the net 
earnings of which inures or may lawfully inure to the benefit of any 
private shareholder or individual, and (except for institutions which 
lease property to assist the homeless under Title V of Pub. L. 100-77) 
which has been held to be tax-exempt under section 501(c)(3) of the 
Internal Revenue Code of 1954.
    (k) Off-site property means surplus buildings, utilities and all 
other removable improvements, including related personal property, to be 
transferred by the Department for removal and use away from the site for 
public health purposes.
    (l) On-site means surplus real property, including related personal 
property, to be transferred by the Department for use in place for 
public health purposes.
    (m) Public benefit allowance means a discount on the sale or lease 
price of real property transferred for public health purposes, 
representing any benefit determined by the Secretary which has accrued 
or may accrue to the United States thereby.
    (n) Related personal property means any personal property: (1) Which 
is located on and is (i) an integral part of, or (ii) useful in the 
operation of real property; or (2) which is determined by the 
Administrator to be otherwise related to the real property.
    (o) Secretary means the Secretary of Health and Human Services.
    (p) State means a State of the United States, and includes the 
District of Columbia, the Commonwealth of Puerto Rico, and the 
Territories and possessions of the United States.
    (q) Surplus when used with respect to real property means any excess 
real property not required for the needs and the discharge of the 
responsibilities of all Federal agencies as determined by the 
Administrator.

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



Sec.  12.2  Scope.

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



Sec.  12.3  General policies.

    (a) It is the policy of the Department to foster and assure maximum 
utilization of surplus real property for public health purposes, 
including research.
    (b) Transfers may be made only to States, their political 
subdivisions and instrumentalities, tax-supported public health 
institutions, and nonprofit public health institutions which (except for 
institutions which lease property to assist the homeless under Title V 
of Pub. L. 100-77) have been held tax-exempt under section 501(c)(3) of 
the Internal Revenue Code of 1954.
    (c) Real property will be requested for assignment only when the 
Department has determined that the property is suitable and needed for 
public health purposes. The amount of real and related personal property 
to be transferred shall not exceed normal operating requirements of the 
applicant. Such property will not be requested for assignment unless it 
is needed at the time of application for public health purposes or will 
be so needed within the immediate or foreseeable future. Where 
construction or major renovation is not required or proposed, the

[[Page 61]]

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

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



Sec.  12.4  Limitations.

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



Sec.  12.5  Awards.

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



Sec.  12.6  Notice of available property.

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



Sec.  12.7  Applications for surplus real property.

    Applications for surplus real property for public health purposes 
shall be made to the Department through the

[[Page 62]]

office specified in the notice of availability.

[55 FR 32252, Aug. 8, 1990]



Sec.  12.8  Assignment of surplus real property.

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



Sec.  12.9  General disposal terms and conditions.

    (a) Surplus real property transfers under this part will be limited 
to public health purposes. Transferees shall be entitled to a public 
benefit allowance in terms of a percentage which will be applied against 
the value of the property to be conveyed. Such an allowance will be 
computed on the basis of benefits to the United States from the use of 
such property for public health purposes. The computation of such public 
benefit allowances will be in accordance with Exhibit A attached hereto 
and made a part hereof.
    (b) A transfer of surplus real property for public health purposes 
is subject to the disapproval of the Administrator within 30 days after 
notice is given to him of the proposed transfer.
    (c) Transfers will be on the following terms and conditions:
    (1) The transferee will be obligated to utilize the property 
continuously in accordance with an approved plan of operation.
    (2) The transferee will not be permitted to sell, lease or sublease, 
rent, mortgage, encumber, or otherwise dispose of the property, or any 
part thereof, without the prior written authorization of the Department.
    (3) The transferee will file with the Department such reports 
covering the utilization of the property as may be required.
    (4) In the event the property is sold, leased or subleased, 
encumbered, disposed of, or is used for purposes other than those set 
forth in the approved plan without the consent of the Department, all 
revenues or the reasonable value of other benefits received by the 
transferee directly or indirectly from such use, as determined by the 
Department, will be considered to have been received and held in trust 
by the transferee for the account of the United States and will be 
subject to the direction and control of the Department. The provisions 
of this paragraph shall not impair or affect the rights reserved to the 
United States in paragraph (c)(6) of this section, or the right of the 
Department to impose conditions to its consent.
    (5) Lessees will be required to carry all perils and liability 
insurance to protect the Government and the Government's residual 
interest in the property. Transferees will be required to carry such 
flood insurance as may be required by the Department pursuant to Pub. L. 
93-234. Where the transferee elects to carry insurance against damages 
to or loss of on-site property due to fire or other hazards, and where 
loss or damage to transferred Federal surplus real property occurs, all 
proceeds from insurance shall be promptly used by the transferee for the 
purpose of repairing and restoring the property to its former condition, 
or replacing it with equivalent or more suitable facilities. If not so 
used, there shall be paid to the United States that part of the 
insurance proceeds that is attributable to the Government's residual 
interest in the property lost, damaged, or destroyed in the case of 
leases, attributable to the fair market value of the leased facilities.
    (6) With respect to on-site property, in the event of noncompliance 
with any of the conditions of the transfer as determined by the 
Department, title to the property transferred and the right

[[Page 63]]

to immediate possession shall, at the option of the Department, revert 
to the Government. In the event title is reverted to the United States 
for noncompliance or voluntarily reconveyed, the transferee shall, at 
the option of the Department, be required to reimburse the Government 
for the decrease in value of the property not due to reasonable wear and 
tear or acts of God or attributable to alterations completed by the 
transferee to adapt the property to the public health use for which the 
property was transferred. With respect to leased property, in the event 
of noncompliance with any of the conditions of the lease, as determined 
by the Department, the right of occupancy and possession shall, at the 
option of the Department, be terminated. In the event a leasehold is 
terminated by the United States for noncompliance or is voluntarily 
surrendered, the lessee shall be required at the option of the 
Department to reimburse the Government for the decrease in value of the 
property not due to reasonable wear and tear or acts of God or 
attributable to alterations completed by the lessee to adapt the 
property to the public health use for which the property was leased.

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


Any payments of cash made by the transferee against the purchase price 
of property transferred shall, upon a forfeiture of title to the 
property for breach of condition, be forfeited.
    (7) With respect to off-site property, in the event of noncompliance 
with any of the terms and conditions of the transfer, the unearned 
public benefit allowance shall, at the option of the Department, become 
immediately due and payable or, if the property or any portion thereof 
is sold, leased, or otherwise disposed of without authorization from the 
Department, such sale, lease or sublease, or other disposal shall be for 
the benefit and account of the United States and the United States shall 
be entitled to the proceeds. In the event the transferee fails to remove 
the property or any portion thereof within the time specified, then in 
addition to the rights reserved above, at the option of the Department, 
all right, title, and interest in and to such unremoved property shall 
be retransferred to other eligible applicants or shall be forfeited to 
the United States.
    (8) With respect only to on-site property which has been declared 
excess by the Department of Defense, such declaration having included a 
statement indicating the property has a known potential for use during a 
national emergency, the Department shall reserve the right during any 
period of emergency declared by the President of the United States or by 
the Congress of the United States to the full and unrestricted use by 
the Government of the surplus real property, or of any portion thereof, 
disposed of in accordance with the provisions of this part. Such use may 
be either exclusive or nonexclusive. Prior to the expiration or 
termination of the period of restricted use by the transferee, the 
Government will not be obligated to pay rent or any other fees or 
charges during the period of emergency, except that the Government will:
    (i) Bear the entire cost of maintenance of such portion of the 
property used by it exclusively or over which it may have exclusive 
possession or control;
    (ii) Pay the fair share, commensurate with the use of the cost of 
maintenance of such surplus real property as it may use nonexclusively 
or over which it may have nonexclusive possession or control;
    (iii) Pay a fair rental for the use of improvements or additions to 
the surplus real property made by the purchaser or lessee without 
Government aid; and
    (iv) Be responsible for any damage to the surplus real property 
caused by its use, reasonable wear and tear, the common enemy and acts 
of God excepted. Subsequent to the expiration or termination of the 
period of restricted use, the obligations of the Government will be as 
set forth in the preceding sentence and, in addition, the Government 
shall be obligated to pay a fair rental for all or any portion of the 
conveyed premises which it uses.

[[Page 64]]

    (9) The restrictions set forth in paragraphs (c) (1) through (7) of 
this section will extend for thirty (30) years for land with or without 
improvements; and for facilities being acquired separately from land 
whether they are for use on-site or off-site, the period of limitations 
on the use of the structures will be equal to their estimated economic 
life. The restrictions set forth in paragraphs (c) (1) through (7) of 
this section will extend for the entire initial lease period and for any 
renewal periods for property leased from the Department.
    (d) Transferees, by obtaining the consent of the Department, may 
abrogate the restrictions set forth in paragraph (c) of this section for 
all or any portion of the property upon payment in cash to the 
Department of an amount equal to the then current fair market value of 
the property to be released, multiplied by the public benefit allowance 
granted at the time of conveyance, divided by the total number of months 
of the period of restriction set forth in the conveyance document and 
multiplied by the number of months that remain in the period of 
restriction as determined by the Department. For purposes of abrogation 
payment computation, the current fair market value shall not include the 
value of any improvements placed on the property by the transferee.
    (e) Related personal property will be transferred or leased as a 
part of the realty and in accordance with real property procedures. It 
will be subject to the same public benefit allowance granted for the 
real property. Where related personal property is involved in an on-site 
transfer, the related personal property may be transferred by a bill of 
sale imposing restrictions for a period not to exceed five years from 
the date of transfer, other terms and conditions to be the same as, and 
made a part of, the real property transaction.



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

    (a) The Department will, prior to making a final decision to convey 
or lease, or to amend, reform, or grant an approval or release with 
respect to a previous conveyance or lease of, surplus real property for 
public health purposes, complete an environmental assessment of the 
proposed transaction in keeping with applicable provisions of the 
National Environmental Policy Act of 1969, the National Historic 
Preservation Act of 1966, the National Archeological Data Preservation 
Act, and other related acts. No permit to use surplus real property 
shall allow the permittee to make, or cause to be made, any irreversible 
change in the condition of said property, and no use permit shall be 
employed for the purpose of delaying or avoiding compliance with the 
requirements of these Acts.
    (b) Applicants shall be required to provide such information as the 
Department deems necessary to make an assessment of the impact of the 
proposed Federal action on the human environment. Materials contained in 
the applicant's official request, responses to a standard questionnaire 
prescribed by the Public Health Service, as well as other relevant 
information, will be used by the Department in making said assessment.
    (c) If the assessment reveals (1) That the proposed Federal action 
involves properties of historical significance which are listed, or 
eligible for listing, in the National Register of Historic Places, or 
(2) that a more than insignificant impact on the human environment is 
reasonably foreseeable as a result of the proposed action, or (3) that 
the proposed Federal action could result in irreparable loss or 
destruction of archeologically significant items or data, the Department 
will, except as provided for in paragraph (d) of this section, prepare 
and distribute, or cause to be prepared or distributed, such notices and 
statements and obtain such approvals as are required by the above cited 
Acts.
    (d) If a proposed action involves other Federal agencies in a 
sequence of actions, or a group of actions, directly related to each 
other because of their functional interdependence, the Department may 
enter into and support a lead agency agreement to designate a single 
lead agency which will assume primary responsibility for coordinating

[[Page 65]]

the assessment of environmental effects of proposed Federal actions, 
preparing and distributing such notices and statements, or obtaining 
such approvals, as are required by the above cited Acts. The procedures 
of the designated lead agency will be utilized in conducting the 
environmental assessment. In the event of disagreement between the 
Department and another Federal agency, the Department will reserve the 
right to abrogate its lead agency agreement with the other Federal 
Agency.

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



Sec.  12.11  Special terms and conditions.

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



Sec.  12.12  Utilization.

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

[[Page 66]]

    (6) To make payments as provided for in Sec.  12.3(c) of this 
chapter.
    (b) Where the transferee or lessee desires to place the property in 
temporary use for a purpose other than that for which the property was 
transferred or leased, approval from the Department must be obtained, 
and will be conditioned upon such terms as the Department may impose.



Sec.  12.13  Form of conveyance.

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



Sec.  12.14  Compliance inspections and reports.

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



Sec.  12.15  Reports to Congress.

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



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

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


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



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



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


[[Page 67]]


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

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



Sec.  12a.1  Definitions.

    Applicant means any representative of the homeless which has 
submitted an application to the Department of Health and Human Services 
to obtain use of a particular suitable property to assist the homeless.
    Checklist or property checklist means the form developed by HUD for 
use by landholding agencies to report the information to be used by HUD 
in making determinations of suitability.
    Classification means a property's designation as unutilized, 
underutilized, excess, or surplus.
    Day means one calendar day including weekends and holidays.
    Eligible organization means a State, unit of local government or a 
private non-profit organization which provides assistance to the 
homeless, and which is authorized by its charter or by State law to 
enter into an agreement with the Federal government for use of real 
property for the purposes of this subpart. Representatives of the 
homeless interested in receiving a deed for a particular piece of 
surplus Federal property must be section 501(c)(3) tax exempt.
    Excess property means any property under the control of any Federal 
executive agency that is not required for the agency's needs or the 
discharge of its responsibilities, as determined by the head of the 
agency pursuant to 40 U.S.C. 483.
    GSA means the General Services Administration.
    HHS means the Department of Health and Human Services.
    Homeless means:
    (1) An individual or family that lacks a fixed, regular, and 
adequate nighttime residence; and
    (2) An individual or family that has a primary nighttime residence 
that is:
    (i) A supervised publicly or privately operated shelter designed to 
provide temporary living accommodations (including welfare hotels, 
congregate shelters, and transitional housing for the mentally ill);
    (ii) An institution that provides a temporary residence for 
individuals intended to be institutionalized; or
    (iii) A public or private place not designed for, or ordinarily used 
as, a regular sleeping accommodation for human beings. This term does 
not include any individual imprisoned or otherwise detained under an Act 
of the Congress or a State law.
    HUD means the Department of Housing and Urban Development.
    ICH means the Interagency Council on the Homeless.
    Landholding agency means a Federal department or agency with 
statutory authority to control real property.
    Lease means an agreement between either the Department of Health and 
Human Services for surplus property, or landholding agencies in the case 
of non-excess properties or properties subject to the Base Closure and 
Realignment Act (Public Law 100-526; 10 U.S.C. 2687), and the applicant, 
giving rise to the relationship of lessor and lessee for the use of 
Federal real property for a term of at least one year under the 
conditions set forth in the lease document.
    Non-profit organization means an organization no part of the net 
earnings of which inures to the benefit of any member, founder, 
contributor, or individual; that has a voluntary board; that has an 
accounting system or has designated an entity that will maintain a 
functioning accounting system for the organization in accordance with 
generally accepted accounting procedures; and that practices 
nondiscrimination in the provision of assistance.
    Permit means a license granted by a landholding agency to use 
unutilized or underutilized property for a specific amount of time under 
terms and conditions determined by the landholding agency.
    Property means real property consisting of vacant land or buildings, 
or a portion thereof, that is excess, surplus, or designated as 
unutilized or underutilized in surveys by the heads of landholding 
agencies conducted pursuant to section 202(b)(2) of the Federal Property 
and Administrative Services Act of 1949 (40 U.S.C. 483(b)(2).)

[[Page 68]]

    Regional Homeless Coordinator means a regional coordinator of the 
Interagency Council on the Homeless.
    Representative of the Homeless means a State or local government 
agency, or private nonprofit organization which provides, or proposes to 
provide, services to the homeless.
    Screen means the process by which GSA surveys Federal agencies, or 
State, local and non-profit entities, to determine if any such entity 
has an interest in using excess Federal property to carry out a 
particular agency mission or a specific public use.
    State Homeless Coordinator means a state contact person designated 
by a state to receive and disseminate information and communications 
received from the Interagency Council on the Homeless in accordance with 
section 210(a) of the Stewart B. McKinney Act of 1987, as amended.
    Suitable property means that HUD has determined that a particular 
property satisfies the criteria listed in Sec.  12a.6.
    Surplus property means any excess real property not required by any 
Federal landholding agency for its needs or the discharge of its 
responsibilities, as determined by the Administrator of GSA.
    Underutilized means an entire property or portion thereof, with or 
without improvements which is used only at irregular periods or 
intermittently by the accountable landholding agency for current program 
purposes of that agency, or which is used for current program purposes 
that can be satisfied with only a portion of the property.
    Unsuitable property means that HUD has determined that a particular 
property does not satisfy the criteria in Sec.  12a.6.
    Unutilized property means an entire property or portion thereof, 
with or without improvements, not occupied for current program purposes 
for the accountable executive agency or occupied in caretaker status 
only.



Sec.  12a.2  Applicability.

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



Sec.  12a.3  Collecting the information.

    (a) Canvass of landholding agencies. On a quarterly basis, HUD will 
canvass landholding agencies to collect information about property 
described as unutilized, underutilized, excess, or surplus, in surveys 
conducted by the agencies under section 202 of the Federal Property and 
Administrative Services Act (40 U.S.C. 483), Executive Order 12512, and 
41 CFR part 101-47.800. Each canvass will collect information on 
properties not previously reported and about property reported 
previously the status or classification of which has changed or for 
which any of the information reported on the property checklist has 
changed.
    (1) HUD will request descriptive information on properties 
sufficient to make a reasonable determination, under the criteria 
described below, of the suitability of a property for use as a facility 
to assist the homeless.

[[Page 69]]

    (2) HUD will direct landholding agencies to respond to requests for 
information within 25 days of receipt of such requests.
    (b) Agency Annual Report. By December 31 of each year, each 
landholding agency must notify HUD regarding the current availability 
status and classification of each property controlled by the agency 
that:
    (1) Was included in a list of suitable properties published that 
year by HUD, and
    (2) Remains available for application for use to assist the 
homeless, or has become available for application during that year.
    (c) GSA Inventory. HUD will collect information, in the same manner 
as described in paragraph (a) of this section, from GSA regarding 
property that is in GSA's current inventory of excess or surplus 
property.
    (d) Change in Status. If the information provided on the property 
checklist changes subsequent to HUD's determination of suitability, and 
the property remains unutilized, underutilized, excess or surplus, the 
landholding agency shall submit a revised property checklist in response 
to the next quarterly canvass. HUD will make a new determination of 
suitability and, if it differs from the previous determination, 
republish the property information in the Federal Register. For example, 
property determined unsuitable for national security concerns may no 
longer be subject to security restrictions, or property determined 
suitable may subsequently be found to be contaminated.

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



Sec.  12a.4  Suitability determination.

    (a) Suitability determination. Within 30 days after the receipt of 
information from landholding agencies regarding properties which were 
reported pursuant to the canvass described in Sec.  12a.3(a), HUD will 
determine, under criteria set forth in Sec.  12a.6, which properties are 
suitable for use as facilities to assist the homeless and report its 
determination to the landholding agency. Properties that are under 
lease, contract, license, or agreement by which a Federal agency retains 
a real property interest or which are scheduled to become unutilized or 
underutilized will be reviewed for suitability no earlier than six 
months prior to the expected date when the property will become 
unutilized or underutilized, except that properties subject to the Base 
Closure and Realignment Act may be reviewed up to eighteen months prior 
to the expected date when the property will become unutilized or 
underutilized.
    (b) Scope of suitability. HUD will determine the suitability of a 
property for use as a facility to assist the homeless without regard to 
any particular use.
    (c) Environmental information. HUD will evaluate the environmental 
information contained in property checklists forwarded to HUD by the 
landholding agencies solely for the purpose of determining suitability 
of properties under the criteria in Sec.  12a.6.
    (d) Written record of suitability determination. HUD will assign an 
identification number to each property reviewed for suitability. HUD 
will maintain a written public record of the following:
    (1) The suitability determination for a particular piece of 
property, and the reasons for that determination; and
    (2) The landholding agency's response to the determination pursuant 
to the requirements of Sec.  12a.7(a).
    (e) Property determined unsuitable. Property that is reviewed by HUD 
under this section and that is determined unsuitable for use to assist 
the homeless may not be made available for any other purpose for 20 days 
after publication in the Federal Register of a Notice of unsuitability 
to allow for review of the determination at the request of a 
representative of the homeless.
    (f) Procedures for appealing unsuitability determinations. (1) To 
request review of a determination of unsuitability, a representative of 
the homeless must contact HUD within 20 days of publication of notice in 
the Federal Register that a property is unsuitable. Requests may be 
submitted to HUD in writing or by calling 1-800-

[[Page 70]]

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



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

    (a) Each landholding agency must submit a report to GSA of 
properties it determines excess. Each landholding agency must also 
provide a copy of HUD's suitability determination, if any, including 
HUD's identification number for the property.
    (b) If a landholding agency reports a property to GSA which has been 
reviewed by HUD for homeless assistance suitability and HUD determined 
the property suitable, GSA will screen the property pursuant to Sec.  
12a.5(g) and will advise HUD of the availability of the property for use 
by the homeless as provided in Sec.  12a.5(e). In lieu of the above, GSA 
may submit a new checklist to HUD and follow the procedures in Sec.  
12a.5(c) through Sec.  12a.5(g).
    (c) If a landholding agency reports a property to GSA which has not 
been reviewed by HUD for homeless assistance suitability, GSA will 
complete a property checklist, based on information provided by the 
landholding agency, and will forward this checklist to HUD for a 
suitability determination. This checklist will reflect any change in 
classification, i.e., from unutilized or underutilized to excess.
    (d) Within 30 days after GSA's submission, HUD will advise GSA of 
the suitability determination.
    (e) When GSA receives a letter from HUD listing suitable excess 
properties in GSA's inventory, GSA will transmit to HUD within 45 days a 
response which includes the following for each identified property:
    (1) A statement that there is no other compelling Federal need for 
the property, and therefore, the property will be determined surplus; or
    (2) A statement that there is further and compelling Federal need 
for the property (including a full explanation of such need) and that, 
therefore, the property is not presently available for use to assist the 
homeless.
    (f) When an excess property is determined suitable and available and 
notice is published in the Federal Register, GSA will concurrently 
notify HHS, HUD, State and local government units, known homeless 
assistance providers that have expressed interest in the particular 
property, and other organizations, as appropriate, concerning suitable 
properties.
    (g) Upon submission of a Report of Excess to GSA, GSA may screen the 
property for Federal use. In addition, GSA may screen State and local 
governmental units and eligible nonprofit organizations to determine 
interest in the property in accordance with current regulations. (See 41 
CFR 101-47.203-5, 101-47.204-1 and 101-47.303-2.)
    (h) The landholding agency will retain custody and accountability 
and will protect and maintain any property

[[Page 71]]

which is reported excess to GSA as provided in 41 CFR 101-47.402.



Sec.  12a.6  Suitability criteria.

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



Sec.  12a.7  Determination of availability.

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



Sec.  12a.8  Public notice of determination.

    (a) No later than 15 days after the last 45 day period has elapsed 
for receiving responses from the landholding agencies regarding 
availability, HUD will publish in the Federal Register a

[[Page 72]]

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



Sec.  12a.9  Application process.

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

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


HHS will notify the landholding agency (for unutilized and underutilized 
properties) or GSA (for excess and surplus properties) when an 
expression of interest has been received for a particular property.
    (4) An expression of interest may be sent to HHS any time after the 
60 day holding period has expired. In such a case, an application 
submitted pursuant to this expression of interest may be approved for 
use by the homeless if:
    (i) No application or written expression of interest has been made 
under any law for use of the property for any purpose; and
    (ii) In the case of excess or surplus property, GSA has not received 
a bona fide offer to purchase that property or advertised for the sale 
of the property by public auction.
    (b) Application Requirements. Upon receipt of an expression of 
interest, DHFP will send an application packet to the interested entity. 
The application packet requires the applicant to provide certain 
information, including the following--
    (1) Description of the applicant organization. The applicant must 
document that it satisfies the definition of a ``representative of the 
homeless,'' as specified in Sec.  12a.1 of this subpart. The applicant 
must document its authority to hold real property. Private non-profit 
organizations applying for deeds

[[Page 73]]

must document that they are section 501(c)(3) tax-exempt.
    (2) Description of the property desired. The applicant must describe 
the property desired and indicate that any modifications made to the 
property will conform to local use restrictions except for local zoning 
regulations.
    (3) Description of the proposed program. The applicant must fully 
describe the proposed program and demonstrate how the program will 
address the needs of the homeless population to be assisted. The 
applicant must fully describe what modifications will be made to the 
property before the program becomes operational.
    (4) Ability to finance and operate the proposed program. The 
applicant must specifically describe all anticipated costs and sources 
of funding for the proposed program. The applicant must indicate that it 
can assume care, custody, and maintenance of the property and that it 
has the necessary funds or the ability to obtain such funds to carry out 
the approved program of use for the property.
    (5) Compliance with non-discrimination requirements. Each applicant 
and lessee under this part must certify in writing that it will comply 
with the requirements of the Fair Housing Act (42 U.S.C. 3601-3619) and 
implementing regulations; and as applicable, Executive Order 11063 
(Equal Opportunity in Housing) and implementing regulations; title VI of 
the Civil Rights Act of 1964 (42 U.S.C. 2000d to d-4) (Nondiscrimination 
in Federally Assisted Programs) and implementing regulations; the 
prohibitions against discrimination on the basis of age under the Age 
Discrimination Act of 1975 (42 U.S.C. 6101-6107) and implementing 
regulations; and the prohibitions against otherwise qualified 
individuals with handicaps under section 504 of the Rehabilitation Act 
of 1973 (29 U.S.C. 794) and implementing regulations. The applicant must 
state that it will not discriminate on the basis of race, color, 
national origin, religion, sex, age, familial status, or handicap in the 
use of the property, and will maintain the required records to 
demonstrate compliance with Federal laws.
    (6) Insurance. The applicant must certify that it will insure the 
property against loss, damage, or destruction in accordance with the 
requirements of 45 CFR 12.9.
    (7) Historic preservation. Where applicable, the applicant must 
provide information that will enable HHS to comply with Federal historic 
preservation requirements.
    (8) Environmental information. The applicant must provide sufficient 
information to allow HHS to analyze the potential impact of the 
applicant's proposal on the environment, in accordance with the 
instructions provided with the application packet. HHS will assist 
applicants in obtaining any pertinent environmental information in the 
possession of HUD, GSA, or the landholding agency.
    (9) Local government notification. The applicant must indicate that 
it has informed the applicable unit of general local government 
responsible for providing sewer, water, police, and fire services, in 
writing of its proposed program.
    (10) Zoning and Local Use Restrictions. The applicant must indicate 
that it will comply with all local use restrictions, including local 
building code requirements. Any applicant which applies for a lease or 
permit for a particular property is not required to comply with local 
zoning requirements. Any applicant applying for a deed of a particular 
property, pursuant to Sec.  12a. 9(b)(3), must comply with local zoning 
requirements, as specified in 45 CFR part 12.
    (c) Scope of evaluations. Due to the short time frame imposed for 
evaluating applications, HHS' evaluation will, generally, be limited to 
the information contained in the application.
    (d) Deadline. Completed applications must be received by DHFP, at 
the above address, within 90 days after an expression of interest is 
received from a particular applicant for that property. Upon written 
request from the applicant, HHS may grant extensions, provided that the 
appropriate landholding agency concurs with the extension. Because each 
applicant will have a different deadline based on the date the applicant 
submitted an expression of interest, applicants should contact the 
individual landholding agency to

[[Page 74]]

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

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



Sec.  12a.10  Action on approved applications.

    (a) Unutilized and underutilized properties. (1) When HHS approves 
an application, it will so notify the applicant and forward a copy of 
the application to the landholding agency. The landholding agency will 
execute the lease, or permit document, as appropriate, in consultation 
with the applicant.
    (2) The landholding agency maintains the discretion to decide the 
following:
    (i) The length of time the property will be available. (Leases and 
permits will be for a period of at least one year unless the applicant 
requests a shorter term.)
    (ii) Whether to grant use of the property via a lease or permit;
    (iii) The terms and conditions of the lease or permit document.
    (b) Excess and surplus properties. (1) When HHS approves an 
application, it will so notify the applicant and request that GSA assign 
the property to HHS for leasing. Upon receipt of the assignment, HHS 
will execute a lease in accordance with the procedures and requirements 
set out in 45 CFR part 12. In accordance with 41 CFR 101-47.402, custody 
and accountability of the property will remain throughout the lease term 
with the agency which initially reported the property as excess.
    (2) Prior to assignment to HHS, GSA may consider other Federal uses 
and other important national needs; however, in deciding the disposition 
of surplus real property, GSA will generally give priority of 
consideration to uses to assist the homeless. GSA may consider any 
competing request for the property made under section 203(k) of the 
Federal Property and Administrative Services Act of 1949 (40 U.S.C. 
484(k)) that is so meritorious and compelling that it outweighs the 
needs of the homeless, and HHS may likewise consider any competing 
request made under subsection 203(k)(1) of that law.
    (3) Whenever GSA or HHS decides in favor of a competing request over 
a request for property for homeless assistance use as provided in 
paragraph (b)(2)

[[Page 75]]

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



Sec.  12a.11  Unsuitable properties.

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



Sec.  12a.12  No applications approved.

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



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



                      Subpart A_General Provisions

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

             Subpart B_Information Required from Applicants

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

            Subpart C_Procedures for Considering Applications

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

Appendix A to Part 13

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

[[Page 76]]


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



                      Subpart A_General Provisions



Sec.  13.1  Purpose of these rules.

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

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



Sec.  13.2  When these rules apply.

    These rules apply to adversary adjudications before the Department.

[69 FR 2845, Jan. 21, 2004]



Sec.  13.3  Proceedings covered.

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

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



Sec.  13.4  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under these regulations, the applicant must be a party, as defined in 5 
U.S.C. 551(3), to the adversary adjudication for which it seeks an 
award. An applicant must show that it meets all conditions of 
eligibility set out in this subpart and in Subpart B.
    (b) The categories of eligible applicants are as follows:
    (1) Charitable or other tax-exempt organizations described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (2) Cooperative associations as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (3) Individuals with a net worth of not more than $2 million;
    (4) Sole owners of unincorporated businesses if the owner has a net 
worth of not more than $7 million, including both personal and business 
interests,

[[Page 77]]

and if the business has not more than 500 employees;
    (5) All other partnerships, corporations, associations, local 
governmental units, and public and private organizations with a net 
worth of not more than $7 million and with not more than 500 employees; 
and
    (6) Where an award is sought on the basis stated in Sec.  13.5(c) of 
this part, small entities as defined in 5 U.S.C. 601.
    (c) For the purpose of determining eligibility, the net worth and 
number of employees of an applicant is calculated as of the date the 
proceeding was initiated. The net worth of an applicant is determined by 
generally accepted accounting principles.
    (d) Whether an applicant who owns an unincorporated business will be 
considered as an ``individual'' or a ``sole owner of an unincorporated 
business'' will be determined by whether the applicant's participation 
in the proceeding is related primarily to individual interests or to 
business interests.
    (e) The employees of an applicant include all those persons 
regularly providing services for remuneration for the applicant, under 
the applicant's direction and control. Part-time employees shall be 
included on a proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or other entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other interest, will be considered an affiliate for purposes of this 
part, unless the adjudicative officer determines that such treatment 
would be unjust and contrary to the purposes of the Act in light of the 
actual relationship between the affiliated entities. In addition, the 
adjudicative officer may determine that financial relationships of the 
applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (g) An applicant is not eligible if it appears from the facts and 
circumstances that it has participated in the proceedings only or 
primarily on behalf of other persons or entities that are ineligible.

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



Sec.  13.5  Standards for awards.

    (a) An award of fees and expenses may be made either on the basis 
that the Department's position in the proceeding was not substantially 
justified or on the basis that, in a proceeding to enforce compliance 
with a statutory or regulatory requirement, the Department's demand 
substantially exceeded the ultimate decision and was unreasonable when 
compared with that decision. These two bases are explained in greater 
detail in paragraphs (b) and (c) of this section.
    (b) Awards where the Department's position was not substantially 
justified. (1) Awards will be made on this basis only where the 
Department's position in the proceeding was not substantially justified. 
The Department's position includes, in addition to the position taken by 
the agency in the proceeding, the agency action or failure to act that 
was the basis for the proceeding. Whether the Department's position was 
substantially justified is to be determined on the basis of the 
administrative record as a whole. The fact that a party has prevailed in 
a proceeding does not create a presumption that the Department's 
position was not substantially justified. The burden of proof as to 
substantial justification is on the agency's litigating party, which may 
avoid an award by showing that its position was reasonable in law and 
fact.
    (2) When two or more matters are joined together for one hearing, 
each of which could have been heard separately (without regard to laws 
or rules fixing a jurisdictional minimum amount for claims), and an 
applicant has prevailed with respect to one or several of the matters, 
an eligible applicant may receive an award for expenses associated only 
with the matters on which it prevailed if the Department's position on 
those matters was not substantially justified.

[[Page 78]]

    (3) Awards for fees and expenses incurred before the date on which a 
proceeding was initiated will be made only if the applicant can 
demonstrate that they were reasonably incurred in preparation for the 
proceeding.
    (4) Awards will be reduced or denied if the applicant has unduly or 
unreasonably protracted the proceeding or if other special circumstances 
make an award unjust.
    (c) Awards where the Department's demand was substantially excessive 
and unreasonable. (1) Awards will be made on this basis only where the 
adversary adjudication arises from the Department's action to enforce a 
party's compliance with a statutory or regulatory requirement. An award 
may be made on this basis only if the Department's demand that led to 
the proceeding was substantially in excess of the ultimate decision in 
the proceeding, and that demand is unreasonable when compared with that 
decision, given all the facts and circumstances of the case.
    (2) Any award made on this basis shall be limited to the fees and 
expenses that are primarily related to defending against the excessive 
nature of the demand. An award shall not include fees and expenses that 
are primarily related to defending against the merits of charges, or 
fees and expenses that are primarily related to defending against the 
portion of the demand that was not excessive, to the extent that these 
fees and expenses are distinguishable from the fees and expenses 
primarily related to defending against the excessive nature of the 
demand.
    (3) Awards will be denied if the party has committed a willful 
violation of law or otherwise acted in bad faith, or if special 
circumstances make an award unjust.

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



Sec.  13.6  Allowable fees and expenses.

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

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



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

    The reasonable cost (or the reasonable portion of the cost) for any 
study, exhibit, analysis, engineering report, test, project or similar 
matter prepared on behalf of a party may be awarded to the extent that:
    (a) The charge for the service does not exceed the prevailing rate 
payable for similar services,
    (b) The study or other matter was necessary to the preparation for 
the administrative proceeding, and

[[Page 79]]

    (c) The study or other matter was prepared for use in connection 
with the administrative proceeding. No award will be made for a study or 
other matter which was necessary to satisfy statutory or regulatory 
requirements, or which would ordinarily be conducted as part of the 
party's business irrespective of the administrative proceeding.



             Subpart B_Information Required from Applicants



Sec.  13.10  Contents of application.

    (a) Applications for an award of fees and expenses must include:
    (1) The name of the applicant and the identification of the 
proceeding;
    (2) Where an award is sought on the basis stated in Sec.  13.5(b) of 
this part, a declaration that the applicant believes it has prevailed, 
and an identification of the position of the Department that the 
applicant alleges was not substantially justified. Where an award is 
sought on the basis stated in Sec.  13.5(c) of this part, an 
identification of the statutory or regulatory requirement that the 
applicant alleges the Department was seeking to enforce, and an 
identification of the Department's demand and of the document or 
documents containing that demand;
    (3) Unless the applicant is an individual, a statement of the number 
of its employees on the date on which the proceeding was initiated, and 
a brief description of the type and purpose of its organization or 
business. However, where an award is sought solely on the basis stated 
in Sec.  13.5(c) of this part, the applicant need not state the number 
of its employees;
    (4) A description of any affiliated individuals or entities, as the 
term ``affiliate'' is defined in Sec.  13.4(f), or a statement that none 
exist;
    (5) A statement that the applicant's net worth as of the date on 
which the proceeding was initiated did not exceed the appropriate limits 
as stated in Sec.  13.4(b) of this part. However, an applicant may omit 
this statement if:
    (i) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code (26 U.S.C. 501(c)(3)) or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualified under 
such section;
    (ii) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)); or
    (iii) It states that it is applying for an award solely on the basis 
stated in Sec.  13.5(c) of this part, and that it is a small entity as 
defined in 5 U.S.C. 601, and it describes the basis for its belief that 
it qualifies as a small entity under that section.
    (6) A statement of the amount of fees and expenses for which an 
award is sought;
    (7) A declaration that the applicant has not received, has not 
applied for, and does not intend to apply for reimbursement of the cost 
of items listed in the Statement of Fees and Expenses under any other 
program or statute; or if the applicant has received or applied for or 
will receive or apply for reimbursement of those expenses under another 
program or statute, a statement of the amount of reimbursement received 
or applied for or intended to be applied for; and
    (8) Any other matters the applicant wishes the Department to 
consider in determining whether and in what amount an award should be 
made.
    (b) All applications must be signed by the applicant or by an 
authorized officer or attorney of the applicant. It shall also contain 
or be accompanied by a written verification under oath or under penalty 
of perjury that the information provided in the application is true and 
correct.

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

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



Sec.  13.11  Net worth exhibits.

    (a) Each applicant must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
defined in Sec.  13.4(f) of this part) when the proceeding was 
initiated. This requirement does not apply to a qualified tax-exempt 
organization or cooperative association. Nor does it apply to a party 
that states

[[Page 80]]

that it is applying for an award solely on the basis stated in Sec.  
13.5(c) of this part. If any individual, corporation, or other entity 
directly or indirectly controls or owns a majority of the voting shares 
or other interest of the applicant, or if the applicant directly or 
indirectly owns or controls a majority of the voting shares or other 
interest of any corporation or other entity, the exhibit must include a 
showing of the net worth of all such affiliates or of the applicant 
including the affiliates. The exhibit may be in any form convenient to 
the applicant that provides full disclosure of the applicant's and its 
affiliates' assets and liabilities and is sufficient to determine 
whether the applicant qualifies under the standards in this part. The 
adjudicative officer may require an applicant to file additional 
information to determine its eligibility for an award.
    (b) The net worth exhibit shall describe any transfers of assets 
from, or obligations incurred by, the applicant or any affiliate, 
occurring in the one year period prior to the date on which the 
proceeding was initiated, that reduced the net worth of the applicant 
and its affiliates below the applicable net worth ceiling. If there were 
no such transactions, the applicant shall so state.
    (c) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, an applicant that objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure may submit 
that portion of the exhibit directly to the adjudicative officer in a 
sealed envelope labeled ``Confidential Financial Information,'' 
accompanied by a motion to withhold the information from public 
disclosure. The motion shall describe the information sought to be 
withheld and explain, in detail, why it falls within one or more of the 
specific exemptions from mandatory disclosure under the Freedom of 
Information Act, 5 U.S.C. 552(b)(1)-(9), why public disclosure of the 
information would adversely affect the applicant, and why disclosure is 
not required in the public interest. The material in question shall be 
served on counsel representing the agency against which the applicant 
seeks an award, but need not be served on any other party to the 
proceeding. If the adjudicative officer finds that the information 
should not be withheld from disclosure, it shall be placed in the public 
record of the proceeding. Otherwise, the officer will omit the material 
from the public record. In that case, any decision regarding disclosure 
of the material (whether in response to a request from an agency or 
person outside the Department or on the Department's own initiative) 
will be made in accordance with applicable statutes and Department rules 
and procedures for commercial and financial records which the submitter 
claims are confidential or privileged. In particular, this regulation is 
not a basis for a promise or obligation of confidentiality.

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

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



Sec.  13.12  Documentation of fees and expenses.

    (a) All applicants must be accompanied by full documentation of the 
fees and expenses, including the cost of any study, exhibit, analysis, 
report, test or other similar item, for which the applicant seeks 
reimbursement.
    (b) The documentation shall include an affidavit from each attorney, 
agent, or expert witness representing or appearing in behalf of the 
party, stating the actual time expended, the rate at which fees and 
other expenses were computed, a description of the specific services 
performed, the total amount claimed, and the total amount paid or 
payable by the applicant or by any other person or entity for the 
services provided. Where the adversary adjudication includes covered 
proceedings (as described in Sec.  13.3) as well as excluded 
proceedings, or two or more matters, each of which could have been heard 
separately, the fees and expenses shall be shown separately for each 
proceeding or matter, and the basis for allocating expenses among the 
proceedings or matters shall be indicated.
    (1) The affidavit shall itemize in detail the services performed by 
the date,

[[Page 81]]

number of hours per date and the services performed during those hours. 
In order to establish the hourly rate, the affidavit shall state the 
hourly rate which is billed and paid by the majority of clients during 
the relevant time periods.
    (2) If no hourly rate is paid by the majority of clients because, 
for instance, the attorney or agent represents most clients on a 
contingency basis, the attorney or agent shall provide affidavits from 
two attorneys or agents with similar experience, who perform similar 
work, stating the hourly rate which they bill and are paid by the 
majority of their clients during a comparable time period.
    (c) If the applicant seeks reimbursement of any expenses not covered 
by the affidavit described in paragraph (b), the documentation must also 
include an affidavit describing all such expenses and stating the 
amounts paid or payable by the applicant or by any other person or 
entity for the services provided.
    (d) The adjudicative officer may require the applicant to provide 
vouchers, receipts, or other substantiation for any fees or expenses 
claimed, pursuant to Sec.  13.25 of this part.

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

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



            Subpart C_Procedures for Considering Applications



Sec.  13.21  Filing and service of pleadings.

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



Sec.  13.22  When an application may be filed.

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

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



Sec.  13.23  Responsive pleadings.

    (a) The agency's litigating party shall file an answer within 30 
calendar days after service of the application or, where the proceeding 
is stayed as provided in Sec.  13.22(d) of this part, within 30 calendar 
days after the final disposition of the underlying controversy. The 
answer shall either consent to the award or explain in detail any 
objections to the award requested and identify the facts relied on in 
support of the agency's position. The adjudicative officer may for good 
cause grant an extension of time for filing an answer.
    (b) Within 15 calendar days after service of an answer, the 
applicant may file a reply. If the reply is based on any alleged facts 
not already in the record of the proceeding, the applicant shall include 
with the reply either supporting affidavits or a request for further 
proceedings under Sec.  13.25.
    (c) Any party to or participant in a proceeding may file comments on 
an application within 30 calendar days, or on an answer within 15 
calendar days

[[Page 82]]

after service of the application or answer.

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



Sec.  13.24  Settlements.

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



Sec.  13.25  Further proceedings.

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

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



Sec.  13.26  Decisions.

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



Sec.  13.27  Agency review.

    (a) The appellate authority for any proceedings shall be the 
official or component that would have jurisdiction over an appeal of the 
merits.
    (b) If either the applicant or the agency's litigating party seeks 
review of the adjudicative officer's decision on the fee application, it 
shall file and serve exceptions within 30 days after issuance of the 
initial decision. Within another 30 days after receipt of such 
exceptions, the opposing party, if it has not done so previously, may 
file its own exceptions to the adjudicative officer's decision. The 
appellate authority shall issue a final decision on the application as 
soon as possible or remand the application to the adjudicative officer 
for further proceedings. Any party that does not file and serve 
exceptions within the stated time limit loses the opportunity to do so.

[69 FR 2847, Jan. 21, 2004]

[[Page 83]]



Sec.  13.28  Judicial review.

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



Sec.  13.29  Payment of award.

    The notification to an applicant of a final decision that an award 
will be made shall contain the name and address of the appropriate 
Departmental finance office that will pay the award. An applicant 
seeking payment of an award shall submit to that finance officer a copy 
of the final decision granting the award, accompanied by a statement 
that the applicant will not seek review of the decision in the United 
States courts. The Department will pay the amount awarded to the 
applicant within 60 days, unless judicial review of the award or of the 
underlying decision of the adversary adjudication has been sought by the 
applicant or any other party to the proceedings.



Sec.  13.30  Designation of adjudicative officer.

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







                       Sec. Appendix A to Part 13

------------------------------------------------------------------------
                                                          Applicable
     Proceedings covered        Statutory authority       regulations
------------------------------------------------------------------------
                       Office of Inspector General
------------------------------------------------------------------------
 
1. Proceedings to impose       42 U.S.C. 1320a-       42 CFR part 1003;
 civil monetary penalties,      7a(c)(2); 1320b-       42 CFR part 1005.
 assessments, or exclusions     10(c); 1395i-
 from Medicare and State        3(b)(3)(B)(ii),
 health care programs.          (g)(2)(A)(i);
                                1395l(h)(5)(D),
                                (i)(6);
                                1395m(a)(11)(A),
                                (a)(18), (b)(5)(C),
                                (j)(2)(A)(iii);
                                1395u(j)(2), (k),
                                (l)(3), (m)(3),
                                (n)(3), (p)(3)(A);
                                1395y(b)(3)(C),
                                (b)(6)(B);
                                1395cc(g);
                                1395dd(d)(1)(A),
                                (B);
                                1395mm(i)(6)(B);
                                1395nn(g)(3), (4);
                                1395ss(d);
                                1395bbb(c)(1);
                                1396b(m)(5)(B);
                                1396r(b)(3)(B)(ii),
                                (g)(2)(A)(i);
                                1396t(i)(3);
                                11131(c);
                                11137(b)(2).
2. Appeals of exclusions from  42 U.S.C. 1320a-7(f);  42 CFR part 1001;
 Medicare and State health      1395l(h)(5)(D);        42 CFR part 1005.
 care programs and/or other     1395m(a)(11)(A),
 programs under the Social      (b)(5)(C);
 Security Act.                  1395u(j)(2), (k),
                                (l)(3), (m)(3),
                                (n)(3), (p)(3)(B).
3. Appeal of exclusions from   42 U.S.C. 1320c-       42 CFR part 1004;
 programs under the Social      5(b)(4), (5).          42 CFR part 1005.
 Security Act, for which
 services may be provided on
 the recommendation of a Peer
 Review Organization.
4. Proceedings to impose       31 U.S.C. 3803.......  45 CFR part 79.
 civil penalties and
 assessments for false claims
 and statements.
------------------------------------------------------------------------
                Centers for Medicare & Medicaid Services
------------------------------------------------------------------------
1. Proceedings to suspend or   42 U.S.C. 263a(i);     42 CFR part 493,
 revoke licenses of clinical    1395w-2.               Subpart R.
 laboratories.
2. Proceedings provided to a   42 U.S.C. 1395h(e)(1)- 42 CFR 421.114,
 fiscal intermediary before     (3).                   421.128.
 assigning or reassigning
 Medicare providers to a
 different fiscal
 intermediary.
3. Appeals of determinations   42 U.S.C. 1395cc(h);   42 CFR 489.53(d);
 that an institution or         1395dd(d)(1)(A).       42 CFR part 498.
 agency is not a Medicare
 provider of services, and
 appeals of terminations or
 nonrenewals of Medicare
 provider agreements.
4. Proceedings before the      42 U.S.C. 1395oo.....  42 CFR part 405,
 Provider Reimbursement                                Subpart R.
 Review Board when Department
 employees appear as counsel
 for the intermediary.
5. Appeals of CMS              42 U.S.C. 1396i......  42 CFR part 498.
 determinations that an
 intermediate care facility
 for the mentally retarded
 (ICFMR) no longer qualifies
 as an ICFMR for Medicaid
 purposes.

[[Page 84]]

 
6. Proceedings to impose       42 U.S.C. 1395i-       42 CFR part 1003.
 civil monetary penalties,      3(h)(2)(B)(ii);
 assessments, or exclusions     1395l(q)(2)(B)(i);
 from Medicare and State        1395m(a)(11)(A),
 health care programs.          (c)(4)(C); 1395w-
                                2(b)(2)(A); 1395w-
                                4(g)(1), (g)(3)(B),
                                (g)(4)(B)(ii);
                                1395nn(g)(5);
                                1395ss(a)(2),
                                (p)(8), (p)(9)(C),
                                (q)(5)(C),
                                (r)(6)(A), (s)(3),
                                (t)(2);
                                1395bbb(f)(2)(A);
                                1396r(h)(3)(C)(ii);
                                1396r-8(b)(3)(B),
                                (C)(ii);
                                1396t(j)(2)(C);
                                1396u(h)(2).
7. Appeals of exclusions from  42 U.S.C.              42 CFR part 498;
 Medicare and State health      1395l(q)(2)(B)(ii);    42 CFR 1001.107.
 care programs and/or other     1395m(a)(11)(A),
 programs under the Social      (c)(5)(C); 1395w-
 Security Act.                  4(g)(1), (g)(3)(B),
                                (g)(4)(B)(ii).
------------------------------------------------------------------------
                      Food and Drug Administration
------------------------------------------------------------------------
1. Proceedings to withdraw     21 U.S.C. 355(e).....  21 CFR part 12; 21
 approval of new drug                                  CFR 314.200.
 applications.
2. Proceedings to withdraw     21 U.S.C. 360b(e),     21 CFR part 12; 21
 approval of new animal drug    (m).                   CFR part 514,
 applications and medicated                            Subpart B.
 feed applications.
3. Proceedings to withdraw     21 U.S.C. 306e(e),     21 CFR part 12.
 approval of medical device     (g).
 premarket approval
 applications.
------------------------------------------------------------------------
 
                         Office for Civil Rights
------------------------------------------------------------------------
1. Proceedings to enforce      42 U.S.C. 2000d-1....  45 CFR 80.9.
 Title VI of the Civil Rights
 Act of 1964, which prohibits
 discrimination on the basis
 of race, color or national
 origin by recipients of
 Federal financial assistance.
2. Proceedings to enforce      29 U.S.C. 794a; 42     45 CFR 84.61.
 section 504 of the             U.S.C. 2000d-1.
 Rehabilitation Act of 1973,
 which prohibits
 discrimination on the basis
 of handicap by recipients of
 Federal financial assistance.
3. Proceedings to enforce the  42 U.S.C. 6104(a)....  45 CFR 91.47.
 Age Discrimination Act of
 1975, which prohibits
 discrimination on the basis
 of age by recipients of
 Federal financial assistance.
4. Proceedings to enforce      20 U.S.C. 1682.......  45 CFR 86.71.
 Title IX of the Education
 Amendments of 1972, which
 prohibits discrimination on
 the basis of sex in certain
 education programs by
 recipients of Federal
 financial assistance.
------------------------------------------------------------------------


[69 FR 2847, Jan. 21, 2004]



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



    Authority: Sec. 213, Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, Pub. L. 91-646, 84 Stat. 1894 (42 
U.S.C. 4633) as amended by the Surface Transportation and Uniform 
Relocation Assistance Act of 1987, Title IV of Pub. L. 100-17, 101 Stat. 
246-256 (42 U.S.C. 4601 note).



Sec.  15.1  Uniform relocation assistance and real property acquisition.

    Regulations and procedures for complying with the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L. 
91-646, 84 Stat. 1894, 42 U.S.C. 4601 et seq.), as amended by the 
Surface Transportation and Uniform Relocation Assistance Act of 1987 
(Title IV of Pub. L. 100-17, 101 Stat. 246-256, 42 U.S.C. 4601 note) are 
set forth in 49 CFR part 24.

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



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



Sec.
16.1 What this part does.
16.2 Definitions.
16.3 When these procedures become available.
16.4 Summary of procedures below.
16.5 How the Board operates.

[[Page 85]]

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

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

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

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



Sec.  16.1  What this part does.

    This part contains requirements and procedures applicable to certain 
disputes arising under the HHS programs described in appendix A. This 
part is designed to provide a fair, impartial, quick and flexible 
process for appeal from written final decisions. This part supplements 
the provisions in part 75 of this title.

[46 FR 43817, Aug. 31, 1981, as amended at 81 FR 3012, Jan. 20, 2016]



Sec.  16.2  Definitions.

    (a) Board means the Departmental Grant Appeals Board of the 
Department of Health and Human Services. Reference below to an action of 
the Board means an action of the Chair, another Board member, or Board 
staff acting at the direction of a Board member. In certain instances, 
the provisions restrict action to particular Board personnel, such as 
the Chair or a Board member assigned to a case.
    (b) Other terms shall have the meaning set forth in part 75 of this 
title, unless the context below otherwise requires.

[46 FR 43817, Aug. 31, 1981, as amended at 81 FR 3012, Jan. 20, 2016]



Sec.  16.3  When these procedures become available.

    Before the Board will take an appeal, three circumstances must be 
present:
    (a) The dispute must arise under a program which uses the Board for 
dispute resolution, and must meet any special conditions established for 
that program. An explanation is contained in appendix A.
    (b) The appellant must have received a final written decision, and 
must appeal that decision within 30 days after receiving it. Details of 
how final decisions are developed and issued, and what must be in them, 
are contained in 45 CFR 75.374.
    (c) The appellant must have exhausted any preliminary appeal process 
required by regulation. For example, see 42 CFR part 50 (subpart D) for 
Public Health Service programs. In such cases, the final written 
decision required for the Board's review is the decision resulting from 
the preliminary review or appeal process. appendix A contains further 
details.

[46 FR 43817, Aug. 31, 1981, as amended at 62 FR 38218, July 17, 1997; 
81 FR 3012, Jan. 20, 2016]



Sec.  16.4  Summary of procedures below.

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

[[Page 86]]

the Board determines that there are complex issues or material facts in 
dispute, or that the Board's review would otherwise be significantly 
enhanced by a hearing. Where the amount in dispute is $25,000 or less, 
there are special expedited procedures (see Sec.  16.12 of this part). 
In all cases, the Board has the flexibility to modify procedures to 
ensure fairness, to avoid delay, and to accommodate the peculiar needs 
of a given case. The Board makes maximum feasible use of preliminary 
informal steps to refine issues and to encourage resolution by the 
parties. The Board also has the capability to provide mediation services 
(see Sec.  16.18).



Sec.  16.5  How the Board operates.

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



Sec.  16.6  Who represents the parties.

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



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

    (a) As explained in 45 CFR 75.374, a prospective appellant must 
submit a notice of appeal to the Board within 30 days after receiving 
the final decision. The notice of appeal must include a copy of the 
final decision, a statement of the amount in dispute in the appeal, and 
a brief statement of why the decision is wrong.
    (b) Within ten days after receiving the notice of appeal, the Board 
will send an acknowledgment, enclose a copy of these procedures, and 
advise the appellant of the next steps. The Board will also send a copy 
of the notice of appeal, its attachments, and the Board's acknowledgment 
to the respondent. If the Board Chair has determined that the appeal 
does not meet the conditions of Sec.  16.3 or if further information is 
needed to make this determination, the Board will notify the parties at 
this point.

[46 FR 43817, Aug. 31, 1981, as amended at 81 FR 3012, Jan. 20, 2016]



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

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

[[Page 87]]

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



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

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



Sec.  16.10  Using a conference.

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

[[Page 88]]

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



Sec.  16.11  Hearing.

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



Sec.  16.12  The expedited process.

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

[[Page 89]]

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



Sec.  16.13  Powers and responsibilities.

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



Sec.  16.14  How Board review is limited.

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



Sec.  16.15  Failure to meet deadlines and other requirements.

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

[[Page 90]]

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



Sec.  16.16  Parties to the appeal.

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



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

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



Sec.  16.18  Mediation.

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



Sec.  16.19  How to calculate deadlines.

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



Sec.  16.20  How to submit material to the Board.

    (a) Submissions should be addressed to the Board's current mailing 
address: Department of Health and Human Services, Departmental Appeals 
Board, Appellate Division--MS 6127, 330 Independence Ave. SW., Cohen 
Building--Rm. G-644, Washington, DC 20201; however, submissions to the 
Board in certain types of cases may be made by electronic filing using 
DAB E-File at https://dab.efile.hhs.gov. Changes to the

[[Page 91]]

mailing address will be made available on the Board's Web site at 
www.hhs.gov/dab/divisions/appellate.
    (b) All submissions after the notice of appeal should identify the 
Board's docket number (the Board's acknowledgement under Sec.  16.7 will 
specify the docket number).
    (c) Unless the Board otherwise specifies, parties shall submit to 
the Board an original and two copies of all materials. Each submission 
other than the notice of appeal, must include a statement that one copy 
of the materials has been sent to the other party, identifying when and 
to whom the copy was sent.
    (d) Unless hand delivered, all materials should be sent to the Board 
and the other party by certified or registered mail, return receipt 
requested.
    (e) The Board considers material to be submitted on the date when it 
is postmarked or hand delivered to the Board.

[46 FR 43817, Aug. 31, 1981, as amended at 81 FR 3012, Jan. 20, 2016]



Sec.  16.21  Record and decisions.

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



Sec.  16.22  The effect of an appeal.

    (a) General. Until the Board disposes of an appeal, the respondent 
shall take no action to implement the final decision appealed.
    (b) Exceptions. The respondent may--
    (1) Suspend funding (see Sec.  75.371 of this title);
    (2) Defer or disallow other claims questioned for reasons also 
disputed in the pending appeal;
    (3) In programs listed in appendix A, B.(a)(1), implement a decision 
to disallow Federal financial participation claimed in expenditures 
reported on a statement of expenditures, by recovering, withholding or 
offsetting payments, if the decision is issued before the reported 
expenditures are included in the calculation of a subsequent grant; or
    (4) Take other action to recover, withhold, or offset funds if 
specifically authorized by statute or regulation.

[46 FR 43817, Aug. 31, 1981, as amended at 81 FR 3012, Jan. 20, 2016]



Sec.  16.23  How long an appeal takes.

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

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

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



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

A. What this appendix covers.
    This appendix describes programs which use the Board for dispute 
resolution, the types of disputes covered, and any conditions

[[Page 92]]

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

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

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

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

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

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

G. How the Board determines whether it will review a case.
    Under Sec.  16.7, the Board Chair determines whether an appeal meets 
the requirements of this appendix. If the Chair finds that there is some 
question about this, the Board will request the written opinion of the 
HHS component which issued the decision. Unless the Chair determines 
that the opinion is clearly erroneous, the Board will be bound by the

[[Page 93]]

opinion. If the HHS component does not respond within a time set by the 
Chair, or cannot determine whether the Board clearly does or does not 
have jurisdiction, the Board will take the appeal.

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



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



Sec.
17.1 Definition.
17.2 Basic policy.
17.3 Precautions to be taken.
17.4 Regulatory investigations and trial-type proceedings.
17.5 Context to be reflected.
17.6 Advance notice.
17.7 Retractions or corrections.

    Authority: 5 U.S.C. 301.

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



Sec.  17.1  Definition.

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



Sec.  17.2  Basic policy.

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



Sec.  17.3  Precautions to be taken.

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



Sec.  17.4  Regulatory investigations and trial-type proceedings.

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



Sec.  17.5  Context to be reflected.

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



Sec.  17.6  Advance notice.

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

[[Page 94]]

advance a response to the information released.



Sec.  17.7  Retractions or corrections.

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



PART 18_OFFICIAL SYMBOL, LOGO, AND SEAL--Table of Contents



    Authority: 42 U.S.C. 3505 and 5 U.S.C. 301.



Sec.  18.1  Description of the Symbol, Logo, and Seal.

    (a) The Departmental Symbol (Symbol) of the Department of Health and 
Human Services (HHS) is the key element in Department identification. It 
represents the American People sheltered in the wing of the American 
Eagle, suggesting the Department's concern and responsibility for the 
welfare of the people. This Symbol is the visual link which connects the 
graphic communications of all components and programs of the Department. 
It is the major design component for the Department Identifiers -- the 
Department Logo, Seal, and Signatures.
    (b) The Symbol is described as follows: The outline of an American 
Eagle, facing left, with one of its wings stretched upward and the other 
wing pointed downward, is flanked on its right side by two outlines of 
the profile of a human head, both of which are located in between the 
eagle's wings. One of the profile outlines is smaller than the other and 
is nestled in the larger outline.
[GRAPHIC] [TIFF OMITTED] TR13MR15.002

    (c) The HHS Departmental Logo (Logo) incorporates the Symbol and is 
described as follows: From the tip of the outstretched wing of the 
American Eagle in symbol to the tip of the other, downward-facing wing, 
the words, ``DEPARTMENT OF HEALTH & HUMAN SERVICES  
USA'' form a circular arc. The official colors of the Logo are either 
Black or Reflex Blue. Reflex Blue RGB Numbers: 0/0/153 (R0, G0, B153)

[[Page 95]]

[GRAPHIC] [TIFF OMITTED] TR13MR15.003

    (d) The HHS Departmental Seal (Seal) incorporates the Symbol and is 
described as follows: Starting from the tip of the downward-facing wing 
of the American Eagle in the HHS symbol and forming a complete circle 
clockwise around the HHS symbol, the words, ``DEPARTMENT OF HEALTH & 
HUMAN SERVICES  USA '' are printed, 
surrounded by a border composed of a solid inner ring at the base of the 
text and a triangular, scalloped edge at the top of the text. The 
official colors of the Seal are Reflex Blue and Gold [Reflex Blue RGB 
Numbers: 0/0/153 (R0, G0, B153); Reflex Gold RGB Numbers: 254/252/1 
(R254, G252, B1)]. The Seal may also appear in Reflex Blue or Black.
[GRAPHIC] [TIFF OMITTED] TR13MR15.004

    (e) The HHS Departmental symbol, logo, and seal shall each be 
referred to as an HHS emblem and shall collectively be referred to as 
HHS emblems.

[80 FR 13252, Mar. 13, 2015]



PART 30_CLAIMS COLLECTION--Table of Contents



                      Subpart A_General Provisions

Sec.
30.1 Purpose, authority, and scope.
30.2 Definitions.
30.3 Antitrust, fraud, exception in the account of an accountable 
          official, and interagency claims excluded.
30.4 Compromise, waiver, or disposition under other statutes not 
          precluded.
30.5 Other administrative remedies.
30.6 Form of payment.
30.7 Subdivision of claims.
30.8 Required administrative proceedings.
30.9 No private rights created.

     Subpart B_Standards for the Administrative Collection of Debts

30.10 Collection activities.
30.11 Demand for payment.
30.12 Administrative offset.
30.13 Debt reporting and the use of credit reporting agencies.
30.14 Contracting with private collection contractors and with entities 
          that locate and recover unclaimed assets.

[[Page 96]]

30.15 Suspension or revocation of eligibility for loans and loan 
          guarantees, licenses, permits or privileges.
30.16 Liquidation of collateral.
30.17 Collection in installments.
30.18 Interest, penalties, and administrative costs.
30.19 Review of cost effectiveness of collection.
30.20 Taxpayer information.

                        Subpart C_Debt Compromise

30.21 Scope and application.
30.22 Basis for compromise.
30.23 Enforcement policy.
30.24 Joint and several liability.
30.25 Further review of compromise offers.
30.26 Consideration of tax consequences to the Government.
30.27 Mutual release of the debtor and the Government.

       Subpart D_Suspending and Terminating Collection Activities

30.28 Scope and application.
30.29 Suspension of collection activity.
30.30 Termination of collection activity.
30.31 Exception to termination.
30.32 Discharge of indebtedness; reporting requirements.

            Subpart E_Referrals to the Department of Justice

30.33 Prompt referral.
30.34 Claims Collection Litigation Report.
30.35 Preservation of evidence.
30.36 Minimum amount of referrals.

    Authority: 31 U.S.C. 3711(d).

    Source: 72 FR 10409, Mar. 8, 2007, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  30.1  Purpose, authority, and scope.

    (a) Purpose. This part prescribes the standards and procedures for 
the Department's use in the administrative collection, offset, 
compromise, and suspension or termination of collection activity for 
claims for funds or property, as defined by 31 U.S.C. 3701(b) and this 
part. Covered activities include the collection of debts in any amount; 
the compromise and suspension or termination of collection activity of 
debts that do not exceed $100,000, or such higher amount as the Attorney 
General may prescribe, exclusive of interest, penalties, and 
administrative costs; and the referral of debts to the Department of the 
Treasury (Treasury), the Treasury-designated debt collection centers, or 
the Department of Justice (Justice) for collection by further 
administrative action or litigation, as applicable.
    (b) Authority. The Secretary is issuing the regulations in this part 
under the authority contained in 31 U.S.C. 3711(d). The standards and 
procedures prescribed in this part are authorized under the Federal 
Claims Collection Act, as amended, Public Law No. 89-508, 80 Stat. 308 
(July 19, 1966), the Debt Collection Act of 1982, Public Law No. 97-365, 
96 Stat. 1749 (October 25, 1982), the Debt Collection Improvement Act of 
1996, Public Law No. 104-134, 110 Stat. 1321, 1358 (April 26, 1996) and 
the Federal Claims Collection Standards at 31 CFR parts 900 through 904.
    (c) Scope. (1) The standards and procedures prescribed in this part 
apply to all officers and employees of the Department, including 
officers and employees of the various Operating Divisions and Regional 
Offices of the Department, charged with the collection and disposition 
of debts owed to the United States.
    (2) The standards and procedures set forth in this part will be 
applied except where specifically excluded herein or where a statute, 
regulation or contract prescribes different standards or procedures.
    (3) Regulations governing the use of certain debt collection 
procedures created under the Debt Collection Improvement Act of 1996, 
including tax refund offset, administrative wage garnishment, and 
Federal salary offset, are contained in parts 31 through 33 of this 
chapter.



Sec.  30.2  Definitions.

    In this part--
    Administrative offset means withholding funds payable by the United 
States to, or held by the United States for, a person to satisfy a debt.
    Agency means a department, agency, court, court administrative 
office, or instrumentality in the executive, judicial, or legislative 
branch of the Government, including Government corporations.

[[Page 97]]

    Appropriate official means the Department official who, by statute 
or delegation of authority, determines the existence and amount of debt.
    Business day means Monday through Friday. For purposes of 
computation, the last day of the period will be included unless it is a 
Federal holiday, in which case the next business day following the 
holiday will be considered the last day of the period.
    Claim see the definition for the term ``debt.'' The terms ``claim'' 
and ``debt'' are synonymous and interchangeable.
    Creditor agency means an agency to which a debt is owed, including a 
debt collection center acting on behalf of a creditor agency.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, Sunday, or a 
Federal holiday, in which case the next business day will be considered 
the last day of the period.
    Debt or claim means an amount of funds or other property determined 
by an appropriate official of the Federal Government to be owed to the 
United States from any person, organization, or entity, except another 
Federal agency. For the purpose of administrative offset, the term 
includes an amount owed by an individual to a State, the District of 
Columbia, American Samoa, Guam, the United States Virgin Islands, the 
Commonwealth of the Northern Mariana Islands, or the Commonwealth of 
Puerto Rico. Debts include, but are not limited to, amounts owed 
pursuant to: Loans insured or guaranteed by the United States; fees; 
leases; rents; royalties; services; sales of real or personal property; 
Federal salary overpayments; overpayments to program beneficiaries, 
contractors, providers, suppliers, and grantees; audit disallowance 
determinations; civil penalties and assessments; theft or loss; 
interest; fines and forfeitures (except those arising under the Uniform 
Code of Military Justice); and all other similar sources.
    Debt collection center means the Department of the Treasury, or 
other Federal agency, subagency, unit, or division designated by the 
Secretary of the Treasury to collect debts owed to the United States.
    Debtor means an individual, organization, association, partnership, 
corporation, or State or local government or subdivision indebted to the 
Government, or the person or entity with legal responsibility for 
assuming the debtor's obligation.
    Debts arising under the Social Security Act are overpayments to, or 
contributions, reimbursements, penalties or assessments owed by, any 
entity, individual, or State under the Social Security Act. Such amounts 
include amounts owed to the Medicare program under section 1862(b) of 
the Social Security Act. Salary overpayments and other debts that result 
from the administration of the provisions of the Social Security Act are 
not deemed to ``arise under'' the Social Security Act for purposes of 
this part.
    Delinquent debt means a debt which the debtor does not pay or 
otherwise resolve by the date specified in the initial demand for 
payment, or in an applicable written repayment agreement or other 
instrument, including a post-delinquency repayment agreement.
    Department means the Department of Health and Human Services, and 
its Operating Divisions and Regional Offices.
    Disbursing official means an officer or employee who has authority 
to disburse public money pursuant to 31 U.S.C. 3321 or another law.
    Disposable pay means that part of the debtor's current basic, 
special, incentive, retired, and retainer pay, or other authorized pay, 
remaining after deduction of amounts required by law to be withheld. For 
purposes of calculating disposable pay, legally required deductions that 
must be applied first include: Tax levies pursuant to the Internal 
Revenue Code (title 26, United States Code); properly withheld taxes, 
FICA, Medicare; health and life insurance premiums; and retirement 
contributions. Amounts deducted under garnishment orders, including 
child support garnishment orders, are not legally required deductions 
for calculating disposable pay.
    Evidence of service means information retained by the Department 
indicating the nature of the document to which it pertains, the date of 
mailing of the document, and the address and name of

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the debtor to whom it is being sent. A copy of the dated and signed 
written notice provided to the debtor pursuant to this part may be 
considered evidence of service for purposes of this part. Evidence of 
service may be retained electronically so long as the manner of 
retention is sufficient for evidentiary purposes.
    FMS means the Financial Management Service, a bureau of the 
Department of the Treasury.
    Hearing means a review of the documentary evidence to confirm the 
existence or amount of a debt or the terms of a repayment schedule. If 
the Secretary determines that the issues in dispute cannot be resolved 
by such a review, such as when the validity of the claim turns on the 
issue of credibility or veracity, the Secretary may provide an oral 
hearing. (See 45 CFR 33.6(c)(2) for oral hearing procedures that may be 
provided by the Secretary).
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Late charges means interest, penalties, and administrative costs 
required or permitted to be assessed on delinquent debts.
    Legally enforceable means that there has been a final agency 
determination that the debt, in the amount stated, is due and there are 
no legal bars to collection action.
    Local government means a political subdivision, instrumentality, or 
authority of any State, the District of Columbia, American Samoa, Guam, 
the United States Virgin Islands, the Commonwealth of the Northern 
Mariana Islands, or the Commonwealth of Puerto Rico, or an Indian tribe, 
band or nation.
    Operating Division means each separate component, agency, subagency, 
and unit within the Department of Health and Human Services, including, 
but not limited to, the Administration for Children and Families, the 
Administration on Aging, the Centers for Disease Control and Prevention, 
the Centers for Medicare & Medicaid Services, the Food and Drug 
Administration, the National Institutes of Health, Substance Abuse and 
Mental Health Services Administration, Indian Health Service, Health 
Resources and Services Administration, Agency for Toxic Substances and 
Disease Registry, Agency for Healthcare Research and Quality, and the 
Office of the Secretary.
    OPM means the Office of Personnel Management.
    Payment authorizing agency means an agency that transmits a voucher 
to a disbursing official for the disbursement of public money.
    Payments made under the Social Security Act means payments by this 
Department or other agencies to beneficiaries, providers, 
intermediaries, physicians, suppliers, carriers, States, or other 
contractors or grantees under a Social Security Act program, including: 
Title I (Grants to States for Old-Age Assistance for the Aged); Title II 
(Federal Old-Age, Survivors, and Disability Insurance Benefits); Title 
III (Grants to States for Unemployment Compensation Administration); 
Title IV (Grants to States for Aid and Services to Needy Families with 
Children and for Child-Welfare Services); Title V (Maternal and Child 
Health Services Block Grant); Title IX (Miscellaneous Provisions 
Relating to Employment Security); Title X (Grants to States for Aid to 
the Blind); Title XI, part B (Peer Review of the Utilization and Quality 
of Health Care Services); Title XII (Advances to State Unemployment 
Funds); Title XIV (Grants to States for Aid to Permanently and Totally 
Disabled); Title XVI (Grants to States for Aid to the Aged, Blind, and 
Disabled); Title XVII (Grants for Planning Comprehensive Action to 
Combat Mental Retardation); Title XVIII (Health Insurance for the Aged 
and Disabled); Title XIX (Grants to States for Medical Assistance 
Programs); Title XX (Block Grants to States for Social Services); and 
Title XXI (State Children's Health Insurance Program). Federal employee 
salaries and other payments made by the Department or other agencies in 
the course of administering the provisions of the Social Security Act 
are not deemed to be ``payable under'' the Social Security Act for 
purposes of this part.
    Private collection contractors means private debt collection under 
contract with the Department to collect a

[[Page 99]]

nontax debt or claim owed to the Department. The term includes private 
debt collectors, collection agencies, and commercial attorneys.
    Salary offset means an administrative offset to collect a debt owed 
by a Federal employee through deductions at one or more officially 
established pay intervals from the current pay account of the employee 
without his or her consent.
    Secretary means the Secretary of Health and Human Services, or the 
Secretary's designee.
    Taxpayer identification number means the identifying number 
described under section 6109 of the Internal Revenue Code of 1986 (26 
U.S.C. 6109). For an individual, the taxpayer identifying number is the 
individual's Social Security Number.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt.



Sec.  30.3  Antitrust, fraud, exception in the account 
of an accountable official, and interagency claims excluded.

    (a) Claims involving antitrust violations or fraud. (1) The 
standards in this part relating to compromise, suspension, and 
termination of collection activity do not apply to any debt based in 
whole or in part on conduct in violation of antitrust laws, or to any 
debt involving fraud, presentation of a false claim, or 
misrepresentation on the part of the debtor or any party having an 
interest in the claim, unless the Department of Justice returns a 
referred claim to the Department for further handling in accordance with 
parts 31 CFR 900 through 904 and this part.
    (2) Upon identification of a debt suspected of involving an 
antitrust violation or fraud, a false claim, misrepresentation, or other 
criminal activity or misconduct, the Secretary shall refer the debt to 
the Office of the Inspector General for review.
    (3) Upon the determination of the Office of the Inspector General 
that a claim is based in whole or in part on conduct in violation of the 
antitrust laws, or involves fraud, the presentation of a false claim, or 
misrepresentation on the part of the debtor or any party having an 
interest in the claim, the Secretary shall promptly refer the case to 
the Department of Justice for action.
    (b) Exception in the account of an accountable official. The 
standards in this part do not apply to compromise of an exception in the 
account of an accountable official.
    (c) Interagency claims. This part does not apply to claims between 
Federal agencies. The Department will attempt to resolve interagency 
claims by negotiation in accordance with EO 12146.



Sec.  30.4  Compromise, waiver, or disposition under other statutes 
not precluded.

    Nothing in this part precludes the Department from disposing of any 
claim under statutes and implementing regulations other than subchapter 
II of chapter 37 of Title 31 of the United States Code and the Federal 
Claims Collection Standards, 31 CFR parts 900 through 904. Any statute 
and implementing regulation specifically applicable to the claims 
collection activities of the Department will take precedence over this 
part.



Sec.  30.5  Other administrative remedies.

    The remedies and sanctions available under this part for collecting 
debts are not intended to be exclusive. Nothing contained in this part 
precludes using any other administrative remedy which may be available 
for collecting debts owed to the Department, such as converting the 
method of payment under a grant from an advancement to a reimbursement 
method or revoking a grantee's letter-of-credit.



Sec.  30.6  Form of payment.

    Claims may be paid in the form of money or, when a contractual basis 
exists, the Department may demand the return of specific property or the 
performance of specific services.



Sec.  30.7  Subdivision of claims.

    Debts may not be subdivided to avoid the monetary ceiling 
established by 31 U.S.C. 3711(a)(2). A debtor's liability arising from a 
particular transaction or contract shall be considered a single debt in 
determining whether the debt, exclusive of interest, penalties and 
administrative costs, does not exceed

[[Page 100]]

$100,000, or such higher amount as prescribed by the Attorney General 
for purposes of compromise, or suspension or termination of collection 
activity.



Sec.  30.8  Required administrative proceedings.

    This part does not supersede, or require omission or duplication of 
administrative proceedings required by contract, or other laws or 
regulations. See for example, 42 CFR part 50 (Public Health Service), 45 
CFR part 16 (Departmental Grant Appeals Board), and 48 CFR part 33 
(Federal Acquisition Regulation) and part 333 (HHS Acquisition 
Regulation).



Sec.  30.9  No private rights created.

    The standards in this part do not create any right or benefit, 
substantive or procedural, enforceable at law or in equity by a party 
against the United States, the Department, its officers, or any other 
person, nor shall the failure of the Department to comply with any of 
the provisions of this part be available to any debtor as a defense.



     Subpart B_Standards for the Administrative Collection of Debts



Sec.  30.10  Collection activities.

    (a) General rule. The Secretary shall aggressively and timely 
collect all debts arising out of activities of, or referred or 
transferred for collection actions to, the Department. Normally, an 
initial written demand for payment shall be made no later than 30 days 
after a determination by an appropriate official that a debt exists.
    (b) Cooperation with other agencies. The Department shall cooperate 
with other agencies in their debt collection activities.
    (c) Transfer of delinquent debts--(1) Mandatory transfer. The 
Department shall transfer legally enforceable debts 180 days or more 
delinquent to Treasury in accordance with the requirements of 31 CFR 
285.12. This requirement does not apply to any debt that:
    (i) Is in litigation or foreclosure;
    (ii) Will be disposed of under an approved asset sale program within 
one year of becoming eligible for sale;
    (iii) Has been referred to a private collection contractor for a 
period of time acceptable to the Secretary of the Treasury;
    (iv) Is at a debt collection center for a period of time acceptable 
to the Secretary of the Treasury (see paragraph (c)(2) of this section);
    (v) Will be collected under internal offset procedures within three 
years after the debt first became delinquent; or
    (vi) Is exempt from this requirement based on a determination by the 
Secretary of the Treasury that exemption for a certain class of debt is 
in the best interest of the United States.
    (2) Permissive transfer. The Secretary may refer debts less than 180 
days delinquent, including debts referred to the Department by another 
agency, to the Treasury in accordance with the requirements of 31 CFR 
285.12, or with the consent of the Treasury, to a Treasury-designated 
debt collection center to accomplish efficient, cost effective debt 
collection. Referrals to debt collection centers shall be at the 
discretion of, and for a time period acceptable to, the Secretary of the 
Treasury. Referrals may be for servicing, collection, compromise, 
suspension, or termination of collection action.



Sec.  30.11  Demand for payment.

    (a) Written demand for payment. (1) Written demand, as described in 
paragraph (b) of this section, shall be made promptly upon a debtor in 
terms that inform the debtor of the consequences of failing to cooperate 
with the Department to resolve the debt.
    (2) Normally, the demand letter will be sent no later than 30 days 
after the appropriate official determines that the debt exists. The 
demand letter shall be sent by first class mail to the debtor's last 
known address.
    (3) When necessary to protect the Government's interest, for example 
to prevent the running of a statute of limitations, the written demand 
for payment may be preceded by other appropriate action under this part, 
including immediate referral to Justice for litigation.
    (b) Demand letters. The specific content, timing, and number of 
demand letters shall depend upon the type and

[[Page 101]]

amount of the debt and the debtor's response, if any, to the 
Department's letters or telephone calls. Generally, one demand letter 
should suffice; however, more may be used.
    (1) The written demand for payment shall include the following 
information:
    (i) The nature and amount of the debt, including the basis for the 
indebtedness;
    (ii) The date by which payment should be made to avoid late charges 
and enforced collection, which generally shall be no later than 30 days 
from the date the demand letter is mailed;
    (iii) The applicable standards for imposing any interest, penalties, 
or administrative costs (see Sec.  30.18);
    (iv) The rights, if any, the debtor may have to:
    (A) Seek review of the Department's determination of the debt, and 
for purposes of administrative wage garnishment or salary offset, to 
request a hearing (see 45 CFR parts 32 and 33); and
    (B) Enter into a reasonable repayment agreement.
    (v) An explanation of how the debtor may exercise any of the rights 
described in paragraph (b)(1)(iv) of this section;
    (vi) The name, address, and phone number of a contact person or 
office within the Department to address any debt-related matters; and
    (vii) The Department's remedies to enforce payment of the debt, 
which may include:
    (A) Garnishing the debtor's wages through administrative wage 
garnishment;
    (B) Offsetting any Federal payments due the debtor, including income 
tax refunds, salary, certain benefit payments such as Social Security, 
retirement, and travel reimbursements and advances;
    (C) Referring the debt to a private collection contractor;
    (D) Reporting the debt to a credit bureau or other automated 
database;
    (E) Referring the debt to Justice for litigation; and
    (F) Referring the debt to Treasury for any of the collection actions 
described in paragraphs (b)(1)(vii)(A) through (E) of this section, 
advising the debtor that such referral is mandatory if the debt is 180 
or more days delinquent.
    (2) The written demand for payment should also include the following 
information:
    (i) The debtor's right to inspect and copy all records of the 
Department pertaining to the debt, or if the debtor or the debtor's 
representative cannot personally inspect the records, to request and 
receive copies of such records;
    (ii) The Department's willingness to discuss with the debtor 
alternative methods of payment;
    (iii) A debtor delinquent on a debt is ineligible for Government 
loans, loan guarantees, or loan insurance until the debtor resolves the 
debt;
    (iv) When seeking to collect statutory penalties, forfeiture or 
other similar types of claim, the debtor's licenses, permits, or other 
privileges may be suspended or revoked if failure to pay the debt is 
inexcusable or willful. Such suspension or revocation shall extend to 
programs or activities administered by the States on behalf of the 
Federal Government, to the extent that they affect the Federal 
Government's ability to collect money or funds owed by debtors;
    (v) Knowingly making false statements or bringing frivolous actions 
may subject the debtor to civil or criminal penalties under 31 U.S.C. 
3729-3731, 18 U.S.C. 286, 287, 1001, and 1002, or any other applicable 
statutory authority, and, if the debtor is a Federal employee, to 
disciplinary action under 5 CFR part 752 or other applicable authority;
    (vi) Any amounts collected and ultimately found not to have been 
owed by the debtor will be refunded;
    (vii) For salary offset, up to 15% of the debtor's current 
disposable pay may be deducted every pay period until the debt is paid 
in full; and
    (viii) Dependent upon applicable statutory authority, the debtor may 
be entitled to consideration for a waiver.
    (c) The Secretary will retain evidence of service indicating the 
date of mailing of the demand letter. The evidence of service, which may 
include a certificate of service, may be retained electronically so long 
as the manner of

[[Page 102]]

retention is sufficient for evidentiary purposes.
    (d) Prior to, during, or after the completion of the demand process, 
if the Secretary determines to pursue, or is required to pursue offset, 
the procedures applicable to offset should be followed (see Sec.  
30.12). The availability of funds for debt satisfaction by offset and 
the Secretary's determination to pursue collection by offset shall 
release the Secretary from the necessity of further compliance with 
paragraphs (a), (b), and (c) of this section.
    (e) Finding debtors. The Secretary will use every reasonable effort 
to locate debtors, using such sources as telephone directories, city 
directories, postmasters, drivers license records, automobile title and 
license records in State and local government agencies, the IRS, credit 
reporting agencies and skip locator services. Referral of a confess-
judgment note to the appropriate United States Attorney's Office for 
entry of judgment will not be delayed because the debtor cannot be 
located.
    (f) Communications from debtors. The Secretary should respond 
promptly to communications from debtor, within 30 days where feasible, 
and should advise debtors who dispute debts to furnish available 
evidence to support their contentions.
    (g) Exception. This section does not require duplication of any 
notice already contained in a written agreement, letter or other 
document signed by, or provided to, the debtor.



Sec.  30.12  Administrative offset.

    (a) Scope. (1) Administrative offset is the withholding of funds 
payable by the United States to, or held by the United States for, a 
person to satisfy a debt.
    (2) This section does not apply to:
    (i) Debts arising under the Social Security Act, except as provided 
in 42 U.S.C. 404;
    (ii) Payments made under the Social Security Act, except as provided 
for in 31 U.S.C. 3716(c), and implementing regulation at 31 CFR 285.4;
    (iii) Debts arising under, or payments made under, the Internal 
Revenue Code or the tariff laws of the United States;
    (iv) Offsets against Federal salaries to the extent these standards 
are inconsistent with regulations published to implement such offsets 
under 5 U.S.C. 5514 and 31 U.S.C. 3716 (see 5 CFR part 550, subpart K; 
31 CFR 285.7; and part 33 of this chapter);
    (v) Offsets under 31 U.S.C. 3728 against a judgment obtained by a 
debtor against the United States;
    (vi) Offsets or recoupments under common law, State law, or Federal 
statutes specifically prohibiting offsets or recoupments for particular 
types of debts; or
    (vii) Offsets in the course of judicial proceedings, including 
bankruptcy.
    (3) Unless otherwise provided for by contract or law, debts or 
payments that are not subject to administrative offset under 31 U.S.C. 
3716 may be collected by administrative offset under the common law or 
other applicable statutory authority.
    (4) Unless otherwise provided by law, collection by administrative 
offset under the authority of 31 U.S.C. 3716 may not be conducted more 
than 10 years after the Department's right to collect the debt first 
accrued, unless facts material to the Department's right to collect the 
debt were not known and could not reasonably have been known by the 
Secretary. This limitation does not apply to debts reduced to judgment.
    (5) Where there is reason to believe that a bankruptcy petition has 
been filed with respect to a debtor, the Office of the General Counsel 
should be contacted for legal advice concerning the impact of the 
Bankruptcy Code, particularly 11 U.S.C. 106, 362 and 553, on pending or 
contemplated collections by offset.
    (b) Centralized administrative offset. (1) Except as provided in the 
exceptions listed in Sec.  30.10(c)(1), legally enforceable debts which 
are 180 days delinquent shall be referred to the Secretary of the 
Treasury for collection by centralized administrative offset pursuant to 
and in accordance with 31 CFR 901.3(b). Debts which are less than 180 
days delinquent, including debts referred to the Department by another 
agency, also may be referred to the Secretary of the Treasury for 
collection by centralized administrative offset.
    (2) When referring delinquent debts to the Secretary of the Treasury 
for

[[Page 103]]

centralized administrative offset, the Department must certify, in a 
form acceptable to the Secretary of the Treasury, that:
    (i) The debt is past due and legally enforceable; and
    (ii) The Department has complied with all due process requirements 
under 31 U.S.C. 3716(a) and paragraph (c)(2) of this section.
    (3) Payments that are prohibited by law from being offset are exempt 
from centralized administrative offset. The Secretary of the Treasury 
shall exempt payments under means-tested programs from centralized 
administrative offset when requested in writing by the head of the 
payment certifying or authorizing agency. Also, the Secretary of the 
Treasury may exempt other classes of payments from centralized offset 
upon the written request of the head of the payment certifying or 
authorizing agency.
    (c) Non-centralized administrative offset. (1) Unless otherwise 
prohibited by law, when centralized administrative offset under 
paragraph (b) of this section is not available or appropriate, the 
Secretary may collect a delinquent debt by conducting non-centralized 
administrative offset internally or in cooperation with the agency 
certifying or authorizing payments to the debtor.
    (2) Except as provided in paragraph (c)(3) of this section, 
administrative offset may be initiated only after:
    (i) The debtor has been sent written notice of the type and amount 
of the debt, the intention of the Department to initiate administrative 
offset to collect the debt, and an explanation of the debtor's rights 
under 31 U.S.C. 3716; and
    (ii) The debtor has been given:
    (A) The opportunity to inspect and copy Department records related 
to the debt;
    (B) The opportunity for a review within the Department of the 
determination of indebtedness; and
    (C) The opportunity to make a written agreement to repay the debt.
    (3) The due process requirements under paragraph (c)(2) of this 
section may be omitted when:
    (i) Offset is in the nature of a recoupment, i.e., the debt and the 
payment to be offset arise out of the same transaction or occurrence;
    (ii) The debt arises under a contract as set forth in Cecile 
Industries, Inc. v. Cheney, 995 F.2d 1052 (Fed. Cir. 1993) (notice and 
other procedural protections set forth in 31 U.S.C. 3716(a) do not 
supplant or restrict established procedures for contractual offsets 
covered by the Contracts Disputes Act); or
    (iii) In the case of non-centralized administrative offset conducted 
under paragraph (c)(1) of this section, the Department first learns of 
the existence of the amount owed by the debtor when there is 
insufficient time before payment would be made to the debtor/payee to 
allow for prior notice and an opportunity for review. When prior notice 
and an opportunity for review are omitted, the Secretary shall give the 
debtor such notice and an opportunity for review as soon as practical 
and shall promptly refund any money ultimately found not to have been 
owed to the Government.
    (4) When the debtor previously has been given any of the required 
notice and review opportunities with respect to a particular debt, such 
as under Sec.  30.11 of this part, the Department need not duplicate 
such notice and review opportunities before administrative offset may be 
initiated.
    (5) Before requesting that a payment authorizing agency to conduct 
non-centralized administrative offset, the Department shall:
    (i) Provide the debtor with due process as set forth in paragraph 
(c)(2) of this section; and
    (ii) Provide the payment authorizing agency written certification 
that the debtor owes the past due, legally enforceable delinquent debt 
in the amount stated, and that the Department has fully complied with 
this section.
    (6) When a creditor agency requests that the Department, as the 
payment authorizing agency, conduct non-centralized administrative 
offset, the Secretary shall comply with the request, unless the offset 
would not be in the best interest of the United States with respect to 
the program of the Department, or would otherwise be contrary to law. 
Appropriate use should be made of the cooperative efforts of other

[[Page 104]]

agencies in effecting collection by administrative offset, including 
salary offset.
    (7) When collecting multiple debts by non-centralized administrative 
offset, the Department will apply the recovered amounts to those debts 
in accordance with the best interests of the United States, as 
determined by the facts and circumstances of the particular case, 
particularly the applicable statute of limitations.
    (d) Requests to OPM to offset a debtor's anticipated or future 
benefit payments under the Civil Service Retirement and Disability Fund 
and the Federal Employee Retirement System. Upon providing OPM written 
certification that a debtor has been afforded the procedures provided in 
paragraph (c)(2) of this section, the Department may request OPM to 
offset a debtor's anticipated or future benefit payments under the Civil 
Service Retirement and Disability Fund (Fund) in accordance with 5 CFR 
part 831, subpart R, or under the Federal Employee Retirement System 
(FERS) in accordance with 5 CFR part 845, subpart D. Upon receipt of 
such a request, OPM will identify and ``flag'' a debtor's account in 
anticipation of the time when the debtor requests, or becomes eligible 
to receive, payments from the Fund or under FERS. This will satisfy any 
requirement that offset be initiated prior to the expiration of the time 
limitations referenced in 31 CFR 901.3(b)(4).
    (e) Review requirements. (1) For purposes of this section, whenever 
the Secretary is required to afford a debtor a review within the 
Department, the debtor shall be provided with a reasonable opportunity 
for an oral hearing when the debtor requests reconsideration of the debt 
and the Secretary determines that the question of the indebtedness 
cannot be resolved by review of the documentary evidence, for example, 
when the validity of the debt turns on an issue of credibility or 
veracity.
    (2) Unless otherwise required by law, an oral hearing under this 
section is not required to be a formal evidentiary hearing, although the 
Department will carefully document all significant matters discussed at 
the hearing.
    (3) An oral hearing is not required with respect to debt collection 
systems where determinations of indebtedness rarely involve issues of 
credibility or veracity, and the Secretary has determined that a review 
of the written record is adequate to correct prior mistakes.
    (4) In those cases when an oral hearing is not required by this 
section, the Secretary shall accord the debtor a ``paper hearing,'' that 
is, a determination of the request for reconsideration based upon a 
review of the written record.



Sec.  30.13  Debt reporting and use of credit reporting agencies.

    (a) Reporting delinquent debts. (1) The Secretary will report 
delinquent debts over $100 to credit bureaus or other automated 
databases. Debts arising under the Social Security Act are excluded from 
paragraph (a).
    (2) Debts owed by individuals will be reported to consumer reporting 
agencies pursuant to 5 U.S.C. 552a(b)(12).
    (3) Once a debt has been referred to Treasury for collection, any 
subsequent reporting to or updating of a credit bureau or other 
automated database may be handled by the Treasury.
    (4) Where there is reason to believe that a bankruptcy petition has 
been filed with respect to a debtor, the Office of the General Counsel 
should be contacted for legal advice concerning the impact of the 
Bankruptcy Code, particularly with respect to the applicability of the 
automatic stay, 11 U.S.C. 362, and the procedures for obtaining relief 
from such stay prior to proceeding under paragraph (a) of this section.
    (5) If the debtor has not received prior written notice under Sec.  
30.11(b), before reporting a delinquent debt under this section, the 
Secretary shall provide the debtor at least 60 days written notice of 
the amount and nature of the debt; that the debt is delinquent and the 
Department intends to report the debt to a credit bureau (including the 
specific information that will be disclosed); that the debtor has the 
right to dispute the accuracy and validity of the information being 
disclosed; and, if

[[Page 105]]

a previous opportunity was not provided, that the debtor may request 
review within the Department of the debt or rescheduling of payment. The 
Secretary may disclose only the individual's name, address, and social 
security number and the nature, amount, status and history of the debt.
    (b) Use of credit reporting agencies. The Secretary may also use 
credit reporting agencies to obtain credit reports to evaluate the 
financial status of loan applicants, potential contractors and grantees; 
to determine a debtor's ability to repay a debt; and to locate debtors. 
In the case of an individual, the Secretary may disclose, as a routine 
use under 5 U.S.C 552a(b)(3), only the individual's name, address, and 
Social Security number and the purpose for which the information will be 
used.



Sec.  30.14  Contracting with private collection contractors 
and with entities that locate and recover unclaimed assets.

    (a) Subject to the provisions of paragraph (b) of this section, the 
Secretary may contract with private collection contractors to recover 
delinquent debts, provided that:
    (1) The Secretary retains the authority to resolve disputes, 
compromise debts, suspend or terminate collection action, and refer 
debts to Justice for litigation;
    (2) The private collection contractor is not allowed to offer the 
debtor, as an incentive for payment, the opportunity to pay the debt 
less the private collection contractor's fee unless the Secretary has 
granted such authority prior to the offer;
    (3) The contract provides that the private collection contractor is 
subject to the Privacy Act of 1974 to the extent specified in 5 U.S.C. 
552a(m), and to applicable Federal and State laws and regulations 
pertaining to debt collection practices, including but not limited to 
the Fair Debt Collection Practices Act, 15 U.S.C. 1692; and
    (4) The private collection contractor is required to account for all 
amounts collected.
    (b) The Secretary shall use government-wide debt collection 
contracts to obtain debt collection services provided by private 
collection contractors. However, the Secretary may refer debts to 
private collection contractors pursuant to a contract between the 
Department and the private collection contractor only if such debts are 
not subject to the requirement to transfer debts to the Department of 
the Treasury for debt collection under 31 U.S.C. 3711(g) and 31 CFR 
285.12(e).
    (c) Debts arising under the Social Security Act (which can be 
collected by private collection contractors only by Treasury after the 
debt has been referred to Treasury for collection) are excluded from 
this section.
    (d) The Secretary may fund private collection contractor contracts 
in accordance with 31 U.S.C. 3718(d), or as otherwise permitted by law. 
A contract under paragraph (a) of this section may provide that the fee 
a private collection contractor charges the Department for collecting 
the debt is payable from the amounts collected.
    (e) The Department may enter into contracts for locating and 
recovering assets of the United States including unclaimed assets. 
However, before entering into a contract to recover assets of the United 
States that may be held by a State government or financial institution, 
the Department must establish procedures that are acceptable to the 
Secretary of Treasury.
    (f) The Secretary may enter into contracts for debtor asset and 
income search reports. In accordance with 31 U.S.C. 3718(d), such 
contracts may provide that the fee a contractor charges the Department 
for such services may be payable from the amounts recovered, unless 
otherwise prohibited by statute.



Sec.  30.15  Suspension or revocation of eligibility for loans 
and loan guarantees, licenses, permits, or privileges.

    (a)(1) Unless waived by the Secretary, financial assistance in the 
form of loans, loan guarantees, or loan insurance shall not be extended 
to any person delinquent on a non-tax debt owed to the United States. 
This prohibition does not apply to disaster loans. Grants, cooperative 
agreements, and contracts are not considered to be loans.
    (2) The authority to waive the application of this section may be 
delegated

[[Page 106]]

to the Chief Financial Officer and re-delegated only to the Deputy Chief 
Financial Officer.
    (3) States that manage Federal activities, pursuant to approval from 
the Secretary, should ensure that appropriate steps are taken to 
safeguard against issuing licenses, permits, or other privileges to 
debtors who fail to pay their debts to the Federal Government.
    (b) The Secretary will report to Treasury any surety that fails to 
honor its obligations under 31 U.S.C. 9305.
    (c) In non-bankruptcy cases, when seeking to collect statutory 
penalties, forfeitures, or other types of claims, the Secretary may 
suspend or revoke licenses, permits, or other privileges of a delinquent 
debtor if the failure to pay the debt is found to be inexcusable or 
willful. Such suspension or revocation will extend to programs or 
activities administered by the States on behalf of the Federal 
Government, to the extent that they affect the Federal Government's 
ability to collect money or funds owed by debtors.
    (d) Where there is reason to believe that a bankruptcy petition has 
been filed with respect to a debtor, before taking any action to suspend 
or revoke under paragraph (c) of this section, the Office of the General 
Counsel should be contacted for legal advice concerning the impact of 
the Bankruptcy Code, particularly 11 U.S.C. 362 and 525, which may 
restrict such action.



Sec.  30.16  Liquidation of collateral.

    (a)(1) The Secretary will liquidate security or collateral through 
the exercise of a power of sale in the security instrument or a non-
judicial foreclosure, and apply the proceeds to the applicable debt(s), 
if the debtor fails to pay the debt(s) within a reasonable time after 
demand and if such action is in the best interests of the United States.
    (2) Collection from other sources, including liquidation of security 
or collateral, is not a prerequisite to requiring payment by a surety, 
insurer, or guarantor unless such action is expressly required by 
statute or contract.
    (3) The Secretary will give the debtor reasonable notice of the sale 
and an accounting of any surplus proceeds and will comply with other 
requirements under law or contract.
    (b) Where there is reason to believe that a bankruptcy petition has 
been filed with respect to a debtor, the Office of the General Counsel 
should be contacted for legal advice concerning the impact of the 
Bankruptcy Code, particularly with respect to the applicability of the 
automatic stay, 11 U.S.C. 362, and the procedures for obtaining relief 
from such stay prior to proceeding under paragraph (a) of this section.



Sec.  30.17  Collection in installments.

    (a) Whenever feasible, the total amount of a debt shall be collected 
in one lump sum payment. If a debtor is financially unable to pay a debt 
in one lump sum, either by funds or administrative offset, the Secretary 
may accept payment in regular installments. The Secretary will obtain 
financial statements from debtors who represent that they are unable to 
pay in one lump sum and independently verify such representations as 
described in Sec.  30.22(a)(1).
    (b)(1) When the Secretary agrees to accept payments in regular 
installments, a legally enforceable written agreement should be obtained 
from the debtor that specifies all the terms and conditions of the 
agreement, and that includes a provision accelerating the debt in the 
event of a default.
    (2) The size and frequency of the payments should reasonably relate 
to the size of the debt and the debtor's ability to pay. Whenever 
feasible, the installment agreement will provide for full payment of the 
debt, including interest and charges, in three years or less.
    (3) In appropriate cases, the agreement should include a provision 
identifying security obtained from the debtor for the deferred payments.



Sec.  30.18  Interest, penalties, and administrative costs.

    (a) Generally. Except as provided in paragraphs (g), (h), and (i) of 
this section, the Department shall charge interest, penalties, and 
administrative costs on delinquent debts owed to the United States. 
These charges shall continue to accrue until the debt is paid in

[[Page 107]]

full or otherwise resolved through compromise, termination, or waiver of 
the charges.
    (b) Interest. The Department shall charge interest on delinquent 
debts owed the United States as follows:
    (1) Interest shall accrue from the date of delinquency, or as 
otherwise provided by law. For debts not paid by the date specified in 
the written demand for payment made under Sec.  30.11, the date of 
delinquency is the date of mailing of the notice. The date of 
delinquency for an installment payment is the due date specified in the 
payment agreement.
    (2) Unless a different rate is prescribed by statute, contract, or a 
repayment agreement, the rate of interest charged shall be the rate 
established annually by the Secretary of the Treasury pursuant to 31 
U.S.C. 3717. The Department may charge a higher rate if necessary to 
protect the rights of the United States and the Secretary has determined 
and documented a higher rate for delinquent debt is required to protect 
the Government's interests. Any such higher rate of interest charged 
will be based on Treasury's quarterly rate certification to the U.S. 
Public Health Service for delinquencies in the National Research 
Services Awards and the National Health Services Corps Scholarship 
Program. The Department publishes this rate in the Federal Register 
quarterly.
    (3) Unless prescribed by statute or contract, the rate of interest, 
as initially charged, shall remain fixed for the duration of the 
indebtedness. When a debtor defaults on a repayment agreement and seeks 
to enter into a new agreement, the Department may require payment of 
interest at a new rate that reflects the Treasury rate in effect at the 
time the new agreement is executed. Interest shall not be compounded, 
that is, interest shall not be charged on interest, penalties, or 
administrative costs required by this section, unless prescribed by 
statute or contract. If, however, the debtor defaults on a previous 
repayment agreement, charges that accrued but were not collected under 
the defaulted agreement shall be added to the principal under the new 
repayment agreement.
    (c) Administrative costs. The Department shall assess administrative 
costs incurred for processing and handling delinquent debts. The 
calculation of administrative costs should be based on actual costs 
incurred or a valid estimate of the actual costs. Calculation of 
administrative costs shall include all direct (personnel, supplies, 
etc.) and indirect collection costs, including the cost of providing a 
hearing or any other form of administrative review requested by a 
debtor, and any costs charged by a collection agency under Sec.  30.14. 
These charges will be assessed monthly, or per payment period, 
throughout the period that the debt is overdue. Such costs may also be 
in addition to other administrative costs if collection is being made 
for another Federal agency or unit.
    (d) Penalty. Unless otherwise established by contract, repayment 
agreement, or statute, the Secretary will charge a penalty of six 
percent a year on the amount due on a debt that is delinquent for more 
than 90 days. This charge shall accrue from the date of delinquency.
    (e) Cost of living adjustment. When there is a legitimate reason to 
do so, such as when calculating interest and penalties on a debt would 
be extremely difficult because of the age of the debt, an administrative 
debt may be increased by the cost of living adjustment in lieu of 
charging interest and penalties under this section. Administrative debt 
includes, but is not limited to, a debt based on fines, penalties, and 
overpayments, but does not include a debt based on the extension of 
Government credit, such as those arising from loans and loan guaranties. 
The cost of living adjustment is the percentage by which the Consumer 
Price Index for the month of June of the calendar year preceding the 
adjustment exceeds the Consumer Price Index for the month of June of the 
calendar year in which the debt was determined or last adjusted. Such 
increases to administrative debts shall be computed annually.
    (f) Priority. When a debt is paid in partial or installment 
payments, amounts received shall be applied first to outstanding 
penalties, second to administrative charges, third to interest, and last 
to principal.

[[Page 108]]

    (g) Waiver. (1) The Secretary shall waive the collection of interest 
and administrative charges imposed pursuant to this section on the 
portion of the debt that is paid within 30 days after the date on which 
interest began to accrue. The Secretary may extend this 30-day period on 
a case-by-case basis if the Secretary determines that such action is in 
the best interest of the Government, or otherwise warranted by equity 
and good conscience.
    (2) The Secretary also may waive interest, penalties, and 
administrative charges charged under this section, in whole or in part, 
without regard to the amount of the debt, based on:
    (i) The criteria set forth at Sec.  30.22(a)(1) through (4) for the 
compromise of debts; or
    (ii) A determination by the Secretary that collection of these 
charges is:
    (A) Against equity and good conscience; or
    (B) Not in the best interest of the United States.
    (h) Review. (1) Except as provided in paragraph (h)(2) of this 
section, administrative review of a debt will not suspend the assessment 
of interest, penalties, and administrative costs. While agency review of 
a debt is pending, the debtor either may pay the debt or be liable for 
interest and related charges on the uncollected debt. When agency review 
results in a final determination that any amount was properly a debt and 
the debtor chose to retain the amount in dispute, the Secretary shall 
collect from the debtor the amount determined to be due, plus interest, 
penalties and administrative costs on such debt amount, as calculated 
under this section, starting from the date the debtor was first made 
aware of the debt and ending when the debt is repaid.
    (2) Exception. Interest, penalties, and administrative cost charges 
will not be imposed on a debt for periods during which collection 
activity has been suspended under Sec.  30.29(c)(1) pending agency 
review or consideration of waiver if statute prohibits collection of the 
debt during this period.
    (i) Common law or other statutory authority. The Department may 
impose and waive interest and related charges on debts not subject to 31 
U.S.C. 3717 in accordance with the common law or other statutory 
authority.



Sec.  30.19  Review of cost effectiveness of collection.

    Periodically, the Secretary will compare costs incurred and amounts 
collected. Data on costs and corresponding recovery rates for debts of 
different types and in various dollar ranges will be used to compare the 
cost effectiveness of alternative collection techniques, establish 
guidelines with respect to points at which costs of further collection 
efforts are likely to exceed recoveries, assist in evaluating offers in 
compromise, and establish minimum debt amounts below which collection 
efforts need not be taken.



Sec.  30.20  Taxpayer information.

    (a) When attempting to locate a debtor in order to collect or 
compromise a debt under this part or any other authority, the Secretary 
may send a request to Treasury in accordance with 31 CFR 901.11 to 
obtain a debtor's mailing address from the records of the IRS.
    (b) Mailing addresses obtained under paragraph (a) of this section 
may be used to enforce collection of a delinquent debt and may be 
disclosed to other agencies and to collection agencies for collection 
purposes.



                        Subpart C_Debt Compromise



Sec.  30.21  Scope and application.

    (a) Scope. The standards set forth in this subpart apply to the 
compromise of debts pursuant to 31 U.S.C. 3711. The Secretary may 
exercise such compromise authority for debts arising out of activities 
of, or referred or transferred for collection services to, the 
Department when the amount of the debt then due, exclusive of interest, 
penalties, and administrative costs, does not exceed $100,000, or any 
higher amount authorized by the Attorney General.
    (b) Application. Unless otherwise provided by law, when the 
principal balance of a debt, exclusive of interest, penalties, and 
administrative costs, exceeds $100,000 or any higher amount authorized 
by the Attorney General, the authority to accept a compromise rests

[[Page 109]]

with Justice. The Secretary shall evaluate the compromise offer, using 
the factors set forth in this subpart. If an offer to compromise any 
debt in excess of $100,000 is acceptable to the Department, the 
Secretary shall refer the debt to the Civil Division or other 
appropriate litigating division in Justice using a Claims Collection 
Litigation Report (CCLR), which may be obtained from Justice's National 
Central Intake Facility. The referral shall include appropriate 
financial information and a recommendation for the acceptance of the 
compromise offer. Justice approval is not required if the Secretary 
rejects a compromise offer.



Sec.  30.22  Bases for compromise.

    (a) Compromise. The Secretary may compromise a debt if the full 
amount cannot be collected based upon inability to pay, inability to 
collect the full debt, cost of collection, or doubt debt can be proven 
in court.
    (1) Inability to pay. The debtor is unable to pay the full amount in 
a reasonable time, as verified through credit reports or other financial 
information. In determining a debtor's inability to pay the full amount 
of the debt within a reasonable time, the Secretary will obtain and 
verify the debtor's claim of inability to pay by using credit reports or 
a current financial Statement from the debtor, executed under penalty of 
perjury, showing the debtor's assets, liabilities, income, and expenses. 
The Secretary may use a Departmental financial information form or may 
request suitable forms from Justice or the local United States 
Attorney's Office. The Secretary also may consider other relevant 
factors such as:
    (i) Age and health of the debtor;
    (ii) Present and potential income;
    (iii) Inheritance prospects;
    (iv) The possibility that assets have been concealed or improperly 
transferred by the debtor; and
    (v) The availability of assets or income that may be realized by 
enforced collection proceedings.
    (2) Inability to collect full debt. The Government is unable to 
collect the debt in full within a reasonable time by enforced collection 
proceedings.
    (i) In determining the Government's ability to enforce collection, 
the Secretary will consider the applicable exemptions available to the 
debtor under State and Federal law, and may also consider uncertainty as 
to the price the collateral or other property will bring at a forced 
sale.
    (ii) A compromise effected under this section should be for an 
amount that bears a reasonable relation to the amount that can be 
recovered by enforced collection procedures, with regard to the 
exemptions available to the debtor and the time that collection will 
take.
    (3) Cost of collection. The cost of collecting the debt does not 
justify the enforced collection of the full amount.
    (i) The Secretary may compromise a debt if the cost of collecting 
the debt does not justify the enforced collection of the full amount. 
The amount accepted in compromise of such cases may reflect an 
appropriate discount for the administrative and litigation costs of 
collection, with consideration given to the time it will take to effect 
collection. Collection costs may be a substantial factor in the 
settlement of small debts.
    (ii) In determining whether the costs of collection justify enforced 
collection of the full amount, the Secretary will consider whether 
continued collection of the debt, regardless of cost, is necessary to 
further an enforcement principal, such as the Government's willingness 
to pursue aggressively defaulting and uncooperative debtors.
    (4) Doubt debt can be proven in court. There is significant doubt 
concerning the Government's ability to prove its case in court.
    (i) If there is significant doubt concerning the Government's 
ability to prove its case in court for the full amount claimed, either 
because of the legal issues involved or because of a bona fide dispute 
as to the facts, then the amount accepted in compromise of such cases 
should fairly reflect the probabilities of successful prosecution to 
judgment, with due regard to the availability of witnesses and other 
evidentiary support for the Government's claim.
    (ii) In determining the litigation risks involved, the Secretary 
will consider the probable amount of court costs and attorney fees 
pursuant to the

[[Page 110]]

Equal Access to Justice Act, 28 U.S.C. 2412, that may be imposed against 
the Government if it is unsuccessful in litigation.
    (b) Installments. The Secretary generally will not accept 
compromises payable in installments. This is not an advantageous form of 
compromise in terms of time and administrative expense. If, however, 
payment of a compromise in installments is necessary, the Secretary 
shall, except in the case of compromises based on paragraph (a)(4) of 
this section, obtain a legally enforceable written agreement providing 
that, in the event of default, the full original principal balance of 
the debt prior to compromise, less sums paid thereon, is reinstated. The 
Office of the General Counsel should be consulted concerning the 
appropriateness of including such a requirement in the case of 
compromises based on paragraph (a)(4) of this section. Whenever 
possible, the Secretary will obtain security for repayment in the manner 
set forth in subpart B of this part.



Sec.  30.23  Enforcement policy.

    The Secretary may compromise statutory penalties, forfeitures, or 
claims established as an aid to enforcement and to compel compliance if 
the Department's enforcement policy, in terms of deterrence and securing 
compliance, present and future, will be adequately served by the 
Secretary's acceptance of the sum to be agreed upon.



Sec.  30.24  Joint and several liability.

    (a) When two or more debtors are jointly and severally liable, the 
Secretary will pursue collection against all debtors, as appropriate. 
The Secretary will not attempt to allocate the burden of payment between 
the debtors but will proceed to liquidate the indebtedness as quickly as 
possible.
    (b) The Secretary will ensure that a compromise agreement with one 
debtor does not automatically release the Department's claim against the 
remaining debtor(s). The amount of a compromise with one debtor shall 
not be considered a precedent or binding in determining the amount that 
will be required from other debtors jointly and severally liable on the 
claim.



Sec.  30.25  Further review of compromise offers.

    If the Secretary is uncertain whether to accept a firm, written, 
substantive compromise offer on a debt that is within the Secretary's 
delegated compromise authority, the Secretary may refer the offer to the 
Civil Division or other appropriate litigating division in Justice, 
using a CCLR accompanied by supporting data and particulars concerning 
the debt. Justice may act upon such an offer or return it to the 
Secretary with instructions or advice.



Sec.  30.26  Consideration of tax consequences to the Government.

    In negotiating a compromise, the Secretary will consider the tax 
consequences to the Government. In particular, the Secretary will 
consider requiring a waiver of tax-loss-carry-forward and tax-loss-
carry-back rights of the debtor. For information on discharge of 
indebtedness reporting requirements see Sec.  30.32.



Sec.  30.27  Mutual release of the debtor and the Government.

    In all appropriate instances, a compromise that is accepted by the 
Secretary will be implemented by means of a mutual release. The terms of 
such mutual release shall provide that the debtor is released from 
further non-tax liability on the compromised debt in consideration of 
payment in full of the compromise amount and the Government and its 
officials, past and present, are released and discharged from any and 
all claims and causes of action arising from the same transaction that 
the debtor may have. In the event a mutual release is not executed when 
a debt is compromised, unless prohibited by law, the debtor is still 
deemed to have waived any and all claims and causes of action against 
the Government and its officials related to the transaction giving rise 
to the compromised debt.



       Subpart D_Suspending and Terminating Collection Activities



Sec.  30.28  Scope and application.

    (a) Scope. The standards set forth in this subpart apply to the 
suspension or

[[Page 111]]

termination of collection activity pursuant to 31 U.S.C. 3711 on debts 
that do not exceed $100,000, or such other amount as the Attorney 
General may direct, exclusive of interest, penalties, and administrative 
costs, after deducting the amount of partial payments or collections, if 
any. Prior to referring a debt to Justice for litigation, the Secretary 
may suspend or terminate collection under this subpart with respect to 
debts arising out of activities of, or referred or transferred for 
collection services to, the Department.
    (b) Application. (1) If, after deducting the amount of partial 
payments or collections, the principal amount of the debt exceeds 
$100,000, or such other amount as the Attorney General may direct, 
exclusive of interest, penalties, and administrative costs, the 
authority to suspend or terminate rests solely with Justice.
    (2) If the Secretary believes that suspension or termination of any 
debt in excess of $100,000 may be appropriate, the Secretary shall refer 
the debt to the Civil Division or other appropriate litigating division 
in Justice, using the CCLR. The referral will specify the reasons for 
the Secretary's recommendation. If, prior to referral to Justice, the 
Secretary determines that a debt is plainly erroneous or clearly without 
merit, the Secretary may terminate collection activity regardless of the 
amount involved without obtaining Justice concurrence.



Sec.  30.29  Suspension of collection activity.

    (a) Generally. The Secretary may suspend collection activity on a 
debt when:
    (1) The Department cannot locate the debtor;
    (2) The debtor's financial condition is expected to improve; or
    (3) The debtor has requested a waiver or review of the debt.
    (b) Financial condition. Based on the current financial condition of 
a debtor, the Secretary may suspend collection activity on a debt when 
the debtor's future prospects justify retention of the debt for periodic 
review and collection activity, and:
    (1) The applicable statute of limitations has not expired;
    (2) Future collection can be effected by administrative offset, 
notwithstanding the expiration of the applicable statute of limitations 
for litigation of claims, with due regard to the 10-year limitation for 
administrative offset prescribed by 31 U.S.C. 3716(e)(1); or
    (3) The debtor agrees to pay interest on the amount of the debt on 
which collection will be suspended, and such suspension is likely to 
enhance the debtor's ability to pay the full amount of the principal of 
the debt with interest at a later date.
    (c) Waiver or review. (1) The Secretary shall suspend collection 
activity during the time required for consideration of the debtor's 
request for waiver or administrative review of the debt if the statute 
under which the request is sought prohibits the Secretary from 
collecting the debt during that time.
    (2) If the statute under which the waiver or administrative review 
request is sought does not prohibit collection activity pending 
consideration of the request, the Secretary may use discretion, on a 
case-by-case basis, to suspend collection. Collection action ordinarily 
will be suspended upon a request for waiver or review if the Secretary 
is prohibited by statute or regulation from issuing a refund of amounts 
collected prior to agency consideration of the debtor's request. 
However, collection will not be suspended when the Secretary determines 
that the request for waiver or review is frivolous or was made primarily 
to delay collection.
    (d) Bankruptcy. Upon learning that a bankruptcy petition has been 
filed with respect to a debtor, in most cases the Secretary must suspend 
collection activity on the debt, pursuant to the provisions of 11 U.S.C. 
362, 1201, and 1301, unless the Secretary can clearly establish that the 
automatic stay has been lifted or is no longer in effect. The Office of 
the General Counsel should be contacted immediately for legal advice, 
and the Secretary will take the necessary legal steps to ensure that no 
funds or money are paid by the Department to the debtor until relief 
from the automatic stay is obtained.

[[Page 112]]



Sec.  30.30  Termination of collection activity.

    (a) The Secretary may terminate collection activity when:
    (1) The Department is unable to collect any substantial amount 
through its own efforts or through the efforts of others;
    (2) The Department is unable to locate the debtor;
    (3) Costs of collection are anticipated to exceed the amount 
recoverable;
    (4) The debt is legally without merit or enforcement of the debt is 
barred by any applicable statute of limitations;
    (5) The debt cannot be substantiated; or
    (6) The debt against the debtor has been discharged in bankruptcy.
    (b)(1) Collection activity will not be terminated before the 
Secretary has pursued all appropriate means of collection and 
determined, based upon the results of the collection activity, that the 
debt is uncollectible.
    (2) Termination of collection activity ceases active collection of 
the debt. The termination of collection activity does not preclude the 
Secretary from retaining a record of the account for purposes of:
    (i) Selling the debt, if the Secretary of the Treasury determines 
that such sale is in the best interest of the United States;
    (ii) Pursuing collection at a subsequent date in the event there is 
a change in the debtor's status or a new collection tool becomes 
available;
    (iii) Offsetting against future income or assets not available at 
the time of termination of collection activity; or
    (iv) Screening future applicants for prior indebtedness.
    (c) Generally, the Secretary shall terminate collection activity on 
a debt that has been discharged in bankruptcy, regardless of the amount. 
The Secretary may continue collection activity, however, subject to the 
provisions of the Bankruptcy Code, for any payments provided under a 
plan of reorganization. Offset and recoupment rights may survive the 
discharge of the debtor in bankruptcy and, under some circumstances, 
claims also may survive the discharge. For example, when the Department 
is a known creditor of a debtor the claims of the Department may survive 
a discharge if the Department did not receive formal notice of the 
bankruptcy proceedings. When the Department believes that it has claims 
or offsets that may have survived the discharge of the debtor, the 
Office of the General Counsel should be contacted for legal advice.



Sec.  30.31  Exception to termination.

    When a significant enforcement policy is involved, or recovery of a 
judgment is a prerequisite to the imposition of administrative 
sanctions, the Secretary may refer debts to Justice for litigation even 
though termination of collection activity may otherwise be appropriate.



Sec.  30.32  Discharge of indebtedness; reporting requirements.

    (a)(1) Before discharging a delinquent debt, also referred to as 
close out of the debt, the Secretary shall take all appropriate steps to 
collect the debt in accordance with 31 U.S.C. 3711(g)(9), and parts 30 
through 33 of this chapter, including, as applicable, administrative 
offset; tax refund offset; Federal salary offset; credit bureau 
reporting; administrative wage garnishment; litigation; foreclosure; and 
referral to Treasury, Treasury-designated debt collection centers, or 
private collection contractors.
    (2) Discharge of indebtedness is distinct from termination or 
suspension of collection activity under this subpart, and is governed by 
the Internal Revenue Code. When collection action on a debt is suspended 
or terminated, the debt remains delinquent and further collection action 
may be pursued at a later date in accordance with the standards set 
forth in this part and 31 CFR parts 900 through 904.
    (3) When the Department discharges a debt in full or in part, 
further collection action is prohibited. Therefore, before discharging a 
debt, the Secretary must:
    (i) Make the determination that collection action is no longer 
warranted; and
    (ii) Terminate debt collection action.
    (b) In accordance with 31 U.S.C. 3711(i), the Secretary shall use 
competitive procedures to sell a delinquent

[[Page 113]]

debt upon termination of collection action if the Secretary of the 
Treasury determines such a sale is in the best interests of the United 
States. Since the discharge of a debt precludes any further collection 
action, including the sale of a delinquent debt, the Secretary may not 
discharge a debt until the requirements of 31 U.S.C. 3711(i) have been 
meet.
    (c) Upon discharge of an indebtedness, the Secretary must report the 
discharge to the IRS in accordance with the requirements of 26 U.S.C. 
6050P and 26 CFR 1.6050P-1. The Secretary may request that Treasury or 
Treasury-designated debt collection centers file such a discharge report 
to the IRS on the Department's behalf.
    (d) When discharging a debt, the Secretary must request that 
litigation counsel release any liens of record securing the debt.



            Subpart E_Referrals to the Department of Justice



Sec.  30.33  Prompt referral.

    (a)(1) The Secretary promptly shall refer to Justice for litigation 
debts on which aggressive collection activity has been taken in 
accordance with subpart B of this part, and that cannot be compromised, 
or on which collection activity cannot be suspended or terminated, in 
accordance with subpart D of this part.
    (2) The Secretary may refer to Justice for litigation those debts 
arising out of activities of, or referred or transferred for collection 
services to, the Department.
    (b)(1) Debts for which the principal amount is over $1,000,000, or 
such other amount as the Attorney General may direct, exclusive of 
interest, penalties, and administrative costs shall be referred to the 
Civil Division or other division responsible for litigating such debts 
at the Department of Justice, Washington DC.
    (2) Debts for which the principal amount is $1,000,000 or less, or 
such other amount as the Attorney General may direct, exclusive of 
interest, penalties, and administrative costs shall be referred to the 
Nationwide Central Intake Facility at Justice as required by the CCLR 
instructions.
    (c)(1) Consistent with aggressive agency collection activity and the 
standards contained in this part and 31 CFR parts 900 through 904, debts 
shall be referred to Justice as early as possible, and, in any event, 
well within the period for initiating timely lawsuits against the 
debtors.
    (2) The Secretary shall make every effort to refer delinquent debts 
to Justice for litigation within one year of the date such debts last 
became delinquent. In the case of guaranteed or insured loans, the 
Secretary will make every effort to refer these delinquent debts to 
Justice for litigation within one year from the date the loan was 
presented to the Department for payment or re-insurance.
    (d) Justice has exclusive jurisdiction over debts referred to it 
pursuant to this subpart. Upon referral of a debt to Justice, the 
Secretary shall:
    (1) Immediately terminate the use of any administrative collection 
activities to collect the debt;
    (2) Advise Justice of the collection activities utilized to date, 
and their result; and
    (3) Refrain from having any contact with the debtor and direct all 
debtor inquiries concerning the debt to Justice.
    (e) After referral of a debt under this subpart, the Secretary shall 
immediately notify the Department of Justice of any payments credited by 
the Department to the debtor's account. Pursuant to 31 CFR 904.1(b), 
after referral of the debt under this subpart, Justice shall notify the 
Secretary of any payment received from the debtor.



Sec.  30.34  Claims Collection Litigation Report.

    (a)(1) Unless excepted by Justice, the Secretary will complete the 
CCLR, accompanied by a signed Certificate of Indebtedness, to refer all 
administratively uncollectible claims to the Department of Justice for 
litigation.
    (2) The Secretary shall complete all of the sections of the CCLR 
appropriate to each debt as required by the CCLR instructions, and 
furnish such other information as may be required in specific cases.
    (b) The Secretary shall indicate clearly on the CCLR the actions 
that

[[Page 114]]

the Department wishes Justice to take with respect to the referred debt. 
The Secretary may indicate specifically any of a number of litigation 
activities which Justice may pursue, including enforced collection, 
judgement lien only, renew judgement lien only, renew judgement lien and 
enforced collection, program enforcement, foreclosure only, and 
foreclosure and deficiency judgment.
    (c) The Secretary also shall use the CCLR to refer a debt to Justice 
for the purpose of obtaining approval of a proposal to compromise the 
debt, or to suspend or terminate administrative collection activity of 
the debt.



Sec.  30.35  Preservation of evidence.

    The Secretary will maintain and preserve all files and records that 
may be needed by Justice to prove the Department's claim in court. When 
referring debts to Justice for litigation, certified copies of the 
documents that form the basis for the claim should be provided along 
with the CCLR. Upon its request, the original documents will be provided 
to Justice.



Sec.  30.36  Minimum amount of referrals.

    (a) Except as in paragraph (b) of this section, claims of less than 
$2,500 exclusive of interest, penalties, and administrative costs, or 
such other amount as the Attorney General may prescribe, shall not be 
referred for litigation.
    (b) The Secretary shall not refer claims of less than the minimum 
amount unless:
    (1) Litigation to collect such smaller amount is important to ensure 
compliance with the policies and programs of the Department;
    (2) The claim is being referred solely for the purpose of securing a 
judgment against the debtor, which will be filed as a lien against the 
debtor's property pursuant to 28 U.S.C. 3201 and returned to the 
Department for enforcement; or
    (3) The debtor has the clear ability to pay the claim and the 
Government effectively can enforce payment, with due regard for the 
exemptions available to the debtor under State and Federal law and the 
judicial remedies available to the Government.
    (c) The Secretary should consult with the Financial Litigation Staff 
of the Executive Office for United States Attorneys in Justice prior to 
referring claims valued at less than the minimum amount.



PART 31_TAX REFUND OFFSET--Table of Contents



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

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

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



Sec.  31.1  Purpose and scope.

    (a) Purpose. This part prescribes the Department's standards and 
procedures for submitting past-due, legally enforceable debts to the 
Department of the Treasury for collection by tax refund offset.
    (b) Authority. These standards and procedures are authorized under 
the tax refund offset provision of the Deficit Reduction Act of 1984, as 
amended by the Debt Collection Improvement Act of 1996, codified at 31 
U.S.C. 3720A, and the implementing regulations issued by the Department 
of the Treasury at 31 CFR 285.2.
    (c) Scope. (1) This part applies to all Departmental Operating 
Divisions and Regional Offices that administer a program that gives rise 
to a past-due non-tax debt owed to the United States, and to all 
officers or employees of the Department authorized to collect such debt. 
This part does not apply to any debt or claim owed to the Department of 
Health and Human Services by another Federal agency.
    (2) Nothing in this part precludes the Department from pursuing 
other debt collection procedures, including administrative wage 
garnishment under part 32 of this title, to collect a debt that has been 
submitted to the Department of the Treasury under this part. The

[[Page 115]]

Department may use such debt collection procedures separately or in 
conjunction with the offset collection procedures of this part.



Sec.  31.2  Definitions.

    In this part, unless the context otherwise requires:
    Administrative offset means withholding funds payable by the United 
States (including funds payable by the United States on behalf of a 
State government) to, or held by the United States for, a person to 
satisfy a claim.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, Sunday, or a 
Federal legal holiday, in which case the next business day will be 
considered the last day of the period.
    Debt or claim means an amount of money, funds, or other property 
determined by an appropriate official to be owed to the United States 
from any individual, entity, organization, association, partnership, 
corporation, or State or local government or subdivision, except another 
Federal agency.
    Debtor means an individual, organization, association, partnership, 
corporation, or State or local government or subdivision indebted to the 
Government, or the person or entity with legal responsibility for 
assuming the debtor's obligation.
    Department means the Department of Health and Human Services, and 
each of its Operating Divisions and regional offices.
    Evidence of service means information retained by the Department 
indicating the nature of the document to which it pertains, the date of 
mailing of the document, and the address and name of the debtor to whom 
it is being sent. A copy of the dated and signed written notice of 
intent to offset provided to the debtor pursuant to this part may be 
considered evidence of service for purposes of this regulation. Evidence 
of service may be retained electronically so long as the manner of 
retention is sufficient for evidentiary purposes.
    FMS means the Financial Management Service, a bureau within the 
Department of the Treasury.
    IRS means the Internal Revenue Service, a bureau of the Department 
of the Treasury.
    Legally enforceable means that there has been a final agency 
determination that the debt, in the amount stated, is due and there are 
no legal bars to collection action.
    Operating division means each separate component, within the 
Department of Health and Human Services, including, but not limited to, 
the Administration for Children and Families, Administration on Aging, 
the Centers for Disease Control and Prevention, the Centers for Medicare 
& Medicaid Services, the Food and Drug Administration, the National 
Institutes of Health, and the Office of the Secretary.
    Past-due debt means a debt which the debtor does not pay or 
otherwise resolve by the date specified in the initial demand for 
payment, or in an applicable written repayment agreement or other 
instrument, including a post-delinquency repayment agreement.
    Secretary means the Secretary of the Department of Health and Human 
Services, or the Secretary's designee within any Operating Division or 
Regional Office.
    Taxpayer identifying number means the identifying number described 
under section 6109 of the Internal Revenue Code of 1986 (26 U.S.C. 
6109). For an individual, the taxpayer identifying number is the 
individual's social security number.
    Tax refund offset means withholding or reducing a tax refund payment 
by an amount necessary to satisfy a debt owed to the United States by 
the payee(s) of a tax refund payment.
    Tax refund payment means any overpayment of Federal taxes to be 
refunded to the person making the overpayment after the IRS makes the 
appropriate credits as provided in 26 U.S.C. 6402 for any liabilities 
for any tax on the part of the person who made the overpayment.



Sec.  31.3  General rule.

    (a) Any past-due, legally enforceable debt of at least $25, or such 
other minimum amount as determined by the

[[Page 116]]

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



Sec.  31.4  Certification and referral of debt.

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

[[Page 117]]



Sec.  31.5  Notice.

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



Sec.  31.6  Review of Departmental records.

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



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

    (a) Requesting a review. (1) If the debtor believes that all or part 
of the debt is not past-due or not legally enforceable, the debtor may 
request a review by the Department by sending a written request to the 
address provided in the notice. The written request must be received by 
the Department within 60 days from the date of the notice or, if the 
debtor has requested to inspect the records, within 30 days from the 
debtor's inspection of the records or the Department's mailing of the 
records under section 31.6(b), whichever is later.
    (2) The request for review must be signed by the debtor, state the 
amount disputed, and fully identify and explain the evidence that the 
debtor believes supports the debtor's position. The debtor must submit 
with the request any documents that the debtor wishes to be considered, 
or the debtor must state in the request that additional information will 
be submitted within the above specified time period.
    (3) Failure to timely request a review will be deemed an admission 
by the debtor that the debt is past-due and legally enforceable, and 
will result in a referral of the debt to the Department of the Treasury 
without further action.
    (b) Review. Upon the timely submission of evidence by the debtor, 
the Department shall review the dispute and shall consider its records 
and any documentation and evidence submitted by the debtor. The 
Department shall make a determination based on the review of the written 
record, and shall send a written notice of its decision to the debtor. 
There is no administrative appeal of this decision.
    (c) A debt that previously has been reviewed pursuant to this part, 
or that has been reduced to a judgment, will not be reconsidered under 
this part unless the evidence presented by the debtor disputes payments 
made or events occurring subsequent to the previous review or judgment.



PART 32_ADMINISTRATIVE WAGE GARNISHMENT--Table of Contents



Sec.
32.1 Purpose and scope.
32.2 Definitions.
32.3 General rule.
32.4 Notice.
32.5 Hearing.
32.6 Withholding order.
32.7 Certification by employer.

[[Page 118]]

32.8 Amounts withheld.
32.9 Financial hardship.
32.10 Refunds.
32.11 Ending garnishment.
32.12 Right of action.

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

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



Sec.  32.1  Purpose and scope.

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



Sec.  32.2  Definitions.

    In this part, unless the context otherwise requires:
    Business day means Monday through Friday. For purposes of 
computation, the last day of the period will be included unless it is a 
Federal legal holiday, in which case the next business day following the 
holiday will be considered the last day of the period.
    Certificate of service means a certificate signed by an employee of 
the Department indicating the nature of the document to which it 
pertains, the date of mailing of the document, and to whom it is being 
sent.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, Sunday, or a 
Federal legal holiday, in which case the next business day will be 
considered the last day of the period.
    Debt or claim means an amount of money, funds, or property that has 
been determined by the Secretary to be owed to the United States by an 
individual, including debt administered by a third party as an agent of 
the Federal Government. A debt or claim includes, but is not limited to: 
amounts owed on account of loans made, insured or guaranteed by the 
Federal Government, including any deficiency or difference between the 
price obtained by the Federal Government upon selling the property and 
the amount owed to the Federal Government; overpayments to program 
beneficiaries; any amount the Federal Government is authorized by 
statute to collect for the benefit of any person; the unpaid share of 
any non-Federal partner in a program involving a Federal payment, 
including a matching or cost-sharing payment of the non-Federal partner; 
any fine, civil penalty or assessment; and other amounts or money or 
property owed to the Federal Government.
    Debtor means an individual who owes a delinquent non-tax debt to the 
United States.
    Delinquent debt means any non-tax debt that has not been paid by the 
date

[[Page 119]]

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



Sec.  32.3  General rule.

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



Sec.  32.4  Notice.

    (a) Notice requirements. At least 30 days before the initiation of 
garnishment proceedings, the Secretary shall mail, by first class mail, 
to the debtor's last known address a written notice informing the debtor 
of:
    (1) The nature and amount of the debt;
    (2) The intention of the Secretary to initiate proceedings to 
collect the debt through deductions from pay until the debt and all 
accumulated interest, penalties, and administrative costs are paid in 
full;
    (3) The debtor's right--
    (i) To inspect and copy Department records related to the debt;
    (ii) To enter into a written repayment agreement with the Department 
under terms agreeable to the Department;
    (iii) To a hearing, in accordance with Sec.  32.5, concerning the 
existence or the amount of the debt or the terms of the proposed 
repayment schedule under the garnishment order, except that the

[[Page 120]]

debtor is not entitled to a hearing concerning the proposed repayment 
schedule if the terms were established by written agreement pursuant to 
paragraph (a)(3)(ii) of this section; and
    (4) The time frames within which the debtor may exercise his or her 
rights.
    (b) The Secretary will keep a copy of the dated notice. The notice 
may be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.



Sec.  32.5  Hearing.

    (a) In general. Upon timely written request of the debtor, the 
Secretary shall provide a hearing, which at the Department's option may 
be oral or written, concerning the existence or amount of the debt, or 
the terms of a repayment schedule established other than by written 
agreement under Sec.  32.4(a)(3)(ii).
    (b) Request for hearing. (1) The request for a hearing must be 
signed by the debtor, state each issue being disputed, and identify and 
explain with reasonable specificity all facts and evidence that the 
debtor believes supports the debtor's position. Supporting documentation 
identified by the debtor should be attached to the request.
    (2) Effect of timely request. Subject to paragraph (j) of this 
section, if the debtor's written request is received on or before the 
15th business day following the mailing of the written notice required 
under this part, a withholding order shall not be issued under Sec.  
32.6 until the debtor has been provided the requested hearing and a 
decision in accordance with paragraphs (g) and (h) of this section has 
been rendered.
    (3) Failure to timely request a hearing. If the debtor's written 
request is received after the 15th business day following the mailing of 
the written notice required under this part, the Secretary shall provide 
a hearing to the debtor. However, the Secretary shall not delay the 
issuance of a withholding order unless the Secretary determines that the 
delay in submitting such request was caused by factors beyond the 
control of the debtor, or the Secretary receives information that the 
Secretary determines justifies a delay or cancellation of the 
withholding order.
    (c) Oral hearing. (1) For purposes of this section, a debtor shall 
be provided a reasonable opportunity for an oral hearing when the 
hearing official determines that the issues in dispute cannot be 
resolved by review of the documentary evidence, such as when the 
validity of the claim turns on the issue of credibility or veracity.
    (2) If the hearing official determines an oral hearing is 
appropriate, the hearing official will establish the date, time and 
location of the hearing. At the debtor's option, the oral hearing may be 
conducted in person or by telephone conference. The hearing official 
will notify the debtor of the date, time, and in the case of an in-
person hearing, the location of the hearing. All travel expenses 
incurred by the debtor in connection with an in-person hearing will be 
borne by the debtor.
    (d) Paper hearing. (1) If the hearing official determines an oral 
hearing is not required by this section, the hearing official shall 
afford the debtor a paper hearing, that is, the issues in dispute will 
be decided based upon a review of the written record.
    (2) The hearing official shall notify the debtor of the deadline for 
the submission of additional evidence if necessary for a review of the 
record.
    (e) Burden of proof. (1) The Secretary has the initial burden of 
proving the existence or amount of the debt.
    (2) Thereafter, if the debtor disputes the existence or amount of 
the debt, the debtor must present by a preponderance of the evidence 
that no debt exists or that the amount is incorrect. When challenging 
the terms of a repayment schedule, the debtor must establish by a 
preponderance of the evidence that the terms of the repayment schedule 
are unlawful, would cause financial hardship to the debtor, or that 
collection of the debt may not be pursued due to operation of law.
    (f) Record. The hearing official shall maintain a summary record of 
any hearing provided under this part. A hearing is not required to be a 
formal evidentiary-type hearing, but witnesses who testify in an oral 
hearing must do so under oath or affirmation.
    (g) Date of decision. (1) The hearing official shall issue a written 
decision, as soon as practicable, but no later

[[Page 121]]

than sixty (60) days after the date on which the request for the hearing 
was received by the Department.
    (2) If the hearing official is unable to provide the debtor with a 
hearing and render a decision within 60 days after the receipt of the 
request for such hearing:
    (i) A withholding order may not be issued until the hearing is held 
and a decision is rendered; or
    (ii) A withholding order previously issued to the debtor's employer 
must be suspended beginning on the 61st day after the receipt of the 
hearing request and continuing until a hearing is held and a decision is 
rendered.
    (h) Content of decision. The written decision shall include:
    (1) A summary of the facts presented;
    (2) The hearing official's findings, analysis, and conclusions; and
    (3) The terms of any repayment schedule, if applicable.
    (i) Final agency action. The hearing official's decision will be the 
final agency action for the purposes of judicial review under the 
Administrative Procedure Act. 5 U.S.C. 701 et seq.
    (j) Failure to appear. In the absence of good cause shown, a debtor 
who fails to appear at a hearing will be deemed as not having timely 
filed a request for a hearing.



Sec.  32.6  Withholding order.

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



Sec.  32.7  Certification by employer.

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



Sec.  32.8  Amounts withheld.

    (a) After receipt of a withholding order issued under this part, the 
employer shall deduct from all disposable pay paid to the debtor during 
each pay period the amount of garnishment described in paragraph (b) of 
this section. The employer may use the SF-329C ``Wage Garnishment 
Worksheet'' to calculate the amount to be deducted from the debtor's 
disposable pay.
    (b) Subject to paragraphs (c) and (d) of this section, the amount of 
garnishment shall be the lesser of:
    (1) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (2) The amount set forth in 15 U.S.C. 1673(a)(2) (Maximum allowable 
garnishment). The amount set forth at 15 U.S.C. 1673(a)(2) is the amount 
by which a debtor's disposable pay exceeds an amount equivalent to 
thirty times the minimum wage. See 29 CFR 870.10.
    (c)(1) Except as provided in paragraph (c)(2) of this section, when 
a debtor's pay is subject to multiple withholding orders, unless 
otherwise provided by Federal law, withholding orders issued pursuant to 
this part shall have priority over other withholding orders that are 
served later in time.
    (2) Notwithstanding the foregoing, withholding orders for family 
support shall have priority over withholding orders issued under this 
part.
    (3) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this part, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to a withholding order issued under this part shall be the 
lesser of:
    (i) The amount calculated under paragraph (b) of this section, or

[[Page 122]]

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

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



Sec.  32.9  Financial hardship.

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



Sec.  32.10  Refunds.

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



Sec.  32.11  Ending garnishment.

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



Sec.  32.12  Right of action.

    (a) The employer of a debtor subject to wage withholding pursuant to 
this part shall pay to the Department as directed in a withholding order 
issued under this part.
    (b) The Secretary may bring suit against an employer for any amount 
that the employer fails to withhold

[[Page 123]]

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



PART 33_SALARY OFFSET--Table of Contents



Sec.
33.1 Purpose, authority, and scope.
33.2 Definitions.
33.3 General rule.
33.4 Notice requirements before offset.
33.5 Review of department records relating to the debt.
33.6 Hearings.
33.7 Obtaining the services of a hearing official.
33.8 Voluntary repayment agreement in lieu of salary offset.
33.9 Special review.
33.10 Procedures for salary offset.
33.11 Salary offset when the Department is the creditor agency but not 
          the paying agency.
33.12 Salary offset when the Department is the paying agency but not the 
          creditor agency.
33.13 Interest, penalties, and administrative costs.
33.14 Non-waiver of rights.
33.15 Refunds.
33.16 Additional administrative collection.

    Authority: 5 U.S.C. 5514; 5 CFR Part 550, Subpart K.

    Source: 72 FR 10421, Mar. 8, 2007, unless otherwise noted.



Sec.  33.1  Purpose, authority, and scope.

    (a) Purpose. This part prescribes the Department's standards and 
procedures for the collection of debts owed by Federal employees to the 
United States through involuntary salary offset.
    (b) Authority. 5 U.S.C. 5514; 5 CFR part 550, subpart K.
    (c) Scope. (1) This part applies to internal and Government-wide 
collections of debts owed by Federal employees by administrative offset 
from the current pay account of the debtor without his or her consent.
    (2) The procedures contained in this part do not apply to any case 
where an employee consents to collection through deduction(s) from the 
employee's pay account, or to debts arising under the Internal Revenue 
Code or the tariff laws of the United States, or where another statute 
explicitly provides for, or prohibits, collection of a debt by salary 
offset (e.g., travel advances in 5 U.S.C. 5705 and employee training 
expenses in 5 U.S.C. 4108).
    (3) This part does not preclude an employee from requesting waiver 
of an erroneous payment under 5 U.S.C. 5584, 10 U.S.C. 2774, or 32 
U.S.C. 716, or in any way questioning the amount or validity of a debt, 
in the manner prescribed by the Secretary. Similarly, this part does not 
preclude an employee from requesting waiver of the collection of a debt 
under any other applicable statutory authority.
    (4) Nothing in this part precludes the compromise of the debt, or 
the suspension or termination of collection actions, in accordance with 
part 30 of this title.



Sec.  33.2  Definitions.

    In this part--
    Administrative offset means withholding funds payable by the United 
States to, or held by the United States for, a person to satisfy a debt 
owed by the payee.
    Agency means an executive department or agency; a military 
department; the United States Postal Service; the Postal Rate 
Commission; the United States Senate; the United States House of 
Representatives; and court, court administrative office, or 
instrumentality in the judicial or legislative branches of the 
Government; or a Government Corporation.
    Creditor agency means the agency to which the debt is owed, 
including a debt collection center when acting on

[[Page 124]]

behalf of a creditor agency in matters pertaining to the collection of a 
debt.
    Day means calendar day. For purposes of computation, the last day of 
the period will be included unless it is a Saturday, Sunday, or a 
Federal holiday, in which case the next business day will be considered 
the last day of the period.
    Debt means an amount determined by an appropriate official to be 
owed to the United States from sources which include loans insured or 
guaranteed by the United States and all other amounts due the United 
States from fees, leases, rents, royalties, services, sales of real or 
personal property, overpayments, penalties, damages, interest, fines and 
forfeitures (except those arising under the Uniform Code of Military 
Justice), and all other similar sources.
    Debt collection center means the Department of the Treasury or other 
Government agency or division designated by the Secretary of the 
Treasury with authority to collect debts on behalf of creditor agencies 
in accordance with 31 U.S.C. 3711(g).
    Debtor means a Federal employee who owes a debt to the United 
States.
    Delinquent debt means a debt which the debtor does not pay or 
otherwise resolve by the date specified in the initial demand for 
payment, or in an applicable written repayment agreement or other 
instrument, including a post-delinquency repayment agreement.
    Department means the Department of Health and Human Services, its 
Staff Divisions, Operating Divisions, and Regional Offices.
    Disposable pay means that part of the debtor's current basic, 
special, incentive, retired, and retainer pay, or other authorized pay, 
remaining after deduction of amounts required by law to be withheld. For 
purposes of calculating disposable pay, legally required deductions that 
must be applied first include: Tax levies pursuant to the Internal 
Revenue Code (title 26, United States Code); properly withheld taxes, 
FICA, Medicare; health and life insurance premiums; and retirement 
contributions. Amounts deducted under garnishment orders, including 
child support garnishment orders, are not legally required deductions 
for calculating disposable pay.
    Employee means any individual currently employed by an agency, as 
defined in this section, including seasonal and temporary employees and 
current members of the Armed Forces or a Reserve of the Armed Forces 
(Reserves).
    Evidence of service means information retained by the Department 
indicating the nature of the document to which it pertains, the date of 
mailing the document, and the address and name of the debtor to whom it 
is being sent. A copy of the dated and signed written notice of intent 
to offset provided to the debtor pursuant to this part may be considered 
evidence of service for purposes of this part. Evidence of service may 
be retained electronically so long as the manner of retention is 
sufficient for evidentiary purposes.
    Hearing means a review of the documentary evidence to confirm the 
existence or amount of a debt or the terms of a repayment schedule. If 
the Secretary determines that the issues in dispute cannot be resolved 
by such a review, such as when the validity of the claim turns on the 
issue of credibility or veracity, the Secretary may provide an oral 
hearing.
    Hearing official means a Departmental Appeals Board administrative 
law judge or appropriate alternate as outlined in Sec.  33.7(a)(2).
    Paying agency means the agency employing the individual and 
authorizing the payment of his or her current pay.
    Salary offset means an administrative offset to collect a debt under 
5 U.S.C. 5514 owed by a federal employee through deductions at one or 
more officially established pay intervals from the current pay account 
of the employee without his or her consent.
    Secretary means the Secretary of Health and Human Services, or the 
Secretary's designee within any Staff Division, Operating Division or 
Regional Office.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt owed by an employee to this Department or another 
agency as required or permitted by 5 U.S.C. 5584, 8346(b), 10 U.S.C. 
2774, 32 U.S.C. 716, or any other law.

[[Page 125]]



Sec.  33.3  General rule.

    (a) Whenever a delinquent debt is owed to the Department by an 
employee, the Secretary may, subject to paragraphs (b) through (d) of 
this section, involuntarily offset the amount of the debt from the 
employee's disposable pay.
    (b) Unless provided by another statute pertaining to a particular 
type of debt (e.g., 42 U.S.C. 292r, Health professionals education, 42 
U.S.C. 297b, Nurse education), the Department may not initiate salary 
offset to collect a debt more than 10 years after the Government's right 
to collect the debt first accrued, unless facts material to the 
Government's right to collect the debt were not known and could not 
reasonably have been known by the official or officials of the 
Government who were charged with the responsibility to discover and 
collect such debts.
    (c) Except as provided in paragraph (d) of this section, prior to 
initiating collection through salary offset under this part, the 
Secretary must first provide the employee with the following:
    (1) Written notice of intent to offset as described in Sec.  33.4; 
and
    (2) An opportunity to petition for a hearing, and, if a hearing is 
provided, to receive a written decision from the hearing official within 
60 days on the following issues:
    (i) The determination of the Department concerning the existence or 
amount of the debt; and
    (ii) The repayment schedule, unless it was established by written 
agreement between the employee and Department.
    (d) The provisions of paragraph (c) of this section do not apply to:
    (1) Any adjustment to pay arising out of an employee's election of 
coverage or a change in coverage under a federal benefits program 
requiring periodic deduction from pay, if the amount to be recovered was 
accumulated over four pay periods or less;
    (2) A routine intra-agency adjustment of pay that is made to correct 
an overpayment of pay attributable to clerical or administrative errors 
or delays in processing pay documents, if the overpayment occurred 
within the four pay periods preceding the adjustment and, at the time of 
such adjustment, or as soon thereafter as practical, the individual is 
provided written notice of the nature and the amount of the adjustment 
and point of contact for contesting such adjustment; or
    (3) Any adjustment to collect a debt amounting to $50 or less, if, 
at the time of such adjustment, or as soon thereafter as practical, the 
individual is provided written notice of the nature and the amount of 
the adjustment and a point of contact for contesting such adjustment.



Sec.  33.4  Notice requirements before offset.

    (a) At least 30 days before the initiation of salary offset under 
this part, the Secretary shall mail, by first class mail, to the 
employee's last known address, a written notice informing the debtor of 
the following:
    (1) The Secretary has reviewed the records relating to the debt and 
has determined that a debt is owed, the amount of the debt, and the 
facts giving rise to the debt;
    (2) The Secretary's intention to collect the debt by means of 
deduction from the employee's current disposable pay account until the 
debt and all accumulated interest, penalties, and administrative costs 
are paid in full;
    (3) The amount, stated either as a fixed dollar amount or as a 
percentage of pay not to exceed 15 percent of disposable pay, the 
frequency, the commencement date, and the duration of the intended 
deductions;
    (4) An explanation of the Department's policies concerning the 
assessment of interest, penalties, and administrative costs, stating 
that such assessments must be made unless waived in accordance with 31 
CFR 901.9 and Sec.  30.18 of this title;
    (5) The employee's right to inspect and copy all records of the 
Department pertaining to the debt or, if the employee or the employee's 
representative cannot personally inspect the records, to request and 
receive copies of such records;
    (6) If not previously provided, the opportunity to establish a 
schedule for the voluntary repayment of the debt through offset, or to 
enter into an agreement to establish a schedule for repayment of the 
debt in lieu of offset, provided the agreement is in writing,

[[Page 126]]

signed by both the employee and the Department, and documented in the 
Department's files;
    (7) The right to a hearing conducted by an impartial hearing 
official with respect to the existence and amount of the debt, or the 
repayment schedule, so long as a petition is filed by the employee as 
prescribed in Sec.  33.6;
    (8) Time limitations and other procedures or conditions for 
inspecting Department records pertaining to the debt, establishing an 
alternative repayment agreement, and requesting a hearing;
    (9) The name, address, and telephone number of the person or office 
within the Department who may be contacted concerning the procedures for 
inspecting Department records, establishing an alternative repayment 
agreement, and requesting a hearing;
    (10) The name and address of the office within the Department to 
which the petition for a hearing should be sent, which generally will be 
the Operating Division or Staff Division responsible for collecting the 
debt;
    (11) A timely and properly filed petition for a hearing will stay 
the commencement of the collection proceeding;
    (12) The Department will initiate action to effect salary offset not 
less than 30 days from the date of mailing the notice of intent, unless 
the employee properly files a timely petition for a hearing,
    (13) A final decision on a hearing, if one is requested, will be 
issued at the earliest practical date, but not later than 60 days after 
the filing of the petition requesting the hearing unless the employee 
requests and the hearing official grants a delay in the proceeding;
    (14) Knowingly false or frivolous statements, representations or 
evidence may subject the employee to:
    (i) Disciplinary procedures appropriate under chapter 75 of title 5, 
United States Code; part 752 of title 5, Code of Federal Regulations; or 
any other applicable statutes or regulations;
    (ii) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
under any other applicable statutory authority; and
    (iii) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, 
or under any other applicable statutory authority;
    (15) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (16) Unless there are applicable contractual or statutory provisions 
to the contrary, amounts paid on or deducted for the debt, which are 
later waived or found not owed to the United States, will be promptly 
refunded to the employee; and
    (17) Proceedings with respect to such debt are governed by 5 U.S.C. 
5514.
    (b) The Secretary will retain evidence of service indicating the 
date of mailing of the notice.



Sec.  33.5  Review of department records relating to the debt.

    (a) To inspect or copy Department records relating to the debt, the 
employee must send a written request to the Department official or 
office designated in the notice of intent to offset stating his or her 
intention. The written request must be received by the Department within 
15 days from the employee's receipt of the notice.
    (b) In response to a timely request as described in paragraph (a) of 
this section, the designated Department official shall notify the 
employee of the location and time when the employee may inspect and copy 
such records. If the employee or employee's representative is unable to 
personally inspect such records as the result of geographical or other 
constraints, the Department shall arrange to send copies of such records 
to the employee.



Sec.  33.6  Hearings.

    (a) Petitions for hearing. (1) To request a hearing concerning the 
existence or amount of the debt or the offset schedule established by 
the Department, the employee must send a written petition to the office 
designated in the notice of intent to offset, see Sec.  33.4(a)(10), 
within 15 days of receipt of the notice.
    (2) The petition must:
    (i) Be signed by the employee;

[[Page 127]]

    (ii) Fully identify and explain with reasonable specificity all the 
facts, evidence, and witnesses, if any, that the employee believes 
support his or her position; and
    (iii) Specify whether an oral or paper hearing is requested. If an 
oral hearing is requested, the request should explain why the matter 
cannot be resolved by review of the documentary evidence alone.
    (3) The timely filing of a petition for hearing shall stay any 
further collection proceedings.
    (b) Failure to timely request. (1) If the petition for hearing is 
filed after the 15-day period provided for in paragraph (a)(1) of this 
section, the Secretary may grant the request if the employee can 
establish that the delay was the result of circumstances beyond the 
employee's control, or that the employee failed to receive actual notice 
of the filing deadline.
    (2) An employee waives the right to a hearing, and will have his or 
her disposable pay offset in accordance with the offset schedule 
established by the Department, if the employee:
    (i) Fails to file a timely request for a hearing, unless such 
failure is excused; or
    (ii) Fails to appear at an oral hearing, of which the employee was 
notified, unless the hearing official determines that the failure to 
appear was due to circumstances beyond the employee's control.
    (c) Form of hearings--(1) General. After the employee requests a 
hearing, the hearing official shall notify the employee of the form of 
the hearing to be provided. If the hearing will be oral, the notice 
shall set forth the date, time, and location of the hearing. If the 
hearing will be a review of the written record, the employee shall be 
notified that he or she should submit evidence and arguments in writing 
to the hearing official by a specified date, after which the record 
shall be closed. The date specified shall give the employee reasonable 
time to submit documentation.
    (2) Oral hearing. An employee who requests an oral hearing shall be 
provided an oral hearing if the hearing official determines that the 
matter cannot be resolved by review of documentary evidence alone 
because an issue of credibility or veracity is involved. Where an oral 
hearing is appropriate, the hearing is not an adversarial adjudication 
and need not take the form of an evidentiary hearing, i.e., the rules of 
evidence need not apply. Oral hearings may take the form of, but are not 
limited to:
    (i) Informal conferences with the hearing official in which the 
employee and agency representative will be given full opportunity to 
present evidence, witnesses, and arguments;
    (ii) Informal meetings in which the hearing official interviews the 
employee; or
    (iii) Formal written submissions with an opportunity for oral 
presentations.
    (3) Paper hearing. If the hearing official determines that an oral 
hearing is not necessary, the hearing official will make the 
determination based upon a review of the available written record.
    (4) Record. The hearing official shall maintain a summary record of 
any hearing conducted under this part. Witnesses who testify in oral 
hearings will do so under oath or affirmation.
    (d) Written decision. (1) Date of decision. The hearing officer 
shall issue a written opinion stating his or her decision, based upon 
documentary evidence and information developed at the hearing, as soon 
as practicable after the hearing, but not later than sixty (60) days 
after the date on which the hearing petition was received by the 
creditor agency, unless the employee requested a delay in the 
proceedings, in which case the 60-day decision period shall be extended 
by the number of days by which the hearing was postponed. The recipient 
of an employee's request for a hearing must forward the request 
expeditiously to the Departmental Appeals Board so as to not jeopardize 
the Boards's ability to issue a decision within this 60-day period.
    (2) Content of decision. The written decision shall include:
    (i) A statement of the facts presented to support the origin, 
nature, and amount of the debt;
    (ii) The hearing official's findings, analysis, and conclusions, 
including a determination whether the employee's petition for hearing 
was baseless and

[[Page 128]]

resulted from an intent to delay creditor agency collection activity; 
and
    (iii) The terms of any repayment schedule, if applicable.
    (e) Failure to appear. In the absence of good cause shown, an 
employee who fails to appear at a hearing shall be deemed, for the 
purpose of this part, to admit the existence and amount of the debt as 
described in the notice of intent. If the representative of the creditor 
agency fails to appear, the hearing official shall proceed with the 
hearing as scheduled and make a determination based upon oral testimony 
presented and the documentary evidence submitted by both parties. With 
the agreement of both parties, the hearing official shall schedule a new 
hearing date, and both parties shall be given reasonable notice of the 
time and place of the new hearing.



Sec.  33.7  Obtaining the services of a hearing official.

    (a)(1) When the Department is the creditor agency, the office 
designated in Sec.  33.4(a)(10) shall schedule a hearing, if one is 
requested by an employee, before a hearing official.
    (2) When the Department cannot provide a prompt and appropriate 
hearing before an administrative law judge or a hearing official 
furnished pursuant to another lawful arrangement, the office designated 
in Sec.  33.4(a)(10) may:
    (i) When the debtor is not an employee of the Department, contact an 
agent of the employee's paying agency designated in 5 CFR part 581, 
appendix A, to arrange for a hearing official; or
    (ii) When the debtor is an employee of the Department, contact an 
agent of any agency designated in 5 CFR part 581, appendix A, to arrange 
for a hearing official.
    (b)(1) When another agency is the creditor agency, it is the 
responsibility of that agency to arrange for a hearing if one is 
requested. The Department will provide a hearing official upon the 
request of a creditor agency when the debtor is employed by the 
Department and the creditor agency cannot provide a prompt and 
appropriate hearing before a hearing official furnished pursuant to 
another lawful arrangement.
    (2) Services rendered to a creditor agency under paragraph (b)(1) of 
this section will be provided on a fully reimbursable basis pursuant to 
the Economy Act of 1932, as amended, 31 U.S.C. 1535.
    (c) The determination of a hearing official designated under this 
section is considered to be an official certification regarding the 
existence and amount of the debt for purposes of executing salary offset 
under 5 U.S.C. 5514 and this part. A creditor agency may make a 
certification to the Secretary of the Treasury under 5 CFR 550.1108 or a 
paying agency under 5 CFR 550.1109 regarding the existence and amount of 
the debt based on the certification of a hearing official. If a hearing 
official determines that a debt may not be collected via salary offset, 
but the creditor agency finds that the debt is still valid, the creditor 
agency may still seek collection of the debt through other means, such 
as offset of other Federal payments or litigation.



Sec.  33.8  Voluntary repayment agreement in lieu of salary offset.

    (a)(1) In response to the notice of intent to offset, the employee 
may propose to establish an alternative schedule for the voluntary 
repayment of the debt by submitting a written request to the Department 
official designated in the notice of intent to offset. An employee who 
wishes to repay the debt without salary offset shall also submit a 
proposed written repayment agreement. The proposal shall admit the 
existence of the debt, and the agreement must be in such form that it is 
legally enforceable. The agreement must:
    (i) Be in writing;
    (ii) Be signed by both the employee and the Department;
    (iii) Specify all the terms of the arrangement for payment; and
    (iv) Contain a provision accelerating the debt in the event of 
default by the employee, but such an increase may not result in a 
deduction that exceeds 15 percent of the employee's disposable pay 
unless the employee has agreed in writing to deduction of a greater 
amount.
    (2) Any proposal under paragraph (a)(1) of this section must be 
received by the Department within 30 days of the date of the notice of 
intent to offset.

[[Page 129]]

    (b) In response to a timely request as described in paragraph (a) of 
this section, the designated Department official shall notify the 
employee whether the proposed repayment schedule is acceptable. It is 
within the Secretary's discretion to accept a proposed alternative 
repayment schedule, and to set the necessary terms of a voluntary 
repayment agreement.
    (c) No voluntary repayment agreement will be binding on the 
Secretary unless it is in writing and signed by both the Secretary and 
the employee.



Sec.  33.9  Special review.

    (a) A Department employee subject to salary offset or a voluntary 
repayment agreement may, at any time, request a special review by the 
Secretary of the amount of the salary offset or voluntary repayment 
installments, based on materially changed circumstances, such as, but 
not limited to, catastrophic illness, divorce, death, or disability.
    (b)(1) In determining whether an offset would prevent the employee 
from meeting essential subsistence expenses, e.g., food, housing, 
clothing, transportation, and medical care, the employee shall submit a 
detailed statement and supporting documents for the employee, his or her 
spouse, and dependents indicating:
    (i) Income from all sources;
    (ii) Assets and liabilities;
    (iii) Number of dependents;
    (iv) Food, housing, clothing, transportation, and medical expenses; 
and
    (v) Exceptional and unusual expenses, if any.
    (2) When requesting a special review under this section, the 
employee shall file an alternative proposed offset or payment schedule 
and a statement, with supporting documents as described in paragraph 
(b)(1) of this section, stating why the current salary offset or 
payments result in an extreme financial hardship to the employee.
    (c)(1) The Secretary shall evaluate the statement and supporting 
documents, and determine whether the original offset or repayment 
schedule imposes extreme financial hardship on the employee.
    (2) Within 30 calendar days of the receipt of the request and 
supporting documents, the Secretary shall notify the employee in writing 
of such determination, including, if appropriate, a revised offset or 
repayment schedule.
    (d) If the special review results in a revised offset or repayment 
schedule, the Secretary shall provide a new certification to the paying 
agency.



Sec.  33.10  Procedures for salary offset.

    (a) Method and source of deductions. Unless the employee and the 
Secretary have agreed to an alternative repayment arrangement under 
Sec.  33.8, a debt shall be collected in lump sum or by installment 
deductions at officially established pay intervals from an employee's 
current pay account.
    (b) Limitation on amount of deduction. Ordinarily, the size of 
installment deductions must bear a reasonable relationship to the size 
of the debt and the employee's ability to pay. However, the amount 
deducted for any pay period must not exceed 15 percent of the disposable 
pay from which the deduction is made, unless the employee has agreed in 
writing to the deduction of a greater amount, as outlined in Sec.  33.8.
    (c) Duration of deductions. (1) Lump sum. If the amount of the debt 
is equal to or less than 15 percent of the employee's disposable pay for 
an officially established pay interval, the debt generally will be 
collected in one lump-sum deduction.
    (2) If the employee is deemed financially unable to pay in one lump-
sum or the amount of the debt exceeds 15 percent of the employee's 
disposable pay for an officially established pay interval, the debt 
shall be collected in installments. Except as provided in paragraphs (e) 
and (f) of this section, installment deductions must be made over a 
period not greater than the anticipated period of active duty or 
employment.
    (d) When deductions may begin. (1) Deductions will begin on the date 
stated in the notice of intent, unless an alternative repayment 
agreement under Sec.  33.8 has been accepted or the employee has filed a 
timely request for a hearing.
    (2) If the employee files a timely petition for hearing as provided 
in Sec.  33.6, deductions will begin after the hearing official has 
provided the employee with

[[Page 130]]

a hearing and a final written decision has been rendered in favor of the 
Department.
    (e) Liquidation from final check. If an employee retires, resigns, 
or the period of employment ends before collection of the debt is 
completed, the remainder of the debt will be offset under 31 U.S.C. 3716 
from subsequent payments of any nature (e.g., final salary payment or 
lump-sum leave) due the employee from the paying agency as of the date 
of separation.
    (f) Recovery from other payments due a separated employee. If the 
debt cannot be satisfied by offset from any final payment due the 
employee on the date of separation, the Secretary will liquidate the 
debt, where appropriate, by administrative offset under 31 U.S.C. 3716 
from later payments of any kind due the former employee (e.g., lump sum 
leave payment).



Sec.  33.11  Salary offset when the Department is the creditor agency 
but not the paying agency.

    (a) Centralized administrative offset. (1) Under 31 U.S.C. 3716, the 
Department shall notify the Secretary of the Treasury of all past-due, 
legally enforceable debts which are 180 days delinquent for purposes of 
collection by centralized administrative offset. This includes debts 
which the Department seeks to recover from the pay account of an 
employee of another agency via salary offset. The Secretary of the 
Treasury and other Federal disbursing officials will match payments, 
including Federal salary payments, against these debts. Where a match 
occurs, and all the requirements for offset have been met, the payments 
will be offset to collect the debt.
    (2) Prior to offset of the pay account of an employee, the 
Department must comply with the requirements of 5 U.S.C. 5514; 5 CFR 
part 550, subpart K, and this part. Specific procedures for notifying 
the Secretary of the Treasury of a debt for purposes of collection by 
administrative offset, including salary offset, are contained in 31 CFR 
parts 285 and 901 and part 30 of this title.
    (b) Non-centralized administrative offset. When salary offset 
through centralized administrative offset under paragraph (a) of this 
section is not possible, the Department may attempt to collect a debt 
through non-centralized administrative offset in accordance with part 30 
of this title.
    (1) Format of the request. Upon completion of the procedures 
established in this part and pursuant to 5 U.S.C. 5514, the Department 
shall:
    (i) Certify in writing to the paying agency that the employee owes 
the debt, the amount and basis of the debt, the date on which payment(s) 
is due, the date the Government's right to collect the debt first 
accrued, and that the Departmental regulations implementing 5 U.S.C. 
5514 have been approved by the Office of Personnel Management.
    (ii) If the collection is to be made in installments, advise the 
paying agency of the number of installments to be collected, the amount 
or percentage of disposable pay to be collected in each installment, and 
the commencement date of the installments, if a date other than the next 
officially established pay period is required.
    (iii) Unless the employee has consented in writing to the salary 
deductions or signed a statement acknowledging receipt of the required 
procedures and this written consent or statement is forwarded to the 
paying agency, advise the paying agency of the action(s) taken under 5 
U.S.C. 5514 and this part, and give the date(s) the action(s) was taken.
    (2) Requesting recovery from current paying agency. (i) Except as 
otherwise provided in this paragraph, the Department shall submit a 
certified debt claim containing the information specified in paragraph 
(a) of this section, and an installment agreement, or other instruction 
on the payment schedule, if applicable, to the employee's paying agency.
    (ii) If the employee is in the process of separating from the 
Federal Government, the Department shall submit the certified debt claim 
to the employee's paying agency for collection as provided in Sec.  
33.10(e). The paying agency must certify the total amount of its 
collection on the debt and send a copy of the certification to the 
employee and another copy to the Department. If the paying agency's 
collection does not

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fully satisfy the debt, and the paying agency is aware that the employee 
is entitled to payments from the Civil Service Retirement and Disability 
Fund, or other similar payments that may be due the employee from other 
Federal Government sources, the paying agency will provide written 
notification of the outstanding debt to the agency responsible for 
making such payments to the employee, stating the employee owes a debt, 
the amount of the debt, and that the provisions of this section have 
been fully complied with. The Department must submit a properly 
certified claim to the agency responsible for making such payments 
before the collection can be made.
    (iii) If the employee is already separated and all payments due from 
the employee's former paying agency have been paid, the Department may 
request, unless otherwise prohibited, that money due and payable to the 
employee from the Civil Service Retirement and Disability Fund (5 CFR 
831.1801 or 5 CFR 845.401) or other similar funds, be administratively 
offset to collect the debt. See 31 U.S.C. 3716 and 31 CFR 901.3.
    (iv) If the employee transfers to another paying agency, the 
Department must submit a properly certified debt claim to the new paying 
agency before collection can be resumed; however, the Department need 
not repeat the due process procedures described in 5 U.S.C. 5514 and 
this part. The Department shall review the debt to ensure that 
collection is resumed by the new paying agency.



Sec.  33.12  Salary offset when the Department is the paying agency 
but not the creditor agency.

    (a) Format of the request. (1) When the Department is the paying 
agency and another agency is the creditor agency, the creditor agency 
must certify, in writing, to the Department that the employee owes the 
debt, the amount and basis of the debt, the date on which payment(s) is 
due, the date the Government's right to collect the debt first accrued, 
and that the creditor agency's regulations implementing 5 U.S.C. 5514 
have been approved by the Office of Personnel Management.
    (2) If the collection is to be made in installments, the creditor 
agency must also advise the Department of the number of installments to 
be collected, the amount or percentage of disposable pay to be collected 
in each installment, and the commencement date of the installments, if a 
date other than the next officially established pay period is required.
    (3) Unless the employee has consented in writing to the salary 
deductions or signed a statement acknowledging receipt of the required 
procedures and the written consent or statement is forwarded to the 
Department, the creditor agency must advise the Department of the 
action(s) taken under 5 U.S.C. Sec.  5514, and give the date(s) the 
action(s) was taken.
    (b) Requests for recovery. (1) Complete claim. When the Department 
receives a properly certified debt claim from a creditor agency, 
deductions should be scheduled to begin prospectively at the next 
officially established pay interval. The employee must receive written 
notice as described in Sec.  33.10 that the Department has received a 
certified debt claim from the creditor agency, including the amount, and 
written notice of the date deductions from salary will commence and the 
amount of such deductions.
    (2) Incomplete claim. When the Department receives an incomplete 
debt claim from a creditor agency, the Secretary shall return the debt 
claim with a notice that procedures under 5 U.S.C. 5514 and 5 CFR part 
550, subpart K, must be provided and a properly certified debt claim 
received before action will be taken to collect from the employee's 
current pay account.
    (c) Review. The Secretary is not required or authorized to review 
the merits of the determination with respect to the amount or validity 
of the debt certified by the creditor agency.
    (d) Employees separating. If an employee begins separation action 
before the Department collects the total debt due the creditor agency, 
the following actions will be taken:
    (1) To the extent possible, the balance owed the creditor agency 
will be liquidated from a final salary check, or other final payments of 
any nature due the employee from the Department;

[[Page 132]]

    (2) The Secretary will certify the total amount of the Department's 
collection on the debt and send a copy of the certification to the 
employee and another copy to the creditor agency; and
    (3) If the Department's collection does not fully satisfy the debt, 
and the Secretary is aware that the employee is entitled to payments 
from the Civil Service Retirement and Disability Fund, or other similar 
payments that may be due the employee from other Federal Government 
sources, the Secretary will provide written notification of the 
outstanding debt to the agency responsible for making such payments to 
the employee. The written notification shall state that the employee 
owes a debt, the amount of the debt, and that the provisions of this 
section have been fully complied with. The Department shall furnish a 
copy of this written notification to the creditor agency so that it can 
file a properly certified debt claim with the agency responsible for 
making such payments.
    (e) Employees who transfer to another paying agency. If, after the 
creditor agency has submitted a debt claim to the Department, the 
employee transfers from the Department to a different paying agency 
before the debt is collected in full, the Secretary shall:
    (1) Certify the total amount of the collection made on the debt; and
    (2) Furnish a copy of the certification to the employee and another 
copy to the creditor agency along with notice of the employee's 
transfer.



Sec.  33.13  Interest, penalties, and administrative costs.

    Debts owed to the Department shall be assessed interest, penalties 
and administrative costs in accordance with 45 CFR 30.18.



Sec.  33.14  Non-waiver of rights.

    An employee's involuntary payment of all or any portion of a debt 
collected under this part shall not be construed as a waiver of any 
rights which the employee may have under 5 U.S.C. 5514 or any other 
provision of law or contract, unless there are statutory or contractual 
provisions to the contrary.



Sec.  33.15  Refunds.

    (a) The Secretary shall promptly refund any amounts paid or deducted 
under this part when:
    (1) A debt is waived or otherwise found not owing to the United 
States; or
    (2) The employee's paying agency is directed by administrative or 
judicial order to refund amount deducted from the employee's current 
pay.
    (b) Unless required or permitted by law or contract, refunds shall 
not bear interest.



Sec.  33.16  Additional administrative collection action.

    Nothing contained in this part is intended to preclude the use of 
any other appropriate administrative remedy.



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



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

    Authority: 31 U.S.C. 3721.

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



Sec.  34.1  Purpose and scope.

    (a) Purpose. This part prescribes polices and procedures for 
handling claims not in excess of $40,000.00 filed by employees against 
the Department of Health and Human Services under the Military Personnel 
and Civilian Employees Claims (MPCE) Act of 1964, 31 U.S.C. 3721, for 
damage to, or loss of, property against the Department. Under the MPCE 
Act, the Secretary may approve claims made against the Government by a 
federal government employee for damage to or loss of personal property 
that is incident to employment when the loss or damage is not due to any 
negligence on the part of employee.
    (b) Scope. This part applies to all Departmental Operating Divisions 
and

[[Page 133]]

Regional Offices that process and review claims under the MPCE Act. 
Nothing in this part shall be construed to bar other types of claims 
that are payable under other statutory authority such as, but not 
limited to, the Federal Tort Claims Act (28 U.S.C. 2671-2680).



Sec.  34.2  Definitions.

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



Sec.  34.3  Filing procedures and time limits.

    (a) Who may file a claim. A claim may be filed by the following 
individuals:
    (1) An employee;
    (2) An authorized agent or representative of an employee or 
employee's estate, regardless of whether the claim arose before or 
concurrent with an employee's death; and
    (3) A former employee or his authorized agent or representative if 
damage or loss occurred prior to the separation from the Department.
    (b) Requirements. A claim submitted under this part must be 
presented in writing to the Claims Officer (See paragraph (c) of this 
section). Claims may be submitted on a HHS-481 form, Employee Claim for 
Loss or Damage to Personal Property. All claims must be signed by the 
claimant or his authorized agent or representative. The HHS-Form can be 
obtained from the Claims Officer or downloaded from the Program Support 
Center's webpage at www.psc.gov. All claims must include the following:
    (1) Name and address of the claimant;
    (2) The office in which the claimant was employed at the time of 
loss, current office, if different, and telephone number;
    (3) Date of loss or damage;
    (4) Amount of claim;
    (5) Description of the property, including but not limited to type, 
design, model number, date acquired, value when acquired, value when 
lost, and estimation of repair or replacement cost;
    (6) Description of incident; and
    (7) If property was insured when loss or damage occurred, a 
statement indicating whether a claim was filed with an insurance 
carrier.
    (c) Where to file your claim. (1) Claimants employed with the 
Regional Offices should submit claims to the Chief Regional Counsel, 
Office of the General Counsel, within the claimant's Region.
    (2) All other claimants must submit claims to the Office of the 
General Counsel, General Law Division, Claims and Employment Law Branch, 
330 Independence Ave., SW., Room 4760, Cohen Building, Washington, DC 
20201.
    (d) Evidence required. You must submit the following:
    (1) Not less than two itemized signed estimates for the cost of 
repairs, or an itemized bill of repair for the damaged property;
    (2) In the event the property is not economically repairable or is 
totally lost or destroyed, proof of this fact, its market value before 
or after loss, purchase price, and date of acquisition of the property;
    (3) Proof of ownership or right to recover for the damage such as a 
receipt;
    (4) Police/incident report;
    (5) If property is insured, insurance information, such as insurance 
carrier, type of coverage, deductible, and whether claim has been filed 
and/or paid;
    (6) Travel orders, if applicable;
    (7) Any citations or traffic tickets, if applicable; and
    (8) Any other evidence required by the claims officer not specified 
above.
    (e) Time limit. (1) A claim filed under this section must be filed 
in writing

[[Page 134]]

with the Department within two years from the date of the incident.
    (2) If the claim accrues in the time of war or in the time of armed 
conflict in which any armed forces of the United States are engaged or 
if such a war or armed conflict occurs within two years after the claim 
accrues, and if good cause is shown, the claim shall be presented no 
more than two years after that cause ceases to exist, or two years after 
the war or armed conflict is terminated, whichever is earlier.
    (3) All required evidence in support of a claim submitted under this 
section must be forwarded to the claims officer within sixty days after 
request. Failure to do so will be deemed as an abandonment of the claim 
and the claim will be disallowed.



Sec.  34.4  Allowable claims.

    (a) What you can claim. (1) Claims for damage or loss may be allowed 
where possession of the property was lawful and reasonable under 
circumstances.
    (2) Claims for property damage or loss by fire, flood, hurricane, 
theft, or other serious occurrence may be allowed when the property is 
located inside:
    (i) Quarters that have been assigned or provided by the government; 
or
    (ii) Quarters outside the United States whether assigned by the 
government or not, except when a civilian employee outside the U.S. is a 
local inhabitant.
    (3) Claims for damage to, or loss of, property may be allowed when 
caused by:
    (i) Marine, air disaster, enemy action or threat thereof, or other 
extraordinary risks incurred incident to the performance of official 
duties by the claimant; and
    (ii) Efforts by the claimant to save human life or government 
property.
    (4) Property used for the benefit of the government. Claims may be 
allowed for damage to, or loss of, property used for the benefit of the 
government at the request, or with the knowledge and consent of, 
superior authority.
    (5) Claims for clothing and accessories may be allowed when loss or 
damage was caused by faulty or defective equipment or furnishings owned 
or managed by the Department.
    (6) Claims for stolen property, only if it is determined that the 
claimant exercised due care in protecting his property and there is 
clear evidence that a burglary or theft occurred.
    (7) Claims for automobiles, only when required to perform official 
business or parked on a government-owned or operated parking lot or 
garage incident to employment. This subsection does not include claims 
for damage or loss when traveling between place of residence and duty 
station, or when the loss or damage was caused by the negligence of a 
third party. If the automobile is a total loss, the maximum amount 
allowed is the value of the vehicle at the time of loss as determined by 
the National Automobile Dealer Association Appraisal Guide or similar 
publications.
    (8) Claims for any other meritorious claims in exceptional cases may 
be allowed by the Claims Officer.
    (9) Transportation or travel losses. Damage or loss of personal 
property, including baggage and household items, while being transported 
by a carrier, agent or agency of the government, or private conveyance, 
may be allowed only if the property is shipped under orders or in 
connection with travel orders.
    (b) [Reserved]



Sec.  34.5  Unallowable claims.

    (a) What you cannot claim. (1) Claims for money or currency, such as 
intangible property (i.e. bankbooks, check, money orders, promissory 
notes, stock certificates, etc.).
    (2) Worn-out or unserviceable property.
    (3) Easily pilferable articles, such as jewelry, cameras, watches, 
and binoculars when they are shipped with household goods by a moving 
company or unaccompanied baggage. This does not apply to checked 
property or property in personal custody of the claimant or his agent 
provided proper security measures have been taken.
    (4) Government property.
    (5) Appraisal or estimate fees.
    (6) Automobiles, except when required to perform official business 
or

[[Page 135]]

parked on a government-owned or operated parking lot or garage incident 
to employment.
    (7) Loss or damage caused in whole or in part by the negligent or 
wrongful act of the claimant or his agent or employee.
    (8) Claims under $30.00.
    (9) Stolen property when it's determined that claimant failed to 
exercise due care in protecting his or her property.
    (10) Sales Tax. Reimbursements for the payment of sales tax incurred 
in connection with repairs or replacing an item will not be allowed.
    (b) [Reserved]



Sec.  34.6  Reconsideration or appeal.

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



Sec.  34.7  Payment procedures.

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



Sec.  34.8  Computation of award and settlement.

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



Sec.  34.9  Claims involving carriers or insurers.

    (a) Carriers. (1) If property is damaged, lost or destroyed while 
being shipped pursuant to authorized travel orders, the owner shall file 
a written claim for reimbursement against the carrier no later than nine 
months from the date of delivery or should have been made according to 
the terms of the contract. It shall be filed before or concurrent with 
submitting a claim against the government under this part.
    (2) The demand shall be made against the responsible carrier if more 
than one contract was issued, a separate demand shall be made against 
the last carrier on each such document, unless claimant knows which 
carrier was in possession of the property when the damage or loss 
occurred.
    (b) Insurers. (1) If property which is damaged, lost, or destroyed 
incident to the claimant's service is insured in

[[Page 136]]

whole or in part, the claimant shall inform the Claims Officer whether a 
claim was made with the insurance carrier.
    (2) The claimant shall inform the claims officer if he or she 
received a reimbursement from the insurance carrier for the item that 
was damaged or lost. The exact amount of the reimbursement must be 
reported.
    (3) If the claimant receives a reimbursement for the lost or damaged 
property from an insurance carrier, the maximum amount that can be 
recovered from the Department is the difference between an appropriate 
award under this regulation and the amount recovered from the insurance 
carrier. The claimant is responsible for submitting to the Department 
documentation that identifies the exact amount of the reimbursement.



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



                            Subpart A_General

Sec.
35.1 Scope of regulations.

                          Subpart B_Procedures

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

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

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



                            Subpart A_General



Sec.  35.1  Scope of regulations.

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



                          Subpart B_Procedures



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

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

[[Page 137]]

Department of Health and Human Services Claims Officer, Washington, DC 
20201.

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



Sec.  35.3  Administrative claim; who may file.

    (a) A claim for injury to or loss of property may be presented by 
the owner of the property interest which is the subject of the claim, 
his duly authorized agent, or his legal representative.
    (b) A claim for personal injury may be presented by the injured 
person, his duly authorized agent, or his legal representative.
    (c) A claim based on death may be presented by the executor or 
administrator of the decedent's estate or by any other person legally 
entitled to assert such a claim under applicable state law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appear, or jointly. Whenever an insurer presents a 
claim asserting the rights of a subrogee, he shall present with his 
claim appropriate evidence that he has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or legal 
representative, show the title or legal capacity of the person signing, 
and be accompanied by evidence of his authority to present a claim on 
behalf of the claimant as agent, executor, administrator, parent, 
guardian, or other representative.



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

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

[[Page 138]]

or the operating agency any other physician's reports previously or 
thereafter made of the physical or mental condition which is the subject 
matter of his claim.
    (2) Itemized bills for medical, dental, and hospital expenses 
incurred, or itemized receipts of payment for such expenses.
    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected duration of and expenses for such treatment.
    (4) If a claim is made for loss of time from employment, a written 
statement from his employer showing actual time lost from employment, 
whether he is a full or part-time employee, and wages or salary actually 
lost.
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings actually 
lost.
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the personal injury 
or the damages claimed.
    (c) Property damage. In support of a claim for damage to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information:
    (1) Proof of ownership.
    (2) A detailed statement of the amount claimed with respect to each 
item of property.
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs.
    (4) A statement listing date of purchase, purchase price, market 
value of the property as of date of damage, and salvage value, where 
repair is not economical.
    (5) Any other evidence or information which may have a bearing 
either on the responsibility of the United States for the injury to or 
loss of property or the damages claimed.
    (d) Time limit. All evidence required to be submitted by this 
section shall be furnished by the claimant within a reasonable time. 
Failure of a claimant to furnish evidence necessary to a determination 
of his claim within three months after a request therefor has been 
mailed to his last known address may be deemed an abandonment of the 
claim. The claim may be thereupon disallowed.



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

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



Sec.  35.6  Final denial of claim.

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

[[Page 139]]

request for reconsideration shall be effected in accordance with the 
provisions of paragraph (a) of this section.

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



Sec.  35.7  Payment of approved claims.

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



Sec.  35.8  Release.

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



Sec.  35.9  Penalties.

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



Sec.  35.10  Limitation on Department's authority.

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



PART 36_INDEMNIFICATION OF HHS EMPLOYEES--Table of Contents





Sec.  36.1  Policy.

    (a) The Department of Health and Human Services may indemnify, in 
whole or in part, its employees (which for the purpose of this 
regulation includes former employees) for any verdict, judgment or other 
monetary award which is rendered against any such employee, provided 
that the conduct giving rise to the verdict, judgment or award was taken 
within the scope of his or her employment with the Department and that 
such indemnification is in the interest of the United States, as 
determined by the Secretary, or his or her designee, in his or her 
discretion.
    (b) The Department of Health and Human Services may settle or 
compromise a personal damage claim against its employee by the payment 
of available funds, at any time, provided the alleged conduct giving 
rise to the personal damage claim was taken within the scope of 
employment and that

[[Page 140]]

such settlement or compromise is in the interest of the United States, 
as determined by the Secretary, or his or her designee, in his or her 
discretion.
    (c) Absent exceptional circumstances, as determined by the Secretary 
or his or her designee, the Department will not entertain a request 
either to agree to indemnify or to settle a personal damage claim before 
entry of an adverse verdict, judgment or monetary award.
    (d) When an employee of the Department of Health and Human Services 
becomes aware that an action has been filed against the employee in his 
or her individual capacity as a result of conduct taken within the scope 
of his or her employment, the employee should immediately notify the 
Department that such an action is pending.
    (e) The employee may, thereafter, request either (1) indemnification 
to satisfy a verdict, judgment or award entered against the employee or 
(2) payment to satisfy the requirements of a settlement proposal. The 
employee shall submit a written request, with documentation including 
copies of the verdict, judgment, award or settlement proposal, as 
appropriate, to the head of his employing component, who shall thereupon 
submit to the General Counsel, in a timely manner, a recommended 
disposition of the request. The General Counsel shall also seek the 
views of the Department of Justice. The General Counsel shall forward 
the request, the employing component's recommendation and the General 
Counsel's recommendation to the Secretary for decision.
    (f) Any payment under this section either to indemnify a Department 
of Health and Human Services employee or to settle a personal damage 
claim shall be contingent upon the availability of appropriated funds of 
the employing component of the Department of Health and Human Services.

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

[53 FR 11280, Apr. 6, 1988]



PART 46_PROTECTION OF HUMAN SUBJECTS--Table of Contents



  Subpart A_Basic HHS Policy for Protection of Human Research Subjects

Sec.
46.101 To what does this policy apply?
46.102 Definitions for purposes of this policy.
46.103 Assuring compliance with this policy--research conducted or 
          supported by any Federal department or agency.
46.104 Exempt research.
46.105-46.106 [Reserved]
46.107 IRB membership.
46.108 IRB functions and operations.
46.109 IRB review of research.
46.110 Expedited review procedures for certain kinds of research 
          involving no more than minimal risk, and for minor changes in 
          approved research.
46.111 Criteria for IRB approval of research.
46.112 Review by institution.
46.113 Suspension or termination of IRB approval of research.
46.114 Cooperative research.
46.115 IRB records.
46.116 General requirements for informed consent.
46.117 Documentation of informed consent.
46.118 Applications and proposals lacking definite plans for involvement 
          of human subjects.
46.119 Research undertaken without the intention of involving human 
          subjects.
46.120 Evaluation and disposition of applications and proposals for 
          research to be conducted or supported by a Federal department 
          or agency.
46.121 [Reserved]
46.122 Use of Federal funds.
46.123 Early termination of research support: Evaluation of applications 
          and proposals.
46.124 Conditions.

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

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

[[Page 141]]

          problem affecting the health or welfare of pregnant women, 
          fetuses, or neonates.

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

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

 Subpart D_Additional Protections for Children Involved as Subjects in 
                                Research

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

          Subpart E_Registration of Institutional Review Boards

46.501 What IRBs must be registered?
46.502 What information must be provided when registering an IRB?
46.503 When must an IRB be registered?
46.504 How must an IRB be registered?
46.505 When must IRB registration information be renewed or updated?

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

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



  Subpart A_Basic HHS Policy for Protection of Human Research Subjects

    Source: 82 FR 7259, 7273, Jan. 19, 2017, unless otherwise noted.



Sec.  46.101  To what does this policy apply?

    (a) Except as detailed in Sec.  46.104, this policy applies to all 
research involving human subjects conducted, supported, or otherwise 
subject to regulation by any Federal department or agency that takes 
appropriate administrative action to make the policy applicable to such 
research. This includes research conducted by Federal civilian employees 
or military personnel, except that each department or agency head may 
adopt such procedural modifications as may be appropriate from an 
administrative standpoint. It also includes research conducted, 
supported, or otherwise subject to regulation by the Federal Government 
outside the United States. Institutions that are engaged in research 
described in this paragraph and institutional review boards (IRBs) 
reviewing research that is subject to this policy must comply with this 
policy.
    (b) [Reserved]
    (c) Department or agency heads retain final judgment as to whether a 
particular activity is covered by this policy and this judgment shall be 
exercised consistent with the ethical principles of the Belmont 
Report.\62\
---------------------------------------------------------------------------

    \62\ The National Commission for the Protection of Human Subjects of 
Biomedical and Behavioral Research.- Belmont Report. Washington, DC: 
U.S. Department of Health and Human Services. 1979.
---------------------------------------------------------------------------

    (d) Department or agency heads may require that specific research 
activities or classes of research activities conducted, supported, or 
otherwise subject to regulation by the Federal department or agency but 
not otherwise covered by this policy comply with some or all of the 
requirements of this policy.

[[Page 142]]

    (e) Compliance with this policy requires compliance with pertinent 
federal laws or regulations that provide additional protections for 
human subjects.
    (f) This policy does not affect any state or local laws or 
regulations (including tribal law passed by the official governing body 
of an American Indian or Alaska Native tribe) that may otherwise be 
applicable and that provide additional protections for human subjects.
    (g) This policy does not affect any foreign laws or regulations that 
may otherwise be applicable and that provide additional protections to 
human subjects of research.
    (h) When research covered by this policy takes place in foreign 
countries, procedures normally followed in the foreign countries to 
protect human subjects may differ from those set forth in this policy. 
In these circumstances, if a department or agency head determines that 
the procedures prescribed by the institution afford protections that are 
at least equivalent to those provided in this policy, the department or 
agency head may approve the substitution of the foreign procedures in 
lieu of the procedural requirements provided in this policy. Except when 
otherwise required by statute, Executive Order, or the department or 
agency head, notices of these actions as they occur will be published in 
the Federal Register or will be otherwise published as provided in 
department or agency procedures.
    (i) Unless otherwise required by law, department or agency heads may 
waive the applicability of some or all of the provisions of this policy 
to specific research activities or classes of research activities 
otherwise covered by this policy, provided the alternative procedures to 
be followed are consistent with the principles of the Belmont 
Report.\63\ Except when otherwise required by statute or Executive 
Order, the department or agency head shall forward advance notices of 
these actions to the Office for Human Research Protections, Department 
of Health and Human Services (HHS), or any successor office, or to the 
equivalent office within the appropriate Federal department or agency, 
and shall also publish them in the Federal Register or in such other 
manner as provided in department or agency procedures. The waiver notice 
must include a statement that identifies the conditions under which the 
waiver will be applied and a justification as to why the waiver is 
appropriate for the research, including how the decision is consistent 
with the principles of the Belmont Report.
---------------------------------------------------------------------------

    \63\ Id.
---------------------------------------------------------------------------

    (j) Federal guidance on the requirements of this policy shall be 
issued only after consultation, for the purpose of harmonization (to the 
extent appropriate), with other Federal departments and agencies that 
have adopted this policy, unless such consultation is not feasible.
    (k) [Reserved]
    (l) Compliance dates and transition provisions:
    (1) Pre-2018 Requirements. For purposes of this section, the pre-
2018 Requirements means this subpart as published in the 2016 edition of 
the Code of Federal Regulations.
    (2) 2018 Requirements. For purposes of this section, the 2018 
Requirements means the Federal Policy for the Protection of Human 
Subjects requirements contained in this subpart. The general compliance 
date for the 2018 Requirements is January 21, 2019. The compliance date 
for Sec.  46.114(b) (cooperative research) of the 2018 Requirements is 
January 20, 2020.
    (3) Research subject to pre-2018 requirements. The pre-2018 
Requirements shall apply to the following research, unless the research 
is transitioning to comply with the 2018 Requirements in accordance with 
paragraph (l)(4) of this section:
    (i) Research initially approved by an IRB under the pre-2018 
Requirements before January 21, 2019;
    (ii) Research for which IRB review was waived pursuant to Sec.  
46.101(i) of the pre-2018 Requirements before January 21, 2019; and
    (iii) Research for which a determination was made that the research 
was exempt under Sec.  46.101(b) of the pre-2018 Requirements before 
January 21, 2019.

[[Page 143]]

    (4) Transitioning research. If, on or after July 19, 2018, an 
institution planning or engaged in research otherwise covered by 
paragraph (l)(3) of this section determines that such research instead 
will transition to comply with the 2018 Requirements, the institution or 
an IRB must document and date such determination.
    (i) If the determination to transition is documented between July 
19, 2018, and January 20, 2019, the research shall:
    (A) Beginning on the date of such documentation through January 20, 
2019, comply with the pre-2018 Requirements, except that the research 
shall comply with the following:
    (1) Section 46.102(l) of the 2018 Requirements (definition of 
research) (instead of Sec.  46.102(d) of the pre-2018 Requirements);
    (2) Section 46.103(d) of the 2018 Requirements (revised 
certification requirement that eliminates IRB review of application or 
proposal) (instead of Sec.  46.103(f) of the pre-2018 Requirements); and
    (3) Section 46.109(f)(1)(i) and (iii) of the 2018 Requirements 
(exceptions to mandated continuing review) (instead of Sec.  46.103(b), 
as related to the requirement for continuing review, and in addition to 
Sec.  46.109, of the pre-2018 Requirements); and
    (B) Beginning on January 21, 2019, comply with the 2018 
Requirements.
    (ii) If the determination to transition is documented on or after 
January 21, 2019, the research shall, beginning on the date of such 
documentation, comply with the 2018 Requirements.
    (5) Research subject to 2018 Requirements. The 2018 Requirements 
shall apply to the following research:
    (i) Research initially approved by an IRB on or after January 21, 
2019;
    (ii) Research for which IRB review is waived pursuant to paragraph 
(i) of this section on or after January 21, 2019; and
    (iii) Research for which a determination is made that the research 
is exempt on or after January 21, 2019.
    (m) Severability: Any provision of this part held to be invalid or 
unenforceable by its terms, or as applied to any person or circumstance, 
shall be construed so as to continue to give maximum effect to the 
provision permitted by law, unless such holding shall be one of utter 
invalidity or unenforceability, in which event the provision shall be 
severable from this part and shall not affect the remainder thereof or 
the application of the provision to other persons not similarly situated 
or to other dissimilar circumstances.

[82 FR 7259, 7273, Jan. 19, 2017, as amended at 83 FR 28518, June 19, 
2018]



Sec.  46.102  Definitions for purposes of this policy.

    (a) Certification means the official notification by the institution 
to the supporting Federal department or agency component, in accordance 
with the requirements of this policy, that a research project or 
activity involving human subjects has been reviewed and approved by an 
IRB in accordance with an approved assurance.
    (b) Clinical trial means a research study in which one or more human 
subjects are prospectively assigned to one or more interventions (which 
may include placebo or other control) to evaluate the effects of the 
interventions on biomedical or behavioral health-related outcomes.
    (c) Department or agency head means the head of any Federal 
department or agency, for example, the Secretary of HHS, and any other 
officer or employee of any Federal department or agency to whom the 
authority provided by these regulations to the department or agency head 
has been delegated.
    (d) Federal department or agency refers to a federal department or 
agency (the department or agency itself rather than its bureaus, offices 
or divisions) that takes appropriate administrative action to make this 
policy applicable to the research involving human subjects it conducts, 
supports, or otherwise regulates (e.g., the U.S. Department of Health 
and Human Services, the U.S. Department of Defense, or the Central 
Intelligence Agency).
    (e)(1) Human subject means a living individual about whom an 
investigator (whether professional or student) conducting research:
    (i) Obtains information or biospecimens through intervention or 
interaction with the individual, and uses,

[[Page 144]]

studies, or analyzes the information or biospecimens; or
    (ii) Obtains, uses, studies, analyzes, or generates identifiable 
private information or identifiable biospecimens.
    (2) Intervention includes both physical procedures by which 
information or biospecimens are gathered (e.g., venipuncture) and 
manipulations of the subject or the subject's environment that are 
performed for research purposes.
    (3) Interaction includes communication or interpersonal contact 
between investigator and subject.
    (4) Private information includes information about behavior that 
occurs in a context in which an individual can reasonably expect that no 
observation or recording is taking place, and information that has been 
provided for specific purposes by an individual and that the individual 
can reasonably expect will not be made public (e.g., a medical record).
    (5) Identifiable private information is private information for 
which the identity of the subject is or may readily be ascertained by 
the investigator or associated with the information.
    (6) An identifiable biospecimen is a biospecimen for which the 
identity of the subject is or may readily be ascertained by the 
investigator or associated with the biospecimen.
    (7) Federal departments or agencies implementing this policy shall:
    (i) Upon consultation with appropriate experts (including experts in 
data matching and re-identification), reexamine the meaning of 
``identifiable private information,'' as defined in paragraph (e)(5) of 
this section, and ``identifiable biospecimen,'' as defined in paragraph 
(e)(6) of this section. This reexamination shall take place within 1 
year and regularly thereafter (at least every 4 years). This process 
will be conducted by collaboration among the Federal departments and 
agencies implementing this policy. If appropriate and permitted by law, 
such Federal departments and agencies may alter the interpretation of 
these terms, including through the use of guidance.
    (ii) Upon consultation with appropriate experts, assess whether 
there are analytic technologies or techniques that should be considered 
by investigators to generate ``identifiable private information,'' as 
defined in paragraph (e)(5) of this section, or an ``identifiable 
biospecimen,'' as defined in paragraph (e)(6) of this section. This 
assessment shall take place within 1 year and regularly thereafter (at 
least every 4 years). This process will be conducted by collaboration 
among the Federal departments and agencies implementing this policy. Any 
such technologies or techniques will be included on a list of 
technologies or techniques that produce identifiable private information 
or identifiable biospecimens. This list will be published in the Federal 
Register after notice and an opportunity for public comment. The 
Secretary, HHS, shall maintain the list on a publicly accessible Web 
site.
    (f) Institution means any public or private entity, or department or 
agency (including federal, state, and other agencies).
    (g) IRB means an institutional review board established in accord 
with and for the purposes expressed in this policy.
    (h) IRB approval means the determination of the IRB that the 
research has been reviewed and may be conducted at an institution within 
the constraints set forth by the IRB and by other institutional and 
federal requirements.
    (i) Legally authorized representative means an individual or 
judicial or other body authorized under applicable law to consent on 
behalf of a prospective subject to the subject's participation in the 
procedure(s) involved in the research. If there is no applicable law 
addressing this issue, legally authorized representative means an 
individual recognized by institutional policy as acceptable for 
providing consent in the nonresearch context on behalf of the 
prospective subject to the subject's participation in the procedure(s) 
involved in the research.
    (j) Minimal risk means that the probability and magnitude of harm or 
discomfort anticipated in the research are not greater in and of 
themselves than those ordinarily encountered in daily life or during the 
performance of routine physical or psychological examinations or tests.

[[Page 145]]

    (k) Public health authority means an agency or authority of the 
United States, a state, a territory, a political subdivision of a state 
or territory, an Indian tribe, or a foreign government, or a person or 
entity acting under a grant of authority from or contract with such 
public agency, including the employees or agents of such public agency 
or its contractors or persons or entities to whom it has granted 
authority, that is responsible for public health matters as part of its 
official mandate.
    (l) Research means a systematic investigation, including research 
development, testing, and evaluation, designed to develop or contribute 
to generalizable knowledge. Activities that meet this definition 
constitute research for purposes of this policy, whether or not they are 
conducted or supported under a program that is considered research for 
other purposes. For example, some demonstration and service programs may 
include research activities. For purposes of this part, the following 
activities are deemed not to be research:
    (1) Scholarly and journalistic activities (e.g., oral history, 
journalism, biography, literary criticism, legal research, and 
historical scholarship), including the collection and use of 
information, that focus directly on the specific individuals about whom 
the information is collected.
    (2) Public health surveillance activities, including the collection 
and testing of information or biospecimens, conducted, supported, 
requested, ordered, required, or authorized by a public health 
authority. Such activities are limited to those necessary to allow a 
public health authority to identify, monitor, assess, or investigate 
potential public health signals, onsets of disease outbreaks, or 
conditions of public health importance (including trends, signals, risk 
factors, patterns in diseases, or increases in injuries from using 
consumer products). Such activities include those associated with 
providing timely situational awareness and priority setting during the 
course of an event or crisis that threatens public health (including 
natural or man-made disasters).
    (3) Collection and analysis of information, biospecimens, or records 
by or for a criminal justice agency for activities authorized by law or 
court order solely for criminal justice or criminal investigative 
purposes.
    (4) Authorized operational activities (as determined by each agency) 
in support of intelligence, homeland security, defense, or other 
national security missions.
    (m) Written, or in writing, for purposes of this part, refers to 
writing on a tangible medium (e.g., paper) or in an electronic format.



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

    (a) Each institution engaged in research that is covered by this 
policy, with the exception of research eligible for exemption under 
Sec.  46.104, and that is conducted or supported by a Federal department 
or agency, shall provide written assurance satisfactory to the 
department or agency head that it will comply with the requirements of 
this policy. In lieu of requiring submission of an assurance, individual 
department or agency heads shall accept the existence of a current 
assurance, appropriate for the research in question, on file with the 
Office for Human Research Protections, HHS, or any successor office, and 
approved for Federal-wide use by that office. When the existence of an 
HHS-approved assurance is accepted in lieu of requiring submission of an 
assurance, reports (except certification) required by this policy to be 
made to department and agency heads shall also be made to the Office for 
Human Research Protections, HHS, or any successor office. Federal 
departments and agencies will conduct or support research covered by 
this policy only if the institution has provided an assurance that it 
will comply with the requirements of this policy, as provided in this 
section, and only if the institution has certified to the department or 
agency head that the research has been reviewed and approved by an IRB 
(if such certification is required by Sec.  46.103(d)).
    (b) The assurance shall be executed by an individual authorized to 
act for

[[Page 146]]

the institution and to assume on behalf of the institution the 
obligations imposed by this policy and shall be filed in such form and 
manner as the department or agency head prescribes.
    (c) The department or agency head may limit the period during which 
any assurance shall remain effective or otherwise condition or restrict 
the assurance.
    (d) Certification is required when the research is supported by a 
Federal department or agency and not otherwise waived under Sec.  
46.101(i) or exempted under Sec.  46.104. For such research, 
institutions shall certify that each proposed research study covered by 
the assurance and this section has been reviewed and approved by the 
IRB. Such certification must be submitted as prescribed by the Federal 
department or agency component supporting the research. Under no 
condition shall research covered by this section be initiated prior to 
receipt of the certification that the research has been reviewed and 
approved by the IRB.
    (e) For nonexempt research involving human subjects covered by this 
policy (or exempt research for which limited IRB review takes place 
pursuant to Sec.  46.104(d)(2)(iii), (d)(3)(i)(C), or (d)(7) or (8)) 
that takes place at an institution in which IRB oversight is conducted 
by an IRB that is not operated by the institution, the institution and 
the organization operating the IRB shall document the institution's 
reliance on the IRB for oversight of the research and the 
responsibilities that each entity will undertake to ensure compliance 
with the requirements of this policy (e.g., in a written agreement 
between the institution and the IRB, by implementation of an 
institution-wide policy directive providing the allocation of 
responsibilities between the institution and an IRB that is not 
affiliated with the institution, or as set forth in a research 
protocol).

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



Sec.  46.104  Exempt research.

    (a) Unless otherwise required by law or by department or agency 
heads, research activities in which the only involvement of human 
subjects will be in one or more of the categories in paragraph (d) of 
this section are exempt from the requirements of this policy, except 
that such activities must comply with the requirements of this section 
and as specified in each category.
    (b) Use of the exemption categories for research subject to the 
requirements of subparts B, C, and D: Application of the exemption 
categories to research subject to the requirements of 45 CFR part 46, 
subparts B, C, and D, is as follows:
    (1) Subpart B. Each of the exemptions at this section may be applied 
to research subject to subpart B if the conditions of the exemption are 
met.
    (2) Subpart C. The exemptions at this section do not apply to 
research subject to subpart C, except for research aimed at involving a 
broader subject population that only incidentally includes prisoners.
    (3) Subpart D. The exemptions at paragraphs (d)(1), (4), (5), (6), 
(7), and (8) of this section may be applied to research subject to 
subpart D if the conditions of the exemption are met. Paragraphs 
(d)(2)(i) and (ii) of this section only may apply to research subject to 
subpart D involving educational tests or the observation of public 
behavior when the investigator(s) do not participate in the activities 
being observed. Paragraph (d)(2)(iii) of this section may not be applied 
to research subject to subpart D.
    (c) [Reserved]
    (d) Except as described in paragraph (a) of this section, the 
following categories of human subjects research are exempt from this 
policy:
    (1) Research, conducted in established or commonly accepted 
educational settings, that specifically involves normal educational 
practices that are not likely to adversely impact students' opportunity 
to learn required educational content or the assessment of educators who 
provide instruction. This includes most research on regular and special 
education instructional strategies, and research on the effectiveness of 
or the comparison among instructional techniques, curricula, or 
classroom management methods.
    (2) Research that only includes interactions involving educational 
tests (cognitive, diagnostic, aptitude, achievement), survey procedures,

[[Page 147]]

interview procedures, or observation of public behavior (including 
visual or auditory recording) if at least one of the following criteria 
is met:
    (i) The information obtained is recorded by the investigator in such 
a manner that the identity of the human subjects cannot readily be 
ascertained, directly or through identifiers linked to the subjects;
    (ii) Any disclosure of the human subjects' responses outside the 
research would not reasonably place the subjects at risk of criminal or 
civil liability or be damaging to the subjects' financial standing, 
employability, educational advancement, or reputation; or
    (iii) The information obtained is recorded by the investigator in 
such a manner that the identity of the human subjects can readily be 
ascertained, directly or through identifiers linked to the subjects, and 
an IRB conducts a limited IRB review to make the determination required 
by Sec.  46.111(a)(7).
    (3)(i) Research involving benign behavioral interventions in 
conjunction with the collection of information from an adult subject 
through verbal or written responses (including data entry) or 
audiovisual recording if the subject prospectively agrees to the 
intervention and information collection and at least one of the 
following criteria is met:
    (A) The information obtained is recorded by the investigator in such 
a manner that the identity of the human subjects cannot readily be 
ascertained, directly or through identifiers linked to the subjects;
    (B) Any disclosure of the human subjects' responses outside the 
research would not reasonably place the subjects at risk of criminal or 
civil liability or be damaging to the subjects' financial standing, 
employability, educational advancement, or reputation; or
    (C) The information obtained is recorded by the investigator in such 
a manner that the identity of the human subjects can readily be 
ascertained, directly or through identifiers linked to the subjects, and 
an IRB conducts a limited IRB review to make the determination required 
by Sec.  46.111(a)(7).
    (ii) For the purpose of this provision, benign behavioral 
interventions are brief in duration, harmless, painless, not physically 
invasive, not likely to have a significant adverse lasting impact on the 
subjects, and the investigator has no reason to think the subjects will 
find the interventions offensive or embarrassing. Provided all such 
criteria are met, examples of such benign behavioral interventions would 
include having the subjects play an online game, having them solve 
puzzles under various noise conditions, or having them decide how to 
allocate a nominal amount of received cash between themselves and 
someone else.
    (iii) If the research involves deceiving the subjects regarding the 
nature or purposes of the research, this exemption is not applicable 
unless the subject authorizes the deception through a prospective 
agreement to participate in research in circumstances in which the 
subject is informed that he or she will be unaware of or misled 
regarding the nature or purposes of the research.
    (4) Secondary research for which consent is not required: Secondary 
research uses of identifiable private information or identifiable 
biospecimens, if at least one of the following criteria is met:
    (i) The identifiable private information or identifiable 
biospecimens are publicly available;
    (ii) Information, which may include information about biospecimens, 
is recorded by the investigator in such a manner that the identity of 
the human subjects cannot readily be ascertained directly or through 
identifiers linked to the subjects, the investigator does not contact 
the subjects, and the investigator will not re-identify subjects;
    (iii) The research involves only information collection and analysis 
involving the investigator's use of identifiable health information when 
that use is regulated under 45 CFR parts 160 and 164, subparts A and E, 
for the purposes of ``health care operations'' or ``research'' as those 
terms are defined at 45 CFR 164.501 or for ``public health activities 
and purposes'' as described under 45 CFR 164.512(b); or
    (iv) The research is conducted by, or on behalf of, a Federal 
department or

[[Page 148]]

agency using government-generated or government-collected information 
obtained for nonresearch activities, if the research generates 
identifiable private information that is or will be maintained on 
information technology that is subject to and in compliance with section 
208(b) of the E-Government Act of 2002, 44 U.S.C. 3501 note, if all of 
the identifiable private information collected, used, or generated as 
part of the activity will be maintained in systems of records subject to 
the Privacy Act of 1974, 5 U.S.C. 552a, and, if applicable, the 
information used in the research was collected subject to the Paperwork 
Reduction Act of 1995, 44 U.S.C. 3501 et seq.
    (5) Research and demonstration projects that are conducted or 
supported by a Federal department or agency, or otherwise subject to the 
approval of department or agency heads (or the approval of the heads of 
bureaus or other subordinate agencies that have been delegated authority 
to conduct the research and demonstration projects), and that are 
designed to study, evaluate, improve, or otherwise examine public 
benefit or service programs, including procedures for obtaining benefits 
or services under those programs, possible changes in or alternatives to 
those programs or procedures, or possible changes in methods or levels 
of payment for benefits or services under those programs. Such projects 
include, but are not limited to, internal studies by Federal employees, 
and studies under contracts or consulting arrangements, cooperative 
agreements, or grants. Exempt projects also include waivers of otherwise 
mandatory requirements using authorities such as sections 1115 and 1115A 
of the Social Security Act, as amended.
    (i) Each Federal department or agency conducting or supporting the 
research and demonstration projects must establish, on a publicly 
accessible Federal Web site or in such other manner as the department or 
agency head may determine, a list of the research and demonstration 
projects that the Federal department or agency conducts or supports 
under this provision. The research or demonstration project must be 
published on this list prior to commencing the research involving human 
subjects.
    (ii) [Reserved]
    (6) Taste and food quality evaluation and consumer acceptance 
studies:
    (i) If wholesome foods without additives are consumed, or
    (ii) If a food is consumed that contains a food ingredient at or 
below the level and for a use found to be safe, or agricultural chemical 
or environmental contaminant at or below the level found to be safe, by 
the Food and Drug Administration or approved by the Environmental 
Protection Agency or the Food Safety and Inspection Service of the U.S. 
Department of Agriculture.
    (7) Storage or maintenance for secondary research for which broad 
consent is required: Storage or maintenance of identifiable private 
information or identifiable biospecimens for potential secondary 
research use if an IRB conducts a limited IRB review and makes the 
determinations required by Sec.  46.111(a)(8).
    (8) Secondary research for which broad consent is required: Research 
involving the use of identifiable private information or identifiable 
biospecimens for secondary research use, if the following criteria are 
met:
    (i) Broad consent for the storage, maintenance, and secondary 
research use of the identifiable private information or identifiable 
biospecimens was obtained in accordance with Sec.  46.116(a)(1) through 
(4), (a)(6), and (d);
    (ii) Documentation of informed consent or waiver of documentation of 
consent was obtained in accordance with Sec.  46.117;
    (iii) An IRB conducts a limited IRB review and makes the 
determination required by Sec.  46.111(a)(7) and makes the determination 
that the research to be conducted is within the scope of the broad 
consent referenced in paragraph (d)(8)(i) of this section; and (iv) The 
investigator does not include returning individual research results to 
subjects as part of the study plan. This provision does not prevent an 
investigator from abiding by any legal requirements to return individual 
research results.

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

[[Page 149]]



Sec.  46.105-46.106  [Reserved]



Sec.  46.107  IRB membership.

    (a) Each IRB shall have at least five members, with varying 
backgrounds to promote complete and adequate review of research 
activities commonly conducted by the institution. The IRB shall be 
sufficiently qualified through the experience and expertise of its 
members (professional competence), and the diversity of its members, 
including race, gender, and cultural backgrounds and sensitivity to such 
issues as community attitudes, to promote respect for its advice and 
counsel in safeguarding the rights and welfare of human subjects. The 
IRB shall be able to ascertain the acceptability of proposed research in 
terms of institutional commitments (including policies and resources) 
and regulations, applicable law, and standards of professional conduct 
and practice. The IRB shall therefore include persons knowledgeable in 
these areas. If an IRB regularly reviews research that involves a 
category of subjects that is vulnerable to coercion or undue influence, 
such as children, prisoners, individuals with impaired decision-making 
capacity, or economically or educationally disadvantaged persons, 
consideration shall be given to the inclusion of one or more individuals 
who are knowledgeable about and experienced in working with these 
categories of subjects.
    (b) Each IRB shall include at least one member whose primary 
concerns are in scientific areas and at least one member whose primary 
concerns are in nonscientific areas.
    (c) Each IRB shall include at least one member who is not otherwise 
affiliated with the institution and who is not part of the immediate 
family of a person who is affiliated with the institution.
    (d) No IRB may have a member participate in the IRB's initial or 
continuing review of any project in which the member has a conflicting 
interest, except to provide information requested by the IRB.
    (e) An IRB may, in its discretion, invite individuals with 
competence in special areas to assist in the review of issues that 
require expertise beyond or in addition to that available on the IRB. 
These individuals may not vote with the IRB.



Sec.  46.108  IRB functions and operations.

    (a) In order to fulfill the requirements of this policy each IRB 
shall:
    (1) Have access to meeting space and sufficient staff to support the 
IRB's review and recordkeeping duties;
    (2) Prepare and maintain a current list of the IRB members 
identified by name; earned degrees; representative capacity; indications 
of experience such as board certifications or licenses sufficient to 
describe each member's chief anticipated contributions to IRB 
deliberations; and any employment or other relationship between each 
member and the institution, for example, full-time employee, part-time 
employee, member of governing panel or board, stockholder, paid or 
unpaid consultant;
    (3) Establish and follow written procedures for:
    (i) Conducting its initial and continuing review of research and for 
reporting its findings and actions to the investigator and the 
institution;
    (ii) Determining which projects require review more often than 
annually and which projects need verification from sources other than 
the investigators that no material changes have occurred since previous 
IRB review; and
    (iii) Ensuring prompt reporting to the IRB of proposed changes in a 
research activity, and for ensuring that investigators will conduct the 
research activity in accordance with the terms of the IRB approval until 
any proposed changes have been reviewed and approved by the IRB, except 
when necessary to eliminate apparent immediate hazards to the subject.
    (4) Establish and follow written procedures for ensuring prompt 
reporting to the IRB; appropriate institutional officials; the 
department or agency head; and the Office for Human Research 
Protections, HHS, or any successor office, or the equivalent office 
within the appropriate Federal department or agency of
    (i) Any unanticipated problems involving risks to subjects or others 
or

[[Page 150]]

any serious or continuing noncompliance with this policy or the 
requirements or determinations of the IRB; and
    (ii) Any suspension or termination of IRB approval.
    (b) Except when an expedited review procedure is used (as described 
in Sec.  46.110), an IRB must review proposed research at convened 
meetings at which a majority of the members of the IRB are present, 
including at least one member whose primary concerns are in 
nonscientific areas. In order for the research to be approved, it shall 
receive the approval of a majority of those members present at the 
meeting.

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



Sec.  46.109  IRB review of research.

    (a) An IRB shall review and have authority to approve, require 
modifications in (to secure approval), or disapprove all research 
activities covered by this policy, including exempt research activities 
under Sec.  46.104 for which limited IRB review is a condition of 
exemption (under Sec.  46.104(d)(2)(iii), (d)(3)(i)(C), and (d)(7), and 
(8)).
    (b) An IRB shall require that information given to subjects (or 
legally authorized representatives, when appropriate) as part of 
informed consent is in accordance with Sec.  46.116. The IRB may require 
that information, in addition to that specifically mentioned in Sec.  
46.116, be given to the subjects when in the IRB's judgment the 
information would meaningfully add to the protection of the rights and 
welfare of subjects.
    (c) An IRB shall require documentation of informed consent or may 
waive documentation in accordance with Sec.  46.117.
    (d) An IRB shall notify investigators and the institution in writing 
of its decision to approve or disapprove the proposed research activity, 
or of modifications required to secure IRB approval of the research 
activity. If the IRB decides to disapprove a research activity, it shall 
include in its written notification a statement of the reasons for its 
decision and give the investigator an opportunity to respond in person 
or in writing.
    (e) An IRB shall conduct continuing review of research requiring 
review by the convened IRB at intervals appropriate to the degree of 
risk, not less than once per year, except as described in Sec.  
46.109(f).
    (f)(1) Unless an IRB determines otherwise, continuing review of 
research is not required in the following circumstances:
    (i) Research eligible for expedited review in accordance with Sec.  
46.110;
    (ii) Research reviewed by the IRB in accordance with the limited IRB 
review described in Sec.  46.104(d)(2)(iii), (d)(3)(i)(C), or (d)(7) or 
(8);
    (iii) Research that has progressed to the point that it involves 
only one or both of the following, which are part of the IRB-approved 
study:
    (A) Data analysis, including analysis of identifiable private 
information or identifiable biospecimens, or
    (B) Accessing follow-up clinical data from procedures that subjects 
would undergo as part of clinical care.
    (2) [Reserved]
    (g) An IRB shall have authority to observe or have a third party 
observe the consent process and the research.

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



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

    (a) The Secretary of HHS has established, and published as a Notice 
in the Federal Register, a list of categories of research that may be 
reviewed by the IRB through an expedited review procedure. The Secretary 
will evaluate the list at least every 8 years and amend it, as 
appropriate, after consultation with other federal departments and 
agencies and after publication in the Federal Register for public 
comment. A copy of the list is available from the Office for Human 
Research Protections, HHS, or any successor office.
    (b)(1) An IRB may use the expedited review procedure to review the 
following:

[[Page 151]]

    (i) Some or all of the research appearing on the list described in 
paragraph (a) of this section, unless the reviewer determines that the 
study involves more than minimal risk;
    (ii) Minor changes in previously approved research during the period 
for which approval is authorized; or
    (iii) Research for which limited IRB review is a condition of 
exemption under Sec.  46.104(d)(2)(iii), (d)(3)(i)(C), and (d)(7) and 
(8).
    (2) Under an expedited review procedure, the review may be carried 
out by the IRB chairperson or by one or more experienced reviewers 
designated by the chairperson from among members of the IRB. In 
reviewing the research, the reviewers may exercise all of the 
authorities of the IRB except that the reviewers may not disapprove the 
research. A research activity may be disapproved only after review in 
accordance with the nonexpedited procedure set forth in Sec.  46.108(b).
    (c) Each IRB that uses an expedited review procedure shall adopt a 
method for keeping all members advised of research proposals that have 
been approved under the procedure.
    (d) The department or agency head may restrict, suspend, terminate, 
or choose not to authorize an institution's or IRB's use of the 
expedited review procedure.



Sec.  46.111  Criteria for IRB approval of research.

    (a) In order to approve research covered by this policy the IRB 
shall determine that all of the following requirements are satisfied:
    (1) Risks to subjects are minimized:
    (i) By using procedures that are consistent with sound research 
design and that do not unnecessarily expose subjects to risk, and
    (ii) Whenever appropriate, by using procedures already being 
performed on the subjects for diagnostic or treatment purposes.
    (2) Risks to subjects are reasonable in relation to anticipated 
benefits, if any, to subjects, and the importance of the knowledge that 
may reasonably be expected to result. In evaluating risks and benefits, 
the IRB should consider only those risks and benefits that may result 
from the research (as distinguished from risks and benefits of therapies 
subjects would receive even if not participating in the research). The 
IRB should not consider possible long-range effects of applying 
knowledge gained in the research (e.g., the possible effects of the 
research on public policy) as among those research risks that fall 
within the purview of its responsibility.
    (3) Selection of subjects is equitable. In making this assessment 
the IRB should take into account the purposes of the research and the 
setting in which the research will be conducted. The IRB should be 
particularly cognizant of the special problems of research that involves 
a category of subjects who are vulnerable to coercion or undue 
influence, such as children, prisoners, individuals with impaired 
decision-making capacity, or economically or educationally disadvantaged 
persons.
    (4) Informed consent will be sought from each prospective subject or 
the subject's legally authorized representative, in accordance with, and 
to the extent required by, Sec.  46.116.
    (5) Informed consent will be appropriately documented or 
appropriately waived in accordance with Sec.  46.117.
    (6) When appropriate, the research plan makes adequate provision for 
monitoring the data collected to ensure the safety of subjects.
    (7) When appropriate, there are adequate provisions to protect the 
privacy of subjects and to maintain the confidentiality of data.
    (i) The Secretary of HHS will, after consultation with the Office of 
Management and Budget's privacy office and other Federal departments and 
agencies that have adopted this policy, issue guidance to assist IRBs in 
assessing what provisions are adequate to protect the privacy of 
subjects and to maintain the confidentiality of data.
    (ii) [Reserved]
    (8) For purposes of conducting the limited IRB review required by 
Sec.  46.104(d)(7)), the IRB need not make the determinations at 
paragraphs (a)(1) through (7) of this section, and shall make the 
following determinations:
    (i) Broad consent for storage, maintenance, and secondary research 
use of identifiable private information or

[[Page 152]]

identifiable biospecimens is obtained in accordance with the 
requirements of Sec.  46.116(a)(1)-(4), (a)(6), and (d);
    (ii) Broad consent is appropriately documented or waiver of 
documentation is appropriate, in accordance with Sec.  46.117; and
    (iii) If there is a change made for research purposes in the way the 
identifiable private information or identifiable biospecimens are stored 
or maintained, there are adequate provisions to protect the privacy of 
subjects and to maintain the confidentiality of data.
    (b) When some or all of the subjects are likely to be vulnerable to 
coercion or undue influence, such as children, prisoners, individuals 
with impaired decision-making capacity, or economically or educationally 
disadvantaged persons, additional safeguards have been included in the 
study to protect the rights and welfare of these subjects.



Sec.  46.112  Review by institution.

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



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

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

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



Sec.  46.114  Cooperative research.

    (a) Cooperative research projects are those projects covered by this 
policy that involve more than one institution. In the conduct of 
cooperative research projects, each institution is responsible for 
safeguarding the rights and welfare of human subjects and for complying 
with this policy.
    (b)(1) Any institution located in the United States that is engaged 
in cooperative research must rely upon approval by a single IRB for that 
portion of the research that is conducted in the United States. The 
reviewing IRB will be identified by the Federal department or agency 
supporting or conducting the research or proposed by the lead 
institution subject to the acceptance of the Federal department or 
agency supporting the research.
    (2) The following research is not subject to this provision:
    (i) Cooperative research for which more than single IRB review is 
required by law (including tribal law passed by the official governing 
body of an American Indian or Alaska Native tribe); or
    (ii) Research for which any Federal department or agency supporting 
or conducting the research determines and documents that the use of a 
single IRB is not appropriate for the particular context.
    (c) For research not subject to paragraph (b) of this section, an 
institution participating in a cooperative project may enter into a 
joint review arrangement, rely on the review of another IRB, or make 
similar arrangements for avoiding duplication of effort.



Sec.  46.115  IRB records.

    (a) An institution, or when appropriate an IRB, shall prepare and 
maintain adequate documentation of IRB activities, including the 
following:
    (1) Copies of all research proposals reviewed, scientific 
evaluations, if any, that accompany the proposals, approved sample 
consent forms, progress reports submitted by investigators, and reports 
of injuries to subjects.
    (2) Minutes of IRB meetings, which shall be in sufficient detail to 
show attendance at the meetings; actions taken by the IRB; the vote on 
these actions including the number of members voting for, against, and 
abstaining; the basis for requiring changes in or disapproving research; 
and a written summary of the discussion of controverted issues and their 
resolution.
    (3) Records of continuing review activities, including the rationale 
for

[[Page 153]]

conducting continuing review of research that otherwise would not 
require continuing review as described in Sec.  46.109(f)(1).
    (4) Copies of all correspondence between the IRB and the 
investigators.
    (5) A list of IRB members in the same detail as described in Sec.  
46.108(a)(2).
    (6) Written procedures for the IRB in the same detail as described 
in Sec.  46.108(a)(3) and (4).
    (7) Statements of significant new findings provided to subjects, as 
required by Sec.  46.116(c)(5).
    (8) The rationale for an expedited reviewer's determination under 
Sec.  46.110(b)(1)(i) that research appearing on the expedited review 
list described in Sec.  46.110(a) is more than minimal risk.
    (9) Documentation specifying the responsibilities that an 
institution and an organization operating an IRB each will undertake to 
ensure compliance with the requirements of this policy, as described in 
Sec.  46.103(e).
    (b) The records required by this policy shall be retained for at 
least 3 years, and records relating to research that is conducted shall 
be retained for at least 3 years after completion of the research. The 
institution or IRB may maintain the records in printed form, or 
electronically. All records shall be accessible for inspection and 
copying by authorized representatives of the Federal department or 
agency at reasonable times and in a reasonable manner.

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



Sec.  46.116  General requirements for informed consent.

    (a) General. General requirements for informed consent, whether 
written or oral, are set forth in this paragraph and apply to consent 
obtained in accordance with the requirements set forth in paragraphs (b) 
through (d) of this section. Broad consent may be obtained in lieu of 
informed consent obtained in accordance with paragraphs (b) and (c) of 
this section only with respect to the storage, maintenance, and 
secondary research uses of identifiable private information and 
identifiable biospecimens. Waiver or alteration of consent in research 
involving public benefit and service programs conducted by or subject to 
the approval of state or local officials is described in paragraph (e) 
of this section. General waiver or alteration of informed consent is 
described in paragraph (f) of this section. Except as provided elsewhere 
in this policy:
    (1) Before involving a human subject in research covered by this 
policy, an investigator shall obtain the legally effective informed 
consent of the subject or the subject's legally authorized 
representative.
    (2) An investigator shall seek informed consent only under 
circumstances that provide the prospective subject or the legally 
authorized representative sufficient opportunity to discuss and consider 
whether or not to participate and that minimize the possibility of 
coercion or undue influence.
    (3) The information that is given to the subject or the legally 
authorized representative shall be in language understandable to the 
subject or the legally authorized representative.
    (4) The prospective subject or the legally authorized representative 
must be provided with the information that a reasonable person would 
want to have in order to make an informed decision about whether to 
participate, and an opportunity to discuss that information.
    (5) Except for broad consent obtained in accordance with paragraph 
(d) of this section:
    (i) Informed consent must begin with a concise and focused 
presentation of the key information that is most likely to assist a 
prospective subject or legally authorized representative in 
understanding the reasons why one might or might not want to participate 
in the research. This part of the informed consent must be organized and 
presented in a way that facilitates comprehension.
    (ii) Informed consent as a whole must present information in 
sufficient detail relating to the research, and must be organized and 
presented in a way that does not merely provide lists of isolated facts, 
but rather facilitates the prospective subject's or legally authorized 
representative's understanding of the reasons why one might or might not 
want to participate.

[[Page 154]]

    (6) No informed consent may include any exculpatory language through 
which the subject or the legally authorized representative is made to 
waive or appear to waive any of the subject's legal rights, or releases 
or appears to release the investigator, the sponsor, the institution, or 
its agents from liability for negligence.
    (b) Basic elements of informed consent. Except as provided in 
paragraph (d), (e), or (f) of this section, in seeking informed consent 
the following information shall be provided to each subject or the 
legally authorized representative:
    (1) A statement that the study involves research, an explanation of 
the purposes of the research and the expected duration of the subject's 
participation, a description of the procedures to be followed, and 
identification of any procedures that are experimental;
    (2) A description of any reasonably foreseeable risks or discomforts 
to the subject;
    (3) A description of any benefits to the subject or to others that 
may reasonably be expected from the research;
    (4) A disclosure of appropriate alternative procedures or courses of 
treatment, if any, that might be advantageous to the subject;
    (5) A statement describing the extent, if any, to which 
confidentiality of records identifying the subject will be maintained;
    (6) For research involving more than minimal risk, an explanation as 
to whether any compensation and an explanation as to whether any medical 
treatments are available if injury occurs and, if so, what they consist 
of, or where further information may be obtained;
    (7) An explanation of whom to contact for answers to pertinent 
questions about the research and research subjects' rights, and whom to 
contact in the event of a research-related injury to the subject;
    (8) A statement that participation is voluntary, refusal to 
participate will involve no penalty or loss of benefits to which the 
subject is otherwise entitled, and the subject may discontinue 
participation at any time without penalty or loss of benefits to which 
the subject is otherwise entitled; and
    (9) One of the following statements about any research that involves 
the collection of identifiable private information or identifiable 
biospecimens:
    (i) A statement that identifiers might be removed from the 
identifiable private information or identifiable biospecimens and that, 
after such removal, the information or biospecimens could be used for 
future research studies or distributed to another investigator for 
future research studies without additional informed consent from the 
subject or the legally authorized representative, if this might be a 
possibility; or
    (ii) A statement that the subject's information or biospecimens 
collected as part of the research, even if identifiers are removed, will 
not be used or distributed for future research studies.
    (c) Additional elements of informed consent. Except as provided in 
paragraph (d), (e), or (f) of this section, one or more of the following 
elements of information, when appropriate, shall also be provided to 
each subject or the legally authorized representative:
    (1) A statement that the particular treatment or procedure may 
involve risks to the subject (or to the embryo or fetus, if the subject 
is or may become pregnant) that are currently unforeseeable;
    (2) Anticipated circumstances under which the subject's 
participation may be terminated by the investigator without regard to 
the subject's or the legally authorized representative's consent;
    (3) Any additional costs to the subject that may result from 
participation in the research;
    (4) The consequences of a subject's decision to withdraw from the 
research and procedures for orderly termination of participation by the 
subject;
    (5) A statement that significant new findings developed during the 
course of the research that may relate to the subject's willingness to 
continue participation will be provided to the subject;
    (6) The approximate number of subjects involved in the study;
    (7) A statement that the subject's biospecimens (even if identifiers 
are removed) may be used for commercial profit and whether the subject 
will or

[[Page 155]]

will not share in this commercial profit;
    (8) A statement regarding whether clinically relevant research 
results, including individual research results, will be disclosed to 
subjects, and if so, under what conditions; and
    (9) For research involving biospecimens, whether the research will 
(if known) or might include whole genome sequencing (i.e., sequencing of 
a human germline or somatic specimen with the intent to generate the 
genome or exome sequence of that specimen).
    (d) Elements of broad consent for the storage, maintenance, and 
secondary research use of identifiable private information or 
identifiable biospecimens. Broad consent for the storage, maintenance, 
and secondary research use of identifiable private information or 
identifiable biospecimens (collected for either research studies other 
than the proposed research or nonresearch purposes) is permitted as an 
alternative to the informed consent requirements in paragraphs (b) and 
(c) of this section. If the subject or the legally authorized 
representative is asked to provide broad consent, the following shall be 
provided to each subject or the subject's legally authorized 
representative:
    (1) The information required in paragraphs (b)(2), (b)(3), (b)(5), 
and (b)(8) and, when appropriate, (c)(7) and (9) of this section;
    (2) A general description of the types of research that may be 
conducted with the identifiable private information or identifiable 
biospecimens. This description must include sufficient information such 
that a reasonable person would expect that the broad consent would 
permit the types of research conducted;
    (3) A description of the identifiable private information or 
identifiable biospecimens that might be used in research, whether 
sharing of identifiable private information or identifiable biospecimens 
might occur, and the types of institutions or researchers that might 
conduct research with the identifiable private information or 
identifiable biospecimens;
    (4) A description of the period of time that the identifiable 
private information or identifiable biospecimens may be stored and 
maintained (which period of time could be indefinite), and a description 
of the period of time that the identifiable private information or 
identifiable biospecimens may be used for research purposes (which 
period of time could be indefinite);
    (5) Unless the subject or legally authorized representative will be 
provided details about specific research studies, a statement that they 
will not be informed of the details of any specific research studies 
that might be conducted using the subject's identifiable private 
information or identifiable biospecimens, including the purposes of the 
research, and that they might have chosen not to consent to some of 
those specific research studies;
    (6) Unless it is known that clinically relevant research results, 
including individual research results, will be disclosed to the subject 
in all circumstances, a statement that such results may not be disclosed 
to the subject; and
    (7) An explanation of whom to contact for answers to questions about 
the subject's rights and about storage and use of the subject's 
identifiable private information or identifiable biospecimens, and whom 
to contact in the event of a research-related harm.
    (e) Waiver or alteration of consent in research involving public 
benefit and service programs conducted by or subject to the approval of 
state or local officials--(1) Waiver. An IRB may waive the requirement 
to obtain informed consent for research under paragraphs (a) through (c) 
of this section, provided the IRB satisfies the requirements of 
paragraph (e)(3) of this section. If an individual was asked to provide 
broad consent for the storage, maintenance, and secondary research use 
of identifiable private information or identifiable biospecimens in 
accordance with the requirements at paragraph (d) of this section, and 
refused to consent, an IRB cannot waive consent for the storage, 
maintenance, or secondary research use of the identifiable private 
information or identifiable biospecimens.
    (2) Alteration. An IRB may approve a consent procedure that omits 
some, or alters some or all, of the elements of

[[Page 156]]

informed consent set forth in paragraphs (b) and (c) of this section 
provided the IRB satisfies the requirements of paragraph (e)(3) of this 
section. An IRB may not omit or alter any of the requirements described 
in paragraph (a) of this section. If a broad consent procedure is used, 
an IRB may not omit or alter any of the elements required under 
paragraph (d) of this section.
    (3) Requirements for waiver and alteration. In order for an IRB to 
waive or alter consent as described in this subsection, the IRB must 
find and document that:
    (i) The research or demonstration project is to be conducted by or 
subject to the approval of state or local government officials and is 
designed to study, evaluate, or otherwise examine:
    (A) Public benefit or service programs;
    (B) Procedures for obtaining benefits or services under those 
programs;
    (C) Possible changes in or alternatives to those programs or 
procedures; or
    (D) Possible changes in methods or levels of payment for benefits or 
services under those programs; and
    (ii) The research could not practicably be carried out without the 
waiver or alteration.
    (f) General waiver or alteration of consent--(1) Waiver. An IRB may 
waive the requirement to obtain informed consent for research under 
paragraphs (a) through (c) of this section, provided the IRB satisfies 
the requirements of paragraph (f)(3) of this section. If an individual 
was asked to provide broad consent for the storage, maintenance, and 
secondary research use of identifiable private information or 
identifiable biospecimens in accordance with the requirements at 
paragraph (d) of this section, and refused to consent, an IRB cannot 
waive consent for the storage, maintenance, or secondary research use of 
the identifiable private information or identifiable biospecimens.
    (2) Alteration. An IRB may approve a consent procedure that omits 
some, or alters some or all, of the elements of informed consent set 
forth in paragraphs (b) and (c) of this section provided the IRB 
satisfies the requirements of paragraph (f)(3) of this section. An IRB 
may not omit or alter any of the requirements described in paragraph (a) 
of this section. If a broad consent procedure is used, an IRB may not 
omit or alter any of the elements required under paragraph (d) of this 
section.
    (3) Requirements for waiver and alteration. In order for an IRB to 
waive or alter consent as described in this subsection, the IRB must 
find and document that:
    (i) The research involves no more than minimal risk to the subjects;
    (ii) The research could not practicably be carried out without the 
requested waiver or alteration;
    (iii) If the research involves using identifiable private 
information or identifiable biospecimens, the research could not 
practicably be carried out without using such information or 
biospecimens in an identifiable format;
    (iv) The waiver or alteration will not adversely affect the rights 
and welfare of the subjects; and
    (v) Whenever appropriate, the subjects or legally authorized 
representatives will be provided with additional pertinent information 
after participation.
    (g) Screening, recruiting, or determining eligibility. An IRB may 
approve a research proposal in which an investigator will obtain 
information or biospecimens for the purpose of screening, recruiting, or 
determining the eligibility of prospective subjects without the informed 
consent of the prospective subject or the subject's legally authorized 
representative, if either of the following conditions are met:
    (1) The investigator will obtain information through oral or written 
communication with the prospective subject or legally authorized 
representative, or
    (2) The investigator will obtain identifiable private information or 
identifiable biospecimens by accessing records or stored identifiable 
biospecimens.
    (h) Posting of clinical trial consent form. (1) For each clinical 
trial conducted or supported by a Federal department or agency, one IRB-
approved informed consent form used to enroll subjects must be posted by 
the awardee or the Federal department or agency component conducting the 
trial on a

[[Page 157]]

publicly available Federal Web site that will be established as a 
repository for such informed consent forms.
    (2) If the Federal department or agency supporting or conducting the 
clinical trial determines that certain information should not be made 
publicly available on a Federal Web site (e.g. confidential commercial 
information), such Federal department or agency may permit or require 
redactions to the information posted.
    (3) The informed consent form must be posted on the Federal Web site 
after the clinical trial is closed to recruitment, and no later than 60 
days after the last study visit by any subject, as required by the 
protocol.
    (i) Preemption. The informed consent requirements in this policy are 
not intended to preempt any applicable Federal, state, or local laws 
(including tribal laws passed by the official governing body of an 
American Indian or Alaska Native tribe) that require additional 
information to be disclosed in order for informed consent to be legally 
effective.
    (j) Emergency medical care. Nothing in this policy is intended to 
limit the authority of a physician to provide emergency medical care, to 
the extent the physician is permitted to do so under applicable Federal, 
state, or local law (including tribal law passed by the official 
governing body of an American Indian or Alaska Native tribe).

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



Sec.  46.117  Documentation of informed consent.

    (a) Except as provided in paragraph (c) of this section, informed 
consent shall be documented by the use of a written informed consent 
form approved by the IRB and signed (including in an electronic format) 
by the subject or the subject's legally authorized representative. A 
written copy shall be given to the person signing the informed consent 
form.
    (b) Except as provided in paragraph (c) of this section, the 
informed consent form may be either of the following:
    (1) A written informed consent form that meets the requirements of 
Sec.  46.116. The investigator shall give either the subject or the 
subject's legally authorized representative adequate opportunity to read 
the informed consent form before it is signed; alternatively, this form 
may be read to the subject or the subject's legally authorized 
representative.
    (2) A short form written informed consent form stating that the 
elements of informed consent required by Sec.  46.116 have been 
presented orally to the subject or the subject's legally authorized 
representative, and that the key information required by Sec.  
46.116(a)(5)(i) was presented first to the subject, before other 
information, if any, was provided. The IRB shall approve a written 
summary of what is to be said to the subject or the legally authorized 
representative. When this method is used, there shall be a witness to 
the oral presentation. Only the short form itself is to be signed by the 
subject or the subject's legally authorized representative. However, the 
witness shall sign both the short form and a copy of the summary, and 
the person actually obtaining consent shall sign a copy of the summary. 
A copy of the summary shall be given to the subject or the subject's 
legally authorized representative, in addition to a copy of the short 
form.
    (c)(1) An IRB may waive the requirement for the investigator to 
obtain a signed informed consent form for some or all subjects if it 
finds any of the following:
    (i) That the only record linking the subject and the research would 
be the informed consent form and the principal risk would be potential 
harm resulting from a breach of confidentiality. Each subject (or 
legally authorized representative) will be asked whether the subject 
wants documentation linking the subject with the research, and the 
subject's wishes will govern;
    (ii) That the research presents no more than minimal risk of harm to 
subjects and involves no procedures for which written consent is 
normally required outside of the research context; or
    (iii) If the subjects or legally authorized representatives are 
members of a distinct cultural group or community in which signing forms 
is not the norm, that the research presents no more

[[Page 158]]

than minimal risk of harm to subjects and provided there is an 
appropriate alternative mechanism for documenting that informed consent 
was obtained.
    (2) In cases in which the documentation requirement is waived, the 
IRB may require the investigator to provide subjects or legally 
authorized representatives with a written statement regarding the 
research.

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



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

    Certain types of applications for grants, cooperative agreements, or 
contracts are submitted to Federal departments or agencies with the 
knowledge that subjects may be involved within the period of support, 
but definite plans would not normally be set forth in the application or 
proposal. These include activities such as institutional type grants 
when selection of specific projects is the institution's responsibility; 
research training grants in which the activities involving subjects 
remain to be selected; and projects in which human subjects' involvement 
will depend upon completion of instruments, prior animal studies, or 
purification of compounds. Except for research waived under Sec.  
46.101(i) or exempted under Sec.  46.104, no human subjects may be 
involved in any project supported by these awards until the project has 
been reviewed and approved by the IRB, as provided in this policy, and 
certification submitted, by the institution, to the Federal department 
or agency component supporting the research.



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

    Except for research waived under Sec.  46.101(i) or exempted under 
Sec.  46.104, in the event research is undertaken without the intention 
of involving human subjects, but it is later proposed to involve human 
subjects in the research, the research shall first be reviewed and 
approved by an IRB, as provided in this policy, a certification 
submitted by the institution to the Federal department or agency 
component supporting the research, and final approval given to the 
proposed change by the Federal department or agency component.



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

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



Sec.  46.121  [Reserved]



Sec.  46.122  Use of Federal funds.

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



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

    (a) The department or agency head may require that Federal 
department or agency support for any project be terminated or suspended 
in the manner prescribed in applicable program requirements, when the 
department or agency head finds an institution has materially failed to 
comply with the terms of this policy.
    (b) In making decisions about supporting or approving applications 
or proposals covered by this policy the department or agency head may 
take into account, in addition to all other eligibility requirements and 
program criteria, factors such as whether the

[[Page 159]]

applicant has been subject to a termination or suspension under 
paragraph (a) of this section and whether the applicant or the person or 
persons who would direct or has/have directed the scientific and 
technical aspects of an activity has/have, in the judgment of the 
department or agency head, materially failed to discharge responsibility 
for the protection of the rights and welfare of human subjects (whether 
or not the research was subject to federal regulation).



Sec.  46.124  Conditions.

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



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

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



Sec.  46.201  To what do these regulations apply?

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



Sec.  46.202  Definitions.

    The definitions in Sec.  46.102 shall be applicable to this subpart 
as well. In addition, as used in this subpart:
    (a) Dead fetus means a fetus that exhibits neither heartbeat, 
spontaneous respiratory activity, spontaneous movement of voluntary 
muscles, nor pulsation of the umbilical cord.
    (b) Delivery means complete separation of the fetus from the woman 
by expulsion or extraction or any other means.
    (c) Fetus means the product of conception from implantation until 
delivery.
    (d) Neonate means a newborn.
    (e) Nonviable neonate means a neonate after delivery that, although 
living, is not viable.
    (f) Pregnancy encompasses the period of time from implantation until 
delivery. A woman shall be assumed to be pregnant if she exhibits any of 
the pertinent presumptive signs of pregnancy, such as missed menses, 
until the results of a pregnancy test are negative or until delivery.
    (g) Secretary means the Secretary of Health and Human Services and 
any other officer or employee of the Department of Health and Human 
Services to whom authority has been delegated.
    (h) Viable, as it pertains to the neonate, means being able, after 
delivery, to survive (given the benefit of available medical therapy) to 
the point of independently maintaining heartbeat and respiration. The 
Secretary may from time to time, taking into account medical advances, 
publish in the Federal Register guidelines to assist in determining 
whether a neonate is viable for purposes of this subpart. If a neonate 
is viable then it may be included in research only to the extent 
permitted and in accordance with the requirements of subparts A and D of 
this part.

[[Page 160]]



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

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



Sec.  46.204  Research involving pregnant women or fetuses.

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



Sec.  46.205  Research involving neonates.

    (a) Neonates of uncertain viability and nonviable neonates may be 
involved in research if all of the following conditions are met:
    (1) Where scientifically appropriate, preclinical and clinical 
studies have been conducted and provide data for assessing potential 
risks to neonates.
    (2) Each individual providing consent under paragraph (b)(2) or 
(c)(5) of this section is fully informed regarding the reasonably 
foreseeable impact of the research on the neonate.
    (3) Individuals engaged in the research will have no part in 
determining the viability of a neonate.
    (4) The requirements of paragraph (b) or (c) of this section have 
been met as applicable.
    (b) Neonates of uncertain viability. Until it has been ascertained 
whether or not a neonate is viable, a neonate may not be involved in 
research covered by this subpart unless the following additional 
conditions are met:
    (1) The IRB determines that:
    (i) The research holds out the prospect of enhancing the probability 
of survival of the neonate to the point of viability, and any risk is 
the least possible for achieving that objective, or
    (ii) The purpose of the research is the development of important 
biomedical knowledge which cannot be obtained by other means and there 
will be no

[[Page 161]]

added risk to the neonate resulting from the research; and
    (2) The legally effective informed consent of either parent of the 
neonate or, if neither parent is able to consent because of 
unavailability, incompetence, or temporary incapacity, the legally 
effective informed consent of either parent's legally authorized 
representative is obtained in accord with subpart A of this part, except 
that the consent of the father or his legally authorized representative 
need not be obtained if the pregnancy resulted from rape or incest.
    (c) Nonviable neonates. After delivery nonviable neonate may not be 
involved in research covered by this subpart unless all of the following 
additional conditions are met:
    (1) Vital functions of the neonate will not be artificially 
maintained;
    (2) The research will not terminate the heartbeat or respiration of 
the neonate;
    (3) There will be no added risk to the neonate resulting from the 
research;
    (4) The purpose of the research is the development of important 
biomedical knowledge that cannot be obtained by other means; and
    (5) The legally effective informed consent of both parents of the 
neonate is obtained in accord with subpart A of this part, except that 
the waiver and alteration provisions of Sec.  46.116(c) and (d) do not 
apply. However, if either parent is unable to consent because of 
unavailability, incompetence, or temporary incapacity, the informed 
consent of one parent of a nonviable neonate will suffice to meet the 
requirements of this paragraph (c)(5), except that the consent of the 
father need not be obtained if the pregnancy resulted from rape or 
incest. The consent of a legally authorized representative of either or 
both of the parents of a nonviable neonate will not suffice to meet the 
requirements of this paragraph (c)(5).
    (d) Viable neonates. A neonate, after delivery, that has been 
determined to be viable may be included in research only to the extent 
permitted by and in accord with the requirements of subparts A and D of 
this part.



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

    (a) Research involving, after delivery, the placenta; the dead 
fetus; macerated fetal material; or cells, tissue, or organs excised 
from a dead fetus, shall be conducted only in accord with any applicable 
Federal, State, or local laws and regulations regarding such activities.
    (b) If information associated with material described in paragraph 
(a) of this section is recorded for research purposes in a manner that 
living individuals can be identified, directly or through identifiers 
linked to those individuals, those individuals are research subjects and 
all pertinent subparts of this part are applicable.



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

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

[[Page 162]]

    (iii) Informed consent will be obtained in accord with the informed 
consent provisions of subpart A and other applicable subparts of this 
part.



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

    Source: 43 FR 53655, Nov. 16, 1978, unless otherwise noted.



Sec.  46.301  Applicability.

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



Sec.  46.302  Purpose.

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



Sec.  46.303  Definitions.

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



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

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

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



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

    (a) In addition to all other responsibilities prescribed for 
Institutional Review Boards under this part, the Board shall review 
research covered by this subpart and approve such research only if it 
finds that:
    (1) The research under review represents one of the categories of 
research permissible under Sec.  46.306(a)(2);
    (2) Any possible advantages accruing to the prisoner through his or 
her participation in the research, when compared to the general living 
conditions, medical care, quality of food, amenities and opportunity for 
earnings in the prison, are not of such a magnitude

[[Page 163]]

that his or her ability to weigh the risks of the research against the 
value of such advantages in the limited choice environment of the prison 
is impaired;
    (3) The risks involved in the research are commensurate with risks 
that would be accepted by nonprisoner volunteers;
    (4) Procedures for the selection of subjects within the prison are 
fair to all prisoners and immune from arbitrary intervention by prison 
authorities or prisoners. Unless the principal investigator provides to 
the Board justification in writing for following some other procedures, 
control subjects must be selected randomly from the group of available 
prisoners who meet the characteristics needed for that particular 
research project;
    (5) The information is presented in language which is understandable 
to the subject population;
    (6) Adequate assurance exists that parole boards will not take into 
account a prisoner's participation in the research in making decisions 
regarding parole, and each prisoner is clearly informed in advance that 
participation in the research will have no effect on his or her parole; 
and
    (7) Where the Board finds there may be a need for follow-up 
examination or care of participants after the end of their 
participation, adequate provision has been made for such examination or 
care, taking into account the varying lengths of individual prisoners' 
sentences, and for informing participants of this fact.
    (b) The Board shall carry out such other duties as may be assigned 
by the Secretary.
    (c) The institution shall certify to the Secretary, in such form and 
manner as the Secretary may require, that the duties of the Board under 
this section have been fulfilled.



Sec.  46.306  Permitted research involving prisoners.

    (a) Biomedical or behavioral research conducted or supported by DHHS 
may involve prisoners as subjects only if:
    (1) The institution responsible for the conduct of the research has 
certified to the Secretary that the Institutional Review Board has 
approved the research under Sec.  46.305 of this subpart; and
    (2) In the judgment of the Secretary the proposed research involves 
solely the following:
    (i) Study of the possible causes, effects, and processes of 
incarceration, and of criminal behavior, provided that the study 
presents no more than minimal risk and no more than inconvenience to the 
subjects;
    (ii) Study of prisons as institutional structures or of prisoners as 
incarcerated persons, provided that the study presents no more than 
minimal risk and no more than inconvenience to the subjects;
    (iii) Research on conditions particularly affecting prisoners as a 
class (for example, vaccine trials and other research on hepatitis which 
is much more prevalent in prisons than elsewhere; and research on social 
and psychological problems such as alcoholism, drug addiction and sexual 
assaults) provided that the study may proceed only after the Secretary 
has consulted with appropriate experts including experts in penology 
medicine and ethics, and published notice, in the Federal Register, of 
his intent to approve such research; or
    (iv) Research on practices, both innovative and accepted, which have 
the intent and reasonable probability of improving the health or well-
being of the subject. In cases in which those studies require the 
assignment of prisoners in a manner consistent with protocols approved 
by the IRB to control groups which may not benefit from the research, 
the study may proceed only after the Secretary has consulted with 
appropriate experts, including experts in penology medicine and ethics, 
and published notice, in the Federal Register, of his intent to approve 
such research.
    (b) Except as provided in paragraph (a) of this section, biomedical 
or behavioral research conducted or supported by DHHS shall not involve 
prisoners as subjects.

[[Page 164]]



 Subpart D_Additional Protections for Children Involved as Subjects in 
                                Research

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



Sec.  46.401  To what do these regulations apply?

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

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



Sec.  46.402  Definitions.

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



Sec.  46.403  IRB duties.

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



Sec.  46.404  Research not involving greater than minimal risk.

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



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

    HHS will conduct or fund research in which the IRB finds that more 
than minimal risk to children is presented by an intervention or 
procedure that holds out the prospect of direct benefit for the 
individual subject, or by a monitoring procedure that is likely to 
contribute to the subject's well-being, only if the IRB finds that:
    (a) The risk is justified by the anticipated benefit to the 
subjects;
    (b) The relation of the anticipated benefit to the risk is at least 
as favorable to the subjects as that presented by available alternative 
approaches; and

[[Page 165]]

    (c) Adequate provisions are made for soliciting the assent of the 
children and permission of their parents or guardians, as set forth in 
Sec.  46.408.



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

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



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

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



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

    (a) In addition to the determinations required under other 
applicable sections of this subpart, the IRB shall determine that 
adequate provisions are made for soliciting the assent of the children, 
when in the judgment of the IRB the children are capable of providing 
assent. In determining whether children are capable of assenting, the 
IRB shall take into account the ages, maturity, and psychological state 
of the children involved. This judgment may be made for all children to 
be involved in research under a particular protocol, or for each child, 
as the IRB deems appropriate. If the IRB determines that the capability 
of some or all of the children is so limited that they cannot reasonably 
be consulted or that the intervention or procedure involved in the 
research holds out a prospect of direct benefit that is important to the 
health or well-being of the children and is available only in the 
context of the research, the assent of the children is not a necessary 
condition for proceeding with the research. Even where the IRB 
determines that the subjects are capable of assenting, the IRB may still 
waive the assent requirement under circumstances in which consent may be 
waived in accord with Sec.  46.116 of subpart A.
    (b) In addition to the determinations required under other 
applicable sections of this subpart, the IRB shall determine, in 
accordance with and to the

[[Page 166]]

extent that consent is required by Sec.  46.116 of subpart A, that 
adequate provisions are made for soliciting the permission of each 
child's parents or guardian. Where parental permission is to be 
obtained, the IRB may find that the permission of one parent is 
sufficient for research to be conducted under Sec.  46.404 or Sec.  
46.405. Where research is covered by Sec. Sec.  46.406 and 46.407 and 
permission is to be obtained from parents, both parents must give their 
permission unless one parent is deceased, unknown, incompetent, or not 
reasonably available, or when only one parent has legal responsibility 
for the care and custody of the child.
    (c) In addition to the provisions for waiver contained in Sec.  
46.116 of subpart A, if the IRB determines that a research protocol is 
designed for conditions or for a subject population for which parental 
or guardian permission is not a reasonable requirement to protect the 
subjects (for example, neglected or abused children), it may waive the 
consent requirements in subpart A of this part and paragraph (b) of this 
section, provided an appropriate mechanism for protecting the children 
who will participate as subjects in the research is substituted, and 
provided further that the waiver is not inconsistent with Federal, state 
or local law. The choice of an appropriate mechanism would depend upon 
the nature and purpose of the activities described in the protocol, the 
risk and anticipated benefit to the research subjects, and their age, 
maturity, status, and condition.
    (d) Permission by parents or guardians shall be documented in 
accordance with and to the extent required by Sec.  46.117 of subpart A.
    (e) When the IRB determines that assent is required, it shall also 
determine whether and how assent must be documented.



Sec.  46.409  Wards.

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



          Subpart E_Registration of Institutional Review Boards

    Source: 74 FR 2405, Jan. 15, 2009, unless otherwise noted.



Sec.  46.501  What IRBs must be registered?

    Each IRB that is designated by an institution under an assurance of 
compliance approved for federalwide use by the Office for Human Research 
Protections (OHRP) under Sec.  46.103(a) and that reviews research 
involving human subjects conducted or supported by the Department of 
Health and Human Services (HHS) must be registered with HHS. An 
individual authorized to act on behalf of the institution or 
organization operating the IRB must submit the registration information.



Sec.  46.502  What information must be provided when registering an IRB?

    The following information must be provided to HHS when registering 
an IRB:
    (a) The name, mailing address, and street address (if different from 
the mailing address) of the institution or organization operating the 
IRB(s); and the name, mailing address, phone number, facsimile number, 
and electronic mail address of the senior officer or head official of 
that institution or organization who is responsible for overseeing 
activities performed by the IRB.

[[Page 167]]

    (b) The name, mailing address, phone number, facsimile number, and 
electronic mail address of the contact person providing the registration 
information.
    (c) The name, if any, assigned to the IRB by the institution or 
organization, and the IRB's mailing address, street address (if 
different from the mailing address), phone number, facsimile number, and 
electronic mail address.
    (d) The name, phone number, and electronic mail address of the IRB 
chairperson.
    (e)(1) The approximate numbers of:
    (i) All active protocols; and
    (ii) Active protocols conducted or supported by HHS.
    (2) For purpose of this regulation, an ``active protocol'' is any 
protocol for which the IRB conducted an initial review or a continuing 
review at a convened meeting or under an expedited review procedure 
during the preceding twelve months.
    (f) The approximate number of full-time equivalent positions devoted 
to the IRB's administrative activities.



Sec.  46.503  When must an IRB be registered?

    An IRB must be registered before it can be designated under an 
assurance approved for federalwide use by OHRP under Sec.  46.103(a). 
IRB registration becomes effective when reviewed and accepted by OHRP. 
The registration will be effective for 3 years.



Sec.  46.504  How must an IRB be registered?

    Each IRB must be registered electronically through http://
ohrp.cit.nih.gov/efile unless an institution or organization lacks the 
ability to register its IRB(s) electronically. If an institution or 
organization lacks the ability to register an IRB electronically, it 
must send its IRB registration information in writing to OHRP.



Sec.  46.505  When must IRB registration information be renewed or updated?

    (a) Each IRB must renew its registration every 3 years.
    (b) The registration information for an IRB must be updated within 
90 days after changes occur regarding the contact person who provided 
the IRB registration information or the IRB chairperson. The updated 
registration information must be submitted in accordance with Sec.  
46.504.
    (c) Any renewal or update that is submitted to, and accepted by, 
OHRP begins a new 3-year effective period.
    (d) An institution's or organization's decision to disband a 
registered IRB which it is operating also must be reported to OHRP in 
writing within 30 days after permanent cessation of the IRB's review of 
HHS-conducted or -supported research.



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



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

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

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



Sec.  50.1  Authority.

    Under the authority of Mutual Educational and Cultural Exchange Act 
of 1961 (75 Stat. 527) and the Immigration and Nationality Act as 
amended (84 Stat. 116), the Department of Health and Human Services is 
an ``interested United States Government agency'' with the authority to 
request the Department of State to recommend to the Attorney General 
waiver of the two-year foreign residence requirement for Exchange 
Visitors under the Mutual Educational and Cultural Exchange Program. HHS 
eligibility requirement criteria for waivers are in addition to and 
independent of the existing waiver and visa criteria established by the 
Immigration and Naturalization Service (INS), the Department of State, 
and

[[Page 168]]

the Department of Labor. The waiver regulations described in this part 
do not relieve alien physicians seeking a waiver of the 2-year foreign 
residence requirement from complying with the terms and conditions 
imposed on their admission to the United States.

[67 FR 77695, Dec. 19, 2002]



Sec.  50.2  Exchange Visitor Waiver Review Board.

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

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



Sec.  50.3  Policy.

    (a) Policy for waivers. The Department of Health and Human Services 
endorses the philosophy that Exchange Visitors are committed to return 
home for at least two years after completing their program. This 
requirement was imposed to prevent the Program from becoming a stepping 
stone to immigration and to ensure that Exchange Visitors make available 
to their home countries their new knowledge and skills obtained in the 
United States. The Department will request waivers for the delivery of 
health care service to carry out the Department's mission to increase 
access to care for the nation's most medically underserved individuals. 
However, in keeping with the philosophy of the Program, the Exchange 
Visitor Waiver Review Board may determine the appropriate numbers and 
geographic areas for waivers for the delivery of health care service.
    (b) Criteria for waivers. The Exchange Visitor Waiver Review Board 
carefully applies stringent and restrictive criteria to its 
consideration of requests that it support waivers for Exchange Visitors. 
Each application is evaluated individually based on the facts available.
    (c) Waiver for members of Exchange Visitor's family. Where a 
decision is made to request a waiver for an Exchange Visitor, a waiver 
will also be requested for the spouse and children, if any, if they have 
J-2 visa status. When both members of a married couple are Exchange 
Visitors in their own right (i.e., each has J-1 visa status), separate 
applications must be submitted for each of them.

[67 FR 77696, Dec. 19, 2002]



Sec.  50.4  Waivers for research.

    In determining whether to request a waiver for an Exchange Visitor 
engaged in the conduct of research, the Board considers the following 
key factors:
    (a) The program or activity at the applicant institution or 
organization in

[[Page 169]]

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

[67 FR 77696, Dec. 19, 2002]



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

    In determining whether to request a waiver for an Exchange Visitor 
to deliver health care service, the Board will consider information from 
and coordinate with State Departments of Public Health (or the 
equivalent), other ``interested government agencies'' which request 
waivers, and other relevant agencies. The Board requires the following 
criteria for requests for waivers for the delivery of health care 
service:
    (a) The Exchange Visitor must submit a statement that he or she does 
not have pending and will not submit any other ``interested government 
agency'' waiver request while HHS processes the waiver request being 
submitted.
    (b) Waivers are limited to primary care physicians and general 
psychiatrists who have completed their primary care or psychiatric 
residency training programs no more than12 months before the date of 
commencement of employment under the contract described in subparagraph 
(d). This 12-month eligibility limitation is to ensure that the 
physicians' primary care training is current and they are not engaged in 
subspecialty training. This HHS eligibility requirement relates only to 
eligibility for an HHS waiver request and does not relieve physicians of 
the responsibility to maintain lawful status. Alien physicians are 
strongly encouraged to begin the waiver process as early as they 
possibly can while still in the residency training program. Early filing 
of the waiver request by the alien physician, coupled with timely 
processing of the request by the relevant government agencies, will 
facilitate the timely completion of the waiver process before the 
authorized J-1 admission expires, and the physician's subsequent 
application for change of nonimmigrant status from J-1 to H-1B.
    (c) Primary care physicians are defined as: physicians practicing 
general internal medicine, pediatrics, family practice or obstetrics/
gynecology willing to work in a primary care Health Professional 
Shortage Area (HPSA) or Medically Underserved Area or Population (MUA/
P); and general psychiatrists who are willing to work in a Mental Health 
HPSA. Note: these HHS eligibility criteria for waivers are in addition 
to and independent of the existing waiver and visa criteria established 
by the Immigration and Naturalization Service (INS), the Department of 
State, and the Department of Labor.
    (d) The Exchange Visitor must have entered a contract with the 
applicant employer. This contract must:
    (1) Require the Exchange Visitor to provide primary medical care in 
a facility physically located in an HHS-designated primary care HPSA or

[[Page 170]]

MUA/P, or general psychiatric care in a Mental Health HPSA.
    (2) Require the Exchange Visitor to complete a term of employment of 
not less than three years providing primary care health services for not 
less than 40 hours per week.
    (3) Require the Exchange Visitor to:
    (i) Be licensed by the State where he or she will practice;
    (ii) Have completed a residency in one of the following specialties: 
family practice, general pediatrics, obstetrics/gynecology, general 
internal medicine, or general psychiatry; and
    (iii) Be either board certified or board eligible in the relevant 
primary care discipline.
    (4) Be terminable only for cause until completion of the three-year 
commitment, except that, with the agreement of the alien physician, the 
employer may assign the contract to another eligible employer with the 
prior approval of HHS and compliance with all applicable INS and 
Department of Labor requirements. Prior to approving an assignment of 
the contract, HHS will review and consider the health care needs of the 
alien physician's current and proposed new locations, as well as the 
reasons for the request.
    (5) Not contain a restrictive covenant or non-compete clause which 
prevents or discourages the physician from continuing to practice in any 
HHS-designated primary care HPSA or MUA/P or Mental Health HPSA after 
the period of obligation under the contract has expired.
    (6) Provide that any amendment to the contract complies with all 
applicable Federal statutes, regulations and HHS policy.
    (7) Be consistent with all applicable Federal statutes, regulations 
and HHS policy.
    (e) The facility or practice sponsoring the physician:
    (1) Must provide health services to individuals without 
discriminating against them because either they are unable to pay for 
those services or payment for those health services will be made under 
Medicare or Medicaid.
    (2) May charge no more than the usual and customary rate prevailing 
in the geographic area in which the services are provided.
    (3) Must provide care on a sliding fee scale for persons at or below 
200 percent of poverty income level. Persons with third-party insurance 
may be charged the full fee for service.
    (4) Must post a notice in a conspicuous location in the patient 
waiting area at the practice site to notify patients of the charges for 
service as required in this paragraph.
    (5) Must provide evidence that the applicant facility made 
unsuccessful efforts to recruit a physician who is a United States 
physician for the position to be filled by the Exchange Visitor.
    (6) Must provide a statement by the head of the facility to confirm 
the facility is located in a specific, designated HPSA or MUA/P, and 
that it provides medical care to Medicaid and Medicare eligible patients 
and to the uninsured indigent.
    (f) The employer and the alien physician must submit information to 
the Secretary at the times and in the manner that the Secretary may 
reasonably require.

[67 FR 77696, Dec. 19, 2002]



Sec.  50.6  Procedures for submission of application to HHS.

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

[67 FR 77697, Dec. 19, 2002]

[[Page 171]]



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

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

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



Sec.  50.8  Compliance.

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

[67 FR 77697, Dec. 19, 2002]



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



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

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

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



Sec.  51.1  Purpose.

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



Sec.  51.2  Application.

    Materials covering procedures for applying for substantial 
disruption waivers (including the comprehensive plan) may be obtained 
from the Educational Commission for Foreign Medical Graduates, 3624 
Market Street, Philadelphia, Pennsylvania 19104.

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



Sec.  51.3  Who is eligible to apply?

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

[[Page 172]]

with one or more categories of participants to promote mutual 
understanding between the people of the United States and the people of 
other countries.



Sec.  51.4  How will the plans be evaluated?

    After consultation with the Federal Substantial Disruption Waiver 
Board (seven Federal representatives charged with the responsibility of 
reviewing substantial disruption waiver applications), the Secretary of 
Health and Human Services will make recommendations to the Director, 
United States Information Agency, for the purpose of granting waivers. 
The Secretary will consider the following factors in determining whether 
or not a plan is satisfactory:
    (a) The extent of the specific problems that the program or 
institution anticipates without a waiver, including, for example,
    (1) Curtailment of services currently provided,
    (2) Downgrading of medical care currently being provided,
    (3) Reduction in the number of inpatients and outpatients receiving 
care,
    (4) Inadequate medical coverage for population served, or
    (5) Inadequate supervision of junior residents.
    (b) The adequacy of the alternative resources and methods (including 
use of physician assistants (as defined in 42 CFR 57.802), nurse 
practitioners (as defined in 42 CFR 57.2402), and other non-physician 
providers) that have been considered and have been and will be applied 
to reduce such disruption in the delivery of health services, especially 
in primary medical care manpower shortage areas, as established under 
section 332 of the Public Health Service Act, and for medicaid patients. 
This may include, for example:
    (1) Greater reliance on fully licensed physicians, and on physician 
assistants, nurse practitioners and other non-physician personnel in an 
expanded role in the delivery of health care, such as admission patient 
histories, making patient rounds, recording patient progress notes, 
doing the initial and follow-up evaluation of patients, performing 
routine laboratory and related studies, or
    (2) Utilization of the team approach to health care delivery 
(individuals functioning as an integral part of an interprofessional 
team of health personnel organized under the leadership of a physician 
working toward more efficient and/or more effective delivery of health 
services).
    (c) The extent to which changes (including improvement of 
educational and medical services) have been considered and which have 
been or will be applied to make the program more attractive to graduates 
of medical schools who are citizens of the United States, as 
demonstrated, for example, by:
    (1) Adding additional services to the existing programs to provide a 
broader educational experience for residents,
    (2) Expanding affiliations with other residency programs to offer a 
broader experience for residents,
    (3) Expanding undergraduate clerkships to provide a broader 
educational experience.
    (4) Creating or modifying administrative units which will provide 
broader clinical experiences, or
    (5) Initiating research projects.
    (d) The adequacy of the recruitment efforts which have been and will 
be undertaken to attract graduates of medical schools who are citizens 
of the United States, as demonstrated, for example, by:
    (1) Broad-based advertisement of the program and of the institution 
through notices in journals, contacts with medical schools, etc.
    (2) Forming committees for the purpose of recruiting U.S. citizens.
    (3) Working with national organizations which are involved with 
medical students and U.S. graduate medical trainees, e.g., the American 
Medical Student Association and the Physician National House Staff 
Association, to attract U.S. citizens.
    (e) The extent to which the program on a year-by-year basis has 
phased down its dependence upon aliens who are graduates of foreign 
medical schools so that the program will not be dependent upon the 
admission to the program of any additional such aliens after December 
31, 1983.

[[Page 173]]



PART 57_VOLUNTEER SERVICES--Table of Contents



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

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

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



Sec.  57.1  Applicability.

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



Sec.  57.2  Definitions.

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



Sec.  57.3  Volunteer service programs.

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



Sec.  57.4  Acceptance and use of volunteer services.

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



Sec.  57.5  Services and benefits available to volunteers.

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



PART 60_NATIONAL PRACTITIONER DATA BANK--Table of Contents



                      Subpart A_General Provisions

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

                   Subpart B_Reporting of Information

60.4 How information must be reported.
60.5 When information must be reported.
60.6 Reporting errors, omissions, revisions, or whether an action is on 
          appeal.
60.7 Reporting medical malpractice payments.
60.8 Reporting licensure actions taken by Boards of Medical Examiners.
60.9 Reporting licensure and certification actions taken by states.
60.10 Reporting Federal licensure and certification actions.

[[Page 174]]

60.11 Reporting negative actions or findings taken by peer review 
          organizations or private accreditation entities.
60.12 Reporting adverse actions taken against clinical privileges.
60.13 Reporting Federal or state criminal convictions related to the 
          delivery of a health care item or service.
60.14 Reporting civil judgments related to the delivery of a health care 
          item or service.
60.15 Reporting exclusions from participation in Federal or state health 
          care programs.
60.16 Reporting other adjudicated actions or decisions.

 Subpart C_Disclosure of Information by the National Practitioner Data 
                                  Bank

60.17 Information which hospitals must request from the National 
          Practitioner Data Bank.
60.18 Requesting information from the National Practitioner Data Bank.
60.19 Fees applicable to requests for information.
60.20 Confidentiality of National Practitioner Data Bank information.
60.21 How to dispute the accuracy of National Practitioner Data Bank 
          information.
60.22 Immunity.

    Authority: 42 U.S.C. 11101-11152; 42 U.S.C. 1396r-2; 42 U.S.C. 
1320a-7e

    Source: 78 FR 20484, Apr. 5, 2013, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  60.1  The National Practitioner Data Bank.

    The Health Care Quality Improvement Act of 1986 (HCQIA), as amended, 
title IV of Public Law 99-660 (42 U.S.C. 11101 et seq.) (hereinafter 
referred to as ``title IV''), authorizes the Secretary to establish 
(either directly or by contract) a National Practitioner Data Bank 
(NPDB) to collect and release certain information relating to the 
professional competence and conduct of physicians, dentists, and other 
health care practitioners. Section 1921 of the Social Security Act 
(hereinafter referred to as ``section 1921''), as amended, (42 U.S.C. 
1396r-2) expanded the requirements under the NPDB and requires each 
state to adopt a system of reporting to the Secretary adverse licensure 
or certification actions taken against health care practitioners, health 
care entities, providers, and suppliers, as well as certain final 
adverse actions taken by state law and fraud enforcement agencies 
against health care practitioners, providers, and suppliers. Section 
1128E of the Social Security Act (hereinafter referred to as ``section 
1128E''), as amended, (42 U.S.C. 1320a-7e) authorizes the Secretary to 
implement a national healthcare fraud and abuse data collection program 
for the reporting and disclosing of certain final adverse actions taken 
by Federal Government agencies and health plans against health care 
practitioners, providers, and suppliers. Information from section 1921 
and section 1128E is to be reported and distributed through the NPDB. 
The regulations in this part set forth the reporting and disclosure 
requirements for the NPDB, as well as procedures to dispute the accuracy 
of information contained in the NPDB.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.2  Applicability.

    The regulations in this part establish reporting requirements 
applicable to hospitals, health care entities, Boards of Medical 
Examiners, and professional societies of health care practitioners which 
take adverse licensure or professional review actions; state licensing 
or certification authorities, peer review organizations, and private 
accreditation entities that take licensure or certification actions or 
negative actions or findings against health care practitioners, health 
care entities, providers, or suppliers; entities (including insurance 
companies) making payments as a result of medical malpractice actions or 
claims; and Federal government agencies, state law and fraud enforcement 
agencies and health plans that take final adverse actions against health 
care practitioners, providers, and suppliers. They also establish 
procedures to enable individuals or entities to obtain information from 
the NPDB or to dispute the accuracy of NPDB information.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]

[[Page 175]]



Sec.  60.3  Definitions.

    Adversely affecting means reducing, restricting, suspending, 
revoking, or denying clinical privileges or membership in a health care 
entity.
    Affiliated or associated refers to health care entities with which a 
subject of a final adverse action has a business or professional 
relationship. This includes, but is not limited to, organizations, 
associations, corporations, or partnerships. This also includes a 
professional corporation or other business entity composed of a single 
individual.
    Board of Medical Examiners, or Board, means a body or subdivision of 
such body which is designated by a state for the purpose of licensing, 
monitoring, and disciplining physicians or dentists. This term includes 
a Board of Osteopathic Examiners or its subdivision, a Board of 
Dentistry or its subdivision, or an equivalent body as determined by the 
state. Where the Secretary, pursuant to section 423(c)(2) of the HCQIA 
(42 U.S.C. 11112(c)), has designated an alternate entity to carry out 
the reporting activities of Sec.  60.12 of this part due to a Board's 
failure to comply with Sec.  60.8 of this part, the term Board of 
Medical Examiners or Board refers to this alternate entity.
    Civil judgment means a court-ordered action rendered in a Federal or 
state court proceeding, other than a criminal proceeding. This reporting 
requirement does not include Consent Judgments that have been agreed 
upon and entered to provide security for civil settlements in which 
there was no finding or admission of liability.
    Clinical privileges means the authorization by a health care entity 
to a health care practitioner for the provision of health care services, 
including privileges and membership on the medical staff.
    Criminal conviction means a conviction as described in section 
1128(i) of the Social Security Act.
    Dentist means a doctor of dental surgery, doctor of dental medicine, 
or the equivalent who is legally authorized to practice dentistry by a 
state (or who, without authority, holds himself or herself out to be so 
authorized).
    Exclusion means a temporary or permanent debarment of an individual 
or entity from participation in any Federal or state health-related 
program, in accordance with which items or services furnished by such 
person or entity will not be reimbursed under any Federal or state 
health-related program.
    Federal Government agency includes, but is not limited to:
    (1) The U.S. Department of Justice;
    (2) The U.S. Department of Health and Human Services;
    (3) Federal law enforcement agencies, including law enforcement 
investigators;
    (4) Any other Federal agency that either administers or provides 
payment for the delivery of health care services, including, but not 
limited to the U.S. Department of Defense and the U.S. Department of 
Veterans Affairs; and
    (5) Federal agencies responsible for the licensing and certification 
of health care practitioners, providers, and suppliers.
    Formal peer review process means the conduct of professional review 
activities through formally adopted written procedures which provide for 
adequate notice and an opportunity for a hearing.
    Formal proceeding means a proceeding held before a state licensing 
or certification authority, peer review organization, or private 
accreditation entity that maintains defined rules, policies, or 
procedures for such a proceeding.
    Health care entity means, for purposes of this part:
    (1) A hospital;
    (2) An entity that provides health care services, and engages in 
professional review activity through a formal peer review process for 
the purpose of furthering quality health care, or a committee of that 
entity; or
    (3) A professional society or a committee or agent thereof, 
including those at the national, state, or local level, of health care 
practitioners that engages in professional review activity through a 
formal peer review process, for the purpose of furthering quality health 
care.
    (4) For purposes of paragraph (2) of this definition, an entity 
includes: a health maintenance organization which is licensed by a state 
or determined to be qualified as such by the Department of Health and 
Human Services; and any group or prepaid

[[Page 176]]

medical or dental practice which meets the criteria of paragraph (2).
    Health care practitioner, licensed health care practitioner, 
licensed practitioner, or practitioner means an individual who is 
licensed or otherwise authorized by a state to provide health care 
services (or any individual who, without authority, holds himself or 
herself out to be so licensed or authorized).
    Health care provider means, for purposes of this part, a provider of 
services as defined in section 1861(u) of the Social Security Act; any 
organization (including a health maintenance organization, preferred 
provider organization or group medical practice) that provides health 
care services and follows a formal peer review process for the purpose 
of furthering quality health care, and any other organization that, 
directly or through contracts, provides health care services.
    Health care supplier means, for purposes of this part, a provider of 
medical and other health care services as described in section 1861(s) 
of the Social Security Act; or any individual or entity, other than a 
provider, who furnishes, whether directly or indirectly, or provides 
access to, health care services, supplies, items, or ancillary services 
(including, but not limited to, durable medical equipment suppliers, 
manufacturers of health care items, pharmaceutical suppliers and 
manufacturers, health record services [such as medical, dental, and 
patient records], health data suppliers, and billing and transportation 
service suppliers). The term also includes any individual or entity 
under contract to provide such supplies, items, or ancillary services; 
health plans as defined in this section (including employers that are 
self-insured); and health insurance producers (including but not limited 
to agents, brokers, solicitors, consultants, and reinsurance 
intermediaries).
    Health plan means, for purposes of this part, a plan, program or 
organization that provides health benefits, whether directly, through 
insurance, reimbursement or otherwise, and includes but is not limited 
to:
    (1) A policy of health insurance;
    (2) A contract of a service benefit organization;
    (3) A membership agreement with a health maintenance organization or 
other prepaid health plan;
    (4) A plan, program, agreement, or other mechanism established, 
maintained, or made available by a self-insured employer or group of 
self-insured employers, a health care practitioner, provider, or 
supplier group, third-party administrator, integrated health care 
delivery system, employee welfare association, public service group or 
organization or professional association;
    (5) An insurance company, insurance service, or insurance 
organization that is licensed to engage in the business of selling 
health care insurance in a state and which is subject to state law which 
regulates health insurance; and
    (6) An organization that provides benefit plans whose coverage is 
limited to outpatient prescription drugs.
    Hospital means, for purposes of this part, an entity described in 
paragraphs (1) and (7) of section 1861(e) of the Social Security Act.
    Medical malpractice action or claim means a written complaint or 
claim demanding payment based on a health care practitioner's provision 
of or failure to provide health care services, and includes the filing 
of a cause of action based on the law of tort, brought in any state or 
Federal court or other adjudicative body.
    Negative action or finding by a Federal or State licensing or 
certification authority, peer review organization, or private 
accreditation entity means:
    (1) A final determination of denial or termination of an 
accreditation status from a private accreditation entity that indicates 
a risk to the safety of a patient(s) or quality of health care services;
    (2) Any recommendation by a peer review organization to sanction a 
health care practitioner; or
    (3) Any negative action or finding that, under the state's law, is 
publicly available information and is rendered by a licensing or 
certification authority, including but not limited to, limitations on 
the scope of practice, liquidations, injunctions, and forfeitures. This 
definition also includes final adverse actions rendered by a Federal or 
state licensing or certification authority, such as exclusions, 
revocations, or

[[Page 177]]

suspension of license or certification, that occur in conjunction with 
settlements in which no finding of liability has been made (although 
such a settlement itself is not reportable under the statute). This 
definition excludes administrative fines or citations and corrective 
action plans and other personnel actions, unless they are:
    (i) Connected to the delivery of health care services; or
    (ii) Taken in conjunction with other adverse licensure or 
certification actions such as revocation, suspension, censure, 
reprimand, probation, or surrender.
    Organization name means the subject's business or employer at the 
time the underlying acts occurred. If more than one business or employer 
is applicable, the one most closely related to the underlying acts 
should be reported as the ``organization name,'' with the others being 
reported as ``affiliated or associated health care entities.''
    Organization type means a description of the nature of that business 
or employer.
    Other adjudicated actions or decisions means formal or official 
final actions taken against a health care practitioner, provider, or 
supplier by a Federal governmental agency, a state law or fraud 
enforcement agency, or a health plan, which include the availability of 
a due process mechanism, and are based on acts or omissions that affect 
or could affect the payment, provision, or delivery of a health care 
item or service. For example, a formal or official final action taken by 
a Federal governmental agency, a state law or fraud enforcement agency, 
or a health plan may include, but is not limited to, a personnel-related 
action such as suspensions without pay, reductions in pay, reductions in 
grade for cause, terminations, or other comparable actions. A hallmark 
of any valid adjudicated action or decision is the availability of a due 
process mechanism. The fact that the subject elects not to use the due 
process mechanism provided by the authority bringing the action is 
immaterial, as long as such a process is available to the subject before 
the adjudicated action or decision is made final. In general, if an 
``adjudicated action or decision'' follows an agency's established 
administrative procedures (which ensure that due process is available to 
the subject of the final adverse action), it would qualify as a 
reportable action under this definition. This definition specifically 
excludes clinical privileging actions taken by Federal Government 
agencies or state law and fraud enforcement agencies and similar 
paneling decisions made by health plans. This definition does not 
include overpayment determinations made by Federal or state government 
programs, their contractors or health plans, and it does not include 
denial of claims determinations made by Federal Government agencies, 
state law or fraud enforcement agencies, or health plans. This 
definition also does not include business or administrative decisions 
taken by health plans that result in contract terminations unrelated to 
health care fraud or abuse or quality of care (e.g., when a 
practitioner's contract is terminated because the practitioner no longer 
practices at a facility in the health plan's network, or a health plan 
terminates all provider contracts in a certain geographic area because 
it ceases business operations in that area). For health plans that are 
not government entities, an action taken following adequate notice and 
the opportunity for a hearing that meets the standards of due process 
set out in section 412(b) of the HCQIA (42 U.S.C. 11112(b)) also would 
qualify as a reportable action under this definition.
    Peer review organization means, for purposes of this part, an 
organization with the primary purpose of evaluating the quality of 
patient care practices or services ordered or performed by health care 
practitioners measured against objective criteria which define 
acceptable and adequate practice through an evaluation by a sufficient 
number of health care practitioners in such an area to ensure adequate 
peer review. The organization has due process mechanisms available to 
health care practitioners. This definition excludes utilization and 
quality control peer review organizations described in Part B of Title 
XI of the Social Security Act

[[Page 178]]

(referred to as QIOs) and other organizations funded by the Centers for 
Medicare & Medicaid Services (CMS) to support the QIO program.
    Physician means, for purposes of this part, a doctor of medicine or 
osteopathy legally authorized to practice medicine or surgery by a state 
(or who, without authority, holds himself or herself out to be so 
authorized).
    Private accreditation entity means an entity or organization that:
    (1) Evaluates and seeks to improve the quality of health care 
provided by a health care entity, provider, or supplier;
    (2) Measures a health care entity's, provider's, or supplier's 
performance based on a set of standards and assigns a level of 
accreditation;
    (3) Conducts ongoing assessments and periodic reviews of the quality 
of health care provided by a health care entity, provider, or supplier; 
and
    (4) Has due process mechanisms available to health care entities, 
providers, or suppliers.
    Professional review action means an action or recommendation of a 
health care entity:
    (1) Taken in the course of professional review activity;
    (2) Based on the professional competence or professional conduct of 
an individual health care practitioner which affects or could affect 
adversely the health or welfare of a patient or patients; and
    (3) Which adversely affects or may adversely affect the clinical 
privileges or membership in a professional society of the health care 
practitioner.
    (4) This term excludes actions which are primarily based on:
    (i) The health care practitioner's association, or lack of 
association, with a professional society or association;
    (ii) The health care practitioner's fees or the health care 
practitioner's advertising or engaging in other competitive acts 
intended to solicit or retain business;
    (iii) The health care practitioner's participation in prepaid group 
health plans, salaried employment, or any other manner of delivering 
health services whether on a fee-for-service or other basis;
    (iv) A health care practitioner's association with, supervision of, 
delegation of authority to, support for, training of, or participation 
in a private group practice with, a member or members of a particular 
class of health care practitioner or professional; or
    (v) Any other matter that does not relate to the competence or 
professional conduct of a health care practitioner.
    Professional review activity means an activity of a health care 
entity with respect to an individual health care practitioner:
    (1) To determine whether the health care practitioner may have 
clinical privileges with respect to, or membership in, the entity;
    (2) To determine the scope or conditions of such privileges or 
membership; or
    (3) To change or modify such privileges or membership.
    Quality Improvement Organization means a utilization and quality 
control peer review organization (as defined in part B of title XI of 
the Social Security Act) that:
    (1)(i) Is composed of a substantial number of the licensed doctors 
of medicine and osteopathy engaged in the practice of medicine or 
surgery in the area and who are representative of the practicing 
physicians in the area, designated by the Secretary under section 1153, 
with respect to which the entity shall perform services under this part, 
or
    (ii) Has available to it, by arrangement or otherwise, the services 
of a sufficient number of licensed doctors of medicine or osteopathy 
engaged in the practice of medicine or surgery in such area to assure 
that adequate peer review of the services provided by the various 
medical specialties and subspecialties can be assured;
    (2) Is able, in the judgment of the Secretary, to perform review 
functions required under section 1154 in a manner consistent with the 
efficient and effective administration of this part and to perform 
reviews of the pattern of quality of care in an area of medical practice 
where actual performance is measured against objective criteria which 
define acceptable and adequate practice; and

[[Page 179]]

    (3) Has at least one individual who is a representative of consumers 
on its governing body.
    Secretary means the Secretary of Health and Human Services and any 
other officer or employee of the Department of Health and Human Services 
to whom the authority involved has been delegated.
    State means the fifty states, the District of Columbia, Puerto Rico, 
the Virgin Islands, Guam, American Samoa, and the Northern Mariana 
Islands.
    State law or fraud enforcement agency includes, but is not limited 
to:
    (1) A state law enforcement agency;
    (2) A state Medicaid fraud control unit (as defined in section 
1903(q) of the Social Security Act); and
    (3) A state agency administering (including those providing payment 
for services) or supervising the administration of a state health care 
program (as defined in section 1128(h) of the Social Security Act).
    State licensing or certification agency includes, but is not limited 
to, any authority of a state (or of a political subdivision thereof) 
responsible for the licensing or certification of health care 
practitioners (or any peer review organization or private accreditation 
entity reviewing the services provided by health care practitioners), 
health care entities, providers, or suppliers. Examples of such state 
agencies include Departments of Professional Regulation, Health, Social 
Services (including State Survey and Certification and Medicaid Single 
State agencies), Commerce, and Insurance.
    Voluntary surrender of license or certification means a surrender 
made after a notification of investigation or a formal official request 
by a Federal or state licensing or certification authority for a health 
care practitioner, health care entity, provider, or supplier to 
surrender the license or certification (including certification 
agreements or contracts for participation in Federal or state health 
care programs). The definition also includes those instances where a 
health care practitioner, health care entity, provider, or supplier 
voluntarily surrenders a license or certification (including program 
participation agreements or contracts) in exchange for a decision by the 
licensing or certification authority to cease an investigation or 
similar proceeding, or in return for not conducting an investigation or 
proceeding, or in lieu of a disciplinary action.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



                   Subpart B_Reporting of Information



Sec.  60.4  How information must be reported.

    Information must be reported to the NPDB as required under 
Sec. Sec.  60.7, 60.8, 60.9, 60.10, 60.11, 60.12, 60.13, 60.14, 60.15 
and 60.16 in such form and manner as the Secretary may prescribe.



Sec.  60.5  When information must be reported.

    Information required under Sec. Sec.  60.7, 60.8, and 60.12 must be 
submitted to the NPDB within 30 days following the action to be 
reported, beginning with actions occurring on or after September 1, 
1990; information required under Sec.  60.11 must be submitted to the 
NPDB within 30 days following the action to be reported, beginning with 
actions occurring on or after January 1, 1992; and information required 
under Sec. Sec.  60.9, 60.10, 60.13, 60.14, 60.15, and 60.16 must be 
submitted to the NPDB within 30 days following the action to be 
reported, beginning with actions occurring on or after August 21, 1996. 
Persons or entities responsible for submitting reports of malpractice 
payments (Sec.  60.7), negative actions or findings (Sec.  60.11), or 
adverse actions (Sec.  60.12) must additionally provide to their 
respective state authorities a copy of the report they submit to the 
NPDB. Following is the list of reportable actions:
    (a) Malpractice payments (Sec.  60.7);
    (b) Licensure and certification actions (Sec. Sec.  60.8, 60.9, and 
60.10);
    (c) Negative actions or findings (Sec.  60.11);
    (d) Adverse actions (Sec.  60.12);
    (e) Health Care-related Criminal Convictions (Sec.  60.13);
    (f) Health Care-related Civil Judgments (Sec.  60.14);
    (g) Exclusions from Federal or state health care programs (Sec.  
60.15); and

[[Page 180]]

    (h) Other adjudicated actions of decisions (Sec.  60.16).

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.6  Reporting errors, omissions, revisions or whether an action 
is on appeal.

    (a) Persons and entities are responsible for the accuracy of 
information which they report to the NPDB. If errors or omissions are 
found after information has been reported, the person or entity which 
reported it must send an addition or correction to the NPDB and, in the 
case of reports made under Sec.  60.12 of this part, also to the Board 
of Medical Examiners, as soon as possible. The NPDB will not accept 
requests for readjudication of the case by the NPDB, and will not 
examine the underlying merits of a reportable action.
    (b) An individual or entity which reports information on licensure 
or certification, negative actions or findings, clinical privileges, 
criminal convictions, civil or administrative judgments, exclusions, or 
adjudicated actions or decisions under Sec.  60.8, Sec.  60.9, Sec.  
60.10, Sec.  60.11, Sec.  60.12, Sec.  60.13, Sec.  60.14, Sec.  60.15, 
or Sec.  60.16 must also report any revision of the action originally 
reported. Revisions include, but are not limited to, reversal of a 
professional review action or reinstatement of a license. In the case of 
actions reported under Sec.  60.9, Sec.  60.10, Sec.  60.13, Sec.  
60.14, Sec.  60.15 or Sec.  60.16, revisions also include whether an 
action is on appeal. Revisions are subject to the same time constraints 
and procedures of Sec.  60.5, Sec.  60.8, Sec.  60.9, Sec.  60.10, Sec.  
60.11, Sec.  60.12, Sec.  60.13, Sec.  60.14, Sec.  60.15, or Sec.  
60.16 as applicable to the original action which was reported.
    (c) The subject will be sent a copy of all reports, including 
revisions and corrections to the report.
    (d) Upon receipt of a report, the subject:
    (1) Can accept the report as written;
    (2) May provide a statement to the NPDB that will be permanently 
appended to the report, either directly or through a designated 
representative; (The NPDB will distribute the statement to queriers, 
where identifiable, and to the reporting entity and the subject of the 
report. Only the subject can, upon request, make changes to the 
statement. The NPDB will not edit the statement; however the NPDB 
reserves the right to redact personal identifying and offensive language 
that does not change the factual nature of the statement.); or
    (3) May follow the dispute process in accordance with Sec.  60.21.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.7  Reporting medical malpractice payments.

    (a) Who must report. Each entity, including an insurance company, 
which makes a payment under an insurance policy, self-insurance, or 
otherwise, for the benefit of a health care practitioner in settlement 
of or in satisfaction in whole or in part of a claim or a judgment 
against such health care practitioner for medical malpractice, must 
report information as set forth in paragraph (b) of this section to the 
NPDB and to the appropriate state licensing board(s) in the state in 
which the act or omission upon which the medical malpractice claim was 
based. For purposes of this section, the waiver of an outstanding debt 
is not construed as a ``payment'' and is not required to be reported.
    (b) What information must be reported. Entities described in 
paragraph (a) of this section must report the following information:
    (1) With respect to the health care practitioner for whose benefit 
the payment is made:
    (i) Name,
    (ii) Work address,
    (iii) Home address, if known,
    (iv) Social Security Number, if known, and if obtained in accordance 
with section 7 of the Privacy Act of 1974 (5 U.S.C. 552a note),
    (v) Date of birth,
    (vi) Name of each professional school attended and year of 
graduation,
    (vii) For each professional license: the license number, the field 
of licensure, and the name of the state or territory in which the 
license is held,
    (viii) Drug Enforcement Administration registration number, if 
known, and
    (ix) Name of each hospital with which he or she is affiliated, if 
known;

[[Page 181]]

    (2) With respect to the reporting entity:
    (i) Name and address of the entity making the payment,
    (ii) Name, title, and telephone number of the responsible official 
submitting the report on behalf of the entity, and
    (iii) Relationship of the reporting entity to the health care 
practitioner for whose benefit the payment is made;
    (3) With respect to the judgment or settlement resulting in the 
payment:
    (i) Where an action or claim has been filed with an adjudicative 
body, identification of the adjudicative body and the case number,
    (ii) Date or dates on which the act(s) or omission(s) which gave 
rise to the action or claim occurred,
    (iii) Date of judgment or settlement,
    (iv) Amount paid, date of payment, and whether payment is for a 
judgment or a settlement,
    (v) Description and amount of judgment or settlement and any 
conditions attached thereto, including terms of payment,
    (vi) A description of the acts or omissions and injuries or 
illnesses upon which the action or claim was based,
    (vii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary, and
    (viii) Other information as required by the Secretary from time to 
time after publication in the Federal Register and after an opportunity 
for public comment.
    (c) Sanctions. Any entity that fails to report information on a 
payment required to be reported under this section is subject to a civil 
money penalty not to exceed the amount specified at 42 CFR 1003.103(c).
    (d) Interpretation of information. A payment in settlement of a 
medical malpractice action or claim shall not be construed as creating a 
presumption that medical malpractice has occurred.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



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

    (a) What actions must be reported. Each Board of Medical Examiners 
must report to the NPDB any action based on reasons relating to a 
physician's or dentist's professional competence or professional 
conduct:
    (1) Which revokes or suspends (or otherwise restricts) a physician's 
or dentist's license,
    (2) Which censures, reprimands, or places on probation a physician 
or dentist, or
    (3) Under which a physician's or dentist's license is surrendered.
    (b) Information that must be reported. The Board must report the 
following information for each action:
    (1) The physician's or dentist's name,
    (2) The physician's or dentist's work address,
    (3) The physician's or dentist's home address, if known,
    (4) The physician's or dentist's Social Security number or 
Individual Tax Identification Number (ITIN), if known, and if obtained 
in accordance with section 7 of the Privacy Act of 1974 (5 U.S.C. 552a 
note),
    (5) National Provider Identifier (NPI),
    (6) The physician's or dentist's date of birth,
    (7) Name of each professional school attended by the physician or 
dentist and year of graduation,
    (8) For each professional license, the physician's or dentist's 
license number, the field of licensure and the name of the state or 
territory in which the license is held,
    (9) The physician's or dentist's Drug Enforcement Administration 
registration number, if known,
    (10) A description of the acts or omissions or other reasons for the 
action taken,
    (11) A description of the Board action, the date the action was 
taken, its effective date and duration,
    (12) Classification of the action in accordance with a reporting 
code adopted by the Secretary, and
    (13) Other information as required by the Secretary from time to 
time after publication in the Federal Register and after an opportunity 
for public comment.
    (c) Sanctions. If, after notice of noncompliance and providing 
opportunity to correct noncompliance, the Secretary determines that a 
Board has failed to submit a report as required by

[[Page 182]]

this section, the Secretary will designate another qualified entity for 
the reporting of information under Sec.  60.12 of this part.



Sec.  60.9  Reporting licensure and certification actions taken by states.

    (a) What actions must be reported. Each state is required to adopt a 
system of reporting to the NPDB actions, as listed below, which are 
taken against a health care practitioner, health care entity, provider, 
or supplier (all as defined in Sec.  60.3 of this part). The actions 
taken must be as a result of formal proceedings (as defined in Sec.  
60.3). The actions which must be reported are:
    (1) Any adverse action taken by the licensing or certification 
authority of the state as a result of a formal proceeding, including 
revocation or suspension of a license, or certification agreement or 
contract for participation in a government health care program (and the 
length of any such suspension), reprimand, censure, or probation;
    (2) Any dismissal or closure of the formal proceeding by reason of 
the health care practitioner, health care entity, provider, or supplier 
surrendering the license or certification agreement or contract for 
participation in a government health care program, or leaving the state 
or jurisdiction;
    (3) Any other loss of license or loss of the certification agreement 
or contract for participation in a government health care program, or 
the right to apply for, or renew, a license or certification agreement 
or contract of the health care practitioner, health care entity, 
provider or supplier, whether by operation of law, voluntary surrender, 
nonrenewal (excluding non-renewals due to nonpayment of fees, 
retirement, or change to inactive status), or otherwise;
    (4) Any negative action or finding by such authority, organization, 
or entity regarding the health care practitioner, health care entity, 
provider, or supplier.
    (b) What information must be reported. Each state must report the 
following information (not otherwise reported under Sec.  60.8 of this 
part):
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Name,
    (ii) Social Security Number or ITIN, if known, and if obtained in 
accordance with section 7 of the Privacy Act of 1974 (5 U.S.C. 552a 
note),
    (iii) Home address or address of record,
    (iv) Sex, and
    (v) Date of birth.
    (2) If the subject is an individual, employment or professional 
identifiers, including:
    (i) Organization name and type,
    (ii) Occupation and specialty, if applicable,
    (iii) National Provider Identifier (NPI),
    (iv) Name of each professional school attended and year of 
graduation, and
    (v) With respect to the professional license (including professional 
certification and registration) on which the reported action was taken, 
the license number, the field of licensure, and the name of the state or 
territory in which the license is held.
    (3) If the subject is an organization, identifiers, including:
    (i) Name,
    (ii) Business address,
    (iii) Federal Employer Identification Number (FEIN), or Social 
Security Number when used by the subject as a Taxpayer Identification 
Number (TIN),
    (iv) The NPI,
    (v) Type of organization, and
    (vi) With respect to the license (including certification and 
registration) on which the reported action was taken, the license and 
the name of the state or territory in which the license is held.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based,
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary,
    (iii) Classification of the action taken in accordance with a 
reporting code adopted by the Secretary, and the amount of any monetary 
penalty resulting from the reported action,
    (iv) The date the action was taken, its effective date and duration,

[[Page 183]]

    (v) Name of the agency taking the action,
    (vi) Name and address of the reporting entity, and
    (vii) The name, title and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) What information may be reported, if known. Reporting entities 
described in paragraph (a) of this section may voluntarily report, if 
known, the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name(s) used,
    (ii) Other address,
    (iii) FEIN, when used by the individual as a TIN, and
    (iv) If deceased, date of death.
    (2) If the subject is an individual, employment or professional 
identifiers, including:
    (i) Other state professional license number(s), field(s) of 
licensure, and the name(s) of the state or territory in which the 
license is held,
    (ii) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Unique Physician 
Identification Number(s) (UPIN), and Medicaid and Medicare provider 
number(s),
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used,
    (ii) Other address(es) used,
    (iii) Other FEIN(s) or Social Security Number(s) used,
    (iv) Other NPI(s) used,
    (v) Other state license number(s) and the name(s) of the state or 
territory in which the license is held,
    (vi) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Clinical Laboratory 
Improvement Act (CLIA) number(s), Food and Drug Administration (FDA) 
number(s), and Medicaid and Medicare provider number(s),
    (vii) Names and titles of principal officers and owners,
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (4) For all subjects:
    (i) Whether the subject will be automatically reinstated.
    (ii) The date of appeal, if any.
    (d) Access to documents. Each state must provide the Secretary (or 
an entity designated by the Secretary) with access to the documents 
underlying the actions described in paragraphs (a)(1) through (4) of 
this section, as may be necessary for the Secretary to determine the 
facts and circumstances concerning the actions and determinations for 
the purpose of carrying out section 1921.
    (e) Sanctions for failure to report. The Secretary will provide for 
a publication of a public report that identifies failures to report 
information on adverse actions as required to be reported under this 
section.



Sec.  60.10  Reporting Federal licensure and certification actions.

    (a) What actions must be reported. Federal licensing and 
certification agencies must report to the NPDB the following final 
adverse actions that are taken against a health care practitioner, 
physician, dentist, provider, or supplier (regardless of whether the 
final adverse action is the subject of a pending appeal):
    (1) Formal or official actions, such as revocation or suspension of 
a license or certification agreement or contract for participation in 
government health care programs (and the length of any such suspension), 
reprimand, censure or probation,
    (2) Any dismissal or closure of the proceedings by reason of the 
health care practitioner, provider, or supplier surrendering their 
license or certification agreement or contract for participation in 
government health care programs, or leaving the state or jurisdiction,
    (3) Any other loss of the license or loss of the certification 
agreement or contract for participation in government health care 
programs, or the right to apply for, or renew, a license

[[Page 184]]

or certification agreement or contract of the health care practitioner, 
provider, or supplier, whether by operation of law, voluntary surrender, 
nonrenewal (excluding non-renewals due to nonpayment of fees, 
retirement, or change to inactive status), or otherwise, and
    (4) Any other negative action or finding by such Federal agency that 
is publicly available information.
    (b) What information must be reported. Each Federal agency described 
in paragraph (a) of this section must report the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Name,
    (ii) Social Security Number or ITIN,
    (iii) Home address or address of record,
    (iv) Sex, and
    (v) Date of birth.
    (2) If the subject is an individual, employment or professional 
identifiers, including:
    (i) Organization name and type,
    (ii) Occupation and specialty, if applicable,
    (iii) National Provider Identifier (NPI),
    (iv) Name of each professional school attended and year of 
graduation, and
    (v) With respect to the state professional license (including 
professional certification and registration) on which the reported 
action was taken, the license number, the field of licensure, and the 
name of the state or territory in which the license is held.
    (3) If the subject is an organization, identifiers, including:
    (i) Name,
    (ii) Business address,
    (iii) Federal Employer Identification Number (FEIN), or Social 
Security Number (or ITIN) when used by the subject as a Taxpayer 
Identification Number (TIN),
    (iv) The NPI,
    (v) Type of organization, and
    (vi) With respect to the state license (including certification and 
registration) on which the reported action was taken, the license and 
the name of the state or territory in which the license is held.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based,
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary,
    (iii) Classification of the action taken in accordance with a 
reporting code adopted by the Secretary, and the amount of any monetary 
penalty resulting from the reported action,
    (iv) The date the action was taken, its effective date and duration,
    (v) Name of the agency taking the action,
    (vi) Name and address of the reporting entity, and
    (vii) The name, title, and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) What information may be reported, if known. Reporting entities 
described in paragraph (a) of this section may voluntarily report, if 
known, the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name(s) used,
    (ii) Other address,
    (iii) FEIN, when used by the individual as a TIN, and
    (iv) If deceased, date of death.
    (2) If the subject is an individual, employment or professional 
identifiers, including:
    (i) Other state professional license number(s), field(s) of 
licensure, and the name(s) of the state or territory in which the 
license is held,
    (ii) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Unique Physician 
Identification Number(s) (UPIN), and Medicaid and Medicare provider 
number(s),
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used,
    (ii) Other address(es) used,
    (iii) Other FEIN(s) or Social Security Number(s) used,
    (iv) Other NPI(s) used,

[[Page 185]]

    (v) Other state license number(s) and the name(s) of the state or 
territory in which the license is held,
    (vi) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Clinical Laboratory 
Improvement Act (CLIA) number(s), Food and Drug Administration (FDA) 
number(s), and Medicaid and Medicare provider number(s),
    (vii) Names and titles of principal officers and owners,
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (4) For all subjects:
    (i) Whether the subject will be automatically reinstated.
    (ii) The date of appeal, if any.
    (d) Sanctions for failure to report. The Secretary will provide for 
a publication of a public report that identifies those agencies that 
have failed to report information on adverse actions as required to be 
reported under this section.



Sec.  60.11  Reporting negative actions or findings taken by peer review 
organizations or private accreditation entities.

    (a) What actions must be reported. Peer review organizations and 
private accreditation entities are required to report any negative 
actions or findings (as defined in Sec.  60.3 of this part) which are 
taken against a health care practitioner, health care entity, provider, 
or supplier to the NPDB and provide a copy to the appropriate state 
licensing or certification agency. The health care practitioner, health 
care entity, provider, or supplier must be licensed or otherwise 
authorized by the state to provide health care services. The actions 
taken must be as a result of formal proceedings (as defined in Sec.  
60.3).
    (b) What information must be reported. Each peer review organization 
and private accreditation entity must report the information as required 
in Sec.  60.9(b) of this part.
    (c) What information may be reported, if known. Each peer review 
organization and private accreditation entity should report, if known, 
the information as described in Sec.  60.9(c).
    (d) Access to documents. Each peer review organization and private 
accreditation entity must provide the Secretary (or an entity designated 
by the Secretary) with access to the documents underlying the actions 
described in this section as may be necessary for the Secretary to 
determine the facts and circumstances concerning the actions and 
determinations for the purpose of carrying out section 1921.



Sec.  60.12  Reporting adverse actions taken against clinical privileges.

    (a) Reporting by health care entities to the NPDB--(1) Actions that 
must be reported and to whom the report must be made. Each health care 
entity must report to the NPDB and provide a copy of the report to the 
Board of Medical Examiners in the state in which the health care entity 
is located the following actions:
    (i) Any professional review action that adversely affects the 
clinical privileges of a physician or dentist for a period longer than 
30 days,
    (ii) Acceptance of the surrender of clinical privileges or any 
restriction of such privileges by a physician or dentist:
    (A) While the physician or dentist is under investigation by the 
health care entity relating to possible incompetence or improper 
professional conduct, or
    (B) In return for not conducting such an investigation or 
proceeding, or
    (iii) In the case of a health care entity which is a professional 
society, when it takes a professional review action concerning a 
physician or dentist.
    (2) Voluntary reporting on other health care practitioners. A health 
care entity may report to the NPDB information as described in paragraph 
(a)(3) of this section concerning actions described in paragraph (a)(1) 
in this section with respect to other health care practitioners.
    (3) What information must be reported. The health care entity must 
report the following information concerning actions described in 
paragraph (a)(1) of this section with respect to a physician or dentist:
    (i) Name,

[[Page 186]]

    (ii) Work address,
    (iii) Home address, if known,
    (iv) Social Security Number, if known, and if obtained in accordance 
with section 7 of the Privacy Act of 1974,
    (v) Date of birth,
    (vi) Name of each professional school attended and year of 
graduation,
    (vii) For each professional license: the license number, the field 
of licensure, and the name of the state or territory in which the 
license is held,
    (viii) DEA registration number, if known,
    (ix) A description of the acts or omissions or other reasons for 
privilege loss, or, if known, for surrender,
    (x) Action taken, date the action was taken, and effective date of 
the action, and
    (xi) Other information as required by the Secretary from time to 
time after publication in the Federal Register and after an opportunity 
for public comment.
    (b) Reporting by the Board of Medical Examiners to the NPDB. Each 
Board must report any known instances of a health care entity's failure 
to report information as required under paragraph (a)(1) of this 
section. In addition, each Board of Medical Examiners must 
simultaneously report this information to the appropriate state 
licensing board in the state in which the health care entity is located, 
if the Board of Medical Examiners is not such licensing board.
    (c) Sanctions--(1) Health care entities. If the Secretary has reason 
to believe that a health care entity has substantially failed to report 
information in accordance with this section, the Secretary will conduct 
an investigation. If the investigation shows that the health care entity 
has not complied with this section, the Secretary will provide the 
entity with a written notice describing the noncompliance, giving the 
health care entity an opportunity to correct the noncompliance, and 
stating that the entity may request, within 30 days after receipt of 
such notice, a hearing with respect to the noncompliance. The request 
for a hearing must contain a statement of the material factual issues in 
dispute to demonstrate that there is cause for a hearing. These issues 
must be both substantive and relevant. The hearing will be held in the 
Washington, DC, metropolitan area. The Secretary will deny a hearing if:
    (i) The request for a hearing is untimely,
    (ii) The health care entity does not provide a statement of material 
factual issues in dispute, or
    (iii) The statement of factual issues in dispute is frivolous or 
inconsequential.
    In the event that the Secretary denies a hearing, the Secretary will 
send a written denial to the health care entity setting forth the 
reasons for denial. If a hearing is denied, or, if as a result of the 
hearing the entity is found to be in noncompliance, the Secretary will 
publish the name of the health care entity in the Federal Register. In 
such case, the immunity protections provided under section 411(a) of 
HCQIA will not apply to the health care entity for professional review 
activities that occur during the 3-year period beginning 30 days after 
the date of publication of the entity's name in the Federal Register.
    (2) Board of Medical Examiners. If, after notice of noncompliance 
and providing opportunity to correct noncompliance, the Secretary 
determines that a Board of Medical Examiners has failed to report 
information in accordance with paragraph (b) of this section, the 
Secretary will designate another qualified entity for the reporting of 
this information.



Sec.  60.13  Reporting Federal or state criminal convictions related to 
the delivery of a health care item or service.

    (a) Who must report. Federal and state prosecutors must report 
criminal convictions against health care practitioners, providers, and 
suppliers related to the delivery of a health care item or service 
(regardless of whether the conviction is the subject of a pending 
appeal).
    (b) What information must be reported. Entities described in 
paragraph (a) of this section must report the following information:
    (1) If the subject is an individual, personal identifiers, 
including:

[[Page 187]]

    (i) Name,
    (ii) Social Security Number (or ITIN) (states must report this 
information, if known, and if obtained in accordance with section 7 of 
the Privacy Act of 1974),
    (iii) Home address or address of record,
    (iv) Sex, and
    (v) Date of birth.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) Organization name and type,
    (ii) Occupation and specialty, if applicable, and
    (iii) National Provider Identifier (NPI).
    (3) If the subject is an organization, identifiers, including:
    (i) Name,
    (ii) Business address,
    (iii) Federal Employer Number (FEIN), or Social Security Number (or 
ITIN) when used by the subject as a Taxpayer Identification Number 
(TIN),
    (iv) The NPI, and
    (v) Type of organization.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based,
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary,
    (iii) Name and location of court or judicial venue in which the 
action was taken,
    (iv) Docket or court file number,
    (v) Type of action taken,
    (vi) Statutory offense(s) and count(s),
    (vii) Name of primary prosecuting agency (or the plaintiff in civil 
actions),
    (viii) Date of sentence or judgment,
    (ix) Length of incarceration, detention, probation, community 
service, or suspended sentence,
    (x) Amounts of any monetary judgment, penalty, fine, assessment, or 
restitution,
    (xi) Other sentence, judgment, or orders,
    (xii) If the action is on appeal,
    (xiii) Name and address of the reporting entity, and
    (xiv) The name, title, and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) What information may be reported, if known. Entities described 
in paragraph (a) of this section and each state should report, if known, 
the following information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name(s) used,
    (ii) Other address(es), and
    (iii) FEIN, when used by the individual as a TIN.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) State professional license (including professional certification 
and registration) number(s), field(s) of licensure, and the name(s) of 
the state or territory in which the license is held,
    (ii) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Unique Physician 
Identification Number(s) (UPIN), and Medicaid and Medicare provider 
number(s);
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used,
    (ii) Other address(es) used,
    (iii) Other FEIN(s) or Social Security Numbers(s) (or ITINs) used,
    (iv) Other NPI(s) used,
    (v) State license (including certification and registration) 
number(s) and the name(s) of the state or territory in which the license 
is held,
    (vi) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Clinical Laboratory 
Improvement Act (CLIA) number(s), Food and Drug Administration (FDA) 
number(s), and Medicaid and Medicare provider number(s),
    (vii) Names and titles of principal officers and owners,
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and

[[Page 188]]

    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (4) For all subjects:
    (i) Prosecuting agency's case number,
    (ii) Investigative agencies involved,
    (iii) Investigative agencies case or file number(s), and
    (iv) The date of appeal, if any.
    (d) Access to documents. Each state must provide the Secretary (or 
an entity designated by the Secretary) with access to the documents 
underlying the actions described in paragraphs (a)(1) through (4) of 
this section, as may be necessary for the Secretary to determine the 
facts and circumstances concerning the actions and determinations for 
the purpose of carrying out section 1921.
    (e) Sanctions for failure to report. The Secretary will provide for 
publication of a public report that identifies those agencies that have 
failed to report information on criminal convictions as required to be 
reported under this section.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.14  Reporting civil judgments related to the delivery 
of a health care item or service.

    (a) Who must report. Federal and state attorneys and health plans 
must report civil judgments against health care practitioners, 
providers, or suppliers related to the delivery of a health care item or 
service (regardless of whether the civil judgment is the subject of a 
pending appeal). If a government agency is party to a multi-claimant 
civil judgment, it must assume the responsibility for reporting the 
entire action, including all amounts awarded to all the claimants, both 
public and private. If there is no government agency as a party, but 
there are multiple health plans as claimants, the health plan which 
receives the largest award must be responsible for reporting the total 
action for all parties.
    (b) What information must be reported. Entities described in 
paragraph (a) of this section must report the information as required in 
Sec.  60.13(b) of this part.
    (c) What information may be reported, if known. Entities described 
in paragraph (a) of this section should report, if known the information 
as described in Sec.  60.13(c) of this part.
    (d) Access to documents. Each state must provide the Secretary (or 
an entity designated by the Secretary) with access to the documents 
underlying the actions described in paragraphs (a)(1) through (4) of 
this section, as may be necessary for the Secretary to determine the 
facts and circumstances concerning the actions and determinations for 
the purpose of carrying out section 1921.
    (e) Sanctions for failure to report. Any health plan that fails to 
report information on a civil judgment required to be reported under 
this section will be subject to a civil money penalty (CMP) of not more 
than $25,000 for each such adverse action not reported. Such penalty 
will be imposed and collected in the same manner as CMPs under 
subsection (a) of section 1128A of the Social Security Act. The 
Secretary will provide for publication of a public report that 
identifies those government agencies that have failed to report 
information on civil judgments as required to be reported under this 
section.



Sec.  60.15  Reporting exclusions from participation in Federal 
or state health care programs.

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

[[Page 189]]

with section 7 of the Privacy Act of 1974),
    (iii) Home address or address of record,
    (iv) Sex, and
    (v) Date of birth.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) Organization name and type,
    (ii) Occupation and specialty, if applicable, and
    (iii) National Provider Identifier (NPI).
    (3) If the subject is an organization, identifiers, including:
    (i) Name,
    (ii) Business address,
    (iii) Federal Employer Identification Number (FEIN) or Social 
Security Number (or ITIN) when used by the subject as a Taxpayer 
Identification Number (TIN),
    (iv) The NPI, and
    (v) Type of organization.
    (4) For all subjects:
    (i) A narrative description of the acts or omissions and injuries 
upon which the reported action was based,
    (ii) Classification of the acts or omissions in accordance with a 
reporting code adopted by the Secretary,
    (iii) Classification of the action taken in accordance with a 
reporting code adopted by the Secretary, and the amount of any monetary 
penalty resulting from the reported action,
    (iv) The date the action was taken, its effective date and duration,
    (v) If the action is on appeal,
    (vi) Name of the agency taking the action,
    (vii) Name and address of the reporting entity, and
    (viii) The name, title, and telephone number of the responsible 
official submitting the report on behalf of the reporting entity.
    (c) What information may be reported, if known. Entities described 
in paragraph (a) of this section should report, if known, the following 
information:
    (1) If the subject is an individual, personal identifiers, 
including:
    (i) Other name(s) used,
    (ii) Other address(es),
    (iii) FEIN, when used by the individual as a TIN,
    (iv) Name of each professional school attended and year of 
graduation, and
    (v) If deceased, date of death.
    (2) If the subject is an individual, that individual's employment or 
professional identifiers, including:
    (i) State professional license (including professional registration 
and certification) number(s), field(s) of licensure, and the name(s) of 
the state or territory in which the license is held,
    (ii) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Unique Physician 
Identification Number(s) (UPIN), and Medicaid and Medicare provider 
number(s),
    (iii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (iv) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (3) If the subject is an organization, identifiers, including:
    (i) Other name(s) used,
    (ii) Other address(es) used,
    (iii) Other FEIN(s) or Social Security Numbers(s) (or ITINs) used,
    (iv) Other NPI(s) used,
    (v) State license (including registration and certification) 
number(s) and the name(s) of the state or territory in which the license 
is held,
    (vi) Other numbers assigned by Federal or state agencies, including, 
but not limited to DEA registration number(s), Clinical Laboratory 
Improvement Act (CLIA) number(s), Food and Drug Administration (FDA) 
number(s), and Medicaid and Medicare provider number(s),
    (vii) Names and titles of principal officers and owners,
    (viii) Name(s) and address(es) of any health care entity with which 
the subject is affiliated or associated, and
    (ix) Nature of the subject's relationship to each associated or 
affiliated health care entity.
    (4) For all subjects:
    (i) If the subject will be automatically reinstated, and
    (ii) The date of appeal, if any.
    (d) Access to documents. Each state must provide the Secretary (or 
an entity designated by the Secretary) with access to the documents 
underlying the actions described in paragraphs (a)(1)

[[Page 190]]

through (4) of this section, as may be necessary for the Secretary to 
determine the facts and circumstances concerning the actions and 
determinations for the purpose of carrying out section 1921.
    (e) Sanctions for failure to report. The Secretary will provide for 
publication of a public report that identifies those government agencies 
that have failed to report information on exclusions or debarments as 
required to be reported under this section.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.16  Reporting other adjudicated actions or decisions.

    (a) Who must report. Federal Government agencies, state law or fraud 
enforcement agencies, and health plans must report other adjudicated 
actions or decisions as defined in Sec.  60.3 of this part related to 
the delivery, payment or provision of a health care item or service 
against health care practitioners, providers, and suppliers (regardless 
of whether the other adjudicated action or decision is subject to a 
pending appeal).
    (b) What information must be reported. Entities described in 
paragraph (a) of this section must report the information as required in 
Sec.  60.15(b) of this part.
    (c) What information may be reported, if known. Entities described 
in paragraph (a) of this section should report, if known, the 
information as described in Sec.  60.15(c) of this part.
    (d) Access to documents. Each state must provide the Secretary (or 
an entity designated by the Secretary) with access to the documents 
underlying the actions described in paragraphs (a)(1) through (4) of 
this section, as may be necessary for the Secretary to determine the 
facts and circumstances concerning the actions and determinations for 
the purpose of carrying out section 1921.
    (e) Sanctions for failure to report. Any health plan that fails to 
report information on another adjudicated action or decision required to 
be reported under this section will be subject to a civil money penalty 
(CMP) of not more than $25,000 for each such action not reported. Such 
penalty will be imposed and collected in the same manner as CMPs under 
subsection (a) of section 1128A of the Social Security Act. The 
Secretary will provide for publication of a public report that 
identifies those government agencies that have failed to report 
information on other adjudicated actions as required to be reported 
under this section.



 Subpart C_Disclosure of Information by the National Practitioner Data 
                                  Bank



Sec.  60.17  Information which hospitals must request from 
the National Practitioner Data Bank.

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

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.18  Requesting information from the National Practitioner Data Bank.

    (a) Who may request information and what information may be 
available. Information in the NPDB will be available, upon request, to 
the persons or entities, or their authorized agents, as described below:

[[Page 191]]

    (1) Information reported under Sec. Sec.  60.7, 60.8, and 60.12 of 
this part is available to:
    (i) A hospital that requests information concerning a health care 
practitioner who is on its medical staff (courtesy or otherwise) or has 
clinical privileges at the hospital,
    (ii) A health care practitioner who requests information concerning 
himself or herself,
    (iii) A State Medical Board of Examiners or other state authority 
that licenses health care practitioners,
    (iv) A health care entity which has entered or may be entering into 
an employment or affiliation relationship with a health care 
practitioner, or to which the health care practitioner has applied for 
clinical privileges or appointment to the medical staff,
    (v) An attorney, or individual representing himself or herself, who 
has filed a medical malpractice action or claim in a state or Federal 
court or other adjudicative body against a hospital, and who requests 
information regarding a specific health care practitioner who is also 
named in the action or claim. This information will be disclosed only 
upon the submission of evidence that the hospital failed to request 
information from the NPDB, as required by Sec.  60.17(a) of this part, 
and may be used solely with respect to litigation resulting from the 
action or claim against the hospital,
    (vi) A health care entity with respect to professional review 
activity, and
    (vii) A person or entity requesting statistical information, in a 
form which does not permit the identification of any individual or 
entity.
    (2) Information reported under Sec. Sec.  60.9, 60.10, 60.11, 60.13, 
60.14, 60.15, and 60.16 of this part is available to the agencies, 
authorities, and officials listed below that request information on 
licensure or certification actions, any other negative actions or 
findings, or final adverse actions concerning an individual 
practitioner, health care entity, provider, or supplier. These agencies, 
authorities, and officials may obtain data for the purposes of 
determining the fitness of individuals to provide health care services, 
protecting the health and safety of individuals receiving health care 
through programs administered by the requesting agency, and protecting 
the fiscal integrity of these programs.
    (i) Agencies administering (including those providing payment for 
services) Federal health care programs, including private entities 
administering such programs under contract,
    (ii) State licensing or certification agencies and Federal agencies 
responsible for the licensing and certification of health care 
practitioners, providers, or suppliers,
    (iii) State agencies administering or supervising the administration 
of state health care programs (as defined in 42 U.S.C. 1128(h)),
    (iv) State law or fraud enforcement agencies,
    (v) Law enforcement officials and agencies such as:
    (A) United States Attorney General,
    (B) United States Chief Postal Inspector,
    (C) United States Inspectors General;
    (D) United States Attorneys,
    (E) United States Comptroller General,
    (F) United States Drug Enforcement Administration,
    (G) United States Nuclear Regulatory Commission, or
    (H) Federal Bureau of Investigation,
    (vi) Utilization and quality control peer review organizations 
described in part B of title XI and to appropriate entities with 
contracts under section 1154(a)(4)(C) of the Social Security Act with 
respect to eligible organizations reviewed under the contracts, but only 
with respect to information provided pursuant to Sec. Sec.  60.9, 60.10, 
and 60.11 of this part, as well as information provided pursuant to 
Sec. Sec.  60.13, 60.14, 60.15, and 60.16 of this part by Federal 
agencies and health plans,
    (vii) Hospitals and other health care entities (as defined in 
section 431 of the Health Care Quality Improvement Act of 1986), with 
respect to health care practitioners who have entered (or may be 
entering) into employment or affiliation relationships with, or have 
applied for clinical privileges or appointments to the medical staff of 
such hospitals or other health care entities, but only with respect to 
information provided pursuant to Sec. Sec.  60.9, 60.10, and 60.11, as 
well as information provided pursuant to Sec. Sec.  60.13, 60.14, 60.15, 
and

[[Page 192]]

60.16 by Federal agencies and health plans,
    (viii) Health plans,
    (ix) A health care practitioner, health care entity, provider, or 
supplier who requests information concerning himself, herself, or 
itself, and
    (x) A person or entity requesting statistical information, in a form 
which does not permit the identification of any individual or entity. 
(For example, researchers may use statistical information to identify 
the total number of nurses with adverse licensure actions in a specific 
state. Similarly, researchers may use statistical information to 
identify the total number of health care entities denied accreditation.)
    (b) Procedures for obtaining NPDB information. Persons and entities 
may obtain information from the NPDB by submitting a request in such 
form and manner as the Secretary may prescribe. These requests are 
subject to fees as described in Sec.  60.19 of this part.

[78 FR 20484, Apr. 5, 2013, 78 FR 25860, May 6, 2013]



Sec.  60.19  Fees applicable to requests for information.

    (a) Policy on fees. The fees described in this section apply to all 
requests for information from the NPDB. The amount of such fees will be 
sufficient to recover the full costs of operating the NPDB. The actual 
fees will be announced by the Secretary in periodic notices in the 
Federal Register. However, for purposes of verification and dispute 
resolution at the time the report is accepted, the NPDB will provide a 
copy--at the time a report has been submitted, automatically, without a 
request and free of charge, of the record to the health care 
practitioner, entity, provider, or supplier who is the subject of the 
report and to the reporter.
    (b) Criteria for determining the fee. The amount of each fee will be 
determined based on the following criteria:
    (1) Direct and indirect personnel costs, including salaries and 
fringe benefits such as medical insurance and retirement,
    (2) Physical overhead, consulting, and other indirect costs 
(including materials and supplies, utilities, insurance, travel, and 
rent and depreciation on land, buildings, and equipment),
    (3) Agency management and supervisory costs,
    (4) Costs of enforcement, research, and establishment of regulations 
and guidance,
    (5) Use of electronic data processing equipment to collect and 
maintain information--the actual cost of the service, including computer 
search time, runs and printouts, and
    (6) Any other direct or indirect costs related to the provision of 
services.
    (c) Assessing and collecting fees. The Secretary will announce 
through notice in the Federal Register from time to time the methods of 
payment of NPDB fees. In determining these methods, the Secretary will 
consider efficiency, effectiveness, and convenience for the NPDB users 
and the Department. Methods may include: credit card, electronic fund 
transfer, and other methods of electronic payment.



Sec.  60.20  Confidentiality of National Practitioner Data Bank information.

    (a) Limitations on disclosure. Information reported to the NPDB is 
considered confidential and shall not be disclosed outside the 
Department of Health and Human Services, except as specified in 
Sec. Sec.  60.17, 60.18, and 60.21 of this part. Persons and entities 
receiving information from the NPDB, either directly or from another 
party, must use it solely with respect to the purpose for which it was 
provided. The Data Bank report may not be disclosed, but nothing in this 
section will prevent the disclosure of information by a party from its 
own files used to create such reports where disclosure is otherwise 
authorized under applicable state or Federal law.
    (b) Penalty for violations. Any person who violates paragraph (a) of 
this section shall be subject to a civil money penalty of up to $11,000 
for each violation. This penalty will be imposed pursuant to procedures 
at 42 CFR part 1003.

[[Page 193]]



Sec.  60.21  How to dispute the accuracy of National Practitioner 
Data Bank information.

    (a) Who may dispute the NPDB information. The NPDB will routinely 
mail or transmit electronically to the subject a copy of the report 
filed in the NPDB. In addition, as indicated in Sec.  60.18, the subject 
may also request a copy of such report. The subject of the report or a 
designated representative may dispute the accuracy of a report 
concerning himself, herself, or itself as set forth in paragraph (b) of 
this section.
    (b) Procedures for disputing a report with the reporting entity. (1) 
If the subject disagrees with the reported information, the subject must 
request in the format as determined by the Secretary that the NPDB enter 
the report into ``disputed status.''
    (2) The NPDB will send the report, with a notation that the report 
has been placed in ``disputed status,'' to queriers (where 
identifiable), the reporting entity and the subject of the report.
    (3) The subject must attempt to enter into discussion with the 
reporting entity to resolve the dispute. If the reporting entity revises 
the information originally submitted to the NPDB, the NPDB will notify 
the subject and all entities to whom reports have been sent that the 
original information has been revised. If the reporting entity does not 
revise the reported information, or does not respond to the subject 
within 60 days, the subject may request that the Secretary review the 
report for accuracy. The Secretary will decide whether to correct the 
report within 30 days of the request. This time frame may be extended 
for good cause. The subject also may provide a statement to the NPDB, 
either directly or through a designated representative that will 
permanently append the report.
    (c) Procedures for requesting a review of a disputed report. (1) The 
subject must request, in the format as determined by the Secretary, that 
the Secretary review the report for accuracy. The subject must return 
this request to the NPDB along with appropriate materials that support 
the subject's position. The Secretary will only review the accuracy of 
the reported information, and will not consider the merits or 
appropriateness of the action or the due process that the subject 
received.
    (2) After the review, if the Secretary:
    (i) Concludes that the information is accurate and reportable to the 
NPDB, the Secretary will inform the subject and the NPDB of the 
determination. The Secretary will include a brief statement (Secretarial 
Statement) in the report that describes the basis for the decision. The 
report will be removed from ``disputed status.'' The NPDB will 
distribute the corrected report and statement(s) to previous queriers 
(where identifiable), the reporting entity and the subject of the 
report.
    (ii) Concludes that the information contained in the report is 
inaccurate, the Secretary will inform the subject of the determination 
and direct the NPDB or the reporting entity to revise the report. The 
Secretary will include a brief statement (Secretarial Statement) in the 
report describing the findings. The NPDB will distribute the corrected 
report and statement(s) to previous queriers (where identifiable), the 
reporting entity and the subject of the report.
    (iii) Determines that the disputed issues are outside the scope of 
the Department's review, the Secretary will inform the subject and the 
NPDB of the determination. The Secretary will include a brief statement 
(Secretarial Statement) in the report describing the findings. The 
report will be removed from ``disputed status.'' The NPDB will 
distribute the report and the statement(s) to previous queriers (where 
identifiable), the reporting entity and the subject of the report.
    (iv) Determines that the adverse action was not reportable and 
therefore should be removed from the NPDB, the Secretary will inform the 
subject and direct the NPDB to void the report. The NPDB will distribute 
a notice to previous queriers (where identifiable), the reporting entity 
and the subject of the report that the report has been voided.



Sec.  60.22  Immunity.

    Individuals, entities or their authorized agents, and the NPDB shall 
not be

[[Page 194]]

held liable in any civil action filed by the subject of a report unless 
the individual, entity, or authorized agent submitting the report has 
actual knowledge of the falsity of the information contained in the 
report.



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



                            Subpart A_General

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

                     Subpart B_Financial Provisions

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

                      Subpart C_Special Provisions

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

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

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



                            Subpart A_General



Sec.  63.1  Purpose and scope.

    (a) Applicability. Except to the extent inconsistent with an 
applicable Federal statute the regulations in this part apply to all 
grant awards of Federal assistance made by the Assistant Secretary for 
Planning and Evaluation or his designee, hereinafter referred to in this 
part as the Assistant Secretary. Such grants include those under section 
232 of the Community Services Act (42 U.S.C. 2835), section 1110 of the 
Social Security Act (42 U.S.C. 1310), section 392A of the Communications 
Act of 1934, and such other authority as may be delegated to the 
Assistant Secretary for policy research activities.
    (b) Exceptions to applicability. The award and administration of 
contracts and cooperative agreements by the Assistant Secretary shall 
not be covered by this subchapter. Contracts entered into by the 
Assistant Secretary shall be subject to the regulations in CFR Title 48, 
Chapter 3. Generally, the Assistant Secretary will select between grant 
and contract procedures and instruments, both with regard to the 
solicitation process and with respect to unsolicited proposals, on the 
basis of criteria set forth in the proposed revision of 45 CFR 75.201(a) 
published at 39 FR 27469 at any subsequent revision thereof.
    (c) Objectives--(1) Policy research. The overall objective of policy 
research activities is to obtain information, as it relates to the 
mission of the Department of Health and Human Services, about the basic 
causes of and methods for preventing and eliminating poverty and 
dependency and about improved methods for delivering human resources 
services. Such information is obtained through the conduct of basic and 
applied research, statistical analyses, and demonstrations and 
evaluations which have demonstrated a high probability of impacting on 
the formulation or modification of major Departmental policies and 
programs.
    (2) Telecommunications demonstrations. The overall objective of the 
Telecommunications Demonstration Program is to promote the development 
of nonbroadcast telecommunications facilities and services for the 
transmission, distribution, and delivery of

[[Page 195]]

health, education, and social service information.

[40 FR 23295, May 29, 1975, as amended at 42 FR 36149, July 13, 1977; 85 
FR 72911, Nov. 16, 2020]



Sec.  63.2  Eligibility for award.

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

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



Sec.  63.3  Program announcements and solicitations.

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

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



Sec.  63.4  Cooperative arrangements.

    (a) Eligible parties may enter into cooperative arrangements with 
other eligible parties, including those in another State, to apply for 
assistance.
    (b) A joint application made by two or more applicants for 
assistance under this subchapter may have separate budgets corresponding 
to the programs, services and activities performed by each of the joint 
applicants or may have a combined budget. If joint applications present 
separate budgets, the Assistant Secretary may make separate awards, or 
may award a single grant authorizing separate amounts for each of the 
joint applicants.
    (c) In the case of each cooperative arrangement authorized under 
paragraph

[[Page 196]]

(a) of this section and receiving assistance, except where the Assistant 
Secretary makes separate awards under paragraph (b) of this section all 
such applicants (1) shall be deemed to be joint legal recipients of the 
grant award and (2) shall be jointly and severally responsible for 
administering the project assisted under such grant.



Sec.  63.5  Effective date of approved grant.

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



Sec.  63.6  Evaluation of applications.

    (a) Review procedures. All applications filed in accordance with 
Sec.  63.3 shall be evaluated by the Assistant Secretary through 
officers, employees, and such experts or consultants engaged for this 
purpose as he/she determines are specially qualified in the areas of 
research pursued by this office. The evaluation criteria below will be 
supplemented each fiscal year by a program announcement outlining 
priorities and objectives for policy research, and by other general or 
specialized solicitations. Such supplements may modify the criteria in 
paragraphs (b) and (c) of this section to provide greater specificity or 
otherwise improve their applicability to a given announcement or 
solicitation.
    (b) Criteria for evaluation of Policy Research Projects. Review of 
applications under paragraph (a) of this section will take into account 
such factors as:
    (1) Scientific merit and the significance of the project in relation 
to policy objectives;
    (2) Feasibility of the project;
    (3) Soundness of research design, statistical technique, and 
procedures and methodology;
    (4) Theoretical and technical soundness of the proposed plan of 
operation including consideration of the extent to which:
    (i) The objectives of the proposed project are sharply defined, 
clearly stated, and capable of being attained by the proposed 
procedures;
    (ii) The objectives of the proposed project show evidence of 
contributing to the achievement of policy objectives;
    (iii) Provisions are made for adequate evaluation of the 
effectiveness of the project and for determining the extent to which the 
objectives are accomplished; and
    (iv) Appropriate provisions are made for satisfactory inservice 
training connected with project services.
    (5) Expected potential for utilizing the results of the proposed 
project in other projects or programs for similar purposes;
    (6) Sufficiency of size, scope, and duration of the project so as to 
secure productive results;
    (7) Adequacy of qualifications and experience, including managerial, 
of personnel;
    (8) Adequacy of facilities and other resources; and
    (9) Reasonableness of estimated cost in relation to anticipated 
results.
    (c) Criteria for evaluation of Telecommunications Demonstrations 
Projects. Review of applications for Telecommunications Demonstrations 
grants will take into account such factors as are listed in paragraphs 
(c) (1) through (10) of this section. Each applicant must include in the 
application, prior to final evaluation by the Assistant Secretary, 
documentation indicating specifically and separately how and to what 
extent each of these criteria have been or will be met:
    (1) That the project for which application is made demonstrates 
innovative methods or techniques of utilizing nonbroadcast 
telecommunications equipment or facilities to satisfy the purpose of 
this authority;
    (2) That the project will have original research value which will 
demonstrate to other potential users that such methods or techniques are 
feasible and cost-effective;

[[Page 197]]

    (3) That the services to be provided are responsive to local needs 
as identified and assessed by the applicant;
    (4) That the applicant has assessed existing telecommunications 
facilities (if any) in the proposed service area and explored their use 
of interconnection in conjunction with the project;
    (5) That there is significant local commitment (e.g., evidence of 
support, participation, and contribution by local institutions and 
agencies) to the proposed project, indicating that it fulfills local 
needs, and gives some promise that operational systems will result from 
successful demonstrations and will be supported by service recipients or 
providers;
    (6) That demonstrations and related activities assisted under this 
section will remain under the administration and control of the 
applicant;
    (7) That the applicant has the managerial and technical capability 
to carry out the project for which the application is made;
    (8) That the facilities and equipment acquired or developed pursuant 
to the applications will be used substantially for the transmission, 
distribution, and delivery of health, education, or social service 
information, and that use of such facilities and equipment may be shared 
among these and additional public or other services;
    (9) That the provision has been made to submit a summary and factual 
evaluation of the results of the demonstration at least annually for 
each year in which funds are received, in the form of a report suitable 
for dissemination to groups representative of national health, 
education, and social service telecommunications interests; and,
    (10) That the project has potential for stimulating cooperation and 
sharing among institutions and agencies, both within and across 
disciplines.
    (d) Applicant's performance on prior award. Where the applicant has 
previously received an award from the Department of Health and Human 
Services, the applicant's compliance or noncompliance with requirements 
applicable to such prior award as reflected in past written evaluation 
reports, memoranda on performance, and completeness of required 
submissions: Provided, That in any case where the Assistant Secretary 
proposes to deny assistance based upon the applicant's noncompliance 
with requirements applicable to a prior award, he shall do so only after 
affording the applicant reasonable notice and an opportunity to rebut 
the proposed basis for denial of assistance.

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



Sec.  63.7  Disposition of applications.

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



Sec.  63.8  Supplemental regulations and grant conditions.

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

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


No other portions of Chapter X of this title are applicable to such 
grants.

[[Page 198]]

    (2) Grants awarded with funds appropriated under section 232 of the 
Community Services Act shall also be subject to the applicable statutory 
requirements in sections 242, 243, and 244, and title VI of the 
Community Services Act. The Assistant Secretary will advise grantees of 
the nature of these requirements at or prior to the time of award.
    (3) In the event that any provision of this part is inconsistent 
with a provision of law or a regulation referenced in paragraphs (a)(1) 
and (2) of this section with respect to any grant funded under section 
232 of the Community Services Act, the provision of this part shall, to 
the extent of any such inconsistency, not be effective.
    (b) Grants under other statutory authority. Grants awarded by the 
Assistant Secretary may be subject to regulations, other than those set 
forth in this part, which have been issued under the authority of 
statutes authorizing particular awards. In such a case, that fact will 
be set forth in the program announcement soliciting applications for 
such grants published in the Federal Register pursuant to Sec.  63.3.
    (c) Other regulations applicable to grants under this part. Federal 
financial assistance provided under this part shall be subject to the 
following additional regulations except as otherwise provided in this 
part:
    (1) Part 75 of this title, establishing uniform administrative 
requirements, cost principles and audit requirements for grants by the 
Department of Health and Human Services.
    (2) Part 80 of this title, effectuating the provisions of title VI 
of the Civil Rights Act of 1964; and
    (3) Part 16 of this title, establishing a Departmental Grant Appeals 
Board for the resolution of specified post-award grant disputes.

[40 FR 23295, May 29, 1975, as amended at 81 FR 3012, Jan. 20, 2016]



                     Subpart B_Financial Provisions



Sec.  63.16  Scope of subpart.

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

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



Sec.  63.17  Amount of award.

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



Sec.  63.18  Limitations on costs.

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



Sec.  63.19  Budget revisions and minor deviations.

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



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

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

[[Page 199]]



Sec.  63.21  Obligation and liquidation by grantee.

    Obligations will be considered to have been incurred by a grantee on 
the basis of documentary evidence of binding commitments for the 
acquisition of goods or property or for the performance of work, except 
that funds for personal services, for services performed by public 
utilities, for travel, and for the rental of facilities, shall be 
considered to have been obligated as of the time such services were 
rendered, such travel was performed, and such rented facilities were 
used, respectively.



Sec.  63.22  Cost sharing.

    Policy Research funds shall not be used to pay any recipient of a 
grant for the conduct of a research project an amount equal to as much 
as the entire cost of the project.



Sec.  63.23  Telecommunications Demonstration Grants.

    The provisions of this section apply only to grants awarded under 
authority of 392A of the Communications Act of 1934.
    (a) Funds provided under the Telecommunications Demonstrations 
Program shall be available to support the planning, development, and 
acquisition or leasing of facilities and equipment necessary to the 
demonstration. However, funds shall not be available for the 
construction, remodeling, or repair of structures to house facilities or 
equipment acquired or developed with such funds, except that such funds 
may be used for minor remodeling which is necessary for and incident to 
the installation of such facilities or equipment.
    (b) Funds shall not be available for the development of programming 
materials or content.
    (c) The funding of any demonstration under this authority shall 
continue for not more than three years from the date of the original 
grant or contract.
    (1) Applications for assistance under the Act may project goals and 
activities over a period of up to three years. Approval of a multi-year 
project is intended to offer the project a reasonable degree of 
stability over time and to facilitiate additional long range planning.
    (2) Applications proposing a multi-year project must be accompanied 
by an explanation of the need for multi-year support, an overview of the 
objectives and activities proposed, and budget estimates to attain these 
objectives in any proposed subsequent year.
    (3) Subject to the availability of funds, an application for 
assistance to continue a project during the project period will be 
reviewed on a non-competitive basis to determine--
    (i) If the award recipient has complied with the award terms and 
conditions, the Act, and applicable regulations;
    (ii) The effectiveness of the project to date in terms of progress 
toward its goals, or the constructive changes proposed as a result of 
the ongoing evaluation of the project; and,
    (iii) If continuation of the project would be in the best interests 
of the Government.
    (d) The use of equipment in demonstration projects shall be subject 
to the rules and regulations of the Federal Communications Commission 
(FCC), and grant funds may not be expended or obligated for purchase, 
lease, or use of such equipment prior to appropriate and necessary 
coordination by the grantee with the Commission. In particular:
    (1) For any project requiring a new or modification of an existing 
authorization(s) from the FCC, application(s) to the FCC for such 
authorization(s) must have been tendered for filing prior to the closing 
date established by any solicitation for grant applications offered 
under the Telecommunications Demonstration Program.
    (2) If the project is to be associated with an existing 
telecommunications activity requiring an FCC authorization, such 
operating authority for that activity must be current and valid.
    (3) For any project requiring a new or modification of an existing 
authorization(s) from the FCC, the applicant must file with the 
Secretary of Health and Human Services a copy of each FCC application 
and any amendments thereto.
    (4) For any project requiring a new or modification of an existing 
authorization(s) from the FCC, the applicant must tender for filing with 
the FCC a

[[Page 200]]

copy of the application to the Secretary for a telecommunications 
demonstration grant.
    (5) If the applicant fails to file required applications by the 
closing date established by the solicitation for grant applications, or 
if the FCC returns as substantially incomplete or deficient, dismisses, 
or denies an application required for the project, or any part thereof, 
or for the operation of any facility with which the project is 
associated, the Secretary may return the application for Federal 
assistance.
    (e) For the purposes of this program, the term ``non-broadcast 
telecommunications facilities'' includes but is not limited to, cable 
television systems, communications satellite systems and related 
terminal equipment, and other methods of transmitting, emitting, or 
receiving images and sounds or intelligence by means of wire, radio, 
optical, electromagnetic, and other means (including non-broadcast 
utilization of telecommunications equipment normally associated with 
broadcasting use).
    (f) Each applicant shall provide such information as the Assistant 
Secretary deems necessary to make a Federal assessment of the impact of 
the project on the quality of the human environment in accordance with 
section 102(2)(C) of the National Environmental Policy Act of 1969 
(including the National Historical Preservation Act and other 
environmental acts). (42 U.S.C. 4332(2)(C)).

[42 FR 36149, July 13, 1977]



                      Subpart C_Special Provisions



Sec.  63.30  Scope of subpart.

    This subpart sets forth supplemental special provisions which apply 
to all grants awarded by the Assistant Secretary.



Sec.  63.31  Protection of human subjects.

    All grants made pursuant to this part are subject to the specific 
provisions of part 46 of this subtitle relating to the protection of 
human subjects.



Sec.  63.32  Data collection instruments.

    (a) Definitions. For the purposes of this section ``Child'' means an 
individual who has not attained the legal age of consent to participate 
in research as determined under the applicable law of the jurisdiction 
in which such research is to be conducted.
    ``Data-collection instruments'' means tests, questionnaires, 
inventories, interview schedules or guides, rating scales, and survey 
plans or any other forms which are used to collect information on 
substantially identical items from 10 or more respondents.
    ``Respondents'' means individuals or organizations from whom 
information is collected.
    (b) Applicability. This section does not apply to instruments which 
deal solely with (1) functions of technical proficiency, such as 
scholastic aptitude or school achievement, or (2) routine demographic 
information.
    (c) Protection of privacy. (1) No project supported under this part 
may involve the use of data collection instruments which constitute 
invasion of personal privacy through inquiries regarding such matters as 
religion, sex, race, or politics.
    (2) A grantee which proposes to use a data collection instrument 
shall set forth in the grant application an explanation of the 
safeguards which will be used to restrict the use and disclosure of 
information so obtained to purposes directly connected with the project, 
including provisions for the destruction of such instruments where no 
longer needed for the purposes of the project.
    (d) Clearance of instruments. (1) Grantees will not be required to 
submit data-collection instruments to the Assistant Secretary or obtain 
the Assistant Secretary's approval for the use of these instruments, 
except where the notification of grant award specifically so provides.
    (2) If a grantee is required under paragraph (d)(1) of this section 
to submit data-collection instruments for the approval of the Assistant 
Secretary or if a grantee wishes the Assistant Secretary to review a 
data-collection instrument, the grantee shall submit seven copies of the 
document to the Assistant Secretary along with seven copies of the 
Office of Management and Budget's standard form No. 83 and seven copies 
of the Supporting Statement as required in the ``Instructions

[[Page 201]]

for Requesting OMB Approval under the Federal Reports Act'' (Standard 
form No. 83A).
    (e) Responsibility for collection of information. A grantee shall 
not in any way represent or imply (either in a letter of transmittal, in 
the data-gathering instruments themselves, or in any other manner) that 
the information is being collected by or for the Federal Government or 
any department, agency or instrumentality thereof. Basic responsibility 
for the study and the data-gathering instruments rests with the grantee.
    (f) Parental consent. In the case of any survey using data-
collection instruments in which children are involved as respondents, 
the grantee, in addition to observing the other requirements contained 
in this section, and in part 46 of this subtitle as appropriate, shall 
provide assurances satisfactory to the Assistant Secretary that informed 
consent will be obtained from the parents of each such respondent prior 
to the use of such instruments, except that a waiver from the 
requirements of this paragraph for specific data-collection activities 
may be granted upon the written request by the grantee and a 
determination by the Assistant Secretary that a waiver is necessary in 
order to fully carry out the purposes of the grant.



Sec.  63.33  Treatment of animals.

    If animals are utilized in any project receiving assistance, the 
applicant for such assistance shall provide assurances satisfactory to 
the Assistant Secretary that such animals will be provided with proper 
care and humane treatment; in accordance with the Animal Welfare Act (7 
U.S.C. 2131 et seq.) and regulations set forth in (9 CFR parts 1, 2, 3, 
4).



Sec.  63.34  Principal investigators.

    The principal investigator(s) designated in successful grant 
applications as responsible for the conduct of the approved project, 
shall not be replaced without the prior approval of the Assistant 
Secretary or his designee. Failure to seek and acquire such approval may 
result in the grant award being terminated in accordance with the 
procedures set forth in Sec.  75.372 of this subtitle or such other 
regulations as may be indicated in the grant terms and conditions.

[40 FR 23295, May 29, 1975, as amended at 81 FR 3012, Jan. 20, 2016]



Sec.  63.35  Dual compensation.

    If a project staff member or consultant of one grantee is involved 
simultaneously in two or more projects supported by any funds either 
under this part or otherwise, he/she may not be compensated for more 
than 100 percent of his/her time from any funds during any part of the 
period of dual involvement.



Sec.  63.36  Fees to Federal employees.

    The grantee shall not use funds from any sources to pay a fee to, or 
travel expenses of, employees of the Federal Government for lectures, 
attending program functions, or any other activities in connection with 
the grant.



Sec.  63.37  Leasing facilities.

    In the case of a project involving the leasing of a facility, the 
grantee shall demonstrate that it will have the right to occupy, to 
operate, and, if necessary, to maintain and improve the leased facility 
during the proposed period of the project.



Sec.  63.38  Publications.

    Any publication or presentation resulting from or primarily related 
to Federal financial assistance under this part shall contain an 
acknowledgement essentially as follows:

    The activity which is the subject of this report was supported in 
whole or part by a grant from the Office of the Assistant Secretary for 
Planning and Evaluation, Department of Health and Human Services. 
However, the opinions expressed herein do not necessarily reflect the 
position or policy of that Office and no official endorsement by that 
Office should be inferred.



Sec.  63.39  Religious worship or instruction.

    Federal funds shall not be used for the making of any payment for 
religious worship or instruction, or for the construction, operation, or 
maintenance of so much of any facility as is

[[Page 202]]

used or to be used for sectarian instruction or as a place for religious 
instruction.



PART 73_STANDARDS OF CONDUCT--Table of Contents



                      Subpart A_General Provisions

Sec.
73.735-101 Purpose.
73.735-102 Definitions.
73.735-103 Applicability.

                       Subpart B_Responsibilities

73.735-201 Employees and supervisors.
73.735-202 Management officials.

                      Subpart C_Conduct on the Job

73.735-301 Courtesy and consideration for others.
73.735-302 Support of department programs.
73.735-303 Use of government funds.
73.735-304 Use of government property.
73.735-305 Conduct in Federal buildings.
73.735-306 Sexual harassment.
73.735-307 Use of official information.

                     Subpart D_Financial Obligations

73.735-401 General provisions.

               Subpart E_Gifts, Entertainment, and Favors

73.735-501 Prohibited acceptance of gifts, entertainment, and favors.
73.735-502 Permissible acceptance of gifts, entertainment, and favors.
73.735-503 Criminal provisions relating to gifts, entertainment, and 
          favors.
73.735-504 Gifts to official superiors.
73.735-505 Acceptance of awards and prizes.
73.735-506 Gifts and decorations from foreign governments.
73.735-507 Acceptance of travel and subsistence.
73.735-508 Other prohibitions.

                      Subpart F_Political Activity

73.735-601 Applicability.
73.735-602 Permissible activities.
73.735-603 Prohibited activities.

                      Subpart G_Outside Activities

73.735-701 General provisions.
73.735-702 Criminal prohibitions on outside activities.
73.735-703 Statutory prohibitions related to employment by a foreign 
          government.
73.735-704 Professional and consultative services.
73.735-705 Writing and editing.
73.735-706 Teaching, lecturing, and speechmaking.
73.735-707 Holding office in professional societies.
73.735-708 Administrative approval of certain outside activities.
73.735-709 Annual reporting of outside activities.
73.735-710 Maintenance of records.

                      Subpart H_Financial Interest

73.735-801 Participation in matters affecting a personal financial 
          interest.
73.735-802 Executive order prohibitions.
73.735-803 Prohibition against involvement in financial transactions 
          based on information obtained through Federal employment.
73.735-804 Waiver of the prohibitions in this subpart.
73.735-805 Advice and guidance on conflicts matters.
73.735-806 Documentation and publication of opinions.

                 Subpart I_Reporting Financial Interests

73.735-901 Reporting requirement of the Ethics in Government Act of 
          1978.
73.735-902 Reporting requirements for certain employees not covered by 
          the Ethics in Government Act of 1978.
73.735-903 Action if conflicts of interest or possible conflicts are 
          noted.
73.735-904 Resolution of apparent or actual conflicts of interest.

   Subpart J_Provisions Relating to Experts, Consultants and Advisory 
                            Committee Members

73.735-1001 Coverage.
73.735-1002 Ethical standards of conduct.
73.735-1003 Conflicts of interest statutes.
73.735-1004 Requesting waivers or exemptions.
73.735-1005 Salary from two sources.
73.735-1006 Reporting financial interests.
73.735-1007 Political activity.

      Subpart K_Special Government Employees Other Than Consultants

73.735-1101 General provision.

                      Subpart L_Disciplinary Action

73.735-1201 General provisions.

                     Subpart M_Reporting Violations

73.735-1301 Responsibility for reporting possible criminal violations.
73.735-1302 Responsibility for reporting allegations of misconduct.
73.735-1303 Prohibition of reprisals.

[[Page 203]]

73.735-1304 Referral of matters arising under the standards of this 
          part.

       Subpart N_Conduct and Responsibilities of Former Employees

73.735-1401 Prohibitions against post-employment conflicts of interest.

Appendix A to Part 73--List of Some Offenses for Which Disciplinary 
          Action May Be Taken
Appendix B to Part 73--Code of Ethics for Government Service

    Authority: 5 U.S.C. 7301, 42 U.S.C. 216; E.O. 11222, 30 FR 6469; 5 
CFR 735.101 et seq.

    Source: 46 FR 7369, Jan. 23, 1981, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  73.735-101  Purpose.

    To assure that the business of the Department of Health and Human 
Services (HHS) is conducted effectively, objectively, and without 
improper influence or the appearance of improper influence, employees 
and special Government employees must be persons of integrity and must 
observe high standards of honesty, impartiality, and behavior. They must 
not engage in any conduct prejudicial to the Government and must avoid 
conflicts of private interests with public duties and responsibilities. 
In accord with these principles, the regulations in this part are issued 
to inform HHS employees and special Government employees what standards 
of conduct are expected of them in performing their duties and what 
activities are permitted or prohibited both while they are employed and 
after their employment with the Department is ended.



Sec.  73.735-102  Definitions.

    In this part:
    (a) Employee means an officer or employee of HHS other than a 
special Government employee and includes Commissioned Officers of the 
Public Health Service who are on active duty, and individuals on 
assignment or detail to HHS pursuant to the Intergovernmental Personnel 
Act (5 U.S.C. 3371-3376). The term also includes HHS employees who are 
detailed to non-Federal or other Federal organizations. At times the 
term ``regular employee'' is used in place of ``employee'' to make a 
clear distinction between special Government employees and others 
employed by the Federal government.
    (b) Special Government employee means an individual who is retained, 
designated, appointed, or employed to perform temporary duties either on 
a full-time or intermittent basis, with or without compensation, for not 
to exceed 130 days during any period of 365 consecutive days.
    (c) Person means an individual, a corporation, a company, an 
association, a firm, a partnership or any other organization.
    (d) Former employee means a former employee of HHS or former special 
Government employee as defined in paragraph (b) of this section.
    (e) Principal Operating Component has the meaning given to that term 
in the Department's General Administration Manual. In addition, when 
used in these regulations, it includes the Office of the Secretary.
    (f) Department means the Department of Health and Human Services.



Sec.  73.735-103  Applicability.

    (a) The regulations in this part apply to all employees of the 
Department and to special Government employees to the extent indicated 
in Subparts J and K. They apply whether an employee is on leave, 
including leave without pay, or on duty.
    (b) These regulations may be supplemented by regulations governing 
principal operating components, or sub-units of principal operating 
components, provided the clearance and publication requirements for 
standards of conduct regulations are met and approval is obtained from 
the Department Ethics Counselor and the Assistant Secretary for 
Personnel Administration.



                       Subpart B_Responsibilities



Sec.  73.735-201  Employees and supervisors.

    (a) Employees and special Government employees shall be responsible 
for observing all generally accepted rules of conduct and the specific 
provisions of law and the regulations of this part that apply to them. 
They are required to become familiar with these

[[Page 204]]

regulations and to exercise informed judgments to avoid misconduct or 
conflicts of interest. They shall secure approvals when required and 
file financial disclosure reports or statements in accordance with the 
provisions of this part. Failure to observe any of these regulations may 
be cause for disciplinary action. Some of the provisions are required by 
law and carry criminal penalties which are in addition to any 
disciplinary action which could be taken. When employees have doubts 
about any provision, they should consult their supervisor, personnel 
office, or the Department Ethics Counselor or a deputy counselor.
    (b) Supervisors, because of their day-to-day relationships with 
employees, are responsible to a large degree for making sure high 
standards of conduct are maintained. They must become familiar with the 
Department's standards of conduct regulations and apply the standards to 
the work they do and supervise. Supervisors shall take suitable action, 
including disciplinary action in accordance with subpart L of these 
regulations, when violations occur.



Sec.  73.735-202  Management officials.

    (a) The Department has an obligation to enforce the requirements of 
this part in all respects and to help employees, special Government 
employees, and supervisors carry out their responsibilities to maintain 
high standards of ethical conduct. This includes an obligation for 
managers to provide information and training concerning the HHS conduct 
regulations, to provide advice and guidance with respect to them, and to 
review for possible conflicts of interest certain outside activities and 
financial interests of employees. The officials responsible for 
discharging the Department's obligations in this regard are identified 
in paragraphs (b) through (f) of this section.
    (b) Department Ethics Counselor. The Assistant General Counsel, 
Business and Administrative Law Division, shall be the Department Ethics 
Counselor and shall serve as the Designated Agency Official for matters 
arising under the Ethics in Government Act of 1978, (Pub. L. 95-521). 
The responsibilities of the Department Ethics Counselor shall include:
    (1) Rendering authoritative advice and guidance on matters of 
general applicability under the standards of this part and all other 
laws and regulations governing employee conduct, with particular 
reference to conflicts of interest matters.
    (2) Coordinating the Department's counselling and training services 
regarding conflicts of interest and assuring that employees of the 
Department are kept informed of developments in conflict of interest 
laws and other related matters of ethics.
    (3) Receiving information on conflicts of interest and appearances 
of conflicts of interest involving employees of the Department and 
forwarding this information to the appropriate management official, or 
the Inspector General, as necessary, with his or her legal evaluation of 
the matters addressed.
    (4) Reviewing the financial disclosure reports, requests for 
approval of outside activities, and similar reports filed by Executive 
level officers, non-career executives, deputy ethics counselors, and 
Schedule C employees in the Office of the Secretary for the purpose of 
identifying and resolving possible and actual conflicts of interest.
    (5) Maintaining liaison with the Office of Government Ethics.
    (6) Advising management officials on the resolution of conflicts of 
interest by any of the remedies set forth in Sec.  73.735-904 of this 
part.
    (7) Maintaining accurate and complete documentation of all formal 
guidance and advice regarding conflict of interest matters subject to 
the provisions of this part, except for routine or repetitious cases 
where the guidance given is not precedential.
    (8) Maintaining and publishing from time to time a list of those 
circumstances or situations which have resulted or may result in 
noncompliance with conflict of interest laws or regulations. [Section 
206(b)(7), Pub. L. 95-521].
    (9) Designating and training an appropriate number of reviewing 
officials to assist him or her in carrying out the duties of the 
Designated Agency Offical under the Ethics in Government Act.

[[Page 205]]

    (10) Maintaining effective lines of communication with deputy ethics 
counselors on all matters regarding employee conduct and ethics.
    (c) Deputy Ethics Counselors. Assistant General Counsels and 
Regional Attorneys are designated deputy ethics counselors to assist the 
Department's Counselor in carrying out his or her responsibilities, 
particularly with respect to employees in the organization in which the 
deputy counselor serves. Regional Attorneys shall provide such 
assistance for all employees of the Department in organizations for 
which the Principal Regional Official provides personnel services.
    (d) The Assistant Secretary for Personnel Administration shall be 
responsible for developing and issuing procedures and requirements for 
the implementation of these regulations and for monitoring the 
application of such procedures and requirements throughout the 
Department.
    (e) Heads of Principal Operating Components and the Assistant 
Secretary for Management and Budget for the Office of the Secretary 
shall be ultimately responsible for assuring that persons who work for 
their respective organizations comply with the standards of this part. 
Their responsibilities shall include:
    (1) Designating officials to review and approve outside activity 
requests in accordance with Sec.  73.735-708 of this part or statements 
of employment or financial interests under Sec.  73.735-902. A list of 
the officials designated for these purposes shall be provided to the 
Department Ethics Counselor and to the Assistant Secretary for Personnel 
Administration and shall be updated in January and July of each year.
    (2) Designating for the components of his or her organization, other 
than those for which a principal regional official provides personnel 
services, one or more individuals to oversee and coordinate the 
administrative aspects of these regulations. Responsibilities of such a 
person include making sure each employee or special government employee 
is provided a copy of these regulations, or an appropriate summary 
thereof; ensuring that training in the requirements of the regulations 
is provided to supervisors and to new employees; providing for the 
distribution, receipt, review and retention of financial interest 
reports and statements as directed by the Department Ethics Counselor 
and the Assistant Secretary for Personnel Administration; sending annual 
reminders as required; providing for a file of outside work requests; 
giving information and assistance to employees on a day-to-day basis; 
and making available to employees the names and addresses of the 
Department's Ethics Counselor and deputy ethics counselors.
    (f) Principal Regional Officials (PROs) shall designate one or more 
regional employees to perform, for components for which personnel 
services are provided by the PROs, the responsibilities in paragraph 
(e)(2) of this section.



                      Subpart C_Conduct on the Job



Sec.  73.735-301  Courtesy and consideration for others.

    (a) An employee's conduct on the job is, in all respects, of concern 
to the Federal government. Courtesy, consideration, and promptness in 
dealing with the public must be shown in carrying out official 
responsibilities, and actions which deny the dignity of individuals or 
conduct which is disrespectful to others must be avoided. Employees must 
recognize that inattention to matters of common courtesy can adversely 
affect the quality of service the Department is responsible for 
providing. Where appropriate, courtesy to the public should be included 
in the standards for employee performance.
    (b) Of equal importance is the requirement that courtesy be shown in 
day-by-day interaction with co-workers. Employees shall be polite to and 
considerate of other employees, and shall respect their needs and 
concerns in the work environment.



Sec.  73.735-302  Support of department programs.

    (a) When a Department program is based on law, Executive Order or 
regulation, every employee has a positive obligation to make it function 
as efficiently and economically as possible and to support it as long as 
it is a part

[[Page 206]]

of recognized public policy. An employee may, therefore, properly make 
an address explaining and interpreting such a program, citing its 
achievements, defending it against uninformed or unjust criticism, or 
soliciting views for improving it.
    (b) An employee shall not, either directly or indirectly, use 
appropriated funds to influence, or attempt to influence, a Member of 
Congress to favor or oppose legislation. However, when authorized by his 
or her supervisor, an employee is not prohibited from:
    (1) Testifying, on request, as a representative of the Department on 
pending legislation or proposals before Congressional Committees; or
    (2) Assisting Congressional Committees in drafting bills or reports 
on request, when it is clear that the employee is serving solely as a 
technical expert under the direction of committee leadership.
    (c) All employees shall be familiar with regulations and published 
instructions that relate to their official duties and responsibilities 
and shall comply with those directives. This includes carrying out 
proper orders from officials authorized to give them.
    (d) Employees are required to assist the Inspector General and other 
investigative officials in the performance of their duties or functions. 
This requirement includes the giving of statements or evidence to 
investigators of the Inspector General's office or other HHS 
investigators authorized to conduct investigations into potential 
violations.



Sec.  73.735-303  Use of government funds.

    (a) An employee shall not:
    (1) Improperly use official travel;
    (2) Improperly use payroll and other vouchers and documents on which 
Government payments are based;
    (3) Take or fail to account for funds with which the employee is 
entrusted in his or her official position; or
    (4) Take other Government funds for personal use. Violation of these 
prohibitions carry criminal penalties.
    (b) In addition, employees shall avoid wasteful actions or behavior 
in the performance of their assigned duties.



Sec.  73.735-304  Use of government property.

    (a) An employee shall not directly or indirectly use, or allow the 
use of, Government property of any kind, including property leased to 
the Government, for other than officially approved activities. An 
Employee has a positive duty to protect and conserve Government 
property, including equipment, supplies, and other property entrusted or 
issued to him or her. For example:
    (1) Only official documents and materials may be processed on 
Government reproduction facilities. Both supervisors and employees must 
assure that this rule is strictly followed. (Exception for employee 
welfare and recreation associations is stated in Chapter 25-10, General 
Administration Manual. Exception for labor organizations is stated in 
Personnel Instruction 711-1.)
    (2) Employees may drive or use Government automobiles or aircraft 
only on official business. Use of a Government owned, leased, or rented 
vehicle or aircraft for non-official purposes may result in suspension 
for at least 30 days or removal from the Federal service. 31 U.S.C. 
638a.

    Example: Normally, use of a Government automobile by travel between 
home and place of duty would not be considered official business and 
could not be authorized. An exception to this rule might be appropriate 
in a situation where an employee is required to leave early in the 
morning to attend a meeting in a distant city, or to return late in the 
day from such a meeting. Allowing the employee to drive a government car 
to his or her home the night before in order to leave from home, or to 
return to his or her home in the evening upon completion of the trip is 
permissible, provided the employee does not use the car for any personal 
reason.



Sec.  73.735-305  Conduct in Federal buildings.

    (a) An employee shall not participate while on Government-owned or 
leased property or while on duty for the Government, in any gambling 
activity including the operation of a gambling device, in conducting a 
lottery or pool, in a game for money or property, or in selling or 
purchasing a numbers slip or ticket.

[[Page 207]]

    (b) An employee shall not while in or on Government-owned or leased 
property or while on duty for the Government solicit alms and 
contributions, engage in commercial soliciting and vending, display or 
distribute commercial advertisements, or collect private debts.
    (c) The prohibitions in paragraphs (a) and (b) of this section do 
not preclude:
    (1) Activities necessitated by an employee's law enforcement duties;
    (2) Participation in Federally sponsored fund-raising activities 
conducted pursuant to Executive Order 10927, or similar HHS-approved 
activities; or
    (3) Buying a lottery ticket at an authorized State lottery outlet 
for a lottery authorized by State law and conducted by an agency of a 
State within that State.
    (d) General Services Administration regulations on ``Conduct on 
Federal Property'' apply to all property under the control of the 
General Services Administration, and they are also applicable to all 
buildings and space under the control of this Department. These 
regulations prohibit, among other things, gambling, being intoxicated, 
and possession, distribution, or use of narcotic or dangerous drugs on 
the premises. The GSA regulations are found in Subpart 101-20.3 of the 
GSA Regulations, 41 CFR 101-20.3.



Sec.  73.735-306  Sexual harassment.

    Sexual harassment is deliberate unsolicited verbal comments, 
gestures, or physical contact of a sexual nature which are unwelcome. 
Sexual harassment is unacceptable conduct and is expressly prohibited. 
In addition, supervisors and managers are prohibited from taking or 
promising personnel actions in exchange for sexual favors, or failing to 
take an action because an employee or applicant for employment, refuses 
to engage in sexual conduct. This same prohibition applies to 
relationships between Department personnel who take or recommend action 
on a grant or contract and the grantee or contractor. Those employees 
who wish to file a complaint of sexual harassment should contact the 
Office of Equal Employment Opportunity (EEO) within their respective 
agencies for guidance. (Time frames for pursuing a charge alleging 
sexual harassment are the same as for any other complaint based on 
allegations of sex discrimination.)



Sec.  73.735-307  Use of official information.

    (a) The public interest requires that certain information in the 
possession of the Government be kept confidential, and released only 
with general or specific authority under Department or operating 
component regulations. Such information may involve the national 
security or be private, personal, or business information which has been 
furnished to the Government in confidence. In addition, information in 
the possession of the Government and not generally available may not be 
used for private gain. The following paragraphs set forth the rules to 
be followed by Department employees in handling information in official 
files or documents:
    (1) Classified information. Employees who have access to information 
which is classified for security reasons in accordance with Executive 
Order 12065 are responsible for its custody and safekeeping, and for 
assuring that it is not disclosed to unauthorized persons. See the 
Department's Security Manual, Part 3 for details.
    (2) Security and investigative information. Security and 
investigative data received from Government agencies or other sources 
for official use only within the Department or developed under a pledge 
of confidence is not to be divulged to unauthorized persons or agencies.
    (3) Information obtained in confidence. Certain Department units 
(e.g., Food and Drug Administration, and the Social Security 
Administration) obtain in the course of their program activities certain 
information from businesses or individuals which they are forbidden by 
law from disclosing. These statutory prohibitions are found in 21 U.S.C. 
331j, and 18 U.S.C. 1905. Each employee is responsible for observing 
these laws.
    (4) Use of information for private gain. Government employees are 
sometimes able to obtain information about some action the Government is 
about to take or some other matter which is not generally known. 
Information of this

[[Page 208]]

kind shall not be used by the employee to further his or her or someone 
else's private financial or other interests. Such a use of official 
information is clearly a violation of a public trust. Employees shall 
not, directly or indirectly, make use of, or permit others to make use 
of, for the purpose of furthering any private interest, official 
information not made available to the general public.
    (b) The Privacy Act provides criminal penalties for an employee who 
willfully discloses individually identifiable information from records, 
disclosure of which is prohibited by that Act. 5 U.S.C. 552a(i).



                     Subpart D_Financial Obligations



Sec.  73.735-401  General provisions.

    (a) The Department considers the indebtedness of its employees to be 
a matter of their own concern. However, employees shall not by failure 
to meet their just financial obligations reflect adversely on the 
Government as their employer. Employees are expected to pay each just 
financial obligation in a proper and timely manner. A ``just financial 
obligation'' is one acknowledged by the employee or reduced to judgment 
by a court, or one imposed by law such as Federal, State, or local 
taxes. ``In a proper and timely manner'' is a manner which the 
Department determines does not, under the circumstances, reflect 
adversely on the part of an employee in meeting his or her financial 
obligations, particularly those that relate to support of the employee's 
family, to payment of Federal, State, or local taxes, or to payments to 
tax-supported institutions such as a city or State hospital, or 
educational institution. If for some reason an employee is unable to pay 
these obligations promptly, he or she is expected to make satisfactory 
arrangements for payment and abide by these arrangements.
    (b) Disciplinary action may be considered when an employee has 
handled his or her financial affairs in such a way that:
    (1) Action on complaints received from creditors requires the use of 
a considerable amount of official time, or
    (2) It appears that financial difficulties are impairing the 
employee's efficiency on the job, or
    (3) Because of the employee's financial irresponsibility, the 
attitude of the general public toward the Department may be adversely 
affected; and the employee after counseling does not make arrangements 
to meet his or her financial obligations.



               Subpart E_Gifts, Entertainment, and Favors



Sec.  73.735-501  Prohibited acceptance of gifts, entertainment, and favors.

    (a) Except as provided in Sec. Sec.  73.735-502 and 73.735-506, an 
employee shall not directly or indirectly solicit or accept anything of 
monetary value, including gifts, gratuities, favors, entertainment or 
loans from a person who the employee knows, or should know because of 
the nature of the employee's work:
    (1) Has, or is seeking to obtain, contractual or other business or 
financial relations with the employee's principal operating component, 
or sub-unit thereof; or with a component of the Department with respect 
to which the employee has official duties;
    (2) Conducts operations or activities that are regulated by the 
employee's principal operating component, or sub-unit thereof or by a 
component of the Department with respect to which the employee has 
official duties; or
    (3) Has interests that may be substantially affected by the 
performance or non-performance of the employee's official duties.
    (b) Employees may not designate a person or an organization, 
including charitable or non-profit organizations, to accept any gift 
which an employee is prohibited from accepting directly.



Sec.  73.735-502  Permissible acceptance of gifts, entertainment, and favors.

    (a) An employee may accept a gift, gratuity, favor, entertainment, 
loan or similar favor of monetary value which stems from a family 
relationship such as that between the employee and his or her parents, 
spouse or children, if it is clear that the relationship is the 
motivating factor.

[[Page 209]]

    (b) Loans from banks or other financial institutions may be accepted 
on customary terms.
    (c) Unsolicited advertising or promotional material such as pens, 
note pads, calendars and similar items of nominal intrinsic value may be 
accepted.
    (d) An employee may accept food or refreshment of nominal value on 
infrequent occasions in the ordinary course of a luncheon or dinner 
meeting or on an inspection tour only if the employee is properly in 
attendance and there is not a reasonable opportunity to pay.

    Example 1: Employee is on the premises of Company participating in a 
meeting at a normal mealtime. A representative of Company provides a 
meal for all meeting participants from a Company facility and there is 
no established method for payment. Employee may accept.
    Example 2: Employee is on the premises of Company and he or she goes 
outside for lunch with a representative of the Company. The 
representative offers to pay the bill. Since it is practical for the 
employee to pay for his or her own meal, the employee may not accept.

    (e) An employee may also accept food or refreshment of nominal value 
on infrequent occasions if the food and/or refreshment is offered to all 
participants or attendees of a meeting or convention.

    Example 1: During the course of a convention of a professional 
organization a luncheon open to all attendees is sponsored by a 
corporation which conducts business with the Department and the employee 
has official dealings with representatives of the corporation. The 
employee may attend the luncheon.



Sec.  73.735-503  Criminal provisions relating to gifts, entertainment, 
and favors.

    (a) The law provides criminal penalties for whoever, directly or 
indirectly:
    (1) Receives or accepts anything of value for or because of any 
official act the employee has performed or will perform; or
    (2) Gives, offers or promises anything of value for the performance 
of an official act or to influence the performance of an official act. 
18 USC 201.
    (b) The law prohibits an employee from receiving any salary or any 
contribution to, or supplementation of, his or her salary as 
compensation for services as an officer or employee of the Government 
from any source other than the United States or any State, county or 
municipality. This law does not prohibit an employee from continuing to 
participate in a bona fide pension, retirement, group life, health or 
accident insurance, profit-sharing, stock bonus or other employee 
welfare or benefit plan maintained by a former employer. 18 U.S.C. 209.

    Example 1: A corporate executive is asked to accept a position in 
the Department. The corporation offers to continue to pay the executive 
the difference between his or her salary as a Government employee and 
that received by an employee of the corporation. Such payment would be 
considered to be ``compensation for'' the employee's Government service 
and is prohibited.
    Example 2: A corporate executive is asked to accept a position in 
the Department. The corporation proposes to pay him or her a special 
severance payment in anticipation of this or her serving in the 
Government. This proposal would be prohibited because there is no 
distinction between the proposed lump-sum payment and the prohibited 
continuation of salary payments described in the example above.
    Example 3: A corporate executive is asked to accept a position in 
the Department. The corporation has an established policy which provides 
for an amount of severance pay to be paid any departing executive and 
proposes to make payment based on that policy when the executive leaves. 
The executive may accept the payment. Under these circumstances it is 
clear that the severance pay is in payment for past services not in 
anticipation of the future services for the Government.



Sec.  73.735-504  Gifts to official superiors.

    An employee shall not solicit a contribution from another employee 
for a gift to an official superior, make a donation as a gift to an 
official superior, or accept a gift from an employee receiving less pay 
than himself or herself. 5 U.S.C. 7351. This section does not prohibit a 
voluntary gift of nominal value or donation in nominal amount made on a 
special occasion such as marriage, illness or retirement.

[[Page 210]]



Sec.  73.735-505  Acceptance of awards and prizes.

    (a) Employees may accept awards, including cash awards, given in 
recognition of a meritorious public contribution or achievement. 
However, if there is any indication that the award may improperly 
influence the employee in the performance of his or her offical duties, 
advice about the acceptance of it should be sought from a deputy ethics 
counselor. Also, an employee may not accept an award from an 
organization which the employee knows, or should know, has a contractual 
or other business arrangement with, or is regulated by, the principal 
operating component, or a sub-unit, in which he or she is employed or 
with respect to which the employee has official duties, unless 
acceptance is approved by the head of the employee's principal operating 
component. The head of the component may not approve acceptance unless 
he or she is satisfied that no actual conflict of interest would result.
    (b) Employees may generally accept trophies, entertainment, rewards, 
and prizes given to competitors in contests or events which are open to 
the public.
    (c) Employees may not accept gifts, awards, decorations or other 
things of value from a foreign government except as provided in Sec.  
73.735-506.



Sec.  73.735-506  Gifts and decorations from foreign governments.

    (a) An employee may not request or otherwise encourage the tender of 
a gift or decorations from a foreign government or official thereof.
    (b) An employee may accept from a foreign government:
    (1) A gift which is in the nature of medical treatment or an 
educational scholarship;
    (2) A tangible gift of minimal value tendered or received as a mark 
of courtesy; (``Minimal value'' means a retail value in the United 
States at the time of acceptance of not more than one hundred dollars, 
unless the Administrator of the General Services Administration adjusts 
the value by regulation.) or
    (3) A tangible gift of more than minimal value when it appears that 
to refuse the gift would be likely to cause offense or embarrassment or 
otherwise adversely affect the foreign relations of the United States. 
However, the acceptance of such a gift would be on behalf of the United 
States and the gift would become the property of the United States. See 
the Department's General Administration Manual, Chapter 20-25 for 
information regarding the disposition of a gift accepted under these 
circumstances.
    (c) An employee may also accept from a foreign government gifts of 
travel or expenses for travel (such as transportation, food and lodging) 
that take place entirely outside the United States and are of more than 
minimal value, if such acceptance is consistent with the interests of 
the United States and is approved by the travel approving authority in 
accordance with the Department's Travel Manual. See General 
Administration Manual, Chapter 20-25 for a requirement to report such 
travel.
    (d) An employee may accept, retain, and wear a decoration tendered 
in recognition of active field service in time of combat operations or 
awarded for other outstanding or unusually meritorious performance, 
subject to the approval of the Secretary or his or her designee.
    (e) Members of an employee's family and household are also subject 
to the regulations in this section. A member of an employee's family and 
household is a relative by blood, marriage or adoption who is a resident 
of the household. However, if a member of an employee's family and 
household is employed by another agency of the Government, the offer or 
acceptance of a gift shall be treated under the regulations of that 
agency.
    (f) For purposes of this section ``foreign government'' means:
    (1) Any unit of foreign government authority including any foreign 
national, state, local and municipal government;
    (2) Any international or multinational organization whose membership 
is composed of any unit of foreign government described in paragraph 
(f)(1) of this section; or
    (3) Any agent or representative of any such unit or organization 
when acting as such agent or representative. (5 U.S.C. 7342)

[[Page 211]]



Sec.  73.735-507  Acceptance of travel and subsistence.

    (a) Except as provided in paragraph (b) of this section, employees 
may accept accommodations, subsistence, and travel in cash or in kind in 
connection with official travel for attendance at meetings, conferences, 
training in non-Governmental facilities or for performing advisory 
services, if approved in accordance with the provisions of the HHS 
Travel Manual. (5 U.S.C. 4111; 42 U.S.C. 3506)
    (b) Employees may not accept accommodations, subsistence, or travel 
in cash or in kind in connection with official travel from a non-
Governmental source with which they have official dealings unless 
Government or commercial travel and/or accommodations are not available. 
If travel and/or subsistence is accepted for official travel under these 
circumstances, such acceptance and the basis for it must be reported in 
writing to the Head of the Principal Operating Component or Assistant 
Secretary for Management and Budget for the Office of the Secretary.



Sec.  73.735-508  Other prohibitions.

    Employees shall avoid any action whether or not specifically 
prohibited by this part, which might result in or create the appearance 
of:
    (a) Using public office for private gain;
    (b) Giving preferential treatment to any person;
    (c) Impeding Government efficiency or economy;
    (d) Losing complete independence or impartiality in the performance 
of their Government duties;
    (e) Making a Government decision outside official channels; or
    (f) Affecting adversely the confidence of the public in the 
integrity of the Government.



                      Subpart F_Political Activity



Sec.  73.735-601  Applicability.

    (a) All employees in the Executive Branch of the Federal Government, 
including non-career employees, are subject to basic political activity 
restrictions in subchapter III of chapter 73 of title 5, United States 
Code (the former Hatch Act) and Civil Service Rule IV. Employees are 
individually responsible for refraining from prohibited political 
activity. Ignorance of a prohibition does not excuse a violation. This 
subpart summarizes provisions of law and regulation concerning political 
activity of employees. The Federal Personnel Manual and other 
publications of the Office of Personnel Management contain more detailed 
information on this subject. These may be reviewed in Department 
personnel offices, or will be made available by the Ethics Counselor, or 
the deputy counselor for the employee's organizational component.
    (b) The Secretary and Under Secretary are exempt from the 
prohibitions concerning active participation in political management and 
political campaigns. Also exempt are other officials of the Department, 
except the Inspector General and Deputy Inspector General, who are 
appointed by the President by and with the advice and consent of the 
Senate, and who determine policies to be pursued by the United States in 
the nationwide administration of Federal laws.
    (c) Intermittent employees are subject to the restrictions when in 
active duty status only and for the entire 24 hours of any day of actual 
employment.
    (d) Employees on leave, on leave without pay, or on furlough even 
though an employee's resignation has been accepted, are subject to the 
restrictions. Separated employees who have received a lump-sum payment 
for annual leave are not subject to the restriction during the period 
covered by the lump-sum payment or thereafter, provided they do not 
return to Federal employment during that period. Employees are not 
permitted to take a leave of absence to work with a political candidate, 
committee, or organization or to become a candidate for office with the 
understanding that they will resign their position if nominated or 
elected.
    (e) Employees are accountable for political activity by another 
person acting as their agent or under the employee's direction or 
control, if they are thus accomplishing indirectly what they may not 
lawfully do directly and openly.

[[Page 212]]

    (f) Though officers in the Public Health Service Commissioned Corps 
are not subject to the restrictions in Subchapter III of Chapter 73 of 
Title 5, United States Code, the provisions of this subpart apply to 
them.



Sec.  73.735-602  Permissible activities.

    (a) Section 7324 of Title 5, United States Code, provides that 
employees have the right to vote as they please and to express their 
opinions on political subjects and candidates. Generally, however, 
employees are prohibited from taking an active part in political 
management or political campaigns or using official authority or 
influence to interfere with an election or affect its results. There are 
some exemptions from the restrictions of the statute:
    (1) Employees may engage in political activity in connection with 
any question not specifically identified with a national or State 
political party. They also may engage in political activity in 
connection with an election, if none of the candidates represents a 
party any of whose candidates for presidential elector received votes at 
the last preceding election at which presidential electors were 
selected.
    (2) An exception relates to political campaigns within, or in 
communities adjacent to, the District of Columbia, or in communities the 
majority of whose voters are employees of the Federal government. 
Communities to which the exception applies are specifically designated 
by the Office of Personnel Management. Information regarding the 
localities and the conditions under which the exceptions are granted may 
be obtained from personnel offices or the Department Counselor or deputy 
counselors.
    (b) A covered employee is permitted to:
    (1) Register and vote in any election;
    (2) Express his or her opinion as an individual citizen privately 
and publicly on political subjects and candidates;
    (3) Display a political picture, sticker, badge or button;
    (4) Participate in the nonpartisan activities of a civic, community, 
social, labor, or professional organization, or of a similar 
organization;
    (5) Be a member of a political party or other political organization 
and participate in its activities to the extent consistent with law;
    (6) Attend a political convention, rally, fund raising function; or 
other political gathering;
    (7) Sign a political petition as an individual citizen;
    (8) Make a financial contribution to a political party organization;
    (9) Take an active part, as an independent candidate, or support of 
an independent candidate, in a partisan election in localities 
identified as permissible for such activities by the Office of Personnel 
Management;
    (10) Take an active part, as a candidate or in support of a 
candidate, in a nonpartisan election;
    (11) Be politically active in connection with a question which is 
not specifically identified with a political party, such as a 
constitutional amendment, referendum, approval of a municipal ordinance 
or any other question or issue of a similar character;
    (12) Serve as an election judge or clerk, or in a similar position 
to perform nonpartisan duties as prescribed by State or local law; and
    (13) Otherwise participate fully in public affairs, except as 
prohibited by law, in a manner which does not materially compromise his 
or her efficiency or integrity as an employee or the neutrality, 
efficiency, or integrity of his or her agency.
    (c) The head of a principal operating component may prohibit or 
limit the participation of an employee or class of employees of his or 
her component in an activity permitted by paragraph (b) of this section, 
if participation in the activity would interfere with the efficient 
performance of official duties, or create a conflict or apparent 
conflict of interest.



Sec.  73.735-603  Prohibited activities.

    (a) The following are prohibited activities:
    (1) Serving as an officer of a political party, a member of a 
national, State or local committee of a political party, an officer or 
member of a committee of a partisan political club, or being a candidate 
for any of these positions;

[[Page 213]]

    (2) Organizing or reorganizing a political party organization or 
political club;
    (3) Directly or indirectly soliciting, receiving, collecting, 
handling, disbursing, or accounting for assessments, contributions, or 
other funds for a partisan political purpose or in connection with a 
partisan election;
    (4) Organizing, selling tickets to, seeking support for, or actively 
participating in a fund-raising activity of, a political party or 
political club;
    (5) Taking an active part in managing the political party campaign 
of a candidate for public office or political office;
    (6) Being a candidate for, or campaigning for, an elective public 
office, except as permitted in Sec.  73.735-602(b)(9);
    (7) Taking an active part in an organized solicitation of votes in 
support of or in opposition to a candidate for public office or 
political party office;
    (8) Acting as recorder, watcher, challenger, or similar officer at 
the polls on behalf of a political party or candidate in a partisan 
election;
    (9) Driving voters to the polls on behalf of a political paty or a 
candidate in a partisan election;
    (10) Endorsing or opposing a candidate in a partisan election in a 
political advertisement, a broadcast, campaign literature, or similar 
material;
    (11) Serving as a delegate, alternate, or proxy to a political party 
convention;
    (12) Addressing a State or national convention or caucus, or a rally 
or similar gathering of a political party, in support of or in 
opposition to a candidate for public or political party office, or on a 
partisan political question; and
    (13) Initiating or circulating a nominating petition for a candidate 
in a partisan election.
    (b) In addition, certain political activities are prohibited by 
Federal criminal law:
    (1) Officers and employees may not directly or indirectly solicit or 
receive, or be in any way involved in soliciting or receiving, any 
assessment, subscription or contribution for any political purpose 
whatever from another officer or employee. This prohibition extends to 
one who acts as a mere agent or messenger for the purpose of turning the 
contribution over to a political organization. 18 U.S.C. 602.
    (2) All persons, whether employees or not, are prohibited from 
soliciting in any manner, or receiving a contribution of, money or a 
thing of value, in any room or building occupied in the discharge of 
official duties by any officer or employee of the United States. 18 
U.S.C. 603. This prohibition extends to the sending of a letter 
soliciting political contributions for delivery in a Government 
building.
    (3) No officer or employee may directly or indirectly give to any 
other officer, employee or person in the service of the United States, 
any money or other thing of value to be applied to the promotion of any 
political objective. 18 U.S.C. 607.
    (4) Discrimination for giving or withholding any contribution for 
any political purpose and discrimination based on political influence or 
recommendations is prohibited.
    (c) Various other laws prohibit certain activities in connection 
with political campaigns and elections. They include:
    (1) Intimidating, threatening, or coercing voters in Federal 
elections (18 U.S.C. 594).
    (2) Using official authority in interfering with a Federal election 
by a person employed in any administrative position by the United States 
or by any department, independent establishment, or agency of the United 
States or by any State, agency, or political subdivision thereof in 
connection with any activity financed in whole or in part by Federal 
funds (18 U.S.C. 595).
    (3) Promising Federal employment, compensation, or any benefit from 
Federal funds, in return for political activity or support (18 U.S.C. 
600).
    (4) Depriving anyone of employment, compensation, or any benefit 
derived from Federal relief or work relief funds on account of race, 
creed, color, or political activity (18 U.S.C. 601).
    (5) Soliciting, assessing, or receiving subscriptions or 
contributions for political purpose from anyone on Federal relief or 
work relief (18 U.S.C. 604).

[[Page 214]]



                      Subpart G_Outside Activities



Sec.  73.735-701  General provisions.

    (a) Outside employment may be appropriate when it will not adversely 
affect performance of an employee's official duties and will not reflect 
discredit on the Government or the Department. Such work may include 
civic, charitable, religious, and community undertakings. There are 
certain types of outside work, however, which give rise to a real or 
apparent conflict of interest. Some of these are prohibited by law. 
Others are prohibited by regulation, as discussed in paragraph (b) of 
this section, or by criteria developed by heads of operating components 
for application within a particular component. All of these provisions 
are binding, but they do not necessarily include all possible conflicts 
of interest. In all instances, good judgment must be used to avoid a 
conflict between an employee's Federal responsibilities and outside 
activities.
    (b) An employee shall not engage in outside employment or other 
outside activity not compatible with the full and proper discharge of 
the duties and responsibilities of his or her Government employment 
whether or not in violation of any specific provision of law. 
Incompatible activities include, but are not limited to:
    (1) Acceptance of a fee, compensation, gift, payment of expense, or 
any other thing of monetary value in any circumstances in which 
acceptance may result in, or create the appearance of, conflicts of 
interest;
    (2) Outside employment which tends to impair the employee's mental 
or physical capacity to perform Government duties and responsibilities 
in an acceptable manner;
    (3) Work which identifies the Department or any employee in his or 
her official capacity with any organization commercializing products 
relating to work conducted by the Department, or with any commercial 
advertising matter, or work performed under such circumstances as to 
give the impression that it is an official act of the Department or 
represents an official point of view;
    (4) Outside work or activity that takes the employee's time and 
attention during his official work hours.
    (c) An employee shall not receive any salary or anything of monetary 
value from a private source as compensation for services to the 
Government. For example, a Department employee may be called upon, as a 
part of his or her official duties, to participate in a professional 
meeting sponsored by a non-Government organization, or to contribute a 
paper or other writing prepared on official time for publication under 
non-Government auspices. The employee must not accept an honorarium or 
fee for such services, even though the organization accepting the 
service customarily makes such a payment to those who participate. Nor 
may the employee accept a contribution to some charity, educational 
institution, or the like, in appreciation of the services furnished by 
the Department employee who cannot accept the usual payment. All offers 
to make such a contribution must be refused. Any employee with whom such 
a question is raised shall explain that the service involved was 
provided as an official action of the Department and is authorized by 
law. Under these circumstances, it is inappropriate for any payment to 
be made, even indirectly and to a third party, for services which are 
furnished without charge by the Government.
    (d) Other than as provided in paragraph (c) of this section, 
employees may receive compensation or other things of monetary value for 
any lecture, discussion, writing or appearance the subject matter of 
which is in part devoted to the responsibility, programs or operations 
of the Department so long as the activity is undertaken in a personal 
capacity, is not performed as official duty, is not done while on 
official time, and does not create a conflict of interest or appearance 
of conflict of interest. However, such activities are considered outside 
employment and may be undertaken only as provided in this subpart.
    (e) This section does not restrict the acceptance of compensation or 
other things of monetary value for any lecture, discussion, writing or 
appearance,

[[Page 215]]

the subject matter of which is not devoted to the responsibilities, 
programs, or operations of the Department and which are undertaken in a 
private capacity and in accordance with Sec.  73.735-704, Sec.  73.735-
705, or Sec.  73.735-706.
    (f) Federal law limits the amount of honorarium that may be paid any 
employee for any one speech, writing or appearance to $2,000.00 (not to 
include amounts for actual travel and subsistence expenses for the 
employee and his or her spouse) and an aggregate of $25,000.00 in any 
calendar year. This limitation applies to such activities whether or not 
the subject matter is related to the responsibilities, programs or 
operations of the Department. (2 U.S.C. 441i) The term ``honorarium'' 
means payment of money or other thing of value whether made gratuitously 
or as a fee for an appearance, speech or article but does not include 
salary or compensation made for services rendered on a continuing basis, 
such as for teaching, or as proceeds from the sale of a book or similar 
undertaking.
    (g) An employee who is a Presidential appointee covered by section 
401(a) of Executive Order 11222 shall not receive compensation or 
anything of monetary value for any consultation, lecture, discussion, 
writing or appearance, the subject matter of which is devoted 
substantially to the responsibilities, programs, or operations of his or 
her component, or which draws substantially on official data or ideas 
which have not or will not on request become public information.
    (h) Application of these general provisions to some specific 
activities is discussed below.



Sec.  73.735-702  Criminal prohibitions on outside activities.

    (a) An employee may not, with or without compensation, represent 
another before any Government agency, court or commission in connection 
with any proceeding, application, request for a ruling, contract, claim 
or other particular matter in which the United States is a party or has 
a direct and substantial interest. (18 U.S.C. 203 and 205)
    (b) An employee may not act as agent or attorney for anyone else in 
prosecuting any claim against the United States (18 U.S.C. 205).
    (c) As an exception to the above, if it is not inconsistent with the 
performance of his or her duties, an employee may act without 
compensation as an agent or attorney for another employee, or a person 
under active consideration for Federal employment, who is the subject of 
disciplinary, loyalty, or other personnel administration proceedings in 
connection with those proceedings at the administrative level. For 
example, an employee may represent another employee who is the subject 
of disciplinary action, or the complainant in a discrimination 
proceeding, at all stages within the Department and before the Merit 
Systems Protection Board or Equal Employment Opportunity Commission but 
not in Federal Court. It would be inconsistent with the performance of 
official duties for a supervisor to represent subordinate employees.
    (d) The law and these regulations do not prohibit an employee from 
acting, with or without compensation, as agent or attorney for his or 
her parents, spouse, child or any person for whom, or estate for which, 
he or she is acting as fiduciary provided that the head of the principal 
operating component or his or her designee approve. Such approval, if 
granted, must be granted in accordance with the procedures for approval 
of outside activity. However, the employee may not do so if the 
particular matter is one in which he or she has participated personally 
and substantially or which is his or her official responsibility. (18 
U.S.C. 205).



Sec.  73.735-703  Statutory prohibitions related to employment 
by a foreign government.

    Employees, including officers in the Public Health Service (PHS) 
Commissioned Corps and retired officers of the Regular Commissioned 
Corps of the PHS, may not, without the consent of Congress, be employed 
by a foreign government or agency of a foreign government (Art. I, Sec. 
9, U.S. Const.). Congress has consented to such employment by Reserve 
Commissioned Officers of the PHS not on active duty and by Retired 
Regular Commissioned Officers (37 U.S.C. 801, note) if approved

[[Page 216]]

under regulations of the Department of State. 22 CFR part 3a.



Sec.  73.735-704  Professional and consultative services.

    (a) Employees may engage in outside professional or consultative 
work only after meeting certain conditions. Except as provided in 
Sec. Sec.  73.735-705 and 73.735-706 for activities discussed in those 
sections, the conditions which must be met are:
    (1) The work is not to be rendered, with or without compensation, to 
organizations, institutions, or state or local governments with which 
the official duties of the employee are directly related, or indirectly 
related if the indirect relationship is significant enough to cause the 
existence of conflict or apparent conflict of interest; or
    (2) The work is not to be rendered for compensation to help a 
person, institution, or government unit prepare or aid in the 
preparation of grant applications, contract proposals, program reports, 
and other material which are designed to become the subject of dealings 
between the institutions or government units and the Federal Government. 
All requests to perform consultative services, either compensated or 
uncompensated, for institutions or government units which have recently 
negotiated or may in the near future seek a contract or grant from this 
Department must be carefully appraised to avoid any conflict or apparent 
conflict of interest.
    (b) Advance administrative approval in accordance with Sec.  73.735-
708 of this subpart must be obtained. Such approval is required whether 
or not the services are for compensation, and whether or not related to 
the employee's official duties.
    (c) For the purpose of this section, ``professional and consultative 
work'' is performance of work requiring knowledge of an advanced type in 
a field of science or learning customarily acquired by a course of 
specialized instruction and study in an institution of higher education, 
or hospital which requires the exercise of judgment and discretion in 
its performance and is primarily intellectual in nature as opposed to 
manual, mechanical or physical work.
    (d) Membership on a Board of Directors, Board of Regents, Board of 
Trustees, Planning Commission, Advisory Council or Committee, or on any 
similar body which provides advice, counsel, or consultation, shall be 
considered outside consultative services for which advance 
administrative approval is required.



Sec.  73.735-705  Writing and editing.

    (a) Employees are encouraged to engage in outside writing and 
editing whether or not done for compensation, when such activity is not 
otherwise prohibited. Such writing and editing, though not a part of 
official duties, may be on a directly related subject or entirely 
unrelated. Certain conditions must be met in either case, however, and 
certain clearances or approvals are prescribed according to the content 
of the material as set forth in paragraphs (b) through (e) of this 
section.
    (b) Conditions applying to writing and editing done not as a part of 
official duties.
    (1) The following conditions shall apply to all writing and editing 
whether related or unrelated to the employee's official duties:
    (i) Government-financed time or supplies shall not be used by the 
author or by other Government employees in connection with the activity; 
and
    (ii) Official support must not be expressed or implied in the 
material itself or advertising or promotional material, including book 
jackets and covers, relating to the employee and his or her contribution 
to the publication.
    (2) If the writing or editing activity is unrelated to the 
employee's official duties or other responsibilities and programs of the 
Federal government, the employee must:
    (i) Make no mention of his or her official title or affiliation with 
the Department, or
    (ii) Use his or her official title or affiliation with the 
Department in a way that will not suggest or convey official endorsement 
of the work.
    (3) If the writing or editing activity is related to the employee's 
official duties or other responsibilities and programs of the Federal 
government, the employee must:

[[Page 217]]

    (i) Make no mention of his or her official title or affiliation with 
the Department, or
    (ii) Use his or her official title or affiliation with the 
Department and a disclaimer as provided in paragraph (c) of this 
section, or
    (iii) Submit the material for clearance within the operating 
component, under procedures established by the component. When clearance 
is denied at any lower level, the employee shall have recourse for 
review up to the head of the principal operating component. This 
clearance will show there are no official objections to the activity and 
the employee may then use his or her official title or affiliation with 
the Department usually without a disclaimer.
    (c) Disclaimers. (1) Except where the requirement for disclaimer is 
waived as a result of official clearance, disclaimers shall be used in 
all writing and editing related to the employee's official duties or 
other responsibilities and programs of the Federal government:
    (i) In which the employee identifies himself or herself by official 
title or affiliation with the Department, or
    (ii) When the prominence of the employee or the employee's position 
might lead the public to associate him or her with the Department, even 
without identification other than name.
    (2) Disclaimers shall read as follows unless a different wording is 
approved by the Assistant General Counsel, Business and Administrative 
Law Division, Office of the General Counsel: ``This (article, book, 
etc.) was (written, edited) by (employee's name) in (his or her) private 
capacity. No official suport or endorsement by (name of operating 
component or of Department) is intended or should be inferred.''
    (d) Advance approval. Advance approval is required in accordance 
with Sec.  73.735-708 of this subpart when one or more of the following 
conditions apply:
    (1) Any Government information is used which is not available on 
request to persons outside the Government;
    (2) Material is written or edited which pertains to subject matter 
directly related to an employee's official duties; (This includes 
editing for scientific or professional journals which is related to his 
or her official duties.)
    (3) Material is written or edited which pertains to any Government-
sponsored research or other studies for which clinical case records or 
other material of a confidential nature are used or to which access is 
limited for persons outside the Government. Such use will not be 
permitted unless made under safeguards established by the operating 
component to retain the confidentiality of the material, and such use is 
determined to be in the public interest.



Sec.  73.735-706  Teaching, lecturing, and speechmaking.

    (a) Employees are encouraged to engage in teaching and lecturing 
activities which are not part of their official duties when certain 
conditions are met. These conditions, which apply to outside teaching 
and lecturing (including giving single addresses such as commencement 
and Memorial Day speeches) whether or not done for compensation, are:
    (1) No Government-financed time, or Government supplies not 
otherwise available to the public, are used in connection with such 
activity;
    (2) Government travel or per diem funds are not used for the sole 
purpose of obtaining or performing such teaching or lecturing;
    (3) Such teaching or lecturing is not dependent on specific 
information which would not otherwise be available to the public;
    (4) Teaching, lecturing, or writing may not be for the purpose of 
the special preparation of a person or class of persons for an 
examination of the Office of Personnel Management or Board of Examiners 
for the Foreign Service, that depends on information obtained as a 
result of the employee's Government employment, except when that 
information has been made available to the general public or will be 
made available on request;
    (5) Such activities do not involve knowingly instructing persons on 
dealing with particular matters pending before Government organizations 
with which the employee is associated in an official capacity;
    (6) Advance approval is obtained when required by paragraph (b) of 
this section.

[[Page 218]]

    (b) Advance approval. Advance approval must be obtained in 
accordance with Sec.  73.735-708 of this subpart before an employee may:
    (1) Teach or lecture for an institution which has or is likely to 
have official dealings with the bureau or comparable organizational unit 
in which he or she is employed;
    (2) Use, for teaching or lecturing purposes, clinical case records 
or other material of a confidential nature or to which access is limited 
for persons outside the Government. Such use will not be permitted 
unless made under safeguards established by the operating component to 
retain the confidentiality of the material, and such use is determined 
to be in the public interest.



Sec.  73.735-707  Holding office in professional societies.

    (a) Employees may be members of professional societies and be 
elected or appointed to office in such a society. Activity in 
professional associations is generally desirable from the point of view 
of both the Department and the employee. Employees shall avoid, however, 
any real or apparent conflict of interest in connection with such 
membership. For example, they must not:
    (1) Directly or indirectly commit the Department or any portion of 
it on any matter unless such action is taken in an official capacity;
    (2) Permit their names to be attached to documents the distribution 
of which would be likely to embarrass the Department; or
    (3) Serve in capacities involving them as representatives of non-
Government organizations in dealing with the Government.
    (b) In undertaking any office or function beyond ordinary membership 
in a professional association, a Department employee must obtain advance 
approval in accordance with Sec.  73.735-708 of this subpart in any 
situation in which his or her responsibilities as an officer would 
relate to his or her official duties or would create a real or apparent 
conflict of interest with responsibilities as a Department employee. For 
example, advance administrative approval must be obtained:
    (1) Before an employee who is responsible for review and approval of 
grants or contracts, or is in a supervisory position over those who 
conduct review and approval, may hold office, or be a trustee or member 
of the governing board, or the chairman or member of a committee, in any 
organization which has or is seeking a grant or contract with the bureau 
or comparable organizational unit in which he or she is employed;
    (2) Before an employee may hold office in an organization which 
customarily expresses publicly views on matters of legislative or 
administrative policy within the specific areas of concern to the 
Department.



Sec.  73.735-708  Administrative approval of certain outside activities.

    (a) Scope. As specified in Sec.  73.735-704 through 707, an employee 
is required to obtain advance administrative approval to engage in the 
following outside activities:
    (1) Certain writing or editing activities;
    (2) Certain types of teaching and lecturing;
    (3) All professional and consultative services;
    (4) Any other outside activity for which the head of a principal 
operating component or the head of a sub-unit of a principal operating 
component imposes internal requirements for administrative approval; and
    (5) Certain office-holding activities in professional societies.
    (b) Requests for Administrative Approval. An employee seeking to 
engage in any of the activities for which advance approval is required 
shall make a written request for administrative approval a reasonable 
time before beginning the activity. (See Sec.  73.735-202(e)(1)). This 
request should be directed to the employee's supervisor who will forward 
it to the official authorized to approve outside work requests for the 
employee's component. The request should include the following 
information:
    (1) Employee's name, position title, grade or rank;
    (2) Nature of the activity, fully describing the specific duties or 
services for which approval is requested;
    (3) Name and business of person or organization for which work will 
be

[[Page 219]]

done, or statement that work will be self-employment. If self-
employment, employee must state whether activity will be conducted alone 
or with partners;
    (4) Place where work will be performed;
    (5) Estimated total time to be devoted to activity. If on a 
continuing basis, indicate estimated time per year and the anticipated 
termination date;
    (6) Whether services can be performed entirely outside of usual duty 
hours. If not, the estimated number of hours absent from work should be 
indicated;
    (7) Method or basis of compensation if any (e.g., fee, per diem, per 
annum, or other).
    (8) Where an employee seeks approval to provide consultative or 
professional services to organizations including governments which have 
been awarded or may apply for a Federal grant or contract, the request 
shall also include full details on any aspect of the professional and 
consultative services which could relate in any way, either directly or 
indirectly, to grant applications, contract proposals, program reports, 
and other material which are designed to become the subject of dealings 
between the grantee or contractor and the Government. (See Sec.  73.735-
704(a)(2))
    (c) The Department Ethics Counselor will review and approve outside 
work requests for Executive level officers, non-career executives, 
deputy ethics counselors, and Schedule C employees in the Office of the 
Secretary.
    (d) Granting Approval of Certain Activities. The approving official 
shall review each request submitted under paragraph (b) of this section, 
and appraise each request on the basis of the standards of this part and 
all other applicable laws, regulations or internal rules of the 
principal operating component or sub-unit thereof. He or she should 
consult with a deputy ethics counselor or the Department Ethics 
Counselor in all cases that raise a difficult or novel question of law 
or fact. The approving official shall approve or disapprove each request 
and communicate his or her decision in writing to the employee.



Sec.  73.735-709  Annual reporting of outside activities.

    By September 10 of each year the approving official shall require a 
report from each person for whom outside work has been approved during 
the past year. The report shall show:
    (a) For the 12 months just past (ending August 31):
    (1) Whether the anticipated work was actually performed for the 
person or organization named in the request for approval;
    (2) Actual amount of time spent on the activity.
    (b) For the forthcoming 12 months (ending August 31):
    (1) Whether it is anticipated that the outside work will continue;
    (2) Whether any change is anticipated with respect to information 
supplied in accordance with the original request on which approval was 
based.



Sec.  73.735-710  Maintenance of records.

    The official responsible for the administrative aspects of these 
regulations (Sec.  73.735-202) shall make provisions for the retention 
and filing of requests for approval of outside work (or copies of such 
requests), a copy of the notification of approval or disapproval, and 
the annual report.



                      Subpart H_Financial Interest



Sec.  73.735-801  Participation in matters affecting a personal 
financial interest.

    (a) An employee shall not participate personally and substantially 
as a Government employee in a matter in which any of the following 
individuals or organizations has a financial interest:
    (1) The employee;
    (2) The employee's spouse;
    (3) The employee's minor child;
    (4) An organization in which the employee serves as an officer, 
director, trustee, partner, or employee; or
    (5) A person or organization with which the employee is negotiating 
for prospective employment or has an arrangement for prospective 
employment. Criminal penalties may be imposed under 18 U.S.C. 208 for 
violations of the prohibition.
    (b) Applying the provision of 18 U.S.C. 208:

[[Page 220]]

    (1) A ``financial interest'' is any interest of monetary value which 
may be directly and predictably affected by the official action of an 
employee. There is no minimum amount of value or control that 
constitutes a financial interest.

    Example 1: An employee owns a single share of stock in a widely-held 
corporation. If the corporation is likely to be affected by a matter in 
which the employee participates as a Government official, the employee 
may violate 18 U.S.C. 208.
    Example 2: An employee has a paid part-time position with a non-
federal organization. If the organization is likely to be affected by a 
matter in which the employee participates as a Government official, the 
employee would violate 18 U.S.C. 208.

    (2) The prohibition of 18 U.S.C. 208 applies to personal and 
substantial involvement by an employee in a matter, exercised through 
decision, approval, disapproval, recommendation, investigation, giving 
advice, or other significant effort regarding the matter.

    Example 1: An employee is a member of a panel that evaluates 
proposals for contracts and makes recommendations as to their award. If 
the employee's spouse owns stock in a company which submits a proposal 
that is reviewed by the panel, the employee would violate 18 U.S.C. 208 
even though the panel recommendation may be rejected by the contracting 
officer.
    Example 2: An employee is on a leave of absence from a university. 
He or she would violate 18 U.S.C. 208 by participating in the drafting 
of regulations which would have a ``direct and predictable effect'' upon 
universities in general and, therefore, upon the employee's university.

    (3) An employee must know that the financial interest exists in 
order to violate 18 U.S.C. 208.

    Example: An employee inherited a beneficial interest in a trust. He 
or she does not, however, have actual knowledge of the specific property 
held by the trustee. If the trust contains stock in a corporation which 
may be affected by the employee's official actions, he or she would not 
violate 18 U.S.C. 208 in taking official action affecting the 
corporation.

    (4) Negotiation for prospective employment includes both an 
indication of interest on the part of the employee in working for an 
organization and an affirmative action on the part of the organization 
to show consideration of the employee.

    Example 1: An employee of the Department sends resumes and cover 
letters to fifty prospective employers, all of whom regularly have 
dealings with HHS. Forty employers do not respond; however, ten respond 
with cordial form letters stating that the employee's resume will be 
retained for future reference. For purposes of the 18 U.S.C. 208 
prohibition, the employee is negotiating for prospective employment at 
the time he or she sends resumes.
    Example 2: At a site visit to a grantee institution, an employee who 
is officially responsible for a grant to that institution informs an 
officer of the institution that he or she is seeking a new position 
outside HHS. The grantee subsequently makes a conditional offer of 
employment to the employee who promptly responds by asking for an 
opportunity to discuss salary and related matters. Under these 
circumstances, a negotiation for prospective employment is underway.

    (c) An employee may obtain approval to participate in his or her 
official capacity in a matter in which he or she has a direct or 
indirect financial interest, if the interest is not so substantial as to 
affect the integrity of his or her official duties. An employee who 
believes that such participation is warranted should follow the 
procedures in Sec.  73.735-804.
    (d) An employee convicted of violating 18 U.S.C. 208 may be fined up 
to $10,000, or imprisoned up to two years, or both.



Sec.  73.735-802  Executive order prohibitions.

    (a) Basic prohibition of Executive Order 11222. (1) An employee 
shall not have a direct or indirect financial interest that conflicts 
substantially, or appears to conflict substantially, with his or her 
duties as a Federal employee.
    (2) An employee need not have a financial interest that actually 
conflicts with his or her duties to violate the prohibition of E.O. 
11222. Any financial interest that could reasonably be viewed as an 
interest which might compromise the employee's integrity, whether or not 
this is in fact true, is subject to this prohibition.
    (3) Except as provided in Sec.  73.735-802 (b) and (c), an employee 
who has an indirect financial interest in a business entity through the 
ownership of shares in a widely-held mutual fund or other

[[Page 221]]

regulated investment company will not violate E.O. 11222. Stocks in 
business entities held by an intermediary such as a mutual fund are 
generally too remote or inconsequential to affect the integrity of an 
employee's services.
    (b) Employees in regulatory activities. (1) An employee who is 
working in a regulatory activity shall not have a financial interest in 
any company whose business activities are subject to the regulations of 
the particular activity with which the employee is associated, unless 
the regulated activities of the company are an insignificant part of its 
total business operations.
    (2) An employee working in a regulatory activity may not hold shares 
in a mutual fund or other regulated investment company which specializes 
in holdings in industries that are regulated by the particular activity 
in which he or she is employed.

    Example: An employee working for the Bureau of Laboratories, Centers 
for Disease Control, may not hold shares in a regulated investment 
company which specializes in holdings that include medical testing 
laboratories.

    (c) Employees having procurement or contracting responsibilities. 
(1) An employee who serves as a procurement or contracting officer shall 
not have a financial interest in a company or companies with which he or 
she in the course of his or her official duties would be likely to have 
procurement or contracting relationships.
    (2) A procurement or contracting officer may not hold shares in a 
mutual fund or other regulated investment company that specializes in 
holdings in industries with which such officer would be likely to have 
procurement or contracting relationships.

    Example: A contracting officer in the Social Security Administration 
owns shares in the XYZ Mutual Fund which specializes in stock in firms 
manufacturing electronic data processing equipment. Ownership of XYZ 
Mutual Fund shares would be prohibited in this instance. On the other 
hand, a contracting officer for a Public Health Service hospital, who is 
not likely to have responsibility for major contracts relating to 
electronic data processing, could hold such shares.



Sec.  73.735-803  Prohibition against involvement in financial transactions 
based on information obtained through Federal employment.

    An employee shall not engage in, directly or indirectly, a financial 
transaction as a result of, or in primary reliance upon, any information 
gained through his or her official duties. Information gained through 
official duties are those facts and other data that relate to the 
employee's official duties or to the functions of the employing 
component and would not be available to the employee were he or she not 
an officer of the Federal government.

    Example 1: An employee working part-time for a consulting firm that 
does no business with the employee's principal operating component, in 
the area of health care planning advises it, based upon his or her 
knowledge of a new health care planning program about to be initiated by 
the Public Health Service. The employee's knowledge of the program was 
acquired solely through reading policy statements and other PHS 
literature available to the public under the Freedom of Information Act. 
In such case, the employee would not violate this regulation if the 
outside activity was otherwise approvable under Subpart G.
    Example 2: A contracting officer with detailed knowledge of a 
negotiated procurement contract invests in a corporation that is likely 
to indirectly profit from the award of that contract. The officer's 
decision to invest is based upon technical details of the successful 
contract proposal that would not otherwise be available to a private 
citizen. The officer would violate this regulation in such a situation.



Sec.  73.735-804  Waiver of the prohibitions in this subpart.

    (a) An employee may request approval to participate in his or her 
official capacity in a matter in which he or she has a direct or 
indirect financial interest if the employee believes the interest is so 
remote and inconsequential that it would not affect the integrity of his 
or her official duties. Also an employee who has a financial interest 
that would otherwise be prohibited under these regulations may request 
an exemption from the prohibition for the reason stated in the preceding 
sentence.
    (b) The request shall be in writing and shall include the following 
information:

[[Page 222]]

    (1) Employee's name, occupational title, grade or rank and Federal 
salary;
    (2) Full description of financial interest: including whether 
ownership, service as officer, partner, etc.;
    (3) Business or activity in which financial interest exists;
    (4) Description of official matter in which employee is requesting 
approval to participate;
    (5) Basis for requesting determination that the interest is ``not so 
substantial as to be deemed likely to affect the integrity of the 
services which the Government may expect.'' (If based on a small total 
value of investment, supply appropriate information on total value, such 
as total shares held and latest quoted market price. If other basis, 
explain fully.)

The request should be sent through usual administrative channels to the 
official responsible for reviewing financial disclosure reports or 
statements for the employee's organization (Subpart I). That official, 
after conferring with a deputy ethics counselor or with the Department 
Ethics Counselor as appropriate, will make a decision about the 
exemption or exception and inform the employee in writing.



Sec.  73.735-805  Advice and guidance on conflicts matters.

    (a) Whenever an employee has a question about the appropriate course 
of conduct to be followed in a matter that may involve an actual or 
apparent conflict of interest, he or she should immediately consult with 
his or her supervisor or a deputy ethics counselor, or both. If a 
supervisor who is consulted determines that the matter warrants further 
consideration, he or she may, in conjunction with the employee, submit 
the details of the matter, in writing, to the appropriate deputy ethics 
counselor. These details should include a description of:
    (1) The activity, relationship, or interest giving rise to the 
question posed by the employee;
    (2) The duties or official responsibilities of the employee(s) 
involved;
    (3) The nature of the actual or apparent conflict of interest; and
    (4) Any other information that may be helpful in reviewing the 
problem.
    (b) Upon receiving the submission of an employee or a supervisor, 
the deputy ethics counselor will develop any additional information 
about the matter as necessary, and will confer with the Department 
Ethics Counselor as appropriate. The Department Ethics Counselor and the 
head of the principal operating component or his or her designee will be 
informed of any serious violation of the standards of this subpart or 
any other conflict of interest law. Questions of first impression or 
other unusual matters shall be brought to the attention of the 
Department Ethics Counselor and the head of the principal operating 
component or his or her designee.
    (c) On the basis of all information gathered including, where 
appropriate, the advice of the Department Ethics Counselor, the deputy 
ethics counselor will:
    (1) Decide that there is no violation or potential violation of the 
standards of this subpart or any other law and so notify the employee 
and his or her supervisor in writing; or
    (2) Decide that a violation or potential violation of the standards 
of this subpart or other law has occurred or may occur, and that the 
employee involved shall take one or more of the steps set forth in Sec.  
731.735-904 to resolve the problem and notify the employee and his or 
her supervisor in writing; or
    (3) Decide that, although no violation of this subpart or other law 
has occurred, the nature of the matter is such that the employee should 
periodically report any additional information that would require 
reconsideration of the initial submission.



Sec.  73.735-806  Documentation and publication of opinions.

    (a) The Department Ethics Counselor, deputy ethics counselors, and 
any other individuals required to be involved in the review and 
resolution of violations or potential violations of this subpart shall 
maintain full and accurate documentation of the formal advice and 
guidance given.
    (b) From time to time, the Department Ethics Counselor shall publish 
summaries of advisory opinions issued by his or her office, deleting, as 
necessary, any personal identifiers or

[[Page 223]]

other information which may give rise to an unwarranted invasion of 
personal privacy. These summaries shall be distributed to all deputy 
ethics counselors, heads of principal operating components, and 
principal regional officials.
    (c) From time to time, the Department Ethics Counselor shall publish 
an index of all summaries issued in accordance with paragraph (b) of 
this section, and shall distribute these indexes to all deputy ethics 
counselors and heads of principal operating components who shall in turn 
make them available for review by supervisors and interested employees.



                 Subpart I_Reporting Financial Interests



Sec.  73.735-901  Reporting requirement of the Ethics in Government Act 
of 1978.

    (a) Applicability. The following employees and special Government 
employees shall submit public financial disclosure reports in accordance 
with the provisions of Title II of the Ethics in Government Act of 1978, 
Pub. L. 95-521, as amended:
    (1) Officers and employees (including consultants who will work more 
than 60 days in a calendar year) whose positions are classified at GS-16 
or above of the General Schedule, or whose basic rate of pay (excluding 
``step'' increases) under other pay schedules is equal to, or greater 
than, the rate for GS-16 (step 1);
    (2) Members of the uniformed services whose pay grade is 0-7 or 
above;
    (3) Officers and employees in any other positions determined by the 
Director of the Office of Government Ethics to be of equal 
classification to GS-16;
    (4) Administrative Law Judges;
    (5) Employees in the excepted service in positions which are of a 
confidential or policy-making character, unless their position has been 
excluded by the Director of the Office of Government Ethics;
    (6) Department Ethics Counselor; and
    (7) Deputy Ethics Counselors.


An employee who thinks that his or her position has been improperly 
included under the reporting requirements of this part may obtain a 
review of that determination by writing to the Department Ethics 
Counselor.
    (b) Filing Dates. Employees listed in Sec.  73.735-901 (a) of this 
subpart shall file a financial disclosure report:
    (1) Within 5 days after the transmittal by the President to the 
Senate of their nomination to a position requiring Senate confirmation, 
or
    (2) Within 30 days after assuming a covered position not requiring 
Senate confirmation unless the employee has left another covered 
position listed in Sec.  73.735-901 (a) of this subpart, or
    (3) Within 30 days after terminating Federal employment or assuming 
a position which is not listed in Sec.  73.735-901 (a) of this subpart; 
and
    (4) By May 15 of each calendar year, unless the employee has in that 
calendar year already submitted a financial disclosure report covering 
the preceding calendar year.
    (c) Submission of reports. (1) Executive level officers, non-career 
executives, deputy ethics counselors and Schedule C employees in the 
Office of the Secretary who are required to report in accordance with 
Sec.  73.735-901 (a) of this subpart shall submit their reports to the 
Department Ethics Counselor.
    (2) All other employees required to report in accordance with Sec.  
73.735-901 (a) of this subpart shall submit their reports to the 
reviewing official for their organizational component under procedures 
described in the Department's Personnel Manual. Personnel offices will 
keep a list of reviewing officials and will give each covered employee 
the name of the official to whom his or her report should be sent.
    (d) Review and certification of reports. (1) Each report submitted 
in accordance with this section shall be reviewed by the appropriate 
reviewing official within 60 days of its receipt. Upon reviewing a 
report and finding that the information contained therein reveals no 
conflict of interest or other violation of any provision of this part or 
applicable law, the reviewing officer shall certify the report with his 
or her signature.
    (2) The certification of a report filed in accordance with this 
section shall have the concurrence of the Office of the General Counsel.

[[Page 224]]

    (3) Action to be taken by the reviewing official if the individual 
is not in compliance with applicable laws and regulations is discussed 
in Sec. Sec.  73.735-903 and 73.735-904.



Sec.  73.735-902  Reporting requirements for certain employees not covered 
by the Ethics in Government Act of 1978.

    (a) Applicability. The following employees and special Government 
employees shall submit confidential statements of employment and 
financial interests in accordance with the provisions of this subpart, 
provided they are not required to submit financial disclosure reports 
under Sec.  73.735-901. A list of the positions in this Department whose 
incumbents are required to file financial interest statements as 
prescribed by this subpart is available for review in all of the 
Departments servicing personnel offices.
    (1) Officers and employees in positions classified at GS-13 or above 
(or comparable pay level) who have decision-making responsibility for 
the following matters:
    (i) Contracting or procurement,
    (ii) Administering or monitoring grants or subsidies,
    (iii) Regulating or auditing private or other non-Federal 
enterprises, or
    (iv) Other activities where the decision or action would have an 
economic impact on the interest of any non-Federal enterprise.
    (2) Incumbents of any other positions designated by the head of the 
principal operating component, or by the Assistant Secretary for 
Management and Budget for the Office of the Secretary, to report 
employment and financial interests in order to protect the integrity of 
the Government and to avoid possible conflicts of interest. The 
designation of any such positions below the GS-13 grade must be approved 
by the Office of Personnel Management.
    (3) All experts, consultants, or advisory committee members who are 
not required to submit a public financial disclosure report in 
accordance with the Ethics in Government Act except:
    (i) Doctors, dentists and allied medical specialists performing 
services for, or consulted as to the diagnosis or treatment of, 
individual patients; or
    (ii) Veterinarians performing services for or consulted as to care 
and service to animals.
    (b) Filing dates. (1) Experts, consultants, and advisory committee 
members shall file a confidential Statement of Employment and Financial 
Interest no later than the date employment commences and shall file 
supplemental statements as necessary to keep all information submitted 
current and accurate.
    (2) Other individuals covered by Sec.  73.735-902 (a) of this 
subpart shall:
    (i) File a confidential statement no later than 30 days after 
assuming a covered position unless the employee, within 30 days before 
assuming the position, left another covered position in HHS that is 
included in Sec.  73.735-901(a) or Sec.  73.735-902(a) of this subpart; 
and
    (ii) Report changes in or additions to the information in the 
statement as of June 30 of each calendar year, or a different date set 
by employee's component with authorization by the Office of Personnel 
Management.
    (c) Submission and review of financial statements. (1) Heads of 
principal operating components, the Assistant Secretary for Management 
and Budget, and principal regional officials for employees under their 
appointing authority shall establish procedures to ensure that financial 
statements from covered employees are received and updated on a timely 
basis and are referred to the appropriate reviewing officials for review 
and certification. (See Sec.  73.735-202 (e)(1)).
    (2) The reviewing official shall review statements to determine 
whether conflicts of interest or apparent conflicts might arise from the 
activities reported thereon. If the review discloses no conflict or 
apparent conflict, the reviewing official shall certify the statement 
with his or her signature. Action to take if the individual is not in 
compliance with applicable laws and regulations is discussed in Sec.  
73.735-903 and Sec.  73.735-904.



Sec.  73.735-903  Action if conflicts of interest or possible 
conflicts are noted.

    (a) If after reviewing a financial disclosure report or a financial 
interest statement, a reviewing official believes that additional 
information is needed,

[[Page 225]]

he or she shall tell the individual submitting such report what 
additional information is required and the time by which it must be 
submitted.
    (b) If the reviewing official is of the opinion that, on the basis 
of information submitted, the reporting individual is not in compliance 
with applicable laws and regulations, he or she shall notify the 
individual, afford him or her a reasonable opportunity for a written or 
oral response, and after consideration of such response, determine 
whether or not the individual is in compliance.
    (c) If the reviewing official determines that an individual is not 
in compliance with applicable laws and regulations, he or she shall 
notify the individual of that determination in writing and, after an 
opportunity for personal consultation, determine and notify the 
individual of the action, including those actions set forth in Sec.  
73.735-904, that would be appropriate to assure compliance with such 
laws and regulations, and the date by which such action should be taken. 
The action required and the date for taking it shall be determined by 
the nature of the financial interest or other relationship, the 
particular circumstances of the reporting individual (including his or 
her ability to resolve the problem), and other factors which the 
reviewing official deems relevant. In no case, however, should the date 
be later than 90 days after the reporting individual is notified of the 
reviewing official's opinion.
    (d) If steps for assuring compliance with applicable laws and 
regulations are not taken by the date set in paragraph (c) of this 
section, the matter shall be referred to the Department Ethics 
Counselor.



Sec.  73.735-904  Resolution of apparent or actual conflicts of interest.

    (a) Disqualification from participating in a particular matter or 
category of matters is an appropriate method for resolving apparent or 
actual conflicts of interest when the interest or activity giving rise 
to the problem:
    (1) Bears a direct or indirect relationship to particular, 
identifiable duties of the employee involved; and
    (2) Is not so substantial as to affect or give the appearance of 
affecting the integrity of the services which the Government may expect 
of the employee. Whenever disqualification is employed to resolve an 
apparent or actual conflict of interest, the disqualified employee shall 
sign a written statement reflecting the scope of the disqualification 
and the precise nature of the conflicting interest or activity. The 
reviewing official shall keep a file of all such disqualification 
statements and shall monitor compliance with these statements on a 
regular basis.
    (b) Change of assignment is an appropriate method for resolving 
apparent or actual conflicts of interest when the interest giving rise 
to the problem bears a direct or indirect relationship to particular, 
identifiable duties of the employee involved, and those duties 
constitute a significant portion of the employee's position.
    (c) Waiver under 18 U.S.C. 208(b) is an appropriate method for 
resolving apparent or actual conflicts of interest when:
    (1) The employee seeking the waiver reported the financial interest 
that bears some relationship to his or her official duties, and the 
reviewing official, in consultation with a deputy ethics counselor or 
the Department Ethics Counselor, determines that the financial interest 
is not so substantial as to be deemed likely to affect the integrity of 
the services which the Government may expect from such employee; or
    (2) By general rule or regulation published in the Federal Register, 
the Department has exempted the financial interest from the requirements 
of 18 U.S.C. 208 and this part as being too remote or too 
inconsequential to affect the integrity of the Government officers' 
service.
    (d) A trust containing a financial interest which may give rise to 
an apparent or actual conflict of interest is an appropriate method of 
resolving such conflicts when:
    (1) The trust is qualified under section 202(f) of the Ethics in 
Government Act of 1978 (Pub. L. 95-521), as amended, and subject to the 
regulations of the Office of Government Ethics; or

[[Page 226]]

    (2) In the opinion of the Department's Ethics Counselor, it is 
sufficiently independent of the employee involved so that the integrity 
of the employee's services to the Government are not compromised.
    (e) Divestiture is an appropriate method for resolving actual 
conflicts of interest when the nature of the financial interest is such 
that the conflict of interest cannot be adequately resolved by any of 
the methods set forth in paragraphs (a), (b), (c), and (d) of this 
section.
    (f) Terminating an appointment as a method for resolving an actual 
conflict of interest should be used only when it is clear that no other 
remedy can be found which would be acceptable to both the Department and 
the employee. Generally, this method will be employed only in the most 
extreme cases. Such a termination would be subject to adverse action.



   Subpart J_Provisions Relating to Experts, Consultants and Advisory 
                            Committee Members



Sec.  73.735-1001  Coverage.

    (a) For purposes of this subpart the title ``consultant'' will be 
used to include those who are appointed to serve as experts, consultants 
or members of advisory committees. All persons who serve as an employee 
of the Government in the capacity of a consultant are covered by the 
provisions of this subpart irrespective of:
    (1) The title by which designated;
    (2) The statutory authority under which services are obtained;
    (3) The duration of the period for which services are obtained;
    (4) Whether services are obtained by appointment or invitation and 
acceptance;
    (5) Whether services are compensated or rendered without 
compensation;
    (6) Whether or not services are obtained pursuant to a statute 
excepting employees or special Government employees from conflict of 
interest statutes.
    (b) When the service is for less than 130 days in a service year, 
experts, consultants, and advisory committee members are included in the 
group of employees designated by law (18 U.S.C. 202) as ``Special 
Government employees.''



Sec.  73.735-1002  Ethical standards of conduct.

    (a) Like other Federal employees, an individual serving in a 
consultant capacity must conduct himself or herself according to ethical 
behavior standards of the highest order. In particular, such an 
individual must:
    (1) Refrain from any use of office which is, or appears to be, 
motivated by a private gain for himself or herself or other persons, 
particularly those with whom he or she has family, business, or 
financial ties. The fact that desired gain, if it materializes, will not 
take place at the expense of the Government makes his or her actions no 
less improper.
    (2) Conduct himself or herself in a manner devoid of any suggestion 
that he or she is exploiting Government employment for private 
advantage. A consultant must not, on the basis of any inside 
information, enter into any speculation or recommend speculation to 
members of his or her family or business associates, in commodities, 
land, or the securities of any private company. This injunction applies 
even though the consultant's duties have no connection whatever with the 
Government programs or activities which may affect the value of such 
commodities, land, or securities. He or she should be careful in all 
personal financial activities to avoid any appearance of acting on the 
basis of information obtained in the course of his or her Government 
work.
    (3) Refrain from using information not generally available to those 
outside the Government for the special benefit of a business or other 
entity by which the consultant is employed or retained or in which he or 
she has a financial interest. Information not available to private 
industry should remain confidential in the consultant's hands and not be 
divulged to his or her private employer or clients. In cases of doubt 
whether information is generally available to the public, the consultant 
should confer with the person for whom he or she provides services, with 
the office having functional responsibility for a specific type of 
information, or,

[[Page 227]]

as appropriate, with the officials designated in Sec.  73.735-202 to 
give interpretive and advisory service.
    (4) Where requested by a private enterprise to act for it in a 
consultant or advisory capacity and the request appears motivated by the 
desire for inside information, make a choice between acceptance of the 
tendered private employment and continuation of his or her Government 
consultancy. He or she may not engage in both.
    (5) Not use his or her position in any way to coerce, or give the 
appearance of coercing, anyone to provide a financial benefit to him or 
her or another person, particularly one with whom the consultant has 
family, business, or financial ties.
    (6) Not receive or solicit anything of value as a gift, gratuity, 
loan, entertainment, or favor for himself or herself or another person, 
particularly one with whom he or she has family, business, or financial 
ties if the acceptance would result in loss of complete independence or 
impartiality in serving the Government. All consultants are subject to 
the restrictions in Sec.  73.735-506 of this part concerning gifts and 
decorations from foreign governments.
    (b) Consultants may engage in other employment so long as there is 
no real or apparent conflict between the consultant's private employment 
and his or her official duties. See Sec.  73.735 Subpart G. The regular 
employment of a consultant who is a special Government employee is not 
considered outside work for purposes of Subpart G. Also, the limitation 
in Sec.  73.735-701(f) regarding the amount of an honorarium that may be 
received does not apply to special Government employees.
    (c) A consultant who has questions about conflicts of interest or 
the application of the regulations in this part to him or her or to his 
or her assigned work should make inquiry of the person for whom services 
are provided. That person may direct the consultant to the Department 
Ethics Counselor or a deputy ethics counselor for interpretative and 
advisory services as provided in Sec.  73.735-202.



Sec.  73.735-1003  Conflicts of interest statutes.

    (a) Each consultant should acquaint himself or herself with sections 
203, 205, 207 and 208 of title 18, United States Code, all of which 
carry criminal penalties related to conflicts of interest. The 
restraints imposed by the four criminal sections are summarized in 
paragraphs (b) and (c) of this section.
    (b) 18 U.S.C. 203 and 205.
    (1) These two sections in general operate to preclude a person who 
works for the Government, except in the discharge of his or her official 
duties, from representing anyone else before a court or Government 
agency in a matter in which the United States is a party or has a direct 
and substantial interest. The prohibition applies whether or not 
compensation is received for the representation. However, if the 
individual is a special Government employee, this restriction applies 
only if:
    (i) The representation involves a matter in which the individual has 
at any time participated personally and substantially in the course of 
his or her Government employment; or
    (ii) The individual has served the Department for more than 60 days 
in the immediately preceding period of 365 days, and the matter is one 
which is pending before the Department. This second restraint applies 
whether or not the matter is one in which the individual participated 
personally and substantially in his or her Government employment. These 
two provisions apply to a special Government employee on days when he or 
she does not serve the Government as well as on the days when services 
are rendered, and they apply to both paid and unpaid representation.
    (2) To a considerable extent the prohibitions of sections 203 and 
205 are aimed at the sale of influence to gain special favors for 
private businesses and other organizations and at the misuse of 
governmental position or information. In accordance with these aims, a 
consultant, even when not compelled to do so by sections 203 and 205, 
should make every effort in his or her private work to avoid any 
personal contact with respect to negotiations for contracts or grants 
with the component of

[[Page 228]]

the department in which he or she is serving, if the subject matter is 
related to the subject matter of his or her consultancy or other 
service. This will not always be possible to achieve where, for example, 
a consultant has an executive position with his or her regular employer 
which requires him or her to participate personally in contract 
negotiations with the department or agency he or she is advising. 
Whenever this is the case, the consultant should participate in the 
negotiations for his or her employer only after advising the responsible 
Government official of his or her involvement in other matters in the 
Department. In other instances an occasional consultant may have 
technical knowledge which is indispensable to his or her regular 
employer in his efforts to formulate a research and development contract 
or a research grant, and for the same reason, it is in the interest of 
the Government that the consultant should take part in negotiations for 
his or her private employer. Again, the individual should participate 
only after advising the responsible Government official of the relevant 
facts.
    (3) Section 205 permits both the Government and the private employer 
of a special Government employee to benefit, in certain cases, from his 
or her performance of work under a grant or contract for which he or she 
would otherwise be disqualified because of having participated in the 
matter for the Government or because it is pending in a component in 
which the consultant had served more than 60 days in the past year. This 
provision gives the head of a department the authority, notwithstanding 
any prohibition in either section 203 or 205, to allow a special 
Government employee to represent before such department or agency either 
his or her regular employer or another person or organization in the 
performance of work under a grant or contract. As a basis for this 
action, the Secretary must first make a certification in writing, 
published in the Federal Register, that it is required by the national 
interest.
    (4) Section 205 contains two other exemptive provisions, which apply 
to both special and regular Government employees. See Sec.  73.735-702.
    (c) 18 U.S.C. 207 applies to individuals who have left Government 
service. See Subpart N of these regulations.
    (d) 18 U.S.C. 208 bears on the activities of Government personnel, 
including special Government employees, in the course of their official 
duties. In general, it prevents a Government employee from participating 
as such in a particular matter in which, to his or her knowledge, he or 
she, his or her spouse, minor child, partner, or a profit or non-profit 
enterprise with which he or she is connected has a financial interest. 
However, the section permits an employee's agency to grant him or her an 
ad hoc exemption if the interest is not so substantial as to affect the 
integrity of his or her services. Insignificant interests may also be 
waived by a general rule or regulation. The matters in which special 
Government employees are disqualified by section 208 are not limited to 
those involving a specific party or parties in which the United States 
is a party or has an interest, as in the case of sections 203, 205 and 
207. Section 208 therefore extends to matters in addition to contracts, 
grants, judicial and quasi-judicial proceedings, and other matters of an 
adversary nature. Accordingly, a special Government employee, like all 
government employees, should in general be disqualified from 
participating as such in a matter of any type the outcome of which will 
have a direct and predictable effect upon the financial interests 
covered by the section.

However, the power of exemption may be exercised in this situation if 
the special Government employee renders advice of a general nature from 
which no preference or advantage over others might be gained by any 
particular person or organization. The power of exemption may also be 
exercised where the financial interests involved are minimal in value.



Sec.  73.735-1004  Requesting waivers or exemptions.

    (a) A consultant may present in writing to the official for whom he 
or she provides services requests for the waivers or exemptions 
specified in Sec.  73.735-1003. That official will take, or refer the 
request for, action as appropriate, and will see that the employee 
receives

[[Page 229]]

advice or decision on his or her request.
    (b) A file of all waivers or exemptions granted shall be maintained 
in such manner that information can be given promptly on individual 
cases or statistics provided upon request. Generally, these records, 
together with written advice given in connection with less formal 
requests concerning questions of ethical standards, are kept with the 
employee's statement of employment and financial interests or financial 
disclosure report (Sec.  73.735-1006).
    (c)(1) Waiver for reviewers from certain multi-campus institutions. 
Applicability of the prohibitions of 18 U.S.C. 208(a) and this subpart 
are hereby waived pursuant to a determination that the interest involved 
is too remote or too inconsequential to affect the integrity of a 
special Government employee's review of a funding application or 
contract proposal from one campus of one of the following multi-campus 
institutions, where the interest consists solely of employment as a 
faculty member (including Department Chairman) at a separate campus of 
the same multi-campus institution:

    The University of Alabama system consisting of the University of 
Alabama, the University of Alabama in Birmingham, and the University of 
Alabama in Huntsville.
    The campuses of the University of California.
    The system consisting of Colorado State University, the University 
of Southern Colorado, and Fort Lewis College.
    The Indiana University system consisting of eight universities on 
nine campuses, with the exception of the system-wide schools: the School 
of Business; the School of Dentistry; the School of Medicine; the School 
of Nursing; and the School of Public and Environmental Affairs.
    The University of Nebraska system consisting of the University of 
Nebraska--Lincoln, the University of Nebraska at Omaha, and the 
University of Nebraska Medical Center.
    The campuses of the State University of New York.
    The Oregon system of higher education consisting of the University 
of Oregon, Oregon State University, Oregon Health Sciences University, 
Portland State University, Western Oregon State College, Southern Oregon 
State College, Eastern Oregon State College, and the Oregon Institute of 
Technology.
    The campuses of the University of Tennessee.
    The separate universities comprising the University of Texas System.
    The separate universities comprising the University of Wisconsin 
System.

    (2) Institutions that are not subject to 18 U.S.C. 208(a) and the 
subpart, because they are not part of the same organization within the 
State. The following State institutions and systems of higher education 
have been determined to be separate from each other to such a degree 
that no waiver is necessary in order to permit a faculty member 
(including Department Chairman) employed by one of the State 
institutions of higher education to review a funding application or 
contract proposal from another of the named institutions within that 
State:

    The University of Alabama System and other Alabama State owned 
institutions of higher education.
    The California Community Colleges, the California State Universities 
and Colleges, and the University of California.
    The University of Colorado, Colorado State University, and other 
Colorado State owned institutions of higher education.
    The University of Connecticut, Connecticut State University, the 
Connecticut Technical Colleges, and the Connecticut Community Colleges.
    The University of Illinois, Illinois State University, Western 
Illinois University, Southern Illinois University, and the Illinois 
Community Colleges.
    The Indiana University and the other Indiana State owned 
institutions of higher education.
    The University of Iowa, and Iowa State University.
    The University of Kansas, Kansas State University, Wichita State 
University, Fort Hays State University, Pittsburg State University, and 
the Kansas Technological Institute.
    Louisiana State University, and other Louisiana State owned 
institutions of higher education.
    The University of Massachusetts, and other Massachusetts State owned 
institutions of higher education.
    The University of Michigan, Michigan State University, and Wayne 
State University.
    The University of Minnesota, the Minnesota State University System, 
and the Minnesota Community College System.
    The University of Missouri, and other Missouri State owned 
institutions of higher education.

[[Page 230]]

    The University of Nebraska, and other Nebraska State owned 
institutions of higher education.
    The State University of New York System, and the City University of 
New York System.
    The University of North Carolina, North Carolina State, and other 
North Carolina State owned institutions of higher education.
    Pennsylvania State University, the University of Pittsburgh, Temple 
University, Lincoln University, and the other State owned colleges and 
universities in Pennsylvania.
    The University of Texas System, the Texas A&M System, the Texas 
State University System, the University System of South Texas, the Lamar 
University System, the University of Houston System, East Texas State 
University, Stephen F. Austin State University, West Texas State 
University, Midwestern University, North Texas State University, Texas 
Southern University, Texas Woman's University, Texas Tech University and 
Pan American University.
    The University of Utah and Utah State University.

[46 FR 7369, Jan. 23, 1981, as amended at 51 FR 15627, Apr. 25, 1986]



Sec.  73.735-1005  Salary from two sources.

    Special Government employees are not subject to 18 U.S.C. 209 which 
prohibits other employees from receiving any salary, or supplementation 
of Government salary, from a private source as a compensation for 
services to the Government. This Department will not knowingly pay per 
diem to a consultant who also receives per diem pay for the same day 
from another Government agency (in or outside the Department). Erroneous 
payments in contravention of this provision will be subject to 
collection, and any consultant who willfully collects double payments 
may be barred from further employment.



Sec.  73.735-1006  Reporting financial interests.

    (a) Consultants who will work more than 60 days in a calendar year 
are subject to the provisions of title II of the Ethics in Government 
Act of 1978 when their rate of pay is equal to or greater than the basic 
rate for GS-16, Step 1. Such consultants are covered by the reporting 
requirements of Sec.  73.735-901 of these regulations.
    (b) Consultants not subject to the Ethics in Government Act shall 
file statements of financial interests as provided by Sec.  73.735-902 
of these regulations.



Sec.  73.735-1007  Political activity.

    Consultants who serve intermittently are subject to the political 
activity restrictions of Subchapter III of Chapter 73 of Title 5 U.S.C. 
and Civil Service Rule IV only on days on which service is rendered and 
then for the entire 24 hours of such service day. Other consultants are 
subject to these restrictions at all times.



      Subpart K_Special Government Employees Other Than Consultants



Sec.  73.735-1101  General provision.

    Individuals who are designated as special Government employees 
because of the nature of their services but who are not serving as a 
consultant, expert, or advisory committee member are subject to the 
provisions of Subparts B through I of these regulations. However, the 
provisions of 18 U.S.C. 205, 206, 207, and 208 apply to them only as 
described in Subpart J. Also, the limitation in Sec.  73.735-701(f) on 
the amount of an honorarium that may be received does not apply.



                      Subpart L_Disciplinary Action



Sec.  73.735-1201  General provisions.

    (a) Violations of the regulations contained in the part may be cause 
for disciplinary action which could be in addition to any penalty 
prescribed by law. (For a list of some offenses for which disciplinary 
action may be taken and ``The Code of Ethics for Government Service,'' 
the violation of which may also result in disciplinary action, see 
appendixes A and B of this part).
    (b) The type of disciplinary action to be taken must be determined 
in relation to the specific violation. Those responsible for 
recommending and for taking disciplinary action must apply judgment to 
each case, taking into account the general objectives of meeting any 
requirements of law, deterring similar offenses by the employee and

[[Page 231]]

other employees, and maintaining high standards of employee conduct and 
public confidence. Some types of disciplinary action which may be 
considered are:
    (1) Admonishment
    (2) Written reprimand
    (3) Reassignment
    (4) Suspension
    (5) Demotion
    (6) Removal
    (c) Suspension, demotion, and removal are adverse actions; and when 
such actions are taken, applicable laws, regulations, and policies must 
be followed.

[46 FR 7369, Jan. 23, 1981, as amended at 53 FR 4409, Feb. 16, 1988]



                     Subpart M_Reporting Violations



Sec.  73.735-1301  Responsibility for reporting possible criminal violations.

    An employee who has information which he or she reasonably believes 
indicates a possible offense against the United States by an employee of 
the Department, or any other individual working on behalf of the 
Department, shall immediately report such information to his or her 
supervisor, any management official, or directly to the Office of the 
Inspector General. Offenses covered by the preceding sentence include, 
but are not limited to, bribery, fraud, perjury, conflict of interest, 
misuse of funds, equipment, or facilities, and other conduct by a 
government officer or employee, grantee, contractor or other person 
which is prohibited by title 18 of the United States Code. Employees and 
supervisors should refer to chapter 5-10 of the Department's General 
Administration Manual for procedures regarding the reporting and 
handling of such information.



Sec.  73.735-1302  Responsibility for reporting allegations of misconduct.

    An employee who has information which he or she reasonably believes 
indicates the existence of an activity constituting (a) a possible 
violation of a rule or regulation of the Department; or (b) 
mismanagement, a gross waste of funds, or abuse of authority; or (c) a 
substantial and specific danger to the public health and safety, shall 
immediately report such information to his or her supervisor, any 
management official of the Department, or directly to the Office of the 
Inspector General. Employees and supervisors should refer to chapter 5-
10 of the Department's General Administration Manual for procedures 
regarding the reporting and handling of such information. This 
subsection does not cover employee grievances, equal employment 
opportunity complaints, classification appeals, or other matters for 
which a formal government-wide review system has been established by the 
Federal government.



Sec.  73.735-1303  Prohibition of reprisals.

    (a) Any employee who has authority to take, direct others to take, 
recommend, or approve any personnel action, shall not, with respect to 
such authority, take or threaten to take any action against any employee 
as a reprisal for making a complaint or providing any information 
pursuant to Sec. Sec.  73.735-1301 and 73.735-1302. If the complaint was 
made or the information was disclosed with the knowledge that it was 
false, or with willful disregard of its truth or falsity, any personnel 
action taken against the employee based on those reasons would not 
constitute a reprisal action.
    (b) An employee who believes that he or she has been threatened with 
a personnel action, any other action, or harassment or has been harmed 
by any action as a reprisal for having made a complaint or providing 
information pursuant to Sec.  73.735-1301 or Sec.  73.735-1302 may 
request the Office of the Inspector General to review his or her 
allegations. Whenever the Inspector General has reason to believe that 
the allegations may be true, he or she will refer the matter to the 
Assistant Secretary for Personnel Administration for appropriate action. 
The Assistant Secretary for Personnel Administration may order a stay of 
any personnel action if he or she determines that there are reasonable 
grounds to believe that the personnel action is being taken as a 
reprisal for making a complaint or providing information pursuant to 
Sec.  73.735-1301 or Sec.  73.735-1302.

[[Page 232]]



Sec.  73.735-1304  Referral of matters arising under the standards 
of this part.

    (a) The Department Ethics Counselor may refer to the Inspector 
General for investigation and/or further action any matter arising under 
the standards of this part.
    (b) The Department Ethics Counselor may refer to the Office of 
Government Ethics, or the Inspector General may refer to the Department 
of Justice, suspected violations of the criminal laws regarding employee 
standards of conduct and conflicts of interest.



       Subpart N_Conduct and Responsibilities of Former Employees



Sec.  73.735-1401  Prohibitions against post-employment conflicts of interest.

    (a) The purpose of criminal prohibition in 18 U.S.C. 207 is to 
prevent the unfair use of inside knowledge or influence that results 
from Federal service. 18 U.S.C. 207 generally prohibits a former 
employee from acting as another person's representative to the 
Government in particular matters involving a specific party or parties 
in which the employee had been involved while in Federal service. This 
prohibition does not require a former employee to decline employment 
with any organization regardless of his or her dealings with that 
organization while employed by the Government. It applies solely to 
activities, not the mere existence of an employment arrangement.
    (b) The Office of Government Ethics, Office of Personnel Management, 
has issued Government-wide regulations covering post-employment conflict 
of interest (5 CFR part 737). Those regulations are incorporated herein 
by reference, and they are available for review in personnel offices 
throughout the Department.





Sec. Appendix A to Part 73--List of Some Offenses for Which Disciplinary 
                           Action May Be Taken

    Following is a list of some offenses for which disciplinary action 
may be taken under this Part. When a statute applies specifically to a 
particular offense, either wholly or in part, the statute is cited. 
Neither the list of offenses nor the statutory citations are all-
inclusive. The ``Code of Ethics for Government Service'' is not cited 
because of its general applicability but is published in its entirety in 
appendix B.
    A. Concerning Efficiency of Operations in General. 1. Engaging in 
wasteful actions or behavior in the performance of assigned duties; 
conducting non-Government business during official work hours; or 
participating in a strike (18 U.S.C. 1918), work stoppage, slowdown, 
sickout, or other similar action.
    2. Absence without leave, failure to adhere to the rules and 
regulations for requesting and obtaining leave, or improper use of sick 
leave.
    3. Deliberate insubordination or refusal to carry out lawful orders 
or assignments given.
    4. Disruptive behavior, such as:
    a. Inflicting or threatening or attempting to inflict bodily injury 
on another (except for necessary defense of self or others) while on the 
job or on Federal premises.
    b. Discourtesy, disreputable conduct, or use of insulting, abusive 
or obscene language to or about other individuals while on the job.
    5. Sexual harassment of employees or members of the public.
    6. Failure to observe precautions for safety, such as failure to use 
safety equipment when it is provided or ignoring signs, posted rules or 
regulations, or written or verbal safety instructions.
    7. Unauthorized use, possession, or distribution of alcoholic 
beverages (5 U.S.C. 7352) or controlled substances (e.g., hallucinogens, 
such as LSD; stimulants, such as cocaine and amphetamines; sedatives, 
such as barbiturates; narcotics and other drugs or substances, such as 
hashish and other cannabis substances).
    8. Unauthorized gambling; or canvassing, soliciting, or peddling on 
Government premises.
    9. Failure to carry or show proper identification or credentials as 
required by competent authority; misuse of identification cards or 
investigative or identification credentials or badges.
    10. Failure to disclose (i.e., report) information, when such 
disclosure is not specifically prohibited by law or Executive Order, 
that involves (a) violation of law, rule, or regulation, (b) 
mismanagement or gross waste of funds or abuse of authority, or (c) 
posing a substantial and specific danger to public health or safety; 
failure to cooperate in an official Department inquiry.
    11. Failure to pay just debts, including taxes to and loans from 
governmental sources.

[[Page 233]]

    12. Deceit or interference in a Civil Service examination (18 U.S.C. 
1917) or in connection with a Government personnel action.
    13. Fraud or false statements in a Government matter. (18 U.S.C. 
1001 through 1003.)
    14. Supervisory failure to initiate disciplinary or corrective 
action when the facts are known and disciplinary or corrective action is 
warranted.
    15. Employment of a member of an organization that advocates the 
overthrow of our constitutional form of government. (5 U.S.C. 7311; 50 
U.S.C. 784.)
    B. Concerning Government Funds, Property, Documents, and Records. 1. 
Actual or attempted embezzlement or theft of Government or personal 
money or property either directly or through use of Government 
documents, automated equipment, or other means; actual or attempted 
embezzlement or theft of the money or property of another person in the 
possession of an employee by reason of his or her employment. (18 U.S.C. 
641 and 654.)
    2. Failure to account for public money. (18 U.S.C. 643.)
    3. Deliberate falsifying of official time and attendance records; 
improper use of official travel or forging, counterfeiting, or otherwise 
falsifying official Government travel records or documents. (18 U.S.C. 
508.)
    4. False record entries or false reports of money or securities. (18 
U.S.C. 2073.)
    5. Loss or misuse of or damage to Government property or endangering 
persons or Government property through carelessness or by willful 
malicious conduct.
    6. Mutilating, destroying, or concealing public records. (18 U.S.C. 
2071.)
    7. Misuse of penalty (postal) privilege. (18 U.S.C. 1719.)
    8. Failure to safeguard administratively confidential, financial, 
and trade secrets information.
    9. Unauthorized use of documents presented or used to procure the 
payment of money from or by the Government. (18 U.S.C. 285.)
    10. Unauthorized use of a Government vehicle; serious or repeated 
violations of traffic regulations while driving a Government vehicle or 
a vehicle rented or leased for official Government purposes; reckless 
driving or improper operation of any Government owned, rented, or leased 
motor vehicle. (31 U.S.C. 1349[b].)
    11. Violations of the Privacy Act, including:
    a. Willful prohibited disclosure of individually identifiable 
information in violation of 5 U.S.C. 552a.
    b. Willfully maintaining a system of records without meeting the 
notice requirements of the Privacy Act as required by 5 U.S.C. 552a.
    12. Violation of regulations concerning the release of classified 
information, confidential, or security and investigative information. 
(18 U.S.C. 798 and 1905; 21 U.S.C. 331j; and 50 U.S.C. 783.)
    C. Concerning Conflicts of Interest and Related Unethical Conduct: 
1. Violations of 18 U.S.C. Chapter 11: Bribery, Graft, and Conflicts of 
Interest, including:
    a. Having a direct or indirect financial interest (includes employee 
ownership of stocks, bonds, or partnership interests in an entity or 
employment of the employee, his or her spouse, or dependent child) that 
conflicts with one's Government duties because such entity is either 
regulated by, has or seeks to do business with the agency, or has any 
other particular matter with or pending before the agency that may give 
rise to either an actual conflict or the appearance thereof. (18 U.S.C. 
208.)
    b. Bribery of a public official; soliciting or accepting directly or 
indirectly anything of monetary value, including gifts, gratuities, 
favors, entertainment, or loans either as compensation for governmental 
services or from individuals who are seeking contractual or other 
business or financial relations with the Department, are conducting 
operations or activities that are regulated by the Department, or have 
interests that may be substantially affected by the performance or 
nonperformance of the employee's official duties; receiving salary or 
any contribution to or supplementation of salary from a private source 
as compensation for services for the Government. (18 U.S.C. 201 and 
209.)
    c. Acting as the agent of a foreign principal registered under the 
Foreign Agents Registration Act. (18 U.S.C. 219.)
    2. Engaging, directly or indirectly, in a financial transaction as a 
result of or primarily relying on information that is obtained through 
one's official duties and would not be available were the employee not 
an employee of the Federal Government.
    3. Soliciting a contribution from another employee for a gift to an 
official superior, making a donation as a gift to an official superior, 
or accepting a gift from an employee receiving less pay than oneself. (5 
U.S.C. 7351.)
    4. Engaging, without required permission, in outside activities that 
result in or create the appearance of a conflict of interest.
    5. Teaching, lecturing, or writing that depends on specific 
information obtained as a result of one's Government employment when 
that information is not otherwise available to the public.
    6. Failure to obtain required clearance of an official speech or 
article.
    7. Lobbying with appropriated funds. (18 U.S.C. 1913.)
    8. Representation before a Federal agency (other than in the proper 
discharge of one's official duties) as an agent or attorney in a claim 
against the United States (or receiving any gratuity or share in any 
such claim in

[[Page 234]]

considertion for assistance given) or as an agent or attorney for anyone 
before any department, agency, court, or otherwise in connection with 
any proceeding, application, request for a ruling, or claim on any other 
particular matter in which the United States is a party or has a direct 
and substantial interest. (18 U.S.C. 205.) (Note: This section 
notwithstanding, an employee may, if not inconsistent with the 
performance of his or her official duties, act without compensation as 
an agent or attorney for another person who is the subject of any 
disciplinary or other administrative proceeding or as an agent or 
attorney for one's parent, spouse, child, or any person or estate for 
whom or which he or she serves as personal fiduciary except in those 
matters in which the employee has participated personally and 
substantially.)
    D. Concerning Prohibited Political and Election Activities. 1. 
Activities prohibited by 5 U.S.C. Chapter 73, Subchapter III, including:
    a. Section 7323, ``Political contributions; prohibition.''
    b. Section 7324, ``Influencing elections; taking part in political 
campaigns; prohibitions; exceptions.''
    2. Activities prohibited by 18 U.S.C. Chapter 29, including:
    a. Section 594, ``Intimidation of voters.''
    b. Section 597, ``Expenditures to influence voting.''
    c. Section 598, ``Coercion by means of relief appropriations.''
    d. Section 600, ``Promise of employment or other benefit for 
political activity.''
    e. Section 601, ``Deprivation of employment or other benefit for 
political contribution.''
    f. Section 602, ``Solicitation of political contributions.''
    g. Section 604, ``Solicitation from persons on relief.''
    h. Section 606, ``Intimidation to secure political contributions.''
    E. Concerning Prohibited Personnel Practices. 1. Commission of a 
prohibited personnel practice (as defined in 5 U.S.C. 2302[b] [1-11]); 
that is, any employee who has authority to take, direct others to take, 
recommend, or approve any personnel action, shall not, with respect to 
such authority, commit any of the following practices:
    a. Discriminate for or against any employee or applicant for 
employment on the basis of race, color, religion, sex, national origin, 
age, handicapping condition, marital status, or political affiliation.
    b. Solicit or consider any recommendation or statement, oral or 
written, with respect to any individual who requests or is under 
consideration for any personnel action unless such recommendation or 
statement is based on the personal knowledge or records of the person 
furnishing it and consists of (1) an evaluation of the work performance 
ability, aptitude, or general qualifications of such individual or (2) 
an evaluation of the character, loyalty, or suitability of such 
individual.
    c. Coerce the political activity of any person (including the 
providing of any political contribution or service) or take any action 
against any employee or applicant for employment as a reprisal for the 
refusal of any person to engage in such political activity.
    d. Deceive or willfully obstruct any person with respect to such 
person's right to compete for employment.
    e. Influence any person to withdraw from competition for any 
position for the purpose of improving or injuring the prospects of any 
other person for employment.
    f. Grant any preference or advantage not authorized by law, rule, or 
regulation to any employee or applicant for employment (including 
defining the scope or manner of competition or the requirements for any 
position) for the purpose of improving or injuring the prospects of any 
particular person for employment.
    g. Appoint, employ, promote, advance, or advocate for appointment, 
employment, promotion, or advancement, in or to a civilian position any 
individual who is a relative (as defined in 5 U.S.C. 3110) when the 
civilian position is in the Department or under his or her jurisdiction 
or control.
    h. Take or fail to take a personnel action with respect to any 
employee or applicant for employment as a reprisal for the lawful 
disclosure of information.
    i. Take or fail to take any personnel action against an employee or 
applicant for employment as a reprisal for the exercise of any appeal 
right granted by any law, rule, or regulation (including HHS 
Instructions and issuances).
    j. Discriminate for or against any employee or applicant for 
employment on the basis of conduct that does not adversely affect the 
performance of the employee or applicant or the performance of others 
(except criminal conviction in determining suitability or fitness).
    k. Take or fail to take any personnel action when the taking of or 
failure to take such action violates any law, rule, or regulation 
implementing, or directly concerning the merit system principles (as set 
forth in 5 U.S.C. 2301).

[53 FR 4410, Feb. 16, 1988]



    Sec. Appendix B to Part 73--Code of Ethics for Government Service

    Any person in Government service should:
    I. Put loyalty to the highest moral principles and to country above 
loyalty to persons, party, or Government department.
    II. Uphold the Constitution, laws, and regulations of the United 
States and all governments therein and never be a party to their 
evasion.

[[Page 235]]

    III. Give a full day's labor for a full day's pay, giving earnest 
effort and best thought to the performance of duties.
    IV. Seek to find and employ more efficient and economical ways of 
getting tasks accomplished.
    V. Never discriminate unfairly by the dispensing of special favors 
or privileges to anyone, whether for remuneration or not; and never 
accept, for himself or herself or family members, favors or benefits 
under circumstances which might be construed by reasonable persons as 
influencing the performance of governmental duties.
    VI. Make no private promises of any kind binding upon the duties of 
office, since a Government employee has no private word which can be 
binding on public duty.
    VII. Engage in no business with the Government, either directly or 
indirectly, which is inconsistent with the conscientious performance of 
governmental duties.
    VIII. Never use any information gained confidentially in the 
performance of governmental duties as a means of making private profit.
    IX. Expose corruption wherever discovered.
    X. Uphold these principles, ever conscious that public office is a 
public trust.

[53 FR 4410, Feb. 16, 1988]



PART 73a_STANDARDS OF CONDUCT: FOOD AND DRUG ADMINISTRATION SUPPLEMENT--
Table of Contents



                      Subpart A_General Provisions

Sec.
73a.735-101 Principles and purpose.
73a.735-103 Responsibilities.
73a.735-104 Advice and guidance.

                   Subpart B_Miscellaneous Provisions

73a.735-201 Control activity employees formerly associated with 
          organizations subject to FDA regulation.

Subpart C [Reserved]

                      Subpart D_Outside Employment

73a.735-401 General provisions.

                      Subpart E_Financial Interests

73a.735-501 General provisions.
73a.735-502 Employees in regulatory activities.
73a.735-504 Exceptions.

Subparts F-I [Reserved]

       Subpart J_Statements of Employment and Financial Interests

73a.735-1004 Submission and review of statements.

    Authority: 45 CFR 73.735-105.

    Source: 43 FR 7619, Feb. 24, 1978, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  73a.735-101  Principles and purpose.

    (a) To assure that the business of the Food and Drug Administration 
(FDA) is conducted effectively, objectively, and without improper 
influence or appearance thereof, all employees must be persons of 
integrity and observe the highest standards of conduct. Because of FDA's 
special regulatory responsibilities to the consumer and industry, its 
employees must be especially alert to avoid any real or appearance of 
conflict of their private interests with their public duties. Their 
actions must be unquestionable and free from suspicion of partiality, 
favoritism, or any hint of conflicting interests. This supplement 
recognizes FDA's public obligation to set reasonable and fair safeguards 
for the prevention of employee conflicts of interest. It is necessary to 
meet FDA's regulatory responsibilities and to otherwise assure full 
protection of the public confidence in the integrity of its employees.
    (b) Since FDA is a unique consumer protection and regulatory agency 
within the Department, the DHHS Standards of Conduct need further 
supplementation to reflect this role. Therefore, for purposes of 
implementing the DHHS Standards of Conduct regulations within the FDA, 
this supplement provides interpretive definitions and additional 
requirements. As further guidance to its employees and supervisory 
officials, FDA will issue internal procedural instructions in accordance 
with this supplement.



Sec.  73a.735-103  Responsibilities.

    (a) A ``control activity'' employee shall be personally responsible 
for assuring that he does not hold an interest in any organization whose 
FDA-regulated activities constitute more than an insignificant part of 
its business as

[[Page 236]]

defined in Sec.  73a.735-502(b)(2). The Associate Commissioner for 
Administration (or his designee) is available to assist such employees 
in obtaining corporate data necessary to make such a determination.
    (b) Other employees are similarly responsible for observing the 
financial interest retention requirements in Sec. Sec.  73a.735-501(b) 
and 73a.735-502(a)(2).



Sec.  73a.735-104  Advice and guidance.

    (a) The Associate Commissioner for Administration (or his designee) 
shall provide day-to-day guidance and assistance to employees and 
supervisors on matters covered by regulations in part 73 and this part 
of this chapter.
    (b) The FDA Conflict of Interest Review Board shall review and make 
recommendations to the Commissioner on requests for exceptions to 
conflict of interest policies and procedures in regulations in this part 
and part 73 of this chapter.



                   Subpart B_Miscellaneous Provisions



Sec.  73a.735-201  Control activity employees formerly associated with 
organizations subject to FDA regulation.

    (a) For a period of 1 year after FDA appointment, or appointment to 
the Food and Drug Division, Office of the General Counsel, a control 
activity employee who was employed in a regulated organization within 1 
year before FDA employment shall not participate in any regulatory 
action before FDA that involves the former employer organization. 
Exceptions may be authorized only under paragraph (e) of this section.
    (b) A control activity employee who was previously employed in a 
regulated organization shall not participate in any regulatory action 
before FDA in which the employee had participated personally and 
substantially in behalf of the former employer organization, e.g., drug 
investigations/applications, food additive petitions, matters dealing 
with compliance in areas of radiation-producing products or medical 
devices. Exceptions may be authorized only under paragraph (e) of this 
section.
    (c) Employment in a regulated organization includes contractual 
relationships, e.g., attorneys who may have represented an FDA-regulated 
firm or industry or an association of such firms and individuals who may 
have served a firm, industry or association in a consultant capacity.
    (d) Within 30 days after assignment to a control activity position, 
an employee shall submit to his supervisor detailed information 
concerning former industry employers, and dates and substance of 
involvement in such regulatory matters as may be subject to the 
prohibition in paragraph (b) of this action.
    (e) The Commissioner may grant individual exceptions to paragraphs 
(a) and (b) of this section whenever he determines that strict 
application would not be in the best interests of the United States. A 
memorandum of any exception granted shall be filed for public inspection 
in the Public Records and Documents Center, Food and Drug 
Administration, Room 4-68, 5600 Fishers Lane, Rockville, Md. 20857, 
within 10 days after the Commissioner's decision. The memorandum shall 
include the employee's name, title, grade, summary of official duties, 
prior pertinent industry involvement, a brief description of the 
specific regulatory action in which the employee has been permitted to 
participate, and a statement explaining why such strict application of 
the subpart would not be in the best interests of the United States.

Subpart C [Reserved]



                      Subpart D_Outside Employment



Sec.  73a.735-401  General provisions.

    (a) Employees of the Food and Drug Administration shall obtain 
advance approval for all outside employment, whether paid or unpaid. 
Employment, as used in this section, does not include:
    (1) Memberships in charitable, religious, social, fraternal, 
recreational, public service, civic, or similar nonbusiness 
organizations.
    (2) Memberships in professional organizations. (Officeholding, 
however, requires advance approval.)

[[Page 237]]

    (3) Performance of duties in the Armed Forces Reserve or National 
Guard.
    (b) Control activity employees (defined in Sec.  73a.735-502) will 
not generally be granted approval to:
    (1) Manage or direct an organization whose activities are subject to 
FDA regulation, or
    (2) Be employed in an organization whose business activities are 
subject to FDA regulation unless:
    (i) The regulated activities of the organization are an 
insignificant part of its total operations, i.e., the regulated products 
of the organization constitute no more than 10 percent of its annual 
gross sales, and
    (ii) The outside employment is in nonregulated activities of the 
organization.
    (c) All other employees will generally be granted approval to engage 
in outside employment which is compatible with the full performance of 
their FDA duties and responsibilities and which will not give rise to a 
real or apparent conflict of interest. Permissible employment includes 
but is not limited to:
    (1) Employment where the sale of FDA-regulated products is 
incidential to the purpose of the establishment, e.g., hotels, theaters, 
bowling alleys, and sports arenas.
    (2) Sales and clerical occupations relating to regulated products, 
e.g., supermarkets, drugstores, department stores, liquor stores.
    (3) Trade, industrial, and service occupations relating to regulated 
products, e.g., gasoline service station attendant, line production or 
assembly work, cook, waiter, waitress, hospital attendant, snack bar 
vendor, warehouseman.
    (d) All employees will generally be granted approval to engage in 
paid or unpaid outside employment which contributes to their technical 
or professional development, e.g.,
    (1) Medical, dental, and veterinary practices.
    (2) Pharmacy practice after meeting the following conditions which 
will serve to protect against possible conflicts or apparent conflicts 
of interest and to avoid other problems resulting in embarrassment to 
the employee or FDA:
    (i) The primary purpose of the part-time employment is to contribute 
to the overall professional development of the employee and generally 
enhance his capability to better perform his current FDA duties.
    (ii) The part-time duties will be confined generally to dispensing 
Rx drugs and related professional pharmacy duties.
    (iii) The employee will avoid unrelated nonprofessional duties such 
as supervision or management of store operations, contractual or 
purchasing responsibilities (except normal ``out-of-stock'' 
requisitioning) and repacking and relabeling of bulk items.
    (iv) The employee will demonstrate a high degree of discretion and 
judgment in his contacts with customers and representatives of regulated 
industry and competitor firms so as to avoid giving the impression that:
    (a) His part-time actions, recommendations, opinions, or remarks are 
official points of view;
    (b) He is using his FDA position for private gain by oral 
misrepresentations and false claims of the company's products;
    (c) He is making a Government decision outside official channels, 
e.g., to customers, prescribing physicians, buyers, distributors;
    (d) He or other FDA representatives will give preferential treatment 
to any regulated organization or representatives of such organizations, 
or that FDA employees have not exercised complete independence or 
impartiality in carrying out their regulatory and consumer protection 
responsibilities; or
    (e) His part-time work is creating an adverse effect on the image of 
FDA or discrediting the integrity of official FDA regulatory decisions.



                      Subpart E_Financial Interests



Sec.  73a.735-501  General provisions.

    (a) No restrictions are placed on ownership of diversified mutual 
funds.
    (b) An FDA employee, other than a control activity employee (defined 
in Sec.  73a.735-502), may have financial interests:

[[Page 238]]

    (1) In an organization whose FDA-regulated activities are an 
insignificant part of its total operations, i.e., no more than 10 
percent of the organization's annual gross sales are in products 
regulated by FDA; or
    (2) In an organization whose FDA-regulated business activities are a 
significant part of its total business operations: Provided, That:
    (i) The holding is less than $5,000 (value or cost at time of 
initial reporting),
    (ii) The holding represents less than 1 percent of the total 
outstanding stock shares of that organization, and
    (iii) No more than 50 percent of the employee's total investment 
value is concentrated in organizations whose FDA-regulated business 
activities are a significant part of their business operations.
    (c) Notwithstanding the provisions of this part permitting employees 
to hold financial interests in organizations subject to FDA regulation, 
an employee holding such an interest shall not participate in an 
official matter whose outcome would have a direct and predictable effect 
on his financial interest. However, this prohibition is not applicable 
to:
    (1) Diversified mutual funds, which are exempted from 18 U.S.C. 208 
by Sec.  73.735-501(a) of this chapter.
    (2) Financial interests for which the Commissioner has in advance 
granted a written exception on the ground that the public interest would 
be served if a particular employee is allowed to participate in an 
official matter whose outcome may have a direct and predictable effect 
on the employee's financial interest. Such exemptions will be granted 
only in exceptional circumstances. Any determination to authorize such 
exceptions shall be made in accordance with 18 U.S.C. 208(b)(1) and 
documented for public inspection in accordance with Sec.  73a.735-504.



Sec.  73a.735-502  Employees in regulatory activities.

    (a) An employee in regulatory activities (``control activity'' 
employee) may hold financial interests in an FDA-regulated organization 
only if either of the following conditions are met:
    (1) The regulated activities of the organization are an 
``insignificant'' part of its total business operations, or
    (2) Written approval for an individual exception is granted by the 
Commissioner in accordance with Sec.  73a.735-504; however, such 
approval will not be considered unless all of the following conditions 
are met:
    (i) Retention of the financial interest does not give rise to an 
actual conflict of interest;
    (ii) Acquisition of the financial interest occurred by marriage or 
inheritance, or the interest was held prior to an FDA reorganization, 
change in regulations, or similar circumstances beyond the control of 
the employee that resulted in the interest becoming prohibited;
    (iii) No direct relationship exists between the employee's official 
duties and the regulated activities of the organization in which the 
financial interest is held;
    (iv) The employee occupies a position below that of Bureau/Deputy 
Bureau Director (or Assistant/Deputy General Counsel, Food and Drug 
Division, Office of the General Counsel); and
    (v) The employee agrees to refrain from engaging, either directly or 
indirectly, in transactions that are designed to increase the value of 
his ``excepted'' financial interest.
    (b) To administer provisions within this part, the following 
interpretations apply:
    (1) A ``control activity'' employee (``control activity'' positions 
are identified in appendix C to part 73 of this chapter), means one who:
    (i) Occupies an FDA position classified at GS-11 or above, or PHS 
Commissioned Officer 0-3 or above, or equivalent;
    (ii) Occupies an FDA position below GS-11 with duties of a nature 
that the employee could in the discharge of his official duties and 
responsibilities cause an economic advantage for or impose a handicap on 
a non-Federal enterprise (includes investigators, inspectors, regulatory 
analysts);
    (iii) Occupies a position at GS-11 or above in the Office of the 
Assistant General Counsel, Food and Drug Division.

[[Page 239]]

    (2) ``Insignificant'' (part of an organization's total business 
operations) means that the FDA-regulated products constitute no more 
than 10 percent of the organization's annual gross sales.



Sec.  73a.735-504  Exceptions.

    (a) A control activity employee who can satisfy all of the 
conditions specified in Sec.  73a.735-502(a)(2) may submit a request to 
retain a prohibited financial interest. Any such request must be 
submitted no later than 30 days after the event that results in the 
employee holding the prohibited financial interest. Such requests for 
exception should be forwarded in writing through supervisory channels to 
the Associate Commissioner for Administration for review by the FDA 
Conflict of Interest Review Board and subsequent recommendation to the 
Commissioner. All decisions on requests for exceptions shall be in 
writing and a copy furnished to the employee involved.
    (b) A memorandum of each approved exception shall be filed in the 
Public Records and Documents Center for public inspection. Such public 
disclosure shall be made within 10 days after the Commissioner's 
decision. The following is an example of the format of such memorandum 
(in a hypothetical employee situation):
    (1) Employee: Joe Doe.
    (2) Title: Research Chemist.
    (3) Grade/Salary: GS-14.
    (4) Organization: Bureau of Biologics, Food and Drug Administration, 
Bethesda, Md.
    (5) Date of employee's request for exception: ___.
    (6) Date of Commissioner's approval: ___.
    (7) Basis for exception: Employee owns financial interest in the ABC 
Foods Corporation, and permanent retention is normally prohibited under 
FDA/HHS conflict of interest regulations for such an employee. The 
employee, however, acquired this financial interest prior to his 
reassignment to FDA on ___, which was part of a major Department 
reorganization transferring certain functions from NIH to the FDA (i.e., 
FDA's Bureau of Biologics). At the time of acquisition and immediately 
prior to the reorganization, the employee's financial interest was 
allowable under Department regulations. The employee's official duties 
are fully confined to the matters under the jurisdiction of the Bureau 
of Biologics, and his official duties do not involve any contact with 
the food industry. The Commissioner has determined that an exception is 
warranted under the following criteria:
    (i) Acquisition occurred prior to Department reorganization;
    (ii) Financial interest retention will not give rise to an actual 
conflict of interest situation;
    (iii) There is no direct relationship between the employee's 
official duties and the regulated activities of ABC Foods;
    (iv) The employee occupies a position below that of Bureau or Deputy 
Bureau Director (or equivalent position in the Office of the 
Commissioner); and
    (v) The employee agrees to refrain from engaging in any direct or 
indirect transactions that are designed to increase the value/shares of 
the ``excepted'' ABC Foods interests.

This exception is considered equitable to the employee involved, and 
retention of the ABC Foods interest will not in any way impair the 
interests of the Government or of the public.
    (c) In interpreting the requirement of Sec.  73a.735-502(a)(2)(v), 
events not involving employee discretion (e.g., accepting dividends in 
the form of cash or additional shares) do not constitute transactions 
designed to increase the value/shares of an ``excepted'' financial 
interest. A transaction involving discretion, e.g., exercise of stock 
options, may be made only if proposed to the Associate Commissioner for 
Administration and approved by the Conflict of Interest Review Board as 
an amendment to the original exception. A memorandum recording such 
approval shall be made public in accordance with paragraph (b) of this 
section.
    (d) An employee may temporarily retain a prohibited financial 
interest pending review of a written request for an exception submitted 
in accordance with this section.
    (e) Except as provided in Sec.  73a.735-501(c), no employee may 
participate in an official matter whose outcome will have a direct and 
predictable effect on

[[Page 240]]

a financial interest held by him. This prohibition applies to official 
matters handled before and after approval of an exception under this 
section.

Subparts F-I [Reserved]



       Subpart J_Statements of Employment and Financial Interests



Sec.  73a.735-1004  Submission and review of statements.

    (a) Employees occupying control activity positions shall file Form 
HHS-473 ``Confidential Statement of Employment and Financial Interests'' 
with the Associate Commissioner for Administration within 30 days after 
entrance in this category and annually thereafter as of June 30, or such 
other dates as the Secretary, with the concurrence of the Civil Service 
Commission, may approve. Prior to the due date, the Associate 
Commissioner for Administration shall advise ``control activity'' 
employees of the annual filing requirement through normal administrative 
channels. The annual reporting requirement shall commence as of June 30, 
1977.
    (b) The Associate Commissioner for Administration (or his designee) 
shall serve as the principal reviewing official for Outside Activity 
Forms, HHS-520 and 521, and shall make final determinations on matters 
arising from activities reported on Form HHS-473.



PART 73b_DEBARMENT OR SUSPENSION OF FORMER EMPLOYEES--Table of Contents



Sec.
73b.1 Scope.
73b.2 Rules and regulations.
73b.3 Reports of violations.
73b.4 Proceedings.
73b.5 Hearings.

    Authority: 18 U.S.C. 207(j).

    Source: 47 FR 17505, Apr. 23, 1982, unless otherwise noted.



Sec.  73b.1  Scope.

    This part contains rules governing debarment or disqualification 
action against a former officer or employee of the Department, including 
former and retired officers of the commissioned corps of the Public 
Health Service, because of violation of the post-employment restrictions 
of the conflict of interest laws and regulations.



Sec.  73b.2  Rules and regulations.

    This part will be applied in conformance with the standards 
established by the Office of Government Ethics in its regulations, 5 CFR 
part 737, and interpretations thereof. Former officers and employees of 
the Department may request advice and assistance in compliance with 
those regulations from the Assistant General Counsel, Business and 
Administrative Law Division, Department of Health and Human Services.



Sec.  73b.3  Reports of violations.

    (a) If an officer or employee of the Department has reason to 
believe that a former officer or employee of the Department has violated 
any provision of 18 U.S.C. 207 (a), (b) or (c) or if any such officer or 
employee receives information to that effect, he/she shall promptly make 
a written report thereof which shall be forwarded to the Inspector 
General. If any other person has information of such violations, he/she 
may make a report thereof to the Inspector General or to any officer or 
employee of the Department.
    (b) The Inspector General shall coordinate proceedings under this 
part with the Department of Justice in cases where it appears criminal 
prosecution is warranted.



Sec.  73b.4  Proceedings.

    (a) Upon a determination by the Assistant General Counsel, Business 
and Administrative Law Division, or his/her designee, after 
investigation by the Inspector General, that there is reasonable cause 
to believe that a former officer or employee, including a former special 
Government employee, of the Department of Health and Human Services 
(former departmental employee) has violated 18 US.C. 207 (a), (b) or 
(c), the Assistant General Counsel, or his/her designee, shall cause a 
copy of written charges of the violation(s) to be served upon such 
individual, either personally or by registered mail. The

[[Page 241]]

charges shall be accompanied by a notice to the former departmental 
employee to show cause within a specified time of not less than 30 days 
after receipt of the notice why he/she should not be prohibited from 
engaging in representational activities in relation to matters pending 
in the Department, as authorized by 18 U.S.C. 207(j), or subjected to 
other appropriate debarment or disqualification action under that 
statute. The notice to show cause shall include:
    (1) A statement of allegations, and their bases, sufficiently 
detailed to enable the former departmental employee to prepare an 
adequate defense;
    (2) Notification of the right to a hearing, and that failure to 
answer shall constitute a waiver of defense; and
    (3) An explanation of the method by which a hearing may be 
requested.
    (b) If a former departmental employee who submits an answer to the 
notice to show cause does not request a hearing or if the Assistant 
General Counsel does not receive an answer within the time prescribed by 
the notice, the Assistant General Counsel shall forward the record, 
including the report(s) of investigation, to the Assistant Secretary for 
Personnel Administration (Assistant Secretary). In the case of a failure 
to answer, such failure shall constitute a waiver of defense.
    (c) Upon receipt of a former departmental employee's request for a 
hearing, the Assistant General Counsel shall notify him/her of the time 
and place thereof, giving due regard both to such person's need for an 
adequate period to prepare a suitable defense and an expeditious 
resolution of allegations that may be damaging to his or her reputation.
    (d) The presiding officer at the hearing and any related proceedings 
shall be a federal administrative law judge. He/she shall insure that 
the former departmental employee has the following rights:
    (1) To self-representation or representation by counsel,
    (2) To introduce and examine witnesses and submit physical evidence,
    (3) To confront and cross-examine adverse witnesses,
    (4) To present oral argument, and
    (5) To a transcript or recording of the proceedings, upon request.
    (e) The Assistant General Counsel shall designate one or more 
officers or employees of the Department to present the evidence against 
the former departmental employee and perform other functions incident to 
the proceedings.
    (f) A decision adverse to the former departmental employee must be 
sustained by substantial evidence that he/she violated 18 U.S.C. 207 
(a), (b) or (c). If a judgment of conviction has been entered by a 
Federal district court against the former departmental employee for 
violation of 18 U.S.C. 207 (a), (b) or (c), regardless of whether the 
judgment is based upon a verdict or a plea of guilty, such judgment of 
conviction shall be conclusive evidence of a violation of 18 U.S.C. 207 
(a), (b) or (c), unless and until the judgment is vacated or reversed on 
appeal.
    (g) The administrative law judge shall issue an initial decision 
based exclusively on the transcript of testimony and exhibits, together 
with all papers and requests filed in the proceeding, and shall set 
forth in the decision findings and conclusions, supported by reasons, on 
the material issues of fact and law presented on the record.
    (h) Within 30 days after issuance of the initial decision, either 
party may appeal in writing to the Assistant Secretary who in that event 
shall issue the final decision based on the record of the proceedings or 
those portions thereof cited by the parties to limit the issues. If the 
final decision modifies or reverses the initial decision, the Assistant 
Secretary shall specify the findings of fact and conclusions of law that 
vary from those of the presiding officer.
    (i) If a former departmental employee fails to appeal from an 
adverse initial decision within the prescribed period of time, the 
administrative law judge shall forward the record of the proceedings to 
the Assistant Secretary.
    (j) In the case of a former departmental employee who filed an 
answer to the notice to show cause but did not request a hearing, the 
Assistant Secretary shall make the final decision on

[[Page 242]]

the record submitted to him by the Assistant General Counsel pursuant to 
paragraph (b) of this section.
    (k) In a case where:
    (1) The defense has been waived,
    (2) The former departmental employee has failed to appeal from an 
adverse initial decision, or
    (3) The Assistant Secretary has issued a final decision that the 
former departmental employee violated 18 U.S.C. 207 (a), (b) or (c),

The Assistant Secretary may issue an order:
    (i) Prohibiting the former departmental employee from making, on 
behalf of any other person (except the United States), any informal or 
formal appearance before, or, with the intent to influence, any oral or 
written communication to, the Department on a pending matter of business 
for a period not to exceed five years, or
    (ii) Prescribing other appropriate debarment or disqualification 
action, such as limiting the action to a particular organization or 
organizations within the Department.
    (l) An order issued under either paragraph (k)(i) or (k)(ii) of this 
section shall be supplemented by a directive to officers and employees 
of the Department not to engage in conduct in relation to the former 
departmental employee that would contravene such order.



Sec.  73b.5  Hearings.

    (a) Hearings shall be stenographically recorded and transcribed and 
the testimony of witnesses shall be taken under oath or affirmation. 
Hearings will be closed unless an open hearing is requested by the 
respondent, except that if classified information or protected 
information of third parties is likely to be adduced at the hearing, it 
will remain closed. If either party to the proceeding fails to appear at 
the hearing, after due notice thereof has been sent to him/her, he/she 
shall be deemed to have waived the right to a hearing and the 
administrative law judge may make a decision on the basis of the record 
before him/her at that time.
    (b) The rules of evidence prevailing in courts of law and equity are 
not controlling in hearings under this part. However, the administrative 
law judge shall exclude evidence which is irrelevant, immaterial, or 
unduly repetitious.
    (c) Depositions for use at a hearing may, with the consent of the 
parties in writing or the written approval of the administrative law 
judge be taken by either the Assistant General Counsel or the respondent 
or their duly authorized representatives. Depositions may be taken upon 
oral or written interrogatories. There shall be at least 10 days written 
notice to the other party. The requirement of a 10-day written notice 
may be waived by the parties in writing. When a deposition is taken upon 
written interrogatories, any cross-examination shall be upon written 
interrogatories. Copies of such written interrogatories shall be served 
upon the other party with the notice, and copies of any written cross-
interrogation shall be mailed or delivered to the opposing party at 
least 5 days before the date of taking the depositions, unless the 
parties mutually agree otherwise. Expenses in the reporting of 
depositions shall be borne by the party at whose instance the deposition 
is taken.

                           PART 74 [RESERVED]



PART 75_UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, 
AND AUDIT REQUIREMENTS FOR HHS AWARDS--Table of Contents



                   Subpart A_Acronyms and Definitions

Sec.
75.1 Acronyms.
75.2 Definitions.

                      Subpart B_General Provisions

75.100 Purpose.
75.101 Applicability.
75.102 Exceptions.
75.103 Authorities.
75.104 Supersession.
75.105 Effects on other issuances.
75.106 Agency implementation.
75.107 OMB responsibilities.
75.108 Inquiries.
75.109 Review date.
75.110 Effective/Applicability date.
75.111 English language.
75.112 Conflict of interest.

[[Page 243]]

75.113 Mandatory disclosures.

 Subpart C_Pre-Federal Award Requirements and Contents of Federal Awards

75.200 Purpose.
75.201 Use of grant agreements (including fixed amount awards), 
          cooperative agreements, and contracts.
75.202 Requirement to provide public notice of Federal financial 
          assistance programs.
75.203 Notices of funding opportunities.
75.204 HHS funding agency review of merit of proposals.
75.205 HHS awarding agency review of risk posed by applicants.
75.206 Standard application requirements, including forms for applying 
          for HHS financial assistance, and state plans.
75.207 Specific award conditions.
75.208 Certifications and representations.
75.209 Pre-award costs.
75.210 Information contained in a Federal award.
75.211 Public access to Federal award information.
75.212 Reporting a determination that a recipient is not qualified for a 
          Federal award.
75.213 Suspension and debarment.
75.214 Metric system of measurement.
75.215 Disclosure of lobbying activities.
75.216 Special provisions for awards to commercial organizations as 
          recipients.
75.217 Special provisions for awards to Federal agencies.
75.218 Participation by faith-based organizations.

                Subpart D_Post Federal Award Requirements

             Standards for Financial and Program Management

75.300 Statutory and national policy requirements.
75.301 Performance measurement.
75.302 Financial management and standards for financial management 
          systems.
75.303 Internal controls.
75.304 Bonds.
75.305 Payment.
75.306 Cost sharing or matching.
75.307 Program income.
75.308 Revision of budget and program plans.
75.309 Period of performance and availability of funds.
75.310-75.315 [Reserved]

                           Property Standards

75.316 Purpose of property standards.
75.317 Insurance coverage.
75.318 Real property.
75.319 Federally-owned and exempt property.
75.320 Equipment.
75.321 Supplies.
75.322 Intangible property and copyrights.
75.323 Property trust relationship.
75.324-75.325 [Reserved]

                          Procurement Standards

75.326 Procurements by states.
75.327 General procurement standards.
75.328 Competition.
75.329 Procurement procedures.
75.330 Contracting with small and minority businesses, women's business 
          enterprises, and labor surplus area firms.
75.331 Procurement of recovered materials.
75.332 Contract cost and price.
75.333 HHS awarding agency or pass-through entity review.
75.334 Bonding requirements.
75.335 Contract provisions.
75.336-75.340 [Reserved]

           Performance and Financial Monitoring and Reporting

75.341 Financial reporting.
75.342 Monitoring and reporting program performance.
75.343 Reporting on real property.
75.344-75.350 [Reserved]

                 Subrecipient Monitoring and Management

75.351 Subrecipient and contractor determinations.
75.352 Requirements for pass-through entities.
75.353 Fixed amount subawards.
75.354-75.360 [Reserved]

                       Record Retention and Access

75.361 Retention requirements for records.
75.362 Requests for transfer or records.
75.363 Methods for collection, transmission and storage of information.
75.364 Access to records.
75.365 Restrictions on public access to records.
75.366-75.370 [Reserved]

                       Remedies for Noncompliance

75.371 Remedies for noncompliance.
75.372 Termination.
75.373 Notification of termination requirement.
75.374 Opportunities to object, hearings, and appeals.
75.375 Effects of suspension and termination.
75.376-75.380 [Reserved]

                                Closeout

75.381 Closeout.
75.382-75.385 [Reserved]

[[Page 244]]

        Post-Closeout Adjustments and Continuing Responsibilities

75.386 Post-closeout adjustments and continuing responsibilities.
75.387-75.390 [Reserved]

                        Collection of Amounts Due

75.391 Collection of amounts due.

                        Subpart E_Cost Principles

                           General Provisions

75.400 Policy guide.
75.401 Application.

                          Basic Considerations

75.402 Composition of costs.
75.403 Factors affecting allowability of costs.
75.404 Reasonable costs.
75.405 Allocable costs.
75.406 Applicable credits.
75.407 Prior written approval (prior approval).
75.408 Limitation on allowance of costs.
75.409 Special considerations.
75.410 Collection of unallowable costs.
75.411 Adjustment of previously negotiated indirect (F&A) cost rates 
          containing unallowable costs.

                     Direct and Indirect (F&A) Costs

75.412 Classification of costs.
75.413 Direct costs.
75.414 Indirect (F&A) costs.
75.415 Required certifications.

 Special Considerations for States, Local Governments and Indian Tribes

75.416 Cost allocation plans and indirect cost proposals.
75.417 Interagency service.

       Special Considerations for Institutions of Higher Education

75.418 Costs incurred by states and local governments.
75.419 Cost accounting standards and disclosure statement.

              General Provisions for Selected Items of Cost

75.420 Considerations for selected items of cost.
75.421 Advertising and public relations.
75.422 Advisory councils.
75.423 Alcoholic beverages.
75.424 Alumni/ae activities.
75.425 Audit services.
75.426 Bad debts.
75.427 Bonding costs.
75.428 Collections of improper payments.
75.429 Commencement and convocation costs.
75.430 Compensation--personal services.
75.431 Compensation--fringe benefits.
75.432 Conferences.
75.433 Contingency provisions.
75.434 Contributions and donations.
75.435 Defense and prosecution of criminal and civil proceedings, 
          claims, appeals, and patent infringements.
75.436 Depreciation.
75.437 Employee health and welfare costs.
75.438 Entertainment costs.
75.439 Equipment and other capital expenditures.
75.440 Exchange rates.
75.441 Fines, penalties, damages and other settlements.
75.442 Fund raising and investment management costs.
75.443 Gains and losses on disposition of depreciable assets.
75.444 General costs of government.
75.445 Goods or services for personal use.
75.446 Idle facilities and idle capacity.
75.447 Insurance and indemnification.
75.448 Intellectual property.
75.449 Interest.
75.450 Lobbying.
75.451 Losses on other awards or contracts.
75.452 Maintenance and repair costs.
75.453 Materials and supplies costs, including costs of computing 
          devices.
75.454 Memberships, subscriptions, and professional activity costs.
75.455 Organization costs.
75.456 Participant support costs.
75.457 Plant and security costs.
75.458 Pre-award costs.
75.459 Professional service costs.
75.460 Proposal costs.
75.461 Publication and printing costs.
75.462 Rearrangement and reconversion costs.
75.463 Recruiting costs.
75.464 Relocation costs of employees.
75.465 Rental costs of real property and equipment.
75.466 Scholarships and student aid costs.
75.467 Selling and marketing costs.
75.468 Specialized service facilities.
75.469 Student activity costs.
75.470 Taxes (including Value Added Tax).
75.471 Termination costs.
75.472 Training and education costs.
75.473 Transportation costs.
75.474 Travel costs.
75.475 Trustees.

                   HHS Specific Selected Items of Cost

75.476 Independent research and development costs.
75.477 Shared responsibility payments.

                      Subpart F_Audit Requirements

                                 General

75.500 Purpose.

[[Page 245]]

                                 Audits

75.501 Audit requirements.
75.502 Basis for determining Federal awards expended.
75.503 Relation to other audit requirements.
75.504 Frequency of audits.
75.505 Sanctions.
75.506 Audit costs.
75.507 Program-specific audits.

                                Auditees

75.508 Auditee responsibilities.
75.509 Auditor selection.
75.510 Financial statements.
75.511 Audit findings follow-up.
75.512 Report submission.

                            Federal Agencies

75.513 Responsibilities.

                                Auditors

75.514 Scope of audit.
75.515 Audit reporting.
75.516 Audit findings.
75.517 Audit documentation.
75.518 Major program determination.
75.519 Criteria for Federal program risk.
75.520 Criteria for a low-risk auditee.

                          Management Decisions

75.521 Management decision.

Appendix I to Part 75--Full Text of Notice of Funding Opportunity
Appendix II to Part 75--Contract Provisions for Non-Federal Entity 
          Contracts Under Federal Awards
Appendix III to Part 75--Indirect (F&A) Costs Identification and 
          Assignment, and Rate Determination for Institutions of Higher 
          Education (IHEs)
Appendix IV to Part 75--Indirect (F&A) Costs Identification and 
          Assignment, and Rate Determination for Nonprofit Organizations
Appendix V to Part 75--State/Local Governmentwide Central Service Cost 
          Allocation Plans
Appendix VI to Part 75--Public Assistance Cost Allocation Plans
Appendix VII to Part 75--States and Local Government and Indian Tribe 
          Indirect Cost Proposals
Appendix VIII to Part 75--Nonprofit Organizations Exempted from Subpart 
          E of Part 75
Appendix IX to Part 75--Principles for Determining Costs Applicable to 
          Research and Development Under Grants and Contracts with 
          Hospitals
Appendix X to Part 75--Data Collection Form (SF-SAC)
Appendix XI to Part 75--Compliance Supplement
Appendix XII to Part 75--Award Term and Conditions for Recipient 
          Integrity and Performance Matters

    Authority: 5 U.S.C. 301; 2 CFR part 200.

    Source: 79 FR 75889, Dec. 19, 2014, unless otherwise noted.



                   Subpart A_Acronyms and Definitions



Sec.  75.1  Acronyms.

    The following acronyms apply to this part:

CAS Cost Accounting Standards
CFDA Catalog of Federal Domestic Assistance
CFR Code of Federal Regulations
CMIA Cash Management Improvement Act
COG Councils Of Governments
COSO Committee of Sponsoring Organizations of the Treadway Commission
EPA Environmental Protection Agency
ERISA Employee Retirement Income Security Act of 1974 (29 U.S.C. 1301-
1461)
EUI Energy Usage Index
F&A Facilities and Administration
FAC Federal Audit Clearinghouse
FAIN Federal Award Identification Number
FAPIIS Federal Awardee Performance and Integrity Information System
FAR Federal Acquisition Regulation
FFATA Federal Funding Accountability and Transparency Act of 2006 or 
Transparency Act--Public Law 109-282, as amended by Sec.  6202(a) of 
Public Law 110-252 (31 U.S.C. 6101)
FICA Federal Insurance Contributions Act
FOIA Freedom of Information Act
FR Federal Register
FTE Full-time equivalent
GAAP Generally Accepted Accounting Principles
GAGAS Generally Accepted Government Auditing Standards
GAO Government Accountability Office
GOCO Government owned, contractor operated
GSA General Services Administration
HHS U.S. Department of Health and Human Services
IBS Institutional Base Salary
IHE Institutions of Higher Education
IRC Internal Revenue Code
ISDEAA Indian Self-Determination and Education and Assistance Act
MTC Modified Total Cost
MTDC Modified Total Direct Cost
OMB Office of Management and Budget
PII Personally Identifiable Information
PMS Payment Management System
PRHP Post-retirement Health Plans
PTE Pass-through Entity
REUI Relative Energy Usage Index

[[Page 246]]

SAM System for Award Management (accessible at https://www.sam.gov)
SF 424 Standard Form 424 series and Form Families Application for 
Federal Assistance
SFA Student Financial Aid
SNAP Supplemental Nutrition Assistance Program
SPOC Single Point of Contact
TANF Temporary Assistance for Needy Families
TFM Treasury Financial Manual
U.S.C. United States Code
VAT Value Added Tax

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3012, Jan. 20, 2016]



Sec.  75.2  Definitions.

    These are the definitions for terms used in this part. Different 
definitions may be found in Federal statutes or regulations that apply 
more specifically to particular program or activities. These definitions 
could be supplemented by additional instructional information provided 
in in governmentwide standard information collections.
    Acquisition cost means the cost of the asset including the cost to 
ready the asset for its intended use. Acquisition cost for equipment, 
for example, means the net invoice price of the equipment, including the 
cost of any modifications, attachments, accessories, or auxiliary 
apparatus necessary to make it usable for the purpose for which it is 
acquired. Acquisition costs for software includes those development 
costs capitalized in accordance with generally accepted accounting 
principles (GAAP). Ancillary charges, such as taxes, duty, protective in 
transit insurance, freight, and installation may be included in or 
excluded from the acquisition cost in accordance with the non-Federal 
entity's regular accounting practices.
    Advance payment means a payment that a Federal awarding agency or 
pass-through entity makes by any appropriate payment mechanism, 
including a predetermined payment schedule, before the non-Federal 
entity disburses the funds for program purposes.
    Allocation means the process of assigning a cost, or a group of 
costs, to one or more cost objective(s), in reasonable proportion to the 
benefit provided or other equitable relationship. The process may entail 
assigning a cost(s) directly to a final cost objective or through one or 
more intermediate cost objectives.
    Audit finding means deficiencies which the auditor is required by 
Sec.  75.516(a) to report in the schedule of findings and questioned 
costs.
    Auditee means any non-Federal entity that expends Federal awards 
which must be audited under subpart F-of this part.
    Auditor means an auditor who is a public accountant, or a Federal, 
state, local government, or Indian Tribe audit organization, which meets 
the general standards specified for external auditors in generally 
accepted government auditing standards (GAGAS). The term auditor does 
not include internal auditors of nonprofit organizations.
    Awardee (see Non-Federal entity).
    Budget means the financial plan for the project or program that the 
Federal awarding agency or pass-through entity approves during the 
Federal award process or in subsequent amendments to the Federal award. 
It may include the Federal and non-Federal share or only the Federal 
share, as determined by the Federal awarding agency or pass-through 
entity.
    Capital assets means tangible or intangible assets used in 
operations having a useful life of more than one year which are 
capitalized in accordance with GAAP. Capital assets include:
    (1) Land, buildings (facilities), equipment, and intellectual 
property (including software) whether acquired by purchase, 
construction, manufacture, lease-purchase, exchange, or through capital 
leases; and
    (2) Additions, improvements, modifications, replacements, 
rearrangements, reinstallations, renovations or alterations to capital 
assets that materially increase their value or useful life (not ordinary 
repairs and maintenance).
    Capital expenditures means expenditures to acquire capital assets or 
expenditures to make additions, improvements, modifications, 
replacements, rearrangements, reinstallations, renovations, or 
alterations to capital assets that materially increase their value or 
useful life.

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    Catalog of Federal Domestic Assistance (CFDA) number means the 
number assigned to a Federal program in the CFDA.
    CFDA program title means the title of the program under which the 
Federal award was funded in the CFDA.
    Central service cost allocation plan means the documentation 
identifying, accumulating, and allocating or developing billing rates 
based on the allowable costs of services provided by a state, local 
government, or Indian tribe on a centralized basis to its departments 
and agencies. The costs of these services may be allocated or billed to 
users.
    Claim means, depending on the context, either:
    (1) A written demand or written assertion by one of the parties to a 
Federal award seeking as a matter of right:
    (i) The payment of money in a sum certain;
    (ii) The adjustment or interpretation of the terms and conditions of 
the Federal award; or
    (iii) Other relief arising under or relating to a Federal award.
    (2) A request for payment that is not in dispute when submitted.
    Class of Federal awards means a group of Federal awards either 
awarded under a specific program or group of programs or to a specific 
type of non-Federal entity or group of non-Federal entities to which 
specific provisions or exceptions may apply.
    Closeout means the process by which the Federal awarding agency or 
pass-through entity determines that all applicable administrative 
actions and all required work of the Federal award have been completed 
and takes actions as described in Sec.  75.381.
    Cluster of programs means a grouping of closely related programs 
that share common compliance requirements. The types of clusters of 
programs are research and development (R&D), student financial aid 
(SFA), and other clusters. ``Other clusters'' are as defined by OMB in 
the compliance supplement or as designated by a state for Federal awards 
the state provides to its subrecipients that meet the definition of a 
cluster of programs. When designating an ``other cluster,'' a state must 
identify the Federal awards included in the cluster and advise the 
subrecipients of compliance requirements applicable to the cluster, 
consistent with Sec.  75.352(a). A cluster of programs must be 
considered as one program for determining major programs, as described 
in Sec.  75.518, and, with the exception of R&D as described in Sec.  
75.501(c), whether a program-specific audit may be elected.
    Cognizant agency for audit means the Federal agency designated to 
carry out the responsibilities described in Sec.  75.513(a). The 
cognizant agency for audit is not necessarily the same as the cognizant 
agency for indirect costs. A list of cognizant agencies for audit may be 
found at the FAC Web site.
    Cognizant agency for indirect costs means the Federal agency 
responsible for reviewing, negotiating, and approving cost allocation 
plans or indirect cost proposals developed under this part on behalf of 
all Federal agencies. The cognizant agency for indirect cost is not 
necessarily the same as the cognizant agency for audit. For assignments 
of cognizant agencies see the following:
    (1) For IHEs: Appendix III to part 75 C.11.
    (2) For nonprofit organizations: Appendix IV to part 75 C.2.a.
    (3) For state and local governments: Appendix V to part 75 F.1.
    (4) For Indian tribes: Appendix VII to part 75 D.1.
    Commercial organization means an organization, institution, 
corporation, or other legal entity, including, but not limited to, 
partnerships, sole proprietorships, and limited liability companies, 
that is organized or operated for the profit or benefit of its 
shareholders or other owners. The term includes small and large 
businesses and is used interchangeably with ``for-profit organization.''
    Compliance supplement means appendix XI to part 75 (previously known 
as the Circular A-133 Compliance Supplement).
    Computing devices means machines used to acquire, store, analyze, 
process, and publish data and other information electronically, 
including accessories

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(or ``peripherals'') for printing, transmitting and receiving, or 
storing electronic information. See also Supplies and Information 
technology systems.
    Contract means a legal instrument by which a non-Federal entity 
purchases property or services needed to carry out the project or 
program under a Federal award. The term as used in this part does not 
include a legal instrument, even if the non-Federal entity considers it 
a contract, when the substance of the transaction meets the definition 
of a Federal award or subaward (see Subaward).
    Contractor means an entity that receives a contract as defined in 
Contract.
    Cooperative agreement means a legal instrument of financial 
assistance between a Federal awarding agency or pass-through entity and 
a non-Federal entity that, consistent with 31 U.S.C. 6302-6305:
    (1) Is used to enter into a relationship the principal purpose of 
which is to transfer anything of value from the Federal awarding agency 
or pass-through entity to the non-Federal entity to carry out a public 
purpose authorized by a law of the United States (see 31 U.S.C. 
6101(3)); and not to acquire property or services for the Federal 
Government or pass-through entity's direct benefit or use;
    (2) Is distinguished from a grant in that it provides for 
substantial involvement between the Federal awarding agency or pass-
through entity and the non-Federal entity in carrying out the activity 
contemplated by the Federal award.
    (3) The term does not include:
    (i) A cooperative research and development agreement as defined in 
15 U.S.C. 3710a; or
    (ii) An agreement that provides only:
    (A) Direct United States Government cash assistance to an 
individual;
    (B) A subsidy;
    (C) A loan;
    (D) A loan guarantee; or
    (E) Insurance
    Cooperative audit resolution means the use of audit follow-up 
techniques which promote prompt corrective action by improving 
communication, fostering collaboration, promoting trust, and developing 
an understanding between the Federal agency and the non-Federal entity. 
This approach is based upon:
    (1) A strong commitment by Federal agency and non-Federal entity 
leadership to program integrity;
    (2) Federal agencies strengthening partnerships and working 
cooperatively with non-Federal entities and their auditors; and non-
Federal entities and their auditors working cooperatively with Federal 
agencies;
    (3) A focus on current conditions and corrective action going 
forward;
    (4) Federal agencies offering appropriate relief for past 
noncompliance when audits show prompt corrective action has occurred; 
and
    (5) Federal agency leadership sending a clear message that continued 
failure to correct conditions identified by audits which are likely to 
cause improper payments, fraud, waste, or abuse is unacceptable and will 
result in sanctions.
    Corrective action means action taken by the auditee that:
    (1) Corrects identified deficiencies;
    (2) Produces recommended improvements; or
    (3) Demonstrates that audit findings are either invalid or do not 
warrant auditee action.
    Cost allocation plan means central service cost allocation plan or 
public assistance cost allocation plan.
    Cost objective means a program, function, activity, award, 
organizational subdivision, contract, or work unit for which cost data 
are desired and for which provision is made to accumulate and measure 
the cost of processes, products, jobs, capital projects, etc. A cost 
objective may be a major function of the non-Federal entity, a 
particular service or project, a Federal award, or an indirect 
(Facilities & Administrative (F&A)) cost activity, as described in 
subpart E of this part. See also Final cost objective and Intermediate 
cost objective.
    Cost sharing or matching means the portion of project costs not paid 
by Federal funds (unless otherwise authorized by Federal statute). This 
may include the value of allowable third party in-kind contributions, as 
well as expenditures by the recipient. See also Sec.  75.306.

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    Cross-cutting audit finding means an audit finding where the same 
underlying condition or issue affects Federal awards of more than one 
Federal awarding agency or pass-through entity.
    Departmental Appeals Board means the independent office established 
in the Office of the Secretary with delegated authority from the 
Secretary to review and decide certain disputes between recipients of 
HHS funds and HHS awarding agencies under 45 CFR part 16 and to perform 
other review, adjudication and mediation services as assigned.
    Disallowed costs means those charges to a Federal award that the 
Federal awarding agency or pass-through entity determines to be 
unallowable, in accordance with the applicable Federal statutes, 
regulations, or the terms and conditions of the Federal award.
    Equipment means tangible personal property (including information 
technology systems) having a useful life of more than one year and a 
per-unit acquisition cost which equals or exceeds the lesser of the 
capitalization level established by the non-Federal entity for financial 
statement purposes, or $5,000. See also Capital assets, Computing 
devices, General purpose equipment, Information technology systems, 
Special purpose equipment, and Supplies.
    Excess property means property acquired in whole or in part under 
the control of any Federal awarding agency that, as determined by the 
head of the awarding agency or his/her delegate, is no longer required 
for the agency's needs or the discharge of its responsibilities.
    Expenditure report means:
    (1) For non-construction awards, the SF-425 Federal Financial Report 
(FFR) (or other OMB-approved equivalent report);
    (2) For construction awards, the SF-271 ``Outlay Report and Request 
for Reimbursement'' (or other OMB-approved equivalent report).
    Expenditures means charges made by a non-Federal entity to a project 
or program for which a Federal award was received.
    (1) The charges may be reported on a cash or accrual basis, as long 
as the methodology is disclosed and is consistently applied.
    (2) For reports prepared on a cash basis, expenditures are the sum 
of:
    (i) Cash disbursements for direct charges for property and services;
    (ii) The amount of indirect expense charged;
    (iii) The value of third-party in-kind contributions applied; and
    (iv) The amount of cash advance payments and payments made to 
subrecipients.
    (3) For reports prepared on an accrual basis, expenditures are the 
sum of:
    (i) Cash disbursements for direct charges for property and services;
    (ii) The amount of indirect expense incurred;
    (iii) The value of third-party in-kind contributions applied; and
    (iv) The net increase or decrease in the amounts owed by the non-
Federal entity for:
    (A) Goods and other property received;
    (B) Services performed by employees, contractors, subrecipients, and 
other payees;
    (C) Programs for which no current services or performance are 
required such as annuities, insurance claims, or other benefit payments.
    Federal agency means an ``agency'' as defined at 5 U.S.C. 551(1) and 
further clarified by 5 U.S.C. 552(f).
    Federal Audit Clearinghouse (FAC) means the clearinghouse designated 
by OMB as the repository of record where non-Federal entities are 
required to transmit the reporting packages required by subpart F of 
this part. The mailing address of the FAC is Federal Audit 
Clearinghouse, Bureau of the Census, 1201 E. 10th Street, 
Jeffersonville, IN 47132 and the web address is: http://
harvester.census.gov/sac/. Any future updates to the location of the FAC 
may be found at the OMB Web site.
    Federal award has the meaning, depending on the context, in either 
paragraph (1) or (2) of this definition:
    (1)(i) The Federal financial assistance that a non-Federal entity 
receives directly from a Federal awarding agency or indirectly from a 
pass-through entity, as described in Sec.  75.101; or

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    (ii) The cost-reimbursement contract under the Federal Acquisition 
Regulations that a non-Federal entity receives directly from a Federal 
awarding agency or indirectly from a pass-through entity, as described 
in Sec.  75.101.
    (2) The instrument setting forth the terms and conditions. The 
instrument is the grant agreement, cooperative agreement, other 
agreement for assistance covered in paragraph (2) of Federal financial 
assistance, or the cost-reimbursement contract awarded under the Federal 
Acquisition Regulations.
    (3) Federal award does not include other contracts that a Federal 
agency uses to buy goods or services from a contractor or a contract to 
operate Federal Government owned, contractor operated facilities 
(GOCOs).
    (4) See also definitions of Federal financial assistance, grant 
agreement, and cooperative agreement.
    Federal award date means the date when the Federal award is signed 
by the authorized official of the Federal awarding agency.
    Federal awarding agency means the Federal agency that provides a 
Federal award directly to a non-Federal entity.
    Federal financial assistance means:
    (1) Assistance that non-Federal entities receive or administer in 
the form of:
    (i) Grants;
    (ii) Cooperative agreements;
    (iii) Non-cash contributions or donations of property (including 
donated surplus property);
    (iv) Direct appropriations;
    (v) Food commodities; and
    (vi) Other financial assistance (except assistance listed in 
paragraph (b) of this section).
    (2) For Sec.  75.202 and subpart F of this part, Federal financial 
assistance also includes assistance that non-Federal entities receive or 
administer in the form of:
    (i) Loans;
    (ii) Loan Guarantees;
    (iii) Interest subsidies; and
    (iv) Insurance.
    (3) Federal financial assistance does not include amounts received 
as reimbursement for services rendered to individuals as described in 
Sec.  75.502(h) and (i).
    Federal interest means, for purposes of Sec.  75.343 or when used in 
connection with the acquisition or improvement of real property, 
equipment, or supplies under a Federal award, the dollar amount that is 
the product of the:
    (1) Federal share of total project costs; and
    (2) Current fair market value of the property, improvements, or 
both, to the extent the costs of acquiring or improving the property 
were included as project costs.
    Federal program means:
    (1) All Federal awards which are assigned a single number in the 
CFDA.
    (2) When no CFDA number is assigned, all Federal awards to non-
Federal entities from the same agency made for the same purpose must be 
combined and considered one program.
    (3) Notwithstanding paragraphs (1) and (2) of this definition, a 
cluster of programs. The types of clusters of programs are:
    (i) Research and development (R&D);
    (ii) Student financial aid (SFA); and
    (iii) ``Other clusters,'' as described in the definition of Cluster 
of Programs
    Federal share means the portion of total project costs that are paid 
by Federal funds.
    Final cost objective means a cost objective which has allocated to 
it both direct and indirect costs and, in the non-Federal entity's 
accumulation system, is one of the final accumulation points, such as a 
particular award, internal project, or other direct activity of a non-
Federal entity. See also Cost objective and Intermediate cost objective.
    Fixed amount awards means a type of grant agreement under which the 
Federal awarding agency or pass-through entity provides a specific level 
of support without regard to actual costs incurred under the Federal 
award. This type of Federal award reduces some of the administrative 
burden and record-keeping requirements for both the non-Federal entity 
and Federal awarding agency or pass-through entity. Accountability is 
based primarily on performance and results. See Sec. Sec.  75.201(b) and 
75.353.
    Foreign organization means an entity that is:
    (1) A public or private organization located in a country other than 
the

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United States and its territories that is subject to the laws of the 
country in which it is located, irrespective of the citizenship of 
project staff or place of performance;
    (2) A private nongovernmental organization located in a country 
other than the United States that solicits and receives cash 
contributions from the general public;
    (3) A charitable organization located in a country other than the 
United States that is nonprofit and tax exempt under the laws of its 
country of domicile and operation, and is not a university, college, 
accredited degree-granting institution of education, private foundation, 
hospital, organization engaged exclusively in research or scientific 
activities, church, synagogue, mosque or other similar entities 
organized primarily for religious purposes; or
    (4) An organization located in a country other than the United 
States not recognized as a Foreign Public Entity.
    Foreign public entity means:
    (1) A foreign government or foreign governmental entity;
    (2) A public international organization, which is an organization 
entitled to enjoy privileges, exemptions, and immunities as an 
international organization under the International Organizations 
Immunities Act (22 U.S.C. 288-288f);
    (3) An entity owned (in whole or in part) or controlled by a foreign 
government; or
    (4) Any other entity consisting wholly or partially of one or more 
foreign governments or foreign governmental entities.
    General purpose equipment means equipment which is not limited to 
research, medical, scientific or other technical activities. Examples 
include office equipment and furnishings, modular offices, telephone 
networks, information technology equipment and systems, air conditioning 
equipment, reproduction and printing equipment, and motor vehicles. See 
also Equipment and Special Purpose Equipment.
    Generally Accepted Accounting Principles (GAAP) has the meaning 
specified in accounting standards issued by the Government Accounting 
Standards Board (GASB) and the Financial Accounting Standards Board 
(FASB).
    Generally Accepted Government Auditing Standards (GAGAS), also known 
as the Yellow Book, means generally accepted government auditing 
standards issued by the Comptroller General of the United States, which 
are applicable to financial audits.
    Grant agreement means a legal instrument of financial assistance 
between a Federal awarding agency or pass-through entity and a non-
Federal entity that, consistent with 31 U.S.C. 6302, 6304:
    (1) Is used to enter into a relationship the principal purpose of 
which is to transfer anything of value from the Federal awarding agency 
or pass-through entity to the non-Federal entity to carry out a public 
purpose authorized by a law of the United States (see 31 U.S.C. 
6101(3)); and not to acquire property or services for the Federal 
awarding agency or pass-through entity's direct benefit or use;
    (2) Is distinguished from a cooperative agreement in that it does 
not provide for substantial involvement between the Federal awarding 
agency or pass-through entity and the non-Federal entity in carrying out 
the activity contemplated by the Federal award.
    (3) Does not include an agreement that provides only:
    (i) Direct United States Government cash assistance to an 
individual;
    (ii) A subsidy;
    (iii) A loan;
    (iv) A loan guarantee; or
    (v) Insurance.
    Grantee (see Recipient)
    HHS awarding agency means any organization component of HHS that is 
authorized to make and administer awards.
    Hospital means a facility licensed as a hospital under the law of 
any state or a facility operated as a hospital by the United States, a 
state, or a subdivision of a state.
    Improper payment:
    (1) Means any payment that should not have been made or that was 
made in an incorrect amount (including overpayments and underpayments) 
under statutory, contractual, administrative, or other legally 
applicable requirements; and

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    (2) Includes any payment to an ineligible party, any payment for an 
ineligible good or service, any duplicate payment, any payment for a 
good or service not received (except for such payments where authorized 
by law), any payment that does not account for credit for applicable 
discounts, and any payment where insufficient or lack of documentation 
prevents a reviewer from discerning whether a payment was proper.
    Indian tribe means any Indian tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33), which is 
recognized as eligible for the special programs and services provided by 
the United States to Indians because of their status as Indians (25 
U.S.C. 450b(e)). See annually published Bureau of Indian Affairs list of 
Indian Entities Recognized and Eligible to Receive Services.
    Indirect cost rate proposal means the documentation prepared by a 
non-Federal entity to substantiate its request for the establishment of 
an indirect cost rate as described in appendix III through appendix VII, 
and appendix IX of this part.
    Indirect (Facilities and Administration or F&A) costs means costs 
incurred for a common or joint purpose benefitting more than one cost 
objective, and not readily assignable to the cost objectives 
specifically benefitted, without effort disproportionate to the results 
achieved. To facilitate equitable distribution of indirect expenses to 
the cost objectives served, it may be necessary to establish a number of 
pools of indirect (F&A) costs. Indirect (F&A) cost pools must be 
distributed to benefitted cost objectives on bases that will produce an 
equitable result in consideration of relative benefits derived.
    Information technology systems means computing devices, ancillary 
equipment, software, firmware, and similar procedures, services 
(including support services), and related resources. See also Computing 
devices and Equipment.
    Institution of Higher Education (IHE) is defined at 20 U.S.C. 1001.
    Intangible property means property having no physical existence, 
such as trademarks, copyrights, patents and patent applications and 
property, such as loans, notes and other debt instruments, lease 
agreements, stock and other instruments of property ownership (whether 
the property is tangible or intangible).
    Intermediate cost objective means a cost objective that is used to 
accumulate indirect costs or service center costs that are subsequently 
allocated to one or more indirect cost pools or final cost objectives. 
See also Cost objective and Final cost objective.
    Internal control over compliance requirements for Federal awards 
means a process implemented by a non-Federal entity designed to provide 
reasonable assurance regarding the achievement of the following 
objectives for Federal awards:
    (1) Transactions are properly recorded and accounted for, in order 
to:
    (i) Permit the preparation of reliable financial statements and 
Federal reports;
    (ii) Maintain accountability over assets; and
    (iii) Demonstrate compliance with Federal statutes, regulations, and 
the terms and conditions of the Federal award;
    (2) Transactions are executed in compliance with:
    (i) Federal statutes, regulations, and the terms and conditions of 
the Federal award that could have a direct and material effect on a 
Federal program; and
    (ii) Any other Federal statutes and regulations that are identified 
in the Compliance Supplement; and
    (3) Funds, property, and other assets are safeguarded against loss 
from unauthorized use or disposition.
    Internal controls means a process, implemented by a non-Federal 
entity, designed to provide reasonable assurance regarding the 
achievement of objectives in the following categories:
    (1) Effectiveness and efficiency of operations;
    (2) Reliability of reporting for internal and external use; and
    (3) Compliance with applicable laws and regulations.
    Loan means a Federal loan or loan guarantee received or administered 
by

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a non-Federal entity, except as used in the definition of Program 
income.
    (1) The term ``direct loan'' means a disbursement of funds by the 
Federal Government to a non-Federal borrower under a contract that 
requires the repayment of such funds with or without interest. The term 
includes the purchase of, or participation in, a loan made by another 
lender and financing arrangements that defer payment for more than 90 
days, including the sale of a Federal Government asset on credit terms. 
The term does not include the acquisition of a federally guaranteed loan 
in satisfaction of default claims or the price support loans of the 
Commodity Credit Corporation.
    (2) The term ``direct loan obligation'' means a binding agreement by 
a Federal awarding agency to make a direct loan when specified 
conditions are fulfilled by the borrower.
    (3) The term ``loan guarantee'' means any Federal Government 
guarantee, insurance, or other pledge with respect to the payment of all 
or a part of the principal or interest on any debt obligation of a non-
Federal borrower to a non-Federal lender, but does not include the 
insurance of deposits, shares, or other withdrawable accounts in 
financial institutions.
    (4) The term ``loan guarantee commitment'' means a binding agreement 
by a Federal awarding agency to make a loan guarantee when specified 
conditions are fulfilled by the borrower, the lender, or any other party 
to the guarantee agreement.
    Local government means any unit of government within a state, 
including a:
    (1) County;
    (2) Borough;
    (3) Municipality;
    (4) City;
    (5) Town;
    (6) Township;
    (7) Parish;
    (8) Local public authority, including any public housing agency 
under the United States Housing Act of 1937;
    (9) Special district;
    (10) School district;
    (11) Intrastate district;
    (12) Council of governments, whether or not incorporated as a 
nonprofit corporation under state law; and
    (13) Any other agency or instrumentality of a multi-, regional, or 
intra-state or local government.
    Major program means a Federal program determined by the auditor to 
be a major program in accordance with Sec.  75.518 or a program 
identified as a major program by a Federal awarding agency or pass-
through entity in accordance with Sec.  75.503(e).
    Management decision means the evaluation by the Federal awarding 
agency or pass-through entity of the audit findings and corrective 
action plan and the issuance of a written decision to the auditee as to 
what corrective action is necessary.
    Micro-purchase means a purchase of supplies or services using 
simplified acquisition procedures, the aggregate amount of which does 
not exceed the micro-purchase threshold. Micro-purchase procedures 
comprise a subset of a non-Federal entity's small purchase procedures. 
The non-Federal entity uses such procedures in order to expedite the 
completion of its lowest-dollar small purchase transactions and minimize 
the associated administrative burden and cost. The micro-purchase 
threshold is set by the Federal Acquisition Regulation at 48 CFR Subpart 
2.1 (Definitions). It is $3,000 except as otherwise discussed in subpart 
2.1 of that regulation, but this threshold is periodically adjusted for 
inflation.
    Modified Total Direct Cost (MTDC) means all direct salaries and 
wages, applicable fringe benefits, materials and supplies, services, 
travel, and up to the first $25,000 of each subaward (regardless of the 
period of performance of the subawards under the award). MTDC excludes 
equipment, capital expenditures, charges for patient care, rental costs, 
tuition remission, scholarships and fellowships, participant support 
costs and the portion of each subaward in excess of $25,000. Other items 
may only be excluded when necessary to avoid a serious inequity in the 
distribution of indirect costs, and with the approval of the cognizant 
agency for indirect costs.
    Non-Federal entity means a state, local government, Indian tribe, 
institution of higher education (IHE), or nonprofit organization that 
carries out a

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Federal award as a recipient or subrecipient.
    Nonprofit organization means any corporation, trust, association, 
cooperative, or other organization, not including IHEs, that:
    (1) Is operated primarily for scientific, educational, service, 
charitable, or similar purposes in the public interest;
    (2) Is not organized primarily for profit; and
    (3) Uses net proceeds to maintain, improve, or expand the operations 
of the organization.
    Obligations, when used in connection with a non-Federal entity's 
utilization of funds under a Federal award, obligations means orders 
placed for property and services, contracts and subawards made, and 
similar transactions during a given period that require payment by the 
non-Federal entity during the same or a future period.
    Office of Management and Budget (OMB) means the Executive Office of 
the President, Office of Management and Budget.
    Oversight agency for audit means the Federal awarding agency that 
provides the predominant amount of funding directly to a non-Federal 
entity not assigned a cognizant agency for audit. When there is no 
direct funding, the Federal awarding agency which is the predominant 
source of pass-through funding must assume the oversight 
responsibilities. The duties of the oversight agency for audit and the 
process for any reassignments are described in Sec.  75.513(b).
    Participant support costs means direct costs for items such as 
stipends or subsistence allowances, travel allowances, and registration 
fees paid to or on behalf of participants or trainees (but not 
employees) in connection with conferences, or training projects.
    Pass-through entity means a non-Federal entity that provides a 
subaward to a subrecipient to carry out part of a Federal program.
    Performance goal means a target level of performance expressed as a 
tangible, measurable objective, against which actual achievement can be 
compared, including a goal expressed as a quantitative standard, value, 
or rate. In some instances (e.g., discretionary research awards), this 
may be limited to the requirement to submit technical performance 
reports (to be evaluated in accordance with agency policy).
    Period of performance means the time during which the non-Federal 
entity may incur new obligations to carry out the work authorized under 
the Federal award. The Federal awarding agency or pass-through entity 
must include start and end dates of the period of performance in the 
Federal award (see Sec. Sec.  75.210(a)(5) and 75.352(a)(1)(v)).
    Personal property means property of any kind except real property. 
It may be tangible, having physical existence, or intangible, such as 
copyrights, patents, or securities.
    Personally Identifiable Information (PII) means information that can 
be used to distinguish or trace an individual's identity, either alone 
or when combined with other personal or identifying information that is 
linked or linkable to a specific individual. Some information that is 
considered to be PII is available in public sources such as telephone 
books, public Web sites, and university listings. This type of 
information is considered to be Public PII and includes, for example, 
first and last name, address, work telephone number, email address, home 
telephone number, and general educational credentials. The definition of 
PII is not anchored to any single category of information or technology. 
Rather, it requires a case-by-case assessment of the specific risk that 
an individual can be identified. Non-PII can become PII whenever 
additional information is made publicly available, in any medium and 
from any source, that, when combined with other available information, 
could be used to identify an individual.
    Principal Investigator/Program Director (PI/PD) means the individual 
(s) designated by the recipient to direct the project or program being 
supported by the grant. The PI/PD is responsible and accountable to 
officials of the recipient organization for the proper conduct of the 
project, program, or activity.
    Prior approval means written approval by an authorized HHS official 
evidencing prior consent before a recipient undertakes certain 
activities or incurs specific costs.

[[Page 255]]

    Program income means gross income earned by the non-Federal entity 
that is directly generated by a supported activity or earned as a result 
of the Federal award during the period of performance except as provided 
in Sec.  75.307(f). (See Period of performance.) Program income includes 
but is not limited to income from fees for services performed, the use 
or rental or real or personal property acquired under Federal awards, 
the sale of commodities or items fabricated under a Federal award, 
license fees and royalties on patents and copyrights, and principal and 
interest on loans made with Federal award funds. Interest earned on 
advances of Federal funds is not program income. Except as otherwise 
provided in Federal statutes, regulations, or the terms and conditions 
of the Federal award, program income does not include rebates, credits, 
discounts, and interest earned on any of them. See also Sec. Sec.  
75.307, 75.407 and 35 U.S.C. 200-212 (applies to inventions made under 
Federal awards).
    Project costs means total allowable costs incurred under a Federal 
award and all required cost sharing and voluntary committed cost 
sharing, including third-party contributions.
    Project period (see Period of performance).
    Property means real property or personal property.
    Protected Personally Identifiable Information (Protected PII) 
Protected PII means an individual's first name or first initial and last 
name in combination with any one or more of types of information, 
including, but not limited to, social security number, passport number, 
credit card numbers, clearances, bank numbers, biometrics, date and 
place of birth, mother's maiden name, criminal, medical and financial 
records, educational transcripts. This does not include PII that is 
required by law to be disclosed. (See also Personally Identifiable 
Information (PII)).
    Questioned cost means a cost that is questioned by the auditor 
because of an audit finding:
    (1) Which resulted from a violation or possible violation of a 
statute, regulation, or the terms and conditions of a Federal award, 
including for funds used to match Federal funds;
    (2) Where the costs, at the time of the audit, are not supported by 
adequate documentation; or
    (3) Where the costs incurred appear unreasonable and do not reflect 
the actions a prudent person would take in the circumstances.
    Real property means land, including land improvements, structures 
and appurtenances thereto, but excludes moveable machinery and 
equipment.
    Recipient means an entity, usually but not limited to non-Federal 
entities, that receives a Federal award directly from a Federal awarding 
agency to carry out an activity under a Federal program. The term 
recipient does not include subrecipients. See also Non-Federal entity.
    Research is defined as a systematic study directed toward fuller 
scientific knowledge or understanding of the subject studied. 
``Development'' is the systematic use of knowledge and understanding 
gained from research directed toward the production of useful materials, 
devices, systems, or methods, including design and development of 
prototypes and processes.
    Research and Development (R&D) means all research activities, both 
basic and applied, and all development activities that are performed by 
HHS award recipients. The term research also includes activities 
involving the training of individuals in research techniques where such 
activities utilize the same facilities as other research and development 
activities and where such activities are not included in the instruction 
function.
    Simplified acquisition threshold means the dollar amount below which 
a non-Federal entity may purchase property or services using small 
purchase methods. Non-Federal entities adopt small purchase procedures 
in order to expedite the purchase of items costing less than the 
simplified acquisition threshold. The simplified acquisition threshold 
is set by the Federal Acquisition Regulation at 48 CFR subpart 2.1 and 
in accordance with 41 U.S.C. 1908. As of the publication of this part, 
the simplified acquisition threshold is $150,000, but this threshold is 
periodically adjusted for inflation. See also Micro-purchase.

[[Page 256]]

    Special purpose equipment means equipment which is used only for 
research, medical, scientific, or other technical activities. Examples 
of special purpose equipment include microscopes, x-ray machines, 
surgical instruments, and spectrometers. See also Equipment and General 
purpose equipment.
    State means any state of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
and any agency or instrumentality thereof exclusive of local 
governments.
    Student Financial Aid (SFA) means Federal awards under those 
programs of general student assistance, such as those authorized by 
Title IV of the Higher Education Act of 1965, as amended, (20 U.S.C. 
1070-1099d), which are administered by the U.S. Department of Education, 
and similar programs provided by other Federal agencies. It does not 
include Federal awards under programs that provide fellowships or 
similar Federal awards to students on a competitive basis, or for 
specified studies or research.
    Subaward means an award provided by a pass-through entity to a 
subrecipient for the subrecipient to carry out part of a Federal award 
received by the pass-through entity. It does not include payments to a 
contractor or payments to an individual that is a beneficiary of a 
Federal program. A subaward may be provided through any form of legal 
agreement, including an agreement that the pass-through entity considers 
a contract.
    Subrecipient means a non-Federal entity that receives a subaward 
from a pass-through entity to carry out part of a Federal program; but 
does not include an individual that is a beneficiary of such program. A 
subrecipient may also be a recipient of other Federal awards directly 
from a Federal awarding agency.
    Supplies means all tangible personal property other than those 
described in Equipment. A computing device is a supply if the 
acquisition cost is less than the lesser of the capitalization level 
established by the non-Federal entity for financial statement purposes 
or $5,000, regardless of the length of its useful life. See also 
Computing devices and Equipment.
    Surplus property (see Excess property)
    Suspension of award activities means an action by the HHS awarding 
agency requiring the recipient to cease all activities on the award 
pending corrective action by the recipient. It is a separate action from 
suspension under HHS regulations (2 CFR part 376) implementing Executive 
Orders 12549 and 12689.
    Termination means the ending of a Federal award, in whole or in part 
at any time prior to the planned end of period of performance.
    Third-party in-kind contributions means the value of non-cash 
contributions (i.e., property or services) that:
    (1) Benefit a federally assisted project or program; and
    (2) Are contributed by non-Federal third parties, without charge, to 
a non-Federal entity under a Federal award.
    Total Costs (see Sec.  75.402).
    Unliquidated obligations means, for financial reports prepared on a 
cash basis, obligations incurred by the non-Federal entity that have not 
been paid (liquidated). For reports prepared on an accrual expenditure 
basis, these are obligations incurred by the non-Federal entity for 
which an expenditure has not been recorded.
    Unobligated balance means the amount of funds authorized under a 
Federal award that the non-Federal entity has not obligated. The amount 
is computed by subtracting the cumulative amount of the non-Federal 
entity's unliquidated obligations and expenditures of funds under the 
Federal award from the cumulative amount of the funds that the Federal 
awarding agency or pass-through entity authorized the non-Federal entity 
to obligate.
    Voluntary committed cost sharing means cost sharing specifically 
pledged on a voluntary basis in the proposal's budget or the Federal 
award on the part of the non-Federal entity and that becomes a binding 
requirement of Federal award.
    Working capital advance means a procedure whereby funds are advanced 
to the recipient to cover its estimated

[[Page 257]]

disbursement needs for a given initial period.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3012, Jan. 20, 2016; 81 
FR 19044, Apr. 4, 2016]



                      Subpart B_General Provisions



Sec.  75.100  Purpose.

    (a)(1) This part establishes uniform administrative requirements, 
cost principles, and audit requirements for Federal awards to non-
Federal entities, as described in Sec.  75.101. HHS awarding agencies 
must not impose additional or inconsistent requirements, except as 
provided in Sec. Sec.  75.102 and 75.210, or unless specifically 
required by Federal statute, regulation, or Executive Order.
    (2) This part provides the basis for a systematic and periodic 
collection and uniform submission by Federal agencies of information on 
all Federal financial assistance programs to the Office of Management 
and Budget (OMB). It also establishes Federal policies related to the 
delivery of this information to the public, including through the use of 
electronic media. It prescribes the manner in which General Services 
Administration (GSA), OMB, and Federal agencies that administer Federal 
financial assistance programs are to carry out their statutory 
responsibilities under the Federal Program Information Act (31 U.S.C. 
6101-6106).
    (b) Administrative requirements. Subparts B through D of this part 
set forth the uniform administrative requirements for grant and 
cooperative agreements, including the requirements for HHS awarding 
agency management of Federal grant programs before the Federal award has 
been made, and the requirements HHS awarding agencies may impose on non-
Federal entities in the Federal award.
    (c) Cost principles. Subpart E of this part establishes principles 
for determining the allowable costs incurred by non-Federal entities 
under Federal awards. The principles are for the purpose of cost 
determination and are not intended to identify the circumstances or 
dictate the extent of Federal Government participation in the financing 
of a particular program or project. The principles are designed to 
provide that Federal awards bear their fair share of cost recognized 
under these principles except where restricted or prohibited by statute.
    (d) Single audit requirements and audit follow-up. Subpart F of this 
part is issued pursuant to the Single Audit Act Amendments of 1996, (31 
U.S.C. 7501-7507). It sets forth standards for obtaining consistency and 
uniformity among Federal agencies for the audit of non-Federal entities 
expending Federal awards. These provisions also provide the policies and 
procedures for HHS awarding agencies and pass-through entities when 
using the results of these audits.
    (e) For OMB guidance to Federal awarding agencies on Challenges and 
Prizes, please see M-10-11 Guidance on the Use of Challenges and Prizes 
to Promote Open Government, issued March 8, 2010, or its successor.



Sec.  75.101  Applicability.

    (a) General applicability to Federal agencies. The requirements 
established in this part apply to Federal agencies that make Federal 
awards to non-Federal entities. These requirements are applicable to all 
costs related to Federal awards.
    (b)(1) Applicability to different types of Federal awards. The 
following table describes what portions of this part apply to which 
types of Federal awards. The terms and conditions of Federal-awards 
(including this part) flow down to subawards to subrecipients unless a 
particular section of this part or the terms and conditions of the 
Federal award specifically indicate otherwise. This means that non-
Federal entities must comply with requirements in this part regardless 
of whether the non-Federal entity is a recipient or subrecipient of a 
Federal award. Pass-through entities must comply with the requirements 
described in subpart D of this part, Sec. Sec.  75.351 through 75.353, 
but not any requirements in this part directed towards Federal awarding 
agencies unless the requirements of this part or the terms and 
conditions of the Federal award indicate otherwise. This table must be 
read along with the other provisions in this section

[[Page 258]]



------------------------------------------------------------------------
                                Are applicable to
                                  the following
                                 types of Federal  Are NOT applicable to
                                awards and fixed-   the following types
 The following portions of the   price contracts   of Federal awards and
             part:               and subcontracts  fixed-price contracts
                                 (except as noted    and subcontracts:
                                in paragraphs (d)
                                 and (e) below):
------------------------------------------------------------------------
 This table must be read along with the other provisions in this section
------------------------------------------------------------------------
Subpart A--Acronyms and         --All............
 Definitions.
Subpart B--General Provisions,  --All............
 except for Sec.  Sec.
 75.111, 75.112. and 75.113.
Sections 75.111, 75.112, and    --Grant            --Agreements for
 75.113.                         agreements and     loans, loan
                                 cooperative        guarantees, interest
                                 agreements.        subsidies and
                                                    insurance.
                                                   --Procurement
                                                    contracts awarded by
                                                    Federal Agencies
                                                    under the Federal
                                                    Acquisition
                                                    Regulations and
                                                    subcontracts under
                                                    these contracts.
Subparts C-D, except for Sec.   --Grant            --Agreements for
 Sec.   75.202, 75.303, 75.351-  agreements and     loans, loan
 .353.                           cooperative        guarantees, interest
                                 agreements.        subsidies and
                                                    insurance.
                                                   --Procurement
                                                    contracts awarded
                                                    under the Federal
                                                    Acquisition
                                                    Regulations and cost-
                                                    reimbursement and
                                                    subcontracts under
                                                    these contracts.
Sec.   75.202.................  --Grant            --Procurement
                                 Agreements and     contracts awarded
                                 cooperative        under the Federal
                                 agreements.        Acquisition
                                --Agreements for    Regulations and cost-
                                 loans, loan        reimbursement and
                                 guarantees,        subcontracts under
                                 interest           these contracts.
                                 subsidies and
                                 insurance.
Sec.  Sec.   75.303, 75.351-    --All............
 .353.
Subpart E--Cost Principles....  --Grant            --Grant agreements
                                 agreements and     and cooperative
                                 cooperative        agreements providing
                                 agreements,        food commodities.
                                 except those      --Fixed amount
                                 providing food     awards.
                                 commodities.      --Agreements for
                                --All procurement   loans, loan
                                 contracts under    guarantees, interest
                                 the Federal        subsidies and
                                 Acquisition        insurance.
                                 Regulations       --Federal awards to
                                 except those       hospitals (See
                                 that are not       Appendix IX).
                                 negotiated.
Subpart F--Audit Requirements.  --Grant            --Fixed-price
                                 agreements and     contracts and
                                 cooperative        subcontracts awarded
                                 agreements.        under the Federal
                                --Contracts and     Acquisition
                                 subcontracts,      Regulation.
                                 except for fixed
                                 price contract
                                 and
                                 subcontracts,
                                 awarded under
                                 the Federal
                                 Acquisition
                                 Regulation.
                                --Agreements for
                                 loans, loan
                                 guarantees,
                                 interest
                                 subsidies and
                                 insurance and
                                 other forms of
                                 Federal
                                 Financial
                                 Assistance as
                                 defined by the
                                 Single Audit Act
                                 Amendment of
                                 1996.
------------------------------------------------------------------------

    (2) Federal award of cost-reimbursement contract under the FAR to a 
non-Federal entity. When a non-Federal entity is awarded a cost-
reimbursement contract, only subpart D of this part Sec. Sec.  75.351 
through 75.353 (in addition to any FAR related requirements for subaward 
monitoring), subpart E of this part and subpart F of this part are 
incorporated by reference into the contract. However, when the Cost 
Accounting Standards (CAS) are applicable to the contract, they take 
precedence over the requirements of this part except for subpart F of 
this part when they are in conflict. In addition,

[[Page 259]]

costs that are made unallowable under 10 U.S.C. 2324(e) and 41 U.S.C. 
4304(a) as described in the FAR subpart 31.2 and subpart 31.603 are 
always unallowable. For requirements other than those covered in subpart 
D of this part, Sec. Sec.  75.351 through 75.353, subpart E of this part 
and subpart F of this part, the terms of the contract and the FAR apply.
    (3) With the exception of subpart F of this part, which is required 
by the Single Audit Act, in any circumstances where the provisions of 
Federal statutes or regulations differ from the provisions of this part, 
the provision of the Federal statutes or regulations govern. This 
includes, for agreements with Indian tribes, the provisions of the 
Indian Self-Determination and Education and Assistance Act (ISDEAA), as 
amended, 25 U.S.C. 450-458ddd-2.
    (c) HHS awarding agencies may apply subparts A through E of this 
part to Federal agencies (see Sec.  75.217), for-profit entities, 
foreign public entities, or foreign organizations, except where the HHS 
awarding agency determines that the application of these subparts would 
be inconsistent with the international obligations of the United States 
or the statutes or regulations of a foreign government.
    (d) Except for Sec.  75.202 and Sec. Sec.  75.351 through 75.353 of 
subpart D of this part, the requirements in subpart C of this part, 
subpart D of this part, and subpart E of this part do not apply to the 
following programs:
    (1) The block grant awards authorized by the Omnibus Budget 
Reconciliation Act of 1981 (including Community Services), except to the 
extent that subpart E of this part apply to subrecipients of Community 
Services Block Grant funds pursuant to 42 U.S.C. 9916(a)(1)(B);
    (2) Federal awards to local education agencies under 20 U.S.C. 7702-
7703b, (portions of the Impact Aid program);
    (3) Payments under the Department of Veterans Affairs' State Home 
Per Diem Program (38 U.S.C. 1741); and
    (4) Federal awards authorized under the Child Care and Development 
Block Grant Act of 1990, as amended:
    (i) Child Care and Development Block Grant (42 U.S.C. 9858)
    (ii) Child Care Mandatory and Matching Funds of the Child Care and 
Development Fund (42 U.S.C. 9858)
    (e) Except for Sec.  75.202, the guidance in subpart C of this part 
does not apply to the following programs:
    (1) Entitlement Federal awards to carry out the following programs 
of the Social Security Act:
    (i) Temporary Assistance for Needy Families (title IV-A of the 
Social Security Act, 42 U.S.C. 601-619);
    (ii) Child Support Enforcement and Establishment of Paternity (title 
IV-D of the Social Security Act, 42 U.S.C. 651-669b);
    (iii) Foster Care and Adoption Assistance (title IV-E of the Act, 42 
U.S.C. 670-679c);
    (iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and 
XVI-AABD of the Act, as amended);
    (v) Medical Assistance (Medicaid) (title XIX of the Act, 42 U.S.C. 
1396-1396w-5) not including the State Medicaid Fraud Control program 
authorized by Sec.  1903(a)(6)(B) of the Social Security Act (42 U.S.C. 
1396b(a)(6)(B)); and
    (vi) Children's Health Insurance Program (title XXI of the Act, 42 
U.S.C. 1397aa-1397mm).
    (2) A Federal award for an experimental, pilot, or demonstration 
project that is also supported by a Federal award listed in paragraph 
(e)(1) of this section;
    (3) Federal awards under subsection 412(e) of the Immigration and 
Nationality Act and subsection 501(a) of the Refugee Education 
Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash 
assistance, medical assistance, and supplemental security income 
benefits to refugees and entrants and the administrative costs of 
providing the assistance and benefits (8 U.S.C. 1522(e));
    (4) Entitlement awards under the following programs of The National 
School Lunch Act:
    (i) National School Lunch Program (section 4 of the Act, 42 U.S.C. 
1753),
    (ii) Commodity Assistance (section 6 of the Act, 42 U.S.C. 1755),
    (iii) Special Meal Assistance (section 11 of the Act, 42 U.S.C. 
1759a),

[[Page 260]]

    (iv) Summer Food Service Program for Children (section 13 of the 
Act, 42 U.S.C. 1761), and
    (v) Child and Adult Care Food Program (section 17 of the Act, 42 
U.S.C. 1766).
    (5) Entitlement awards under the following programs of The Child 
Nutrition Act of 1966:
    (i) Special Milk Program (section 3 of the Act, 42 U.S.C. 1772),
    (ii) School Breakfast Program (section 4 of the Act, 42 U.S.C. 
1773), and
    (iii) State Administrative Expenses (section 7 of the Act, 42 U.S.C. 
1776).
    (6) Entitlement awards for State Administrative Expenses under The 
Food and Nutrition Act of 2008 (section 16 of the Act, 7 U.S.C. 2025).
    (7) Non-discretionary Federal awards under the following non-
entitlement programs:
    (i) Special Supplemental Nutrition Program for Women, Infants and 
Children (section 17 of the Child Nutrition Act of 1966) 42 U.S.C. 1786;
    (ii) The Emergency Food Assistance Programs (Emergency Food 
Assistance Act of 1983) 7 U.S.C. 7501 note; and
    (iii) Commodity Supplemental Food Program (section 5 of the 
Agriculture and Consumer Protection Act of 1973) 7 U.S.C. 612c note.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3013, Jan. 20, 2016; 81 
FR 89395, Dec. 12, 2016; 86 FR 2278, Jan. 12, 2021]



Sec.  75.102  Exceptions.

    (a) With the exception of subpart F of this part, OMB may allow 
exceptions for classes of Federal awards or non-Federal entities subject 
to the requirements of this part when exceptions are not prohibited by 
statute. However, in the interest of maximum uniformity, exceptions from 
the requirements of this part will be permitted only in unusual 
circumstances. Exceptions for classes of Federal awards or non-Federal 
entities will be published on the OMB Web site at www.whitehouse.gov/
omb.
    (b) Exceptions on a case-by-case basis for individual non-Federal 
entities may be authorized by the HHS awarding agency or cognizant 
agency for indirect costs, except where otherwise required by law or 
where OMB or other approval is expressly required by this part.
    (c) The HHS awarding agency may apply more restrictive requirements 
to a class of Federal awards or non-Federal entities when approved by 
OMB, or when required by Federal statutes or regulations, except for the 
requirements in subpart F of this part. An HHS awarding agency may apply 
less restrictive requirements when making fixed amount awards as defined 
in subpart A of this part, except for those requirements imposed by 
statute or in subpart F of this part.
    (d) On a case-by-case basis, OMB will approve new strategies for 
Federal awards when proposed by the HHS awarding agency in accordance 
with OMB guidance (such as M-13-17) to develop additional evidence 
relevant to addressing important policy challenges or to promote cost-
effectiveness in and across Federal programs. Proposals may draw on the 
innovative program designs discussed in M-13-17 to expand or improve the 
use of effective practices in delivering Federal financial assistance 
while also encouraging innovation in service delivery. Proposals 
submitted to OMB in accordance with M-13-17 may include requests to 
waive requirements other than those in subpart F of this part.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016]



Sec.  75.103  Authorities.

    This part is issued under the following authorities.
    (a) Subpart B of this part through subpart D of this part are 
authorized under 31 U.S.C. 503 (the Chief Financial Officers Act, 
Functions of the Deputy Director for Management), 31 U.S.C. 1111 
(Improving Economy and Efficiency of the United States Government), 41 
U.S.C. 1101-1131 (the Office of Federal Procurement Policy Act), 
Reorganization Plan No. 2 of 1970, and Executive Order 11541 Prescribing 
the Duties of the Office of Management and Budget and the Domestic 
Policy Council in the Executive Office of the President, the Single 
Audit Act Amendments of 1996, (31 U.S.C. 7501-7507), as well as The 
Federal Program Information Act (Public Law 95-220 and Public Law 98-
169, as amended, codified at 31 U.S.C. 6101-6106).

[[Page 261]]

    (b) Subpart E of this part is authorized under the Budget and 
Accounting Act of 1921, as amended; the Budget and Accounting Procedures 
Act of 1950, as amended (31 U.S.C. 1101-1125); the Chief Financial 
Officers Act of 1990 (31 U.S.C. 503-504); Reorganization Plan No. 2 of 
1970; and Executive Order No. 11541 Prescribing the Duties of the Office 
of Management and Budget and the Domestic Policy Council in the 
Executive Office of the President.
    (c) Subpart F of this part is authorized under the Single Audit Act 
Amendments of 1996, (31 U.S.C. 7501-7507).

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016]



Sec.  75.104  Supersession.

    As described in Sec.  75.110, this part supersedes:
    (a) The following OMB guidance documents and regulations under Title 
2 of the Code of Federal Regulations:
    (1) A-21, ``Cost Principles for Educational Institutions'' (2 CFR 
part 220);
    (2) A-87, ``Cost Principles for State, Local and Indian Tribal 
Governments'' (2 CFR part 225) and also Federal Register notice 51 FR 
552 (January 6, 1986);
    (3) A-89, ``Federal Domestic Assistance Program Information'';
    (4) A-102, ``Grant Awards and Cooperative Agreements with State and 
Local Governments'';
    (5) A-110, ``Uniform Administrative Requirements for Awards and 
Other Agreements with Institutions of Higher Education, Hospitals, and 
Other Nonprofit Organizations'' (codified at 2 CFR 215);
    (6) A-122, ``Cost Principles for Non-Profit Organizations'' (2 CFR 
part 230);
    (7) A-133, ``Audits of States, Local Governments and Non-Profit 
Organizations'', and
    (8) Those sections of A-50 related to audits performed under subpart 
F of this part.
    (b) This part also supersedes HHS' regulations at 45 CFR parts 74 
and 92.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016]



Sec.  75.105  Effect on other issuances.

    For Federal awards subject to this part, all administrative 
requirements, program manuals, handbooks and other non-regulatory 
materials that are inconsistent with the requirements of this part are 
superseded upon implementation of this part by the HHS awarding agency, 
except to the extent they are required by statute or authorized in 
accordance with the provisions in Sec.  75.102.



Sec.  75.106  Agency implementation.

    HHS is implementing the language in 2 CFR part 200 in these codified 
regulations.



Sec.  75.107  OMB responsibilities.

    OMB will review HHS agency regulations and implementation of 2 CFR 
part 200, and will provide interpretations of policy requirements and 
assistance to ensure effective and efficient implementation. Any 
exceptions will be subject to approval by OMB. Exceptions will only be 
made in particular cases where adequate justification is presented.



Sec.  75.108  Inquiries.

    Inquiries concerning 2 CFR part 200 may be directed to the Office of 
Federal Financial Management, Office of Management and Budget, in 
Washington, DC. Inquiries concerning 45 CFR part 75 should be addressed 
to the HHS awarding agency, cognizant agency for indirect costs, 
cognizant or oversight agency for audit, or pass-through entity as 
appropriate.



Sec.  75.109  Review date.

    OMB will review 2 CFR part 200 and HHS will review 45 part 75 at 
least every five years after December 26, 2013.



Sec.  75.110  Effective/Applicability date.

    (a) The standards set forth in this part which affect administration 
of Federal awards issued by HHS agencies become effective December 26, 
2014 unless different provisions are required by statute or approved by 
OMB. For the procurement standards in 45 CFR 75.326 through 75.335, non-
Federal entities may continue to comply with the procurement standards 
in previous OMB guidance (superseded by this part as described in 45 CFR 
75.104) for two additional fiscal years after this part goes

[[Page 262]]

into effect. If a non-Federal entity chooses to use the previous 
procurement standards for an additional two fiscal years before adopting 
the procurement standards in this part, the non-Federal entity must 
document this decision in their internal procurement policies.
    (b) The standards set forth in subpart F of this part and any other 
standards which apply directly to HHS agencies will be effective 
December 26, 2013, and will apply to audits of fiscal years beginning on 
or after December 26, 2014.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016; 81 
FR 89395, Dec. 12, 2016]



Sec.  75.111  English language.

    (a) All Federal financial assistance announcements and Federal award 
information must be in the English language. Applications must be 
submitted in the English language and must be in the terms of U.S. 
dollars. If the HHS awarding agency receives applications in another 
currency, the HHS awarding agency will evaluate the application by 
converting the foreign currency to United States currency using the date 
specified for receipt of the application.
    (b) Non-Federal entities may translate the Federal award and other 
documents into another language. In the event of inconsistency between 
any terms and conditions of the Federal award and any translation into 
another language, the English language meaning will control. Where a 
significant portion of the non-Federal entity's employees who are 
working on the Federal award are not fluent in English, the non-Federal 
entity must provide the Federal award in English and the language(s) 
with which employees are more familiar.



Sec.  75.112  Conflict of interest.

    (a) HHS awarding agencies must establish conflict of interest 
policies for Federal awards. The non-Federal entity must disclose in 
writing any potential conflict of interest to the respective HHS 
awarding agency or pass-through entity in accordance with applicable HHS 
awarding agency's policy. As a general matter, HHS awarding agencies' 
conflict of interest policies must:
    (1) Address conditions under which outside activities, 
relationships, or financial interests are proper or improper;
    (2) Provide for advance notification of outside activities, 
relationships, or financial interests, and a process of review as 
appropriate; and
    (3) Outline how financial conflicts of interest may be addressed.
    (b) Agencies with Public Health Service (PHS) funded research will 
ensure that any conflict of interest policies are aligned with the 
requirements of 42 CFR part 50, subpart F.



Sec.  75.113  Mandatory disclosures.

    The non-Federal entity or applicant for a Federal award must 
disclose, in a timely manner, in writing to the HHS awarding agency or 
pass-through entity all violations of Federal criminal law involving 
fraud, bribery, or gratuity violations potentially affecting the Federal 
award. Non-Federal entities that have received a Federal award including 
the term and condition outlined in Appendix XII are required to report 
certain civil, criminal, or administrative proceedings to SAM. Failure 
to make required disclosures can result in any of the remedies described 
in Sec.  75.371, including suspension or debarment. (See also 2 CFR 
parts 180 and 376, and 31 U.S.C. 3321).

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016]



 Subpart C_Pre-Federal Award Requirements and Contents of Federal Awards



Sec.  75.200  Purpose.

    (a) Sections 75.201 through 75.208 prescribe instructions and other 
pre-award matters to be used in the announcement and application 
process.
    (b) Use of Sec. Sec.  75.203, 75.204, 75.205, and 75.207, is 
required only for competitive Federal awards, but may also be used by 
the HHS awarding agency for non-competitive awards where appropriate or 
where required by Federal statute.

[[Page 263]]



Sec.  75.201  Use of grant agreements (including fixed amount awards), 
cooperative agreements, and contracts.

    (a) The HHS awarding agency or pass-through entity must decide on 
the appropriate instrument for the Federal award (i.e., grant agreement, 
cooperative agreement, or contract) in accordance with the Federal Grant 
and Cooperative Agreement Act (31 U.S.C. 6301-08).
    (b) Fixed Amount Awards. In addition to the options described in 
paragraph (a) of this section, HHS awarding agencies, or pass-through 
entities as permitted in Sec.  75.353, may use fixed amount awards (see 
Sec.  75.2 Fixed amount awards) to which the following conditions apply:
    (1) The Federal award amount is negotiated using the cost principles 
(or other pricing information) as a guide. The HHS awarding agency or 
pass-through entity may use fixed amount awards if the project scope is 
specific and if adequate cost, historical, or unit pricing data is 
available to establish a fixed amount award based on a reasonable 
estimate of actual cost. Payments are based on meeting specific 
requirements of the Federal award. Accountability is based on 
performance and results. Except in the case of termination before 
completion of the Federal award, there is no governmental review of the 
actual costs incurred by the non-Federal entity in performance of the 
award. Some of the ways in which the Federal award may be paid include, 
but are not limited to:
    (i) In several partial payments, the amount of each agreed upon in 
advance, and the ``milestone'' or event triggering the payment also 
agreed upon in advance, and set forth in the Federal award;
    (ii) On a unit price basis, for a defined unit or units, at a 
defined price or prices, agreed to in advance of performance of the 
Federal award and set forth in the Federal award; or,
    (iii) In one payment at Federal award completion.
    (2) A fixed amount award cannot be used in programs which require 
mandatory cost sharing or match.
    (3) The non-Federal entity must certify in writing to the HHS 
awarding agency or pass-through entity at the end of the Federal award 
that the project or activity was completed or the level of effort was 
expended. If the required level of activity or effort was not carried 
out, the amount of the Federal award must be adjusted.
    (4) Periodic reports may be established for each Federal award.
    (5) Changes in principal investigator, project leader, project 
partner, or scope of effort must receive the prior written approval of 
the HHS awarding agency or pass-through entity.



Sec.  75.202  Requirement to provide public notice of Federal financial 
assistance programs.

    (a) The HHS awarding agency must notify the public of Federal 
programs in the Catalog of Federal Domestic Assistance (CFDA), 
maintained by the General Services Administration (GSA).
    (1) The CFDA, or any OMB-designated replacement, is the single, 
authoritative, government-wide comprehensive source of Federal financial 
assistance program information produced by the executive branch of the 
Federal Government.
    (2) The information that the HHS awarding agency must submit to GSA 
for approval by OMB is listed in paragraph (b) of this section. GSA must 
prescribe the format for the submission.
    (3) The HHS awarding agency may not award Federal financial 
assistance without assigning it to a program that has been included in 
the CFDA as required in this section unless there are exigent 
circumstances requiring otherwise, such as timing requirements imposed 
by statute.
    (b) For each program that awards discretionary Federal awards, non-
discretionary Federal awards, loans, insurance, or any other type of 
Federal financial assistance, the HHS awarding agency must submit the 
following information to GSA:
    (1) Program Description, Purpose, Goals and Measurement. A brief 
summary of the statutory or regulatory requirements of the program and 
its intended outcome. Where appropriate, the Program Description, 
Purpose, Goals, and Measurement should align

[[Page 264]]

with the strategic goals and objectives within the HHS awarding agency's 
performance plan and should support the HHS awarding agency's 
performance measurement, management, and reporting as required by Part 6 
of OMB Circular A-11;
    (2) Identification of whether the program makes Federal awards on a 
discretionary basis or the Federal awards are prescribed by Federal 
statute, such as in the case of formula grants.
    (3) Projected total amount of funds available for the program. 
Estimates based on previous year funding are acceptable if current 
appropriations are not available at the time of the submission;
    (4) Anticipated Source of Available Funds: The statutory authority 
for funding the program and, to the extent possible, agency, sub-agency, 
or, if known, the specific program unit that will issue the Federal 
awards, and associated funding identifier (e.g., Treasury Account 
Symbol(s));
    (5) General Eligibility Requirements: The statutory, regulatory or 
other eligibility factors or considerations that determine the 
applicant's qualification for Federal awards under the program (e.g., 
type of non-Federal entity); and
    (6) Applicability of Single Audit Requirements as required by 
subpart F of this part.



Sec.  75.203  Notices of funding opportunities.

    For competitive grants and cooperative agreements, the HHS awarding 
agency must announce specific funding opportunities by providing the 
following information in a public notice:
    (a) Summary Information in Notices of Funding Opportunities. The HHS 
awarding agency must display the following information posted on the 
OMB-designated government-wide Web site for finding and applying for 
Federal financial assistance, in a location preceding the full text of 
the announcement:
    (1) HHS Awarding Agency Name;
    (2) Funding Opportunity Title;
    (3) Announcement Type (whether the funding opportunity is the 
initial announcement of this funding opportunity or a modification of a 
previously announced opportunity);
    (4) Funding Opportunity Number (required, if applicable). If the HHS 
awarding agency has assigned or will assign a number to the funding 
opportunity announcement, this number must be provided;
    (5) Catalog of Federal Domestic Assistance (CFDA) Number(s);
    (6) Key Dates. Key dates include due dates for applications or 
Executive Order 12372 submissions, as well as for any letters of intent 
or pre-applications. For any announcement issued before a program's 
application materials are available, key dates also include the date on 
which those materials will be released; and any other additional 
information, as deemed applicable by the relevant HHS awarding agency.
    (b) The HHS awarding agency must generally make all funding 
opportunities available for application for at least 60 calendar days. 
The HHS awarding agency may make a determination to have a less than 60 
calendar day availability period but no funding opportunity should be 
available for less than 30 calendar days unless exigent circumstances 
require as determined by the HHS awarding agency head or delegate.
    (c) Full Text of Funding Opportunities. The HHS awarding agency must 
include the following information in the full text of each funding 
opportunity. For specific instructions on the content required in this 
section, refer to appendix I of this part.
    (1) Full programmatic description of the funding opportunity.
    (2) Federal award information, including sufficient information to 
help an applicant make an informed decision about whether to submit an 
application. (See also Sec.  75.414(c)(4)).
    (3) Specific eligibility information, including any factors or 
priorities that affect an applicant's or its application's eligibility 
for selection.
    (4) Application Preparation and Submission Information, including 
the applicable submission dates and time.
    (5) Application Review Information including the criteria and 
process to be used to evaluate applications. See also Sec. Sec.  75.204 
and 75.205.

[[Page 265]]

    (6) Federal Award Administration Information. See also Sec.  75.210.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016]



Sec.  75.204  HHS funding agency review of merit of proposals.

    For competitive grants or cooperative agreements, unless prohibited 
by Federal statute, the HHS awarding agency must design and execute a 
merit review process for applications. This process must be described or 
incorporated by reference in the applicable funding opportunity (see 
appendix I to this part.) See also Sec.  75.203.



Sec.  75.205  HHS awarding agency review of risk posed by applicants.

    (a) Review of OMB-designated repositories of governmentwide data. 
(1) Prior to making a Federal award, the HHS awarding agency is required 
by 31 U.S.C. 3321 and 41 U.S.C. 2313 note to review information 
available through any OMB-designated repositories of governmentwide 
eligibility qualification or financial integrity information as 
appropriate. See also suspension and debarment requirements at 2 CFR 
parts 180 and 376.
    (2) In accordance 41 U.S.C. 2313, the HHS awarding agency is 
required to review the non-public segment of the OMB-designated 
integrity and performance system accessible through SAM (currently the 
Federal Awardee Performance and Integrity Information System (FAPIIS)) 
prior to making a Federal award where the Federal share is expected to 
exceed the simplified acquisition threshold, defined in 41 U.S.C. 134, 
over the period of performance. At a minimum, the information in the 
system for a prior Federal award recipient must demonstrate a 
satisfactory record of executing programs or activities under Federal 
grants, cooperative agreements, or procurement awards; and integrity and 
business ethics. The HHS awarding agency may make a Federal award to a 
recipient who does not fully meet these standards, if it is determined 
that the information is not relevant to the current Federal award under 
consideration or there are specific conditions that can appropriately 
mitigate the effects of the non-Federal entity's risk in accordance with 
Sec.  75.207.
    (b) In addition, for competitive grants or cooperative agreements, 
the HHS awarding agency must have in place a framework for evaluating 
the risks posed by applicants before they receive Federal awards. This 
evaluation may incorporate results of the evaluation of the applicant's 
eligibility or the quality of its application. If the HHS awarding 
agency determines that a Federal award will be made, special conditions 
that correspond to the degree of risk assessed may be applied to the 
Federal award. Criteria to be evaluated must be described in the 
announcement of funding opportunity described in Sec.  75.203.
    (c) In evaluating risks posed by applicants, the HHS awarding agency 
may use a risk-based approach and may consider any items such as the 
following:
    (1) Financial stability;
    (2) Quality of management systems and ability to meet the management 
standards prescribed in this part;
    (3) History of performance. The applicant's record in managing 
Federal awards, if it is a prior recipient of Federal awards, including 
timeliness of compliance with applicable reporting requirements, 
conformance to the terms and conditions of previous Federal awards, and 
if applicable, the extent to which any previously awarded amounts will 
be expended prior to future awards;
    (4) Reports and findings from audits performed under subpart F of 
this part or the reports and findings of any other available audits; and
    (5) The applicant's ability to effectively implement statutory, 
regulatory, or other requirements imposed on non-Federal entities.
    (d) In addition to this review, the HHS awarding agency must comply 
with the guidelines on government-wide suspension and debarment in 2 CFR 
part 180, and must require non-Federal entities to comply with these 
provisions. These provisions restrict Federal awards, subawards and 
contracts with certain parties that are

[[Page 266]]

debarred, suspended or otherwise excluded from or ineligible for 
participation in Federal programs or activities.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3014, Jan. 20, 2016; 81 
FR 19044, Apr. 4, 2016]



Sec.  75.206  Standard application requirements, including forms 
for applying for HHS financial assistance, and state plans.

    (a) Paperwork clearances. The HHS awarding agency may only use 
application information collections approved by OMB under the Paperwork 
Reduction Act of 1995 and OMB's implementing regulations in 5 CFR part 
1320, Controlling Paperwork Burdens on the Public. Consistent with these 
requirements, OMB will authorize additional information collections only 
on a limited basis.
    (b) If applicable, the HHS awarding agency may inform applicants and 
recipients that they do not need to provide certain information 
otherwise required by the relevant information collection.
    (c) Forms for applying for HHS financial assistance. HHS awarding 
agencies should use the Standard Form 424 (SF-424 Application for 
Federal Assistance) series (or its successor) and its program narrative 
whenever possible. Alternative mechanisms may be used for formula grant 
programs which do not require applicants to apply for funds on a project 
basis.
    (1) Applicants shall use the SF-424 series or those forms and 
instructions prescribed by the HHS awarding agency.
    (2) For Federal programs covered by Executive Order 12372, as 
amended by Executive Order 12416, the applicant shall complete the 
appropriate sections of the SF-424 indicating whether the application 
was subject to review by the State Single Point of Contact (SPOC). The 
name and address of the SPOC for a particular State can be obtained from 
the HHS awarding agency or the Catalog of Federal Domestic Assistance. 
The SPOC shall advise the applicant whether the program for which 
application is made has been selected by that State for review. (See 
also 45 CFR part 100.)
    (3) HHS awarding agencies that do not use the SF-424 series will 
indicate on the application form they prescribe whether the application 
is subject to review by the State under Executive Order 12372.
    (4) This section does not apply to applications for subawards.
    (5) Except where otherwise noted, or granted by HHS deviation, HHS 
awarding agencies shall direct applicants to apply for HHS financial 
assistance through Grants.gov, an OMB-designated Web site for Find and 
Apply.
    (d) State plans. The statutes for some programs require States to 
submit plans before receiving grants. Under regulations implementing 
Executive Order 12372, States are allowed to simplify, consolidate and 
substitute plans. This section contains additional provisions for plans 
that are subject to regulations implementing Executive Order 12372.
    (1) Requirements. A State need meet only Federal administrative or 
programmatic requirements for a plan that are in statutes or codified 
regulations.
    (2) Assurances. In each plan, the State will include an assurance 
that the State will comply with all applicable Federal statutes and 
regulations in effect with respect to the periods for which it receives 
grant funding. For this assurance and other assurances required in this 
plan, the State may:
    (i) Cite by number the statutory or regulatory provisions requiring 
the assurances and affirm that it gives the assurances required by those 
provisions,
    (ii) Repeat the assurance language in the statutes or regulations, 
or
    (iii) Develop its own language to the extent permitted by law.
    (3) Amendments. A State will amend a plan whenever necessary to 
reflect:
    (i) New or revised Federal statutes or regulations, or
    (ii) A material change in any State law, organization, policy, or 
State agency operation. The State will obtain approval for the amendment 
and its effective date but need submit for approval only the amended 
portions of the plan.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3015, Jan. 20, 2016]

[[Page 267]]



Sec.  75.207  Specific award conditions.

    (a) The HHS awarding agency or pass-through entity may impose 
additional specific award conditions as needed in accordance with 
paragraphs (b) and (c) of this section, under the following 
circumstances:
    (1) Based on the criteria set forth in Sec.  75.205;
    (2) When an applicant or recipient has a history of failure to 
comply with the general or specific terms and conditions of a Federal 
award;
    (3) When an applicant or recipient fails to meet expected 
performance goals as described in Sec.  75.210, or;
    (4) When an applicant or recipient is not otherwise responsible.
    (b) These additional Federal award conditions may include items such 
as the following:
    (1) Requiring payments as reimbursements rather than advance 
payments;
    (2) Withholding authority to proceed to the next phase until receipt 
of evidence of acceptable performance within a given period of 
performance;
    (3) Requiring additional, more detailed financial reports;
    (4) Requiring additional project monitoring;
    (5) Requiring the non-Federal entity to obtain technical or 
management assistance; or
    (6) Establishing additional prior approvals.
    (c) The HHS awarding agency or pass-through entity must notify the 
applicant or non-Federal entity as to:
    (1) The nature of the additional requirements;
    (2) The reason why the additional requirements are being imposed;
    (3) The nature of the action needed to remove the additional 
requirement, if applicable;
    (4) The time allowed for completing the actions if applicable, and
    (5) The method for requesting reconsideration of the additional 
requirements imposed.
    (d) Any specific conditions must be promptly removed once the 
conditions that prompted them have been corrected.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3015, Jan. 20, 2016]



Sec.  75.208  Certifications and representations.

    Unless prohibited by Federal statutes or regulations, each HHS 
awarding agency or pass-through entity is authorized to require the non-
Federal entity to submit certifications and representations required by 
Federal statutes, or regulations on an annual basis. Submission may be 
required more frequently if the non-Federal entity fails to meet a 
requirement of a Federal award.
    (a) The funds governed under this part shall be administered in 
compliance with the standards set forth in 45 CFR part 87.
    (b) For assurances under State plans, see Sec.  75.206(d)(2).



Sec.  75.209  Pre-award costs.

    For requirements on costs incurred by the applicant prior to the 
start date of the period of performance of the Federal award, see Sec.  
75.458.



Sec.  75.210  Information contained in a Federal award.

    A Federal award must include the following information:
    (a) General Federal award information. The HHS awarding agency must 
include the following general Federal award information in each Federal 
award:
    (1) Recipient name (which must match the name associated with its 
unique entity identifier as defined in 2 CFR 25.315);
    (2) Recipient's unique entity identifier;
    (3) Unique Federal Award Identification Number (FAIN);
    (4) Federal Award Date (see Sec.  75.2 Federal award date);
    (5) Period of Performance Start and End Date;
    (6) Amount of Federal Funds Obligated by this action,
    (7) Total Amount of Federal Funds Obligated;
    (8) Total Amount of the Federal Award;
    (9) Budget Approved by the HHS Awarding Agency;
    (10) Total Approved Cost Sharing or Matching, where applicable;

[[Page 268]]

    (11) Federal award project description (to comply with statutory 
requirements (e.g., FFATA));
    (12) Name of HHS awarding agency and contact information for 
awarding official,
    (13) CFDA Number and Program Name;
    (14) Identification of whether the award is R&D and
    (15) Indirect cost rate for the Federal award (including if the de 
minimis rate is charged per Sec.  75.414).
    (b) General terms and conditions. (1) HHS awarding agencies must 
incorporate the following general terms and conditions either in the 
Federal award or by reference, as applicable:
    (i) Administrative requirements implemented by the HHS awarding 
agency as specified in this part.
    (ii) National policy requirements. These include statutory, 
executive order, other Presidential directive, or regulatory 
requirements that apply by specific reference and are not program-
specific. See Sec.  75.300.
    (iii) Recipient integrity and performance matters. If the total 
Federal share of the Federal award may include more than $500,000 over 
the period of performance, the HHS awarding agency must include the term 
and condition available in appendix XII. See also Sec.  75.113.
    (2) The Federal award must include wording to incorporate, by 
reference, the applicable set of general terms and conditions, The 
reference must be to the Web site at which the HHS awarding agency 
maintains the general terms and conditions.
    (3) If a non-Federal entity requests a copy of the full text of the 
general terms and conditions, the HHS awarding agency must provide it.
    (4) Wherever the general terms and conditions are publicly 
available, the HHS awarding agency must maintain an archive of previous 
versions of the general terms and conditions, with effective dates, for 
use by the non-Federal entity, auditors, or others.
    (c) HHS awarding agency, program, or Federal award specific terms 
and conditions. The HHS awarding agency may include with each Federal 
award any terms and conditions necessary to communicate requirements 
that are in addition to the requirements outlined in the HHS awarding 
agency's general terms and conditions. Whenever practicable, these 
specific terms and conditions also should be shared on a public Web site 
and in notices of funding opportunities (as outlined in Sec.  75.203) in 
addition to being included in a Federal award. See also Sec.  75.206.
    (d) Federal award performance goals. The HHS awarding agency must 
include in the Federal award an indication of the timing and scope of 
expected performance by the non-Federal entity as related to the 
outcomes intended to be achieved by the program. In some instances 
(e.g., discretionary research awards), this may be limited to the 
requirement to submit technical performance reports (to be evaluated in 
accordance with HHS awarding agency policy). Where appropriate, the 
Federal award may include specific performance goals, indicators, 
milestones, or expected outcomes (such as outputs, or services performed 
or public impacts of any of these) with an expected timeline for 
accomplishment. Reporting requirements must be clearly articulated such 
that, where appropriate, performance during the execution of the Federal 
award has a standard against which non-Federal entity performance can be 
measured. The HHS awarding agency may include program-specific 
requirements, as applicable. These requirements should be aligned with 
agency strategic goals, strategic objectives or performance goals that 
are relevant to the program. See also OMB Circular A-11 Preparation, 
Submission and Execution of the Budget, Part 6 for definitions of 
strategic objectives and performance goals.
    (e) Any other information required by the HHS awarding agency.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3015, Jan. 20, 2016]



Sec.  75.211  Public access to Federal award information.

    (a) In accordance with statutory requirements for Federal spending 
transparency (e.g., FFATA), except as noted in this section, for 
applicable Federal awards the HHS awarding agency must announce all 
Federal awards publicly and publish the required information on a 
publicly available OMB-designated

[[Page 269]]

government-wide Web site (at time of publication, www.USAspending.gov).
    (b) All information posted in the designated integrity and 
performance system accessible through SAM (currently FAPIIS) on or after 
April 15, 2011 will be publicly available after a waiting period of 14 
calendar days, except for:
    (1) Past performance reviews required by Federal Government 
contractors in accordance with the Federal Acquisition Regulation (FAR) 
42.15;
    (2) Information that was entered prior to April 15, 2011; or
    (3) Information that is withdrawn during the 14-calendar day waiting 
period by the Federal Government official.
    (c) Nothing in this section may be construed as requiring the 
publication of information otherwise exempt under the Freedom of 
Information Act (5 U.S.C. 552), or controlled unclassified information 
pursuant to Executive Order 13556.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3015, Jan. 20, 2016]



Sec.  75.212  Reporting a determination that a recipient is not qualified 
for a Federal award.

    (a) If an HHS awarding agency does not make a Federal award to a 
non-Federal entity because the official determines that the non-Federal 
entity does not meet either or both of the minimum qualification 
standards as described in Sec.  75.205(a)(2), the HHS awarding agency 
must report that determination to the designated integrity and 
performance system accessible through SAM (currently FAPIIS), only if 
all of the following apply:
    (1) The only basis for the determination described in paragraph (a) 
of this section is the non-Federal entity's prior record of executing 
programs or activities under Federal awards or its record of integrity 
and business ethics, as described in Sec.  75.205(a)(2), (i.e., the 
entity was determined to be qualified based on all factors other than 
those two standards), and
    (2) The total Federal share of the Federal award that otherwise 
would be made to the non-Federal entity is expected to exceed the 
simplified acquisition threshold over the period of performance.
    (b) The HHS awarding agency is not required to report a 
determination that a non-Federal entity is not qualified for a Federal 
award if it makes the Federal award to the non-Federal entity and 
includes specific award terms and conditions, as described in Sec.  
75.207.
    (c) If an HHS awarding agency reports a determination that a non-
Federal entity is not qualified for a Federal award, as described in 
paragraph (a) of this section, the HHS awarding agency also must notify 
the non-Federal entity that--
    (1) The determination was made and reported to the designated 
integrity and performance system accessible through SAM, and include 
with the notification an explanation of the basis for the determination;
    (2) The information will be kept in the system for a period of five 
years from the date of the determination, as required by section 872 of 
Public Law 110-417, as amended (41 U.S.C. 2313), then archived;
    (3) Each HHS awarding agency that considers making a Federal award 
to the non-Federal entity during that five year period must consider 
that information in judging whether the non-Federal entity is qualified 
to receive the Federal award when the total Federal share of the Federal 
award is expected to include an amount of Federal funding in excess of 
the simplified acquisition threshold over the period of performance;
    (4) The non-Federal entity may go to the awardee integrity and 
performance portal accessible through SAM (currently the Contractor 
Performance Assessment Reporting System (CPARS)) and comment on any 
information the system contains about the non-Federal entity itself; and
    (5) HHS awarding agencies will consider that non-Federal entity's 
comments in determining whether the non-Federal entity is qualified for 
the future Federal award.
    (d) If an HHS awarding agency enters information into the designated 
integrity and performance system accessible through SAM about a 
determination that a non-Federal entity is not qualified for a Federal 
award and subsequently:

[[Page 270]]

    (1) Learns that any of that information is erroneous, the HHS 
awarding agency must correct the information in the system within three 
business days;
    (2) Obtains an update to that information that could be helpful to 
other Federal awarding agencies, the HHS awarding agency is strongly 
encouraged to amend the information in the system to incorporate the 
update in a timely way.
    (e) HHS awarding agencies shall not post any information that will 
be made publicly available in the non-public segment of the designated 
integrity and performance system that is covered by a disclosure 
exemption under the Freedom of Information Act. If the recipient asserts 
within seven calendar days to the HHS awarding agency that posted the 
information that some or all of the information made publicly available 
is covered by a disclosure exemption under the Freedom of Information 
Act, the HHS awarding agency that posted the information must remove the 
posting within seven calendar days of receiving the assertion. Prior to 
reposting the releasable information, the HHS awarding agency must 
resolve the issue in accordance with the agency's Freedom of Information 
Act procedures.

[81 FR 3015, Jan. 20, 2016]



Sec.  75.213  Suspension and debarment.

    Non-federal entities are subject to the non-procurement debarment 
and suspension regulations implementing Executive Orders 12549 and 
12689, 2 CFR parts 180 and 376. These regulations restrict awards, 
subawards and contracts with certain parties that are debarred, 
suspended or otherwise excluded from or ineligible for participation in 
Federal assistance programs or activities.

[79 FR 75889, Dec. 19, 2014. Redesignated and amended at 81 FR 3015, 
3016, Jan. 20, 2016]



Sec.  75.214  Metric system of measurement.

    The Metric Conversion Act, as amended by the Omnibus Trade and 
Competitiveness Act, 15 U.S.C. 205, declares that the metric system is 
the preferred measurement system for United States trade and commerce. 
HHS awarding agencies will follow the provisions of Executive Order 
12770.

[79 FR 75889, Dec. 19, 2014. Redesignated at 81 FR 3015, Jan. 20, 2016]



Sec.  75.215  Disclosure of lobbying activities.

    Recipients are subject to the restrictions on lobbying as set forth 
in 45 CFR part 93.

[79 FR 75889, Dec. 19, 2014. Redesignated at 81 FR 3015, Jan. 20, 2016]



Sec.  75.216  Special provisions for awards to commercial organizations 
as recipients.

    (a) This section contains provisions that apply to awards to 
commercial organizations. These provisions are in addition to other 
applicable provisions of this part, or they make exceptions from other 
provisions of this part for awards to commercial organizations.
    (b) Prohibition against profit. Except for awards under the Small 
Business Innovation Research (SBIR) and Small Business Technology 
Transfer Research (STTR) programs (15 U.S.C. 638), no HHS funds may be 
paid as profit to any recipient even if the recipient is a commercial 
organization. Profit is any amount in excess of allowable direct and 
indirect costs.
    (c) Program income. Except for grants for research, program income 
earned by a commercial organization may not be used to further eligible 
project or program objectives except in the SBIR and STTR programs.
    (d)(1) Commercial organizations that receive awards (including for-
profit hospitals) have two options regarding audits:
    (i) A financial related audit of a particular award in accordance 
with Generally Accepted Government Auditing Standards issued by the 
Comptroller General of the United States, in those cases where the 
commercial organization receives awards under only one HHS program; or, 
if awards are received under multiple HHS programs, a financial related 
audit of all awards in accordance with Generally Accepted Government 
Auditing Standards issued by the Comptroller General of the United 
States; or
    (ii) An audit that meets the requirements contained in subpart F.

[[Page 271]]

    (2) Commercial organizations that receive annual awards totaling 
less than the audit requirement threshold in subpart F are exempt from 
HHS audit requirements for that year, but records must be available for 
review by appropriate officials of Federal agencies or the Government 
Accountability Office. (See Sec.  75.501).

[79 FR 75889, Dec. 19, 2014. Redesignated at 81 FR 3015, Jan. 20, 2016]



Sec.  75.217  Special provisions for awards to Federal agencies.

    (a) In order for an HHS awarding agency to make a Federal award to a 
Federal agency, the HHS awarding agency must have statutory authority 
that makes such Federal agency explicitly eligible for a Federal award.
    (b) All provisions of this part and other HHS regulations apply to 
Federal entities receiving Federal awards, except for the following:
    (1) Except for grants for research, any program income earned by a 
Federal institution must be used under the deduction alternative. Any 
program income earned after the end of grant support should be returned 
to the United States Treasury.
    (2) No salary or fringe benefit payments may be made from HHS 
awarding agency grant funds to support career, career-conditional, or 
other Federal employees (civilian or uniformed services) without 
permanent appointments at a Federal institution receiving a grant. While 
the level of effort required for the project must be allowed by the 
recipient as part of each individual's official duties, salary costs 
associated with an individual participating in an official capacity as a 
Federal employee under a grant to that Federal institution are not 
allowable costs under an HHS awarding agency grant.
    (3) Federal agencies may not be reimbursed for indirect costs under 
Federal awards.

[79 FR 75889, Dec. 19, 2014. Redesignated at 81 FR 3015, Jan. 20, 2016]



Sec.  75.218  Participation by faith-based organizations.

    The funds provided under this part must be administered in 
compliance with the standards set forth in 45 CFR part 87.

[79 FR 75889, Dec. 19, 2014. Redesignated at 81 FR 3015, Jan. 20, 2016]



                Subpart D_Post Federal Award Requirements

             Standards for Financial and Program Management



Sec.  75.300  Statutory and national policy requirements.

    (a) The Federal awarding agency must manage and administer the 
Federal award in a manner so as to ensure that Federal funding is 
expended and associated programs are implemented in full accordance with 
U.S. statutory and public policy requirements: Including, but not 
limited to, those protecting public welfare, the environment, and 
prohibiting discrimination. The Federal awarding agency must communicate 
to the non-Federal entity all relevant public policy requirements, 
including those in general appropriations provisions, and incorporate 
them either directly or by reference in the terms and conditions of the 
Federal award.
    (b) The non-Federal entity is responsible for complying with all 
requirements of the Federal award. For all Federal awards, this includes 
the provisions of FFATA, which includes requirements on executive 
compensation, and also requirements implementing the Act for the non-
Federal entity at 2 CFR part 25 and 2 CFR part 170. See also statutory 
requirements for whistleblower protections at 10 U.S.C. 2324 and 2409, 
and 41 U.S.C. 4304, 4310, and 4712.
    (c) It is a public policy requirement of HHS that no person 
otherwise eligible will be excluded from participation in, denied the 
benefits of, or subjected to discrimination in the administration of HHS 
programs and services, to the extent doing so is prohibited by federal 
statute.
    (d) HHS will follow all applicable Supreme Court decisions in 
administering its award programs.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 89395, Dec. 12, 2016; 
86 FR 2278, Jan. 12, 2021]

[[Page 272]]



Sec.  75.301  Performance measurement.

    The HHS awarding agency must require the recipient to use OMB 
approved standard information collections when providing financial and 
performance information. As appropriate and in accordance with above 
mentioned information collections, the HHS awarding agency must require 
the recipient to relate financial data to performance accomplishments of 
the Federal award. Also, in accordance with above mentioned standard 
information collections, and when applicable, recipients must also 
provide cost information to demonstrate cost effective practices (e.g., 
through unit cost data). The recipient's performance should be measured 
in a way that will help the HHS awarding agency and other non-Federal 
entities to improve program outcomes, share lessons learned, and spread 
the adoption of promising practices. The HHS awarding agency should 
provide recipients with clear performance goals, indicators, and 
milestones as described in Sec.  75.210. Performance reporting frequency 
and content should be established to not only allow the HHS awarding 
agency to understand the recipient progress but also to facilitate 
identification of promising practices among recipients and build the 
evidence upon which the HHS awarding agency's program and performance 
decisions are made.



Sec.  75.302  Financial management and standards for financial 
management systems.

    (a) Each state must expend and account for the Federal award in 
accordance with state laws and procedures for expending and accounting 
for the state's own funds. In addition, the state's and the other non- 
Federal entity's financial management systems, including records 
documenting compliance with Federal statutes, regulations, and the terms 
and conditions of the Federal award, must be sufficient to permit the 
preparation of reports required by general and program-specific terms 
and conditions; and the tracing of funds to a level of expenditures 
adequate to establish that such funds have been used according to the 
Federal statutes, regulations, and the terms and conditions of the 
Federal award. See also Sec.  75.450.
    (b) The financial management system of each non-Federal entity must 
provide for the following (see also Sec. Sec.  75.361, 75.362, 75.363, 
75.364, and 75.365):
    (1) Identification, in its accounts, of all Federal awards received 
and expended and the Federal programs under which they were received. 
Federal program and Federal award identification must include, as 
applicable, the CFDA title and number, Federal award identification 
number and year, name of the HHS awarding agency, and name of the pass-
through entity, if any.
    (2) Accurate, current, and complete disclosure of the financial 
results of each Federal award or program in accordance with the 
reporting requirements set forth in Sec. Sec.  75.341 and 75.342. If an 
HHS awarding agency requires reporting on an accrual basis from a 
recipient that maintains its records on other than an accrual basis, the 
recipient must not be required to establish an accrual accounting 
system. This recipient may develop accrual data for its reports on the 
basis of an analysis of the documentation on hand. Similarly, a pass-
through entity must not require a subrecipient to establish an accrual 
accounting system and must allow the subrecipient to develop accrual 
data for its reports on the basis of an analysis of the documentation on 
hand.
    (3) Records that identify adequately the source and application of 
funds for federally-funded activities. These records must contain 
information pertaining to Federal awards, authorizations, obligations, 
unobligated balances, assets, expenditures, income and interest and be 
supported by source documentation.
    (4) Effective control over, and accountability for, all funds, 
property, and other assets. The non-Federal entity must adequately 
safeguard all assets and assure that they are used solely for authorized 
purposes. See Sec.  75.303.
    (5) Comparison of expenditures with budget amounts for each Federal 
award.
    (6) Written procedures to implement the requirements of Sec.  
75.305.

[[Page 273]]

    (7) Written procedures for determining the allowability of costs in 
accordance with subpart E of this part and the terms and conditions of 
the Federal award.



Sec.  75.303  Internal controls.

    The non-Federal entity must:
    (a) Establish and maintain effective internal control over the 
Federal award that provides reasonable assurance that the non-Federal 
entity is managing the Federal award in compliance with Federal 
statutes, regulations, and the terms and conditions of the Federal 
award. These internal controls should be in compliance with guidance in 
``Standards for Internal Control in the Federal Government,'' issued by 
the Comptroller General of the United States or the ``Internal Control 
Integrated Framework,'' issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (COSO).
    (b) Comply with Federal statutes, regulations, and the terms and 
conditions of the Federal awards.
    (c) Evaluate and monitor the non-Federal entity's compliance with 
statutes, regulations and the terms and conditions of Federal awards.
    (d) Take prompt action when instances of noncompliance are 
identified including noncompliance identified in audit findings.
    (e) Take reasonable measures to safeguard protected personally 
identifiable information and other information the HHS awarding agency 
or pass-through entity designates as sensitive or the non-Federal entity 
considers sensitive consistent with applicable Federal, state, local, 
and tribal laws regarding privacy and obligations of confidentiality.



Sec.  75.304  Bonds.

    The HHS awarding agency may include a provision on bonding, 
insurance, or both in the following circumstances:
    (a) Where the Federal Government guarantees or insures the repayment 
of money borrowed by the recipient, the HHS awarding agency, at its 
discretion, may require adequate bonding and insurance if the bonding 
and insurance requirements of the non-Federal entity are not deemed 
adequate to protect the interest of the Federal Government.
    (b) The HHS awarding agency may require adequate fidelity bond 
coverage where the non-Federal entity lacks sufficient coverage to 
protect the Federal Government's interest.
    (c) Where bonds are required in the situations described above, the 
bonds must be obtained from companies holding certificates of authority 
as acceptable sureties, as prescribed in 31 CFR part 223.



Sec.  75.305  Payment.

    (a)(1) For States, payments are governed by Treasury-State CMIA 
agreements and default procedures codified at 31 CFR part 205 and TFM 
4A-2000 Overall Disbursing Rules for All Federal Agencies.
    (2) To the extent that Treasury-State CMIA agreements and default 
procedures do not address expenditure of program income, rebates, 
refunds, contract settlements, audit recoveries and interest earned on 
such funds, such funds must be expended before requesting additional 
cash payments.
    (b) For non-Federal entities other than states, payments methods 
must minimize the time elapsing between the transfer of funds from the 
United States Treasury or the pass-through entity and the disbursement 
by the non-Federal entity whether the payment is made by electronic 
funds transfer, or issuance or redemption of checks, warrants, or 
payment by other means. See also Sec.  75.302(b)(6). Except as noted 
elsewhere in this part, HHS awarding agencies must require recipients to 
use only OMB-approved standard governmentwide information collection 
requests to request payment.
    (1) The non-Federal entity must be paid in advance, provided it 
maintains or demonstrates the willingness to maintain both written 
procedures that minimize the time elapsing between the transfer of funds 
and disbursement by the non-Federal entity, and financial management 
systems that meet the standards for fund control and accountability as 
established in this part. Advance payments to a non-Federal entity must 
be limited to the minimum amounts needed and be timed to be in

[[Page 274]]

accordance with the actual, immediate cash requirements of the non-
Federal entity in carrying out the purpose of the approved program or 
project. The timing and amount of advance payments must be as close as 
is administratively feasible to the actual disbursements by the non-
Federal entity for direct program or project costs and the proportionate 
share of any allowable indirect costs. The non-Federal entity must make 
timely payment to contractors in accordance with the contract 
provisions.
    (2) Whenever possible, advance payments must be consolidated to 
cover anticipated cash needs for all Federal awards made by the HHS 
awarding agency to the recipient.
    (i) Advance payment mechanisms include, but are not limited to, 
Treasury check and electronic funds transfer and must comply with 
applicable guidance in 31 CFR part 208.
    (ii) Non-Federal entities must be authorized to submit requests for 
advance payments and reimbursements at least monthly when electronic 
fund transfers are not used, and as often as they like when electronic 
transfers are used, in accordance with the provisions of the Electronic 
Fund Transfer Act (15 U.S.C. 1693-1693r).
    (3) Reimbursement is the preferred method when the requirements in 
paragraph (b) cannot be met, when the HHS awarding agency sets a 
specific condition per Sec.  75.207, or when the non-Federal entity 
requests payment by reimbursement. This method may be used on any 
Federal award for construction, or if the major portion of the 
construction project is accomplished through private market financing or 
Federal loans, and the Federal award constitutes a minor portion of the 
project. When the reimbursement method is used, the HHS awarding agency 
or pass-through entity must make payment within 30 calendar days after 
receipt of the billing, unless the HHS awarding agency or pass-through 
entity reasonably believes the request to be improper.
    (4) If the non-Federal entity cannot meet the criteria for advance 
payments and the HHS awarding agency or pass-through entity has 
determined that reimbursement is not feasible because the non-Federal 
entity lacks sufficient working capital, the HHS awarding agency or 
pass-through entity may provide cash on a working capital advance basis. 
Under this procedure, the HHS awarding agency or pass-through entity 
must advance cash payments to the non-Federal entity to cover its 
estimated disbursement needs for an initial period generally geared to 
the non-Federal entity's disbursing cycle. Thereafter, the HHS awarding 
agency or pass-through entity must reimburse the non-Federal entity for 
its actual cash disbursements. Use of the working capital advance method 
of payment requires that the pass-through entity provide timely advance 
payments to any subrecipients in order to meet the subrecipient's actual 
cash disbursements. The working capital advance method of payment must 
not be used by the pass-through entity if the reason for using this 
method is the unwillingness or inability of the pass-through entity to 
provide timely advance payments to the subrecipient to meet the 
subrecipient's actual cash disbursements.
    (5) Use of resources before requesting cash advance payments. To the 
extent available, the non-Federal entity must disburse funds available 
from program income (including repayments to a revolving fund), rebates, 
refunds, contract settlements, audit recoveries, and interest earned on 
such funds before requesting additional cash payments.
    (6) Unless otherwise required by Federal statutes, payments for 
allowable costs by non-Federal entities must not be withheld at any time 
during the period of performance unless the conditions of Sec. Sec.  
75.207, subpart D of this part, 75.371, or one or more of the following 
applies:
    (i) The non-Federal entity has failed to comply with the project 
objectives, Federal statutes, regulations, or the terms and conditions 
of the Federal award.
    (ii) The non-Federal entity is delinquent in a debt to the United 
States as defined in OMB Guidance A-129 ``Policies for Federal Credit 
Programs and Non-Tax Receivables.''
    (iii) A payment withheld for failure to comply with Federal award 
conditions, but without suspension of the

[[Page 275]]

Federal award, must be released to the non-Federal entity upon 
subsequent compliance. When a Federal award is suspended, payment 
adjustments will be made in accordance with Sec.  75.375.
    (iv) A payment must not be made to a non-Federal entity for amounts 
that are withheld by the non-Federal entity from payment to contractors 
to assure satisfactory completion of work. A payment must be made when 
the non-Federal entity actually disburses the withheld funds to the 
contractors or to escrow accounts established to assure satisfactory 
completion of work.
    (7) Standards governing the use of banks and other institutions as 
depositories of advance payments under Federal awards are as follows:
    (i) The HHS awarding agency and pass-through entity must not require 
separate depository accounts for funds provided to a non-Federal entity 
or establish any eligibility requirements for depositories for funds 
provided to the non-Federal entity. However, the non-Federal entity must 
be able to account for the receipt, obligation and expenditure of funds.
    (ii) Advance payments of Federal funds must be deposited and 
maintained in insured accounts whenever possible.
    (8) The non-Federal entity must maintain advance payments of Federal 
awards in interest-bearing accounts, unless the following apply:
    (i) The non-Federal entity receives less than $120,000 in Federal 
awards per year.
    (ii) The best reasonably available interest-bearing account would 
not be expected to earn interest in excess of $500 per year on Federal 
cash balances.
    (iii) The depository would require an average or minimum balance so 
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
    (iv) A foreign government or banking system prohibits or precludes 
interest bearing accounts.
    (9) Interest earned amounts up to $500 per year may be retained by 
the non-Federal entity for administrative expense. Any additional 
interest earned on Federal advance payments deposited in interest-
bearing accounts must be remitted annually to the Department of Health 
and Human Services Payment Management System (PMS) through an electronic 
medium using either Automated Clearing House (ACH) network or a Fedwire 
Funds Service payment. Remittances must include pertinent information of 
the payee and nature of the payment in the memo area (often referred to 
as ``addenda records'' by Financial Institutions) as that will assist in 
the timely posting of interest earned on federal funds. Pertinent 
details include the Payee Account Number (PAN) if the payment originated 
from PMS, or Agency information, if the payment originated from ASAP, 
NSF or another federal agency payment system. The remittance must be 
submitted as follows:

For ACH Returns:
Routing Number: 051036706
Account number: 303000
Bank Name and Location: Credit Gateway--ACH Receiver St. Paul, MN

For Fedwire Returns*:
Routing Number: 021030004
Account number: 75010501
Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer 
Division New York, NY
(* Please note organization initiating payment is likely to incur a 
charge from your Financial Institution for this type of payment)

For International ACH Returns:
Beneficiary Account: Federal Reserve Bank of New York/ITS (FRBNY/ITS)
Bank: Citibank N.A. (New York)
Swift Code: CITIUS33
Account Number: 36838868
Bank Address: 388 Greenwich Street, New York, NY 10013 USA
Payment Details (Line 70): Agency Name (abbreviated when possible) and 
ALC Agency POC: Michelle Haney, (301) 492-5065

    For recipients that do not have electronic remittance capability, 
please make check** payable to:

``The Department of Health and Human Services''

Mail Check to Treasury approved lockbox:
HHS Program Support Center
P.O. Box 530231
Atlanta, GA 30353-0231
(** Please allow 4-6 weeks for processing of a payment by check to be 
applied to the appropriate PMS account)

[[Page 276]]

Any additional information/instructions may be found on the PMS Web site 
at http://www.dpm.psc.gov/.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016; 86 
FR 2278, Jan. 12, 2021]



Sec.  75.306  Cost sharing or matching.

    (a) Under Federal research proposals, voluntary committed cost 
sharing is not expected. It cannot be used as a factor during the merit 
review of applications or proposals, but may be considered if it is both 
in accordance with HHS awarding agency regulations and specified in a 
notice of funding opportunity. Criteria for considering voluntary 
committed cost sharing and any other program policy factors that may be 
used to determine who may receive a Federal award must be explicitly 
described in the notice of funding opportunity. Furthermore, only 
mandatory cost sharing or cost sharing specifically committed in the 
project budget must be included in the organized research base for 
computing the indirect (F&A) cost rate or reflected in any allocation of 
indirect costs. See also Sec. Sec.  75.414, 75.203, and appendix I to 
this part.
    (b) For all Federal awards, any shared costs or matching funds and 
all contributions, including cash and third party in-kind contributions, 
must be accepted as part of the non-Federal entity's cost sharing or 
matching when such contributions meet all of the following criteria:
    (1) Are verifiable from the non-Federal entity's records;
    (2) Are not included as contributions for any other Federal award;
    (3) Are necessary and reasonable for accomplishment of project or 
program objectives;
    (4) Are allowable under subpart E of this part;
    (5) Are not paid by the Federal Government under another Federal 
award, except where the Federal statute authorizing a program 
specifically provides that Federal funds made available for such program 
can be applied to matching or cost sharing requirements of other Federal 
programs;
    (6) Are provided for in the approved budget when required by the HHS 
awarding agency; and
    (7) Conform to other provisions of this part, as applicable.
    (c) Unrecovered indirect costs, including indirect costs on cost 
sharing or matching may be included as part of cost sharing or matching 
only with prior approval of the HHS awarding agency. Unrecovered 
indirect cost means the difference between the amount charged to the 
Federal award and the amount which could have been charged to the 
Federal award under the non-Federal entity's approved negotiated 
indirect cost rate.
    (d) Values for non-Federal entity contributions of services and 
property must be established in accordance with the cost principles in 
subpart E. If an HHS awarding agency authorizes the non-Federal entity 
to donate buildings or land for construction/facilities acquisition 
projects or long-term use, the value of the donated property for cost 
sharing or matching must be the lesser of paragraphs (d)(1) or (2) of 
this section.
    (1) The value of the remaining life of the property recorded in the 
non-Federal entity's accounting records at the time of donation.
    (2) The current fair market value. However, when there is sufficient 
justification, the HHS awarding agency may approve the use of the 
current fair market value of the donated property, even if it exceeds 
the value described in paragraph (1) of this section at the time of 
donation.
    (e) Volunteer services furnished by third-party professional and 
technical personnel, consultants, and other skilled and unskilled labor 
may be counted as cost sharing or matching if the service is an integral 
and necessary part of an approved project or program. Rates for third-
party volunteer services must be consistent with those paid for similar 
work by the non-Federal entity. In those instances in which the required 
skills are not found in the non-Federal entity, rates must be consistent 
with those paid for similar work in the labor market in which the non-
Federal entity competes for the kind of services involved. In either 
case, paid fringe benefits that are reasonable, necessary, allocable, 
and otherwise allowable may be included in the valuation.

[[Page 277]]

    (f) When a third-party organization furnishes the services of an 
employee, these services must be valued at the employee's regular rate 
of pay plus an amount of fringe benefits that is reasonable, necessary, 
allocable, and otherwise allowable, and indirect costs at either the 
third-party organization's approved federally negotiated indirect cost 
rate or, a rate in accordance with Sec.  75.414(f), provided these 
services employ the same skill(s) for which the employee is normally 
paid. Where donated services are treated as indirect costs, indirect 
cost rates will separate the value of the donated services so that 
reimbursement for the donated services will not be made.
    (g) Donated property from third parties may include such items as 
equipment, office supplies, laboratory supplies, or workshop and 
classroom supplies. Value assessed to donated property included in the 
cost sharing or matching share must not exceed the fair market value of 
the property at the time of the donation.
    (h) The method used for determining cost sharing or matching for 
third-party-donated equipment, buildings and land for which title passes 
to the non-Federal entity may differ according to the purpose of the 
Federal award, if paragraph (h)(1) or (2) of this section applies.
    (1) If the purpose of the Federal award is to assist the non-Federal 
entity in the acquisition of equipment, buildings or land, the aggregate 
value of the donated property may be claimed as cost sharing or 
matching.
    (2) If the purpose of the Federal award is to support activities 
that require the use of equipment, buildings or land, normally only 
depreciation charges for equipment and buildings may be made. However, 
the fair market value of equipment or other capital assets and fair 
rental charges for land may be allowed, provided that the HHS awarding 
agency has approved the charges. See also Sec.  75.420.
    (i) The value of donated property must be determined in accordance 
with the usual accounting policies of the non-Federal entity, with the 
following qualifications:
    (1) The value of donated land and buildings must not exceed its fair 
market value at the time of donation to the non-Federal entity as 
established by an independent appraiser (e.g., certified real property 
appraiser or General Services Administration representative) and 
certified by a responsible official of the non-Federal entity as 
required by the Uniform Relocation Assistance and Real Property 
Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601-4655) 
(Uniform Act) except as provided in the implementing regulations at 49 
CFR part 24.
    (2) The value of donated equipment must not exceed the fair market 
value of equipment of the same age and condition at the time of 
donation.
    (3) The value of donated space must not exceed the fair rental value 
of comparable space as established by an independent appraisal of 
comparable space and facilities in a privately-owned building in the 
same locality.
    (4) The value of loaned equipment must not exceed its fair rental 
value.
    (j) For third-party in-kind contributions, the fair market value of 
goods and services must be documented and to the extent feasible 
supported by the same methods used internally by the non-Federal entity.
    (k) For IHEs, see also OMB memorandum M-01-06, dated January 5, 
2001, Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost 
Sharing and Tuition Remission Costs.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.307  Program income.

    (a) General. Non-Federal entities are encouraged to earn income to 
defray program costs where appropriate.
    (b) Cost of generating program income. If authorized by Federal 
regulations or the Federal award, costs incidental to the generation of 
program income may be deducted from gross income to determine program 
income, provided these costs have not been charged to the Federal award.
    (c) Governmental revenues. Taxes, special assessments, levies, 
fines, and other such revenues raised by a non-Federal entity are not 
program income unless the revenues are specifically identified in the 
Federal award or HHS awarding agency regulations as program income.

[[Page 278]]

    (1) The Patent and Trademark Laws Amendments, 34 U.S.C. 200-212, 
apply to inventions made under an award for performance of experimental, 
developmental, or research work.
    (2) Unless the terms and conditions for the Federal award provide 
otherwise, recipients shall have no obligation to HHS with respect to 
program income earned from license fees and royalties for copyrighted 
material, patents, patent applications, trademarks, and inventions made 
under a Federal award. However, no scholarship, fellowship, training 
grant, or other funding agreement made primarily to a recipient for 
educational purposes will contain any provision giving the HHS awarding 
agency rights to inventions made by the recipient.
    (d) Property. Proceeds from the sale of real property, equipment, or 
supplies, are not program income; such proceeds will be handled in 
accordance with the requirements of subpart D of this part, Sec. Sec.  
75.318, 75.320, and 75.321, or as specifically identified in Federal 
statutes, regulations, or the terms and conditions of the Federal award.
    (e) Use of program income. If the HHS awarding agency does not 
specify in its regulations or the terms and conditions of the Federal 
award, or give prior approval for how program income is to be used, 
paragraph (e)(1) of this section must apply. For Federal awards made to 
IHEs and nonprofit research institutions, if the HHS awarding agency 
does not specify in its regulations or the terms and conditions of the 
Federal award how program income is to be used, paragraph (e)(2) of this 
section must apply unless the recipient is subject to conditions under 
Sec.  75.207 or Sec.  75.216. In specifying alternatives to paragraphs 
(e)(1) and (2) of this section, the HHS awarding agency may distinguish 
between income earned by the recipient and income earned by 
subrecipients and between the sources, kinds, or amounts of income. When 
the HHS awarding agency authorizes the approaches in paragraphs (e)(2) 
and (3) of this section, program income in excess of any amounts 
specified must also be deducted from expenditures.
    (1) Deduction. Ordinarily program income must be deducted from total 
allowable costs to determine the net allowable costs. Program income 
must be used for current costs unless the HHS awarding agency authorizes 
otherwise. Program income that the non-Federal entity did not anticipate 
at the time of the Federal award must be used to reduce the Federal 
award and non-Federal entity contributions rather than to increase the 
funds committed to the project.
    (2) Addition. With prior approval of the HHS awarding agency (except 
for IHEs and nonprofit research institutions, as described in paragraph 
(e) of this section), program income may be added to the Federal award 
by the Federal agency and the non-Federal entity. The program income 
must be used for the purposes and under the conditions of the Federal 
award.
    (3) Cost sharing or matching. With prior approval of the HHS 
awarding agency, program income may be used to meet the cost sharing or 
matching requirement of the Federal award. The amount of the Federal 
award remains the same.
    (f) Income after the period of performance. There are no Federal 
requirements governing the disposition of income earned after the end of 
the period of performance for the Federal award, unless the HHS awarding 
agency regulations or the terms and conditions of the award provide 
otherwise. The HHS awarding agency may negotiate agreements with 
recipients regarding appropriate uses of income earned after the period 
of performance as part of the grant closeout process. See also Sec.  
75.381.
    (g) Unless the Federal statute, regulations, or terms and conditions 
for the Federal award provide otherwise, the non-Federal entity has no 
obligation to the HHS awarding agency with respect to program income 
earned from license fees and royalties for copyrighted material, 
patents, patent applications, trademarks, and inventions made under a 
Federal award to which 37 CFR part 401, ``Rights to Inventions Made by 
Nonprofit Organizations and Small Business Firms under Government 
Awards, Contracts and Cooperative Agreements'' is applicable.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]

[[Page 279]]



Sec.  75.308  Revision of budget and program plans.

    (a) The approved budget for the Federal award summarizes the 
financial aspects of the project or program as approved during the 
Federal award process. It may include either the Federal and non-Federal 
share (see Sec.  75.2 Federal share) or only the Federal share, 
depending upon HHS awarding agency requirements. It must be related to 
performance for program evaluation purposes whenever appropriate.
    (b) Recipients are required to report deviations from budget or 
project scope or objective, and request prior approvals from HHS 
awarding agencies for budget and program plan revisions, in accordance 
with this section.
    (c)(1) For non-construction Federal awards, recipients must request 
prior approvals from HHS awarding agencies for one or more of the 
following program or budget-related reasons:
    (i) Change in the scope or the objective of the project or program 
(even if there is no associated budget revision requiring prior written 
approval).
    (ii) Change in a key person specified in the application or the 
Federal award.
    (iii) The disengagement from the project for more than three months, 
or a 25 percent reduction in time devoted to the project, by the 
approved project director or principal investigator.
    (iv) The inclusion, unless waived by the HHS awarding agency, of 
costs that require prior approval in accordance with subpart E of this 
part, or appendix IX of this part, or 48 CFR part 31, as applicable.
    (v) The transfer of funds budgeted for participant support costs as 
defined in Sec.  75.2 to other categories of expense.
    (vi) Unless described in the application and funded in the approved 
Federal awards, the subawarding, transferring or contracting out of any 
work under a Federal award, including fixed amount subawards as 
described in Sec.  75.353. This provision does not apply to the 
acquisition of supplies, material, equipment or general support 
services.
    (vii) Changes in the approved cost-sharing or matching provided by 
the non-Federal entity.
    (viii) The need arises for additional Federal funds to complete the 
project.
    (ix) The inclusion of research patient care costs in research awards 
made for the performance of research work.
    (x) The provision of subawards by a pass-through entity on fixed 
amounts up to the Simplified Acquisition Threshold, provided that the 
subawards meet the requirements for fixed amount awards in Sec.  75.201. 
See Sec.  75.353.
    (xi) The recipient wishes to dispose of, replace, or encumber title 
to real property, equipment, or intangible property that are acquired or 
improved with a Federal award. See Sec. Sec.  75.318, 75.320, 75.322, 
and 75.323.
    (2) No other prior approval requirements for specific items may be 
imposed unless an exception has been approved by OMB. See also 
Sec. Sec.  75.102 and 75.407.
    (d) Except for requirements listed in paragraph (c)(1) of this 
section, the HHS awarding agencies are authorized, at their option, to 
waive prior written approvals required by paragraph (c) this section. 
Such waivers may include authorizing recipients to do any one or more of 
the following:
    (1) Incur project costs 90 calendar days before the HHS awarding 
agency makes the Federal award. Expenses more than 90 calendar days pre-
award require prior approval of the HHS awarding agency. All costs 
incurred before the HHS awarding agency makes the Federal award are at 
the recipient's risk (i.e., the HHS awarding agency is under no 
obligation to reimburse such costs if for any reason the recipient does 
not receive a Federal award or if the Federal award is less than 
anticipated and inadequate to cover such costs). See also Sec.  75.458.
    (2) Initiate a one-time extension of the period of performance by up 
to 12 months unless one or more of the conditions outlined in paragraphs 
(d)(2)(i) through (iii) of this section apply. For one-time extensions, 
the recipient must notify the HHS awarding agency in writing with the 
supporting reasons and revised period of performance at least 10 
calendar days before the end of the period of performance specified in 
the Federal award. This one-time extension may not be exercised merely 
for the purpose of using unobligated balances. Extensions require 
explicit

[[Page 280]]

prior HHS awarding agency approval when:
    (i) The terms and conditions of the Federal award prohibit the 
extension.
    (ii) The extension requires additional Federal funds.
    (iii) The extension involves any change in the approved objectives 
or scope of the project.
    (3) Carry forward unobligated balances to subsequent periods of 
performance.
    (4) For Federal awards that support research, unless the HHS 
awarding agency provides otherwise in the Federal award or in the HHS 
awarding agency's regulations, the prior approval requirements described 
in paragraph (d) are automatically waived (i.e., recipients need not 
obtain such prior approvals) unless one of the conditions included in 
paragraph (d)(2) applies.
    (e) The HHS awarding agency may, at its option, restrict the 
transfer of funds among direct cost categories or programs, functions 
and activities for Federal awards in which the Federal share of the 
project exceeds the Simplified Acquisition Threshold and the cumulative 
amount of such transfers exceeds or is expected to exceed 10 percent of 
the total budget as last approved by the HHS awarding agency. The HHS 
awarding agency cannot permit a transfer that would cause any Federal 
appropriation to be used for purposes other than those consistent with 
the appropriation.
    (f) All other changes to non-construction budgets, except for the 
changes described in paragraph (c) of this section, do not require prior 
approval (see also Sec.  75.407).
    (g) For construction Federal awards, the recipient must request 
prior written approval promptly from the HHS awarding agency for budget 
revisions whenever paragraph (g)(1), (2), or (3) of this section 
applies.
    (1) The revision results from changes in the scope or the objective 
of the project or program.
    (2) The need arises for additional Federal funds to complete the 
project.
    (3) A revision is desired which involves specific costs for which 
prior written approval requirements may be imposed consistent with 
applicable OMB cost principles listed in subpart E of this part.
    (4) No other prior approval requirements for budget revisions may be 
imposed unless an exception has been approved by OMB.
    (5) When an HHS awarding agency makes a Federal award that provides 
support for construction and non-construction work, the HHS awarding 
agency may require the recipient to obtain prior approval from the HHS 
awarding agency before making any fund or budget transfers between the 
two types of work supported.
    (h) When requesting approval for budget revisions, the recipient 
must use the same format for budget information that was used in the 
application, unless the HHS awarding agency indicates a letter of 
request suffices.
    (i) Within 30 calendar days from the date of receipt of the request 
for budget revisions, the HHS awarding agency must review the request 
and notify the recipient whether the budget revisions have been 
approved. If the revision is still under consideration at the end of 30 
calendar days, the HHS awarding agency must inform the recipient in 
writing of the date when the recipient may expect the decision.
    (j) All approvals granted in keeping with the provisions of this 
section shall not be valid unless they are in writing, and signed by at 
least one of the following HHS officials:
    (1) The Head of the HHS awarding agency that made the award or 
subordinate official with proper delegated authority from the Head, 
including the Head of the Regional Office of the HHS awarding agency 
that made the award; or
    (2) The responsible Grants Officer of the HHS awarding agency that 
made the award or an individual duly authorized by the Grants Officer.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.309  Period of performance and availability of funds.

    (a) A non-Federal entity may charge to the Federal award only 
allowable costs incurred during the period of performance (except as 
described in Sec.  75.461) and any costs incurred before the HHS 
awarding agency or pass-

[[Page 281]]

through entity made the Federal award that were authorized by the 
Federal awarding agency or pass-through entity. Funds available to pay 
allowable costs during the period of performance include both Federal 
funds awarded and carryover balances.
    (b) A non-Federal entity must liquidate all obligations incurred 
under the award not later than 90 days after the end of the funding 
period (or as specified in a program regulation) to coincide with the 
submission of the final Federal Financial Report (FFR). This deadline 
may be extended with prior written approval from the HHS awarding 
agency.



Sec. Sec.  75.310-75.315  [Reserved]

                           Property Standards



Sec.  75.316  Purpose of property standards.

    Sections 75.317 through 75.323 set forth uniform standards governing 
management and disposition of property furnished by HHS or whose cost 
was charged directly to a project supported by an HHS award. The HHS 
awarding agency may not impose additional requirements, unless 
specifically required to do so by Federal statute. The recipient may use 
its own property management standards and procedures provided they meet 
the provisions of these sections.



Sec.  75.317  Insurance coverage.

    The non-Federal entity must, at a minimum, provide the equivalent 
insurance coverage for real property and equipment acquired or improved 
with Federal funds as provided to other property owned by the non-
Federal entity. Federally-owned property need not be insured unless 
required by the terms and conditions of the Federal award.



Sec.  75.318  Real property.

    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to real property acquired or improved under a 
Federal award will vest upon acquisition in the non-Federal entity.
    (b) Use. (1) Except as otherwise provided by Federal statutes or by 
the HHS awarding agency, real property will be used for the originally 
authorized purpose as long as needed for that purpose, during which time 
the non-Federal entity must not dispose of or encumber its title or 
other interests.
    (2) The non-Federal entity shall obtain written approval from the 
HHS awarding agency for the use of real property in other federally-
sponsored projects when the recipient determines that the property is no 
longer needed for the purpose of the original project. Use in other 
projects shall be limited to those under federally-sponsored projects 
(i.e., awards) or programs that have purpose consistent with those 
authorized for support by the HHS awarding agency.
    (c) Disposition. When real property is no longer needed as provided 
in subsection (b), the non-Federal entity must obtain disposition 
instructions from the HHS awarding agency or pass-through entity. The 
instructions must provide for one of the following alternatives:
    (1) Retain title after compensating the HHS awarding agency. The 
amount paid to the HHS awarding agency will be computed by applying the 
HHS awarding agency's percentage of participation in the cost of the 
original purchase (and costs of any improvements) to the fair market 
value of the property. However, in those situations where the non-
Federal entity is disposing of real property acquired or improved with a 
Federal award and acquiring replacement real property under the same 
Federal award, the net proceeds from the disposition may be used as an 
offset to the cost of the replacement property.
    (2) Sell the property and compensate the HHS awarding agency. The 
amount due to the HHS awarding agency will be calculated by applying the 
HHS awarding agency's percentage of participation in the cost of the 
original purchase (and cost of any improvements) to the proceeds of the 
sale after deduction of any actual and reasonable selling and fixing-up 
expenses. If the Federal award has not been closed out, the net proceeds 
from sale may be offset against the original cost of the property. When 
the non-Federal entity

[[Page 282]]

is directed to sell property, sales procedures must be followed that 
provide for competition to the extent practicable and result in the 
highest possible return.
    (3) Transfer title to the HHS awarding agency or to a third party 
designated/approved by the HHS awarding agency. The non-Federal entity 
is entitled to be paid an amount calculated by applying the non-Federal 
entity's percentage of participation in the purchase of the real 
property (and cost of any improvements) to the current fair market value 
of the property.



Sec.  75.319  Federally-owned and exempt property.

    (a) Title to Federally-owned property remains vested in the Federal 
Government. The non-Federal entity must submit annually an inventory 
listing of Federally-owned property in its custody to the HHS awarding 
agency. Upon completion of the Federal award or when the property is no 
longer needed, the non-Federal entity must report the property to the 
HHS awarding agency for further Federal agency utilization.
    (b) If the HHS awarding agency has no further need for the property, 
it must declare the property excess and report it for disposal to the 
appropriate Federal disposal authority, unless the HHS awarding agency 
has statutory authority to dispose of the property by alternative 
methods (e.g., the authority provided by the Federal Technology Transfer 
Act (15 U.S.C. 3710 (i)) to donate research equipment to educational and 
non-profit organizations in accordance with Executive Order 12999). The 
HHS awarding agency must issue appropriate instructions to the non-
Federal entity.
    (c) Exempt Federally-owned property means property acquired under a 
Federal award where the HHS awarding agency has chosen to vest title to 
the property to the non-Federal entity without further obligation to the 
Federal Government, based upon the explicit terms and conditions of the 
Federal award. The HHS awarding agency may exercise this option when 
statutory authority exists. Absent statutory authority and specific 
terms and conditions of the Federal award, title to exempt Federally-
owned property acquired under the Federal award remains with the Federal 
Government.



Sec.  75.320  Equipment.

    See also Sec.  75.439.
    (a) Title. Subject to the obligations and conditions set forth in 
this section, title to equipment acquired under a Federal award will 
vest upon acquisition in the non-Federal entity. Unless a statute 
specifically authorizes the Federal agency to vest title in the non-
Federal entity without further obligation to the Federal Government, and 
the Federal agency elects to do so, the title must be a conditional 
title. Title must vest in the non-Federal entity subject to the 
following conditions:
    (1) Use the equipment for the authorized purposes of the project 
during the period of performance, or until the property is no longer 
needed for the purposes of the project.
    (2) Not encumber the property without approval of the HHS awarding 
agency or pass-through entity.
    (3) Use and dispose of the property in accordance with paragraphs 
(b), (c) and (e) of this section.
    (b) A state must use, manage and dispose of equipment acquired under 
a Federal award by the state in accordance with state laws and 
procedures. Other non-Federal entities must follow paragraphs (c) 
through (e) of this section.
    (c) Use. (1) Equipment must be used by the non-Federal entity in the 
program or project for which it was acquired as long as needed, whether 
or not the project or program continues to be supported by the Federal 
award, and the non-Federal entity must not encumber the property without 
prior approval of the HHS awarding agency. When no longer needed for the 
original program or project, the equipment may be used in other 
activities supported by the HHS awarding agency, in the following order 
of priority:
    (i) Activities under a Federal award from the HHS awarding agency 
which funded the original program or project, then
    (ii) Activities under Federal awards from other HHS awarding 
agencies. This includes consolidated equipment for information 
technology systems.

[[Page 283]]

    (2) During the time that equipment is used on the project or program 
for which it was acquired, the non-Federal entity must also make the 
equipment available for use on other projects or programs currently or 
previously supported by the Federal Government, provided that such use 
will not interfere with the work on the projects or program for which it 
was originally acquired. First preference for other use must be given to 
other programs or projects supported by the HHS awarding agency that 
financed the equipment and second preference must be given to programs 
or projects under Federal awards from other Federal awarding agencies. 
Use for non-federally-funded programs or projects is also permissible. 
User fees should be considered if appropriate.
    (3) Notwithstanding the encouragement in Sec.  75.307 to earn 
program income, the non-Federal entity must not use equipment acquired 
with the Federal award to provide services for a fee that is less than 
private companies charge for equivalent services unless specifically 
authorized by Federal statute for as long as the Federal Government 
retains an interest in the equipment.
    (4) When acquiring replacement equipment, the non-Federal entity may 
use the equipment to be replaced as a trade-in or sell the property and 
use the proceeds to offset the cost of the replacement property subject 
to the approval of the HHS awarding agency.
    (d) Management requirements. Procedures for managing equipment 
(including replacement equipment), whether acquired in whole or in part 
under a Federal award, until disposition takes place will, as a minimum, 
meet the following requirements:
    (1) Property records must be maintained that include a description 
of the property, a serial number or other identification number, the 
source of funding for the property (including the FAIN), who holds 
title, the acquisition date, and cost of the property, percentage of 
Federal participation in the project costs for the Federal award under 
which the property was acquired, the location, use and condition of the 
property, and any ultimate disposition data including the date of 
disposal and sale price of the property.
    (2) A physical inventory of the property must be taken and the 
results reconciled with the property records at least once every two 
years.
    (3) A control system must be developed to ensure adequate safeguards 
to prevent loss, damage, or theft of the property. Any loss, damage, or 
theft must be investigated.
    (4) Adequate maintenance procedures must be developed to keep the 
property in good condition.
    (5) If the non-Federal entity is authorized or required to sell the 
property, proper sales procedures must be established to ensure the 
highest possible return.
    (e) Disposition. When original or replacement equipment acquired 
under a Federal award is no longer needed for the original project or 
program or for other activities currently or previously supported by a 
HHS awarding agency, except as otherwise provided in Federal statutes, 
regulations, or HHS awarding agency disposition instructions, the non-
Federal entity must request disposition instructions from the HHS 
awarding agency if required by the terms and conditions of the Federal 
award. Disposition of the equipment will be made as follows, in 
accordance with HHS awarding agency disposition instructions:
    (1) Items of equipment with a current per unit fair market value of 
$5,000 or less may be retained, sold or otherwise disposed of with no 
further obligation to the HHS awarding agency.
    (2) Except as provided in Sec.  75.319(b), or if the HHS awarding 
agency fails to provide requested disposition instructions within 120 
days, items of equipment with a current per-unit fair-market value in 
excess of $5,000 may be retained by the non-Federal entity or sold. The 
HHS awarding agency is entitled to an amount calculated by multiplying 
the current market value or proceeds from sale by the HHS awarding 
agency's percentage of participation in the cost of the original 
purchase. If the equipment is sold, the HHS awarding agency may permit 
the non-Federal entity to deduct and retain from the Federal share $500 
or ten percent of the proceeds, whichever is

[[Page 284]]

less, for its selling and handling expenses.
    (3) The non-Federal entity may transfer title to the property to the 
Federal Government or to an eligible third party provided that, in such 
cases, the non-Federal entity must be entitled to compensation for its 
attributable percentage of the current fair market value of the 
property.
    (4) In cases where a non-Federal entity fails to take appropriate 
disposition actions, the HHS awarding agency may direct the non-Federal 
entity to take disposition actions.



Sec.  75.321  Supplies.

    See also Sec.  75.453.
    (a) Title to supplies will vest in the non-Federal entity upon 
acquisition. If there is a residual inventory of unused supplies 
exceeding $5,000 in total aggregate value upon termination or completion 
of the project or program and the supplies are not needed for any other 
Federal award, the non-Federal entity must retain the supplies for use 
on other activities or sell them, but must, in either case, compensate 
the Federal Government for its share. The amount of compensation must be 
computed in the same manner as for equipment. See Sec.  75.320(e)(2) for 
the calculation methodology.
    (b) As long as the Federal Government retains an interest in the 
supplies, the non-Federal entity must not use supplies acquired under a 
Federal award to provide services to other organizations for a fee that 
is less than private companies charge for equivalent services, unless 
specifically authorized by Federal statute.



Sec.  75.322  Intangible property and copyrights.

    (a) Title to intangible property (see Sec.  75.2 Intangible 
property) acquired under a Federal award vests upon acquisition in the 
non-Federal entity. The non-Federal entity must use that property for 
the originally-authorized purpose, and must not encumber the property 
without approval of the HHS awarding agency. When no longer needed for 
the originally authorized purpose, disposition of the intangible 
property must occur in accordance with the provisions in Sec.  
75.320(e).
    (b) The non-Federal entity may copyright any work that is subject to 
copyright and was developed, or for which ownership was acquired, under 
a Federal award. The HHS awarding agency reserves a royalty-free, 
nonexclusive and irrevocable right to reproduce, publish, or otherwise 
use the work for Federal purposes, and to authorize others to do so.
    (c) The non-Federal entity is subject to applicable regulations 
governing patents and inventions, including government-wide regulations 
issued by the Department of Commerce at 37 CFR part 401.
    (d) The Federal Government has the right to:
    (1) Obtain, reproduce, publish, or otherwise use the data produced 
under a Federal award; and
    (2) Authorize others to receive, reproduce, publish, or otherwise 
use such data for Federal purposes
    (e) Freedom of Information Act (FOIA). (1) In response to a Freedom 
of Information Act (FOIA) request for research data relating to 
published research findings produced under a Federal award that were 
used by the Federal Government in developing an agency action that has 
the force and effect of law, the HHS awarding agency must request, and 
the non-Federal entity must provide, within a reasonable time, the 
research data so that they can be made available to the public through 
the procedures established under the FOIA. If the HHS awarding agency 
obtains the research data solely in response to a FOIA request, the HHS 
awarding agency may charge the requester a reasonable fee equaling the 
full incremental cost of obtaining the research data. This fee should 
reflect costs incurred by the Federal agency and the non-Federal entity. 
This fee is in addition to any fees the HHS awarding agency may assess 
under the FOIA (5 U.S.C. 552(a)(4)(A)).
    (2) Published research findings means when:
    (i) Research findings are published in a peer-reviewed scientific or 
technical journal; or
    (ii) A Federal agency publicly and officially cites the research 
findings in support of an agency action that has the force and effect of 
law. ``Used by

[[Page 285]]

the Federal Government in developing an agency action that has the force 
and effect of law'' is defined as when an agency publicly and officially 
cites the research findings in support of an agency action that has the 
force and effect of law.
    (3) Research data means the recorded factual material commonly 
accepted in the scientific community as necessary to validate research 
findings, but not any of the following: Preliminary analyses, drafts of 
scientific papers, plans for future research, peer reviews, or 
communications with colleagues. This ``recorded'' material excludes 
physical objects (e.g., laboratory samples). Research data also do not 
include:
    (i) Trade secrets, commercial information, materials necessary to be 
held confidential by a researcher until they are published, or similar 
information which is protected under law; and
    (ii) Personnel and medical information and similar information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, such as information that could be used to identify a 
particular person in a research study.
    (f) The requirements set forth in paragraph (e)(1) of this section 
do not apply to commercial organizations

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.323  Property trust relationship.

    Real property, equipment, and intangible property, that are acquired 
or improved with a Federal award must be held in trust by the non-
Federal entity as trustee for the beneficiaries of the project or 
program under which the property was acquired or improved. The HHS 
awarding agency may require the non-Federal entity to record liens or 
other appropriate notices of record to indicate that personal or real 
property has been acquired or improved with a Federal award and that use 
and disposition conditions apply to the property.



Sec. Sec.  75.324-75.325  [Reserved]

                          Procurement Standards



Sec.  75.326  Procurements by states.

    When procuring property and services under a Federal award, a state 
must follow the same policies and procedures it uses for procurements 
from its non-Federal funds. The state will comply with Sec.  75.331 and 
ensure that every purchase order or other contract includes any clauses 
required by Sec.  75.335. All other non-Federal entities, including 
subrecipients of a state, will follow Sec. Sec.  75.327 through 75.335.



Sec.  75.327  General procurement standards.

    (a) The non-Federal entity must use its own documented procurement 
procedures which reflect applicable State, local, and tribal laws and 
regulations, provided that the procurements conform to applicable 
Federal law and the standards identified in this part.
    (b) Non-Federal entities must maintain oversight to ensure that 
contractors perform in accordance with the terms, conditions, and 
specifications of their contracts or purchase orders.
    (c)(1) The non-Federal entity must maintain written standards of 
conduct covering conflicts of interest and governing the actions of its 
employees engaged in the selection, award and administration of 
contracts. No employee, officer, or agent may participate in the 
selection, award, or administration of a contract supported by a Federal 
award if he or she has a real or apparent conflict of interest. Such a 
conflict of interest would arise when the employee, officer, or agent, 
any member of his or her immediate family, his or her partner, or an 
organization which employs or is about to employ any of the parties 
indicated herein, has a financial or other interest in or a tangible 
personal benefit from a firm considered for a contract. The officers, 
employees, and agents of the non-Federal entity may neither solicit nor 
accept gratuities, favors, or anything of monetary value from 
contractors or parties to subcontracts. However, non-Federal entities 
may set standards for situations in which the financial interest is not 
substantial or

[[Page 286]]

the gift is an unsolicited item of nominal value. The standards of 
conduct must provide for disciplinary actions to be applied for 
violations of such standards by officers, employees, or agents of the 
non-Federal entity.
    (2) If the non-Federal entity has a parent, affiliate, or subsidiary 
organization that is not a state, local government, or Indian tribe, the 
non-Federal entity must also maintain written standards of conduct 
covering organizational conflicts of interest. Organizational conflicts 
of interest means that because of relationships with a parent company, 
affiliate, or subsidiary organization, the non-Federal entity is unable 
or appears to be unable to be impartial in conducting a procurement 
action involving a related organization.
    (d) The non-Federal entity's procedures must avoid acquisition of 
unnecessary or duplicative items. Consideration should be given to 
consolidating or breaking out procurements to obtain a more economical 
purchase. Where appropriate, an analysis will be made of lease versus 
purchase alternatives, and any other appropriate analysis to determine 
the most economical approach.
    (e) To foster greater economy and efficiency, and in accordance with 
efforts to promote cost-effective use of shared services across the 
Federal Government, the non-Federal entity is encouraged to enter into 
state and local intergovernmental agreements or inter-entity agreements 
where appropriate for procurement or use of common or shared goods and 
services.
    (f) The non-Federal entity is encouraged to use Federal excess and 
surplus property in lieu of purchasing new equipment and property 
whenever such use is feasible and reduces project costs.
    (g) The non-Federal entity is encouraged to use value engineering 
clauses in contracts for construction projects of sufficient size to 
offer reasonable opportunities for cost reductions. Value engineering is 
a systematic and creative analysis of each contract item or task to 
ensure that its essential function is provided at the overall lower 
cost.
    (h) The non-Federal entity must award contracts only to responsible 
contractors possessing the ability to perform successfully under the 
terms and conditions of a proposed procurement. Consideration will be 
given to such matters as contractor integrity, compliance with public 
policy, record of past performance, and financial and technical 
resources. See also Sec.  75.213.
    (i) The non-Federal entity must maintain records sufficient to 
detail the history of procurement. These records will include, but are 
not necessarily limited to the following: rationale for the method of 
procurement, selection of contract type, contractor selection or 
rejection, and the basis for the contract price.
    (j)(1) The non-Federal entity may use a time and materials type 
contract only after a determination that no other contract is suitable 
and if the contract includes a ceiling price that the contractor exceeds 
at its own risk. Time and materials type contract means a contract whose 
cost to a non-Federal entity is the sum of:
    (i) The actual cost of materials; and
    (ii) Direct labor hours charged at fixed hourly rates that reflect 
wages, general and administrative expenses, and profit.
    (2) Since this formula generates an open-ended contract price, a 
time-and-materials contract provides no positive profit incentive to the 
contractor for cost control or labor efficiency. Therefore, each 
contract must set a ceiling price that the contractor exceeds at its own 
risk. Further, the non-Federal entity awarding such a contract must 
assert a high degree of oversight in order to obtain reasonable 
assurance that the contractor is using efficient methods and effective 
cost controls.
    (k) The non-Federal entity alone must be responsible, in accordance 
with good administrative practice and sound business judgment, for the 
settlement of all contractual and administrative issues arising out of 
procurements. These issues include, but are not limited to, source 
evaluation, protests, disputes, and claims. These standards do not 
relieve the non-Federal entity of any contractual responsibilities under 
its contracts. The HHS awarding agency will not substitute its

[[Page 287]]

judgment for that of the non-Federal entity unless the matter is 
primarily a Federal concern. Violations of law will be referred to the 
local, tribal, state, or Federal authority having proper jurisdiction.
    (l) The type of procuring instruments used must be determined by the 
recipient but shall be appropriate for the particular procurement and 
for promoting the best interest of the program or project involved.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.328  Competition.

    (a) All procurement transactions must be conducted in a manner 
providing full and open competition consistent with the standards of 
this section. In order to ensure objective contractor performance and 
eliminate unfair competitive advantage, contractors that develop or 
draft specifications, requirements, statements of work, or invitations 
for bids or requests for proposals must be excluded from competing for 
such procurements. Some of the situations considered to be restrictive 
of competition include but are not limited to:
    (1) Placing unreasonable requirements on firms in order for them to 
qualify to do business;
    (2) Requiring unnecessary experience and excessive bonding;
    (3) Noncompetitive pricing practices between firms or between 
affiliated companies;
    (4) Noncompetitive contracts to consultants that are on retainer 
contracts;
    (5) Organizational conflicts of interest;
    (6) Specifying only a ``brand name'' product instead of allowing 
``an equal'' product to be offered and describing the performance or 
other relevant requirements of the procurement; and
    (7) Any arbitrary action in the procurement process.
    (b) The non-Federal entity must conduct procurements in a manner 
that prohibits the use of statutorily or administratively imposed state, 
local, or tribal geographical preferences in the evaluation of bids or 
proposals, except in those cases where applicable Federal statutes 
expressly mandate or encourage geographic preference. Nothing in this 
section preempts state licensing laws. When contracting for 
architectural and engineering (A/E) services, geographic location may be 
a selection criterion provided its application leaves an appropriate 
number of qualified firms, given the nature and size of the project, to 
compete for the contract.
    (c) The non-Federal entity must have written procedures for 
procurement transactions. These procedures must ensure that all 
solicitations:
    (1) Incorporate a clear and accurate description of the technical 
requirements for the material, product, or service to be procured. Such 
description must not, in competitive procurements, contain features 
which unduly restrict competition. The description may include a 
statement of the qualitative nature of the material, product or service 
to be procured and, when necessary, must set forth those minimum 
essential characteristics and standards to which it must conform if it 
is to satisfy its intended use. Detailed product specifications should 
be avoided if at all possible. When it is impractical or uneconomical to 
make a clear and accurate description of the technical requirements, a 
``brand name or equivalent'' description may be used as a means to 
define the performance or other salient requirements of procurement. The 
specific features of the named brand which must be met by offers must be 
clearly stated; and
    (2) Identify all requirements which the offerors must fulfill and 
all other factors to be used in evaluating bids or proposals.
    (d) The non-Federal entity must ensure that all prequalified lists 
of persons, firms, or products which are used in acquiring goods and 
services are current and include enough qualified sources to ensure 
maximum open and free competition. Also, the non-Federal entity must not 
preclude potential bidders from qualifying during the solicitation 
period.



Sec.  75.329  Procurement procedures.

    The non-Federal entity must use one of the following methods of 
procurement.
    (a) Procurement by micro-purchases. Procurement by micro-purchase is 
the

[[Page 288]]

acquisition of supplies or services, the aggregate dollar amount of 
which does not exceed the micro-purchase threshold (See micro-purchase). 
To the extent practicable, the non-Federal entity must distribute micro-
purchases equitably among qualified suppliers. Micro-purchases may be 
awarded without soliciting competitive quotations if the non-Federal 
entity considers the price to be reasonable.
    (b) Procurement by small purchase procedures. Small purchase 
procedures are those relatively simple and informal procurement methods 
for securing services, supplies, or other property that do not cost more 
than the Simplified Acquisition Threshold. If small purchase procedures 
are used, price or rate quotations must be obtained from an adequate 
number of qualified sources.
    (c) Procurement by sealed bids (formal advertising). Bids are 
publicly solicited and a firm fixed price contract (lump sum or unit 
price) is awarded to the responsible bidder whose bid, conforming with 
all the material terms and conditions of the invitation for bids, is the 
lowest in price. The sealed bid method is the preferred method for 
procuring construction, if the conditions in paragraph (c)(1) of this 
section apply.
    (1) In order for sealed bidding to be feasible, the following 
conditions should be present:
    (i) A complete, adequate, and realistic specification or purchase 
description is available;
    (ii) Two or more responsible bidders are willing and able to compete 
effectively for the business; and
    (iii) The procurement lends itself to a firm fixed price contract 
and the selection of the successful bidder can be made principally on 
the basis of price.
    (2) If sealed bids are used, the following requirements apply:
    (i) Bids must be solicited from an adequate number of known 
suppliers, providing them sufficient response time prior to the date set 
for opening the bids, for local, and tribal governments, the invitation 
for bids must be publicly advertised;
    (ii) The invitation for bids, which will include any specifications 
and pertinent attachments, must define the items or services in order 
for the bidder to properly respond;
    (iii) All bids will be opened at the time and place prescribed in 
the invitation for bids, for local, and tribal governments, the bids 
must be opened publicly;
    (iv) A firm fixed price contract award will be made in writing to 
the lowest responsive and responsible bidder. Where specified in bidding 
documents, factors such as discounts, transportation cost, and life 
cycle costs must be considered in determining which bid is lowest. 
Payment discounts will only be used to determine the low bid when prior 
experience indicates that such discounts are usually taken advantage of; 
and
    (v) Any or all bids may be rejected if there is a sound documented 
reason.
    (d) Procurement by competitive proposals. The technique of 
competitive proposals is normally conducted with more than one source 
submitting an offer, and either a fixed price or cost-reimbursement type 
contract is awarded. It is generally used when conditions are not 
appropriate for the use of sealed bids. If this method is used, the 
following requirements apply:
    (1) Requests for proposals must be publicized and identify all 
evaluation factors and their relative importance. Any response to 
publicized requests for proposals must be considered to the maximum 
extent practical;
    (2) Proposals must be solicited from an adequate number of qualified 
sources;
    (3) The non-Federal entity must have a written method for conducting 
technical evaluations of the proposals received and for selecting 
recipients;
    (4) Contracts must be awarded to the responsible firm whose proposal 
is most advantageous to the program, with price and other factors 
considered; and
    (5) The non-Federal entity may use competitive proposal procedures 
for qualifications-based procurement of architectural/engineering (A/E) 
professional services whereby competitors' qualifications are evaluated 
and the most qualified competitor is selected, subject to negotiation of 
fair and reasonable compensation. The method, where price is not used as 
a selection

[[Page 289]]

factor, can only be used in procurement of A/E professional services. It 
cannot be used to purchase other types of services though A/E firms are 
a potential source to perform the proposed effort.
    (e) [Reserved]
    (f) Procurement by noncompetitive proposals. Procurement by 
noncompetitive proposals is procurement through solicitation of a 
proposal from only one source and may be used only when one or more of 
the following circumstances apply:
    (1) The item is available only from a single source;
    (2) The public exigency or emergency for the requirement will not 
permit a delay resulting from competitive solicitation;
    (3) The HHS awarding agency or pass-through entity expressly 
authorizes noncompetitive proposals in response to a written request 
from the non-Federal entity; or
    (4) After solicitation of a number of sources, competition is 
determined inadequate.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.330  Contracting with small and minority businesses, women's 
business enterprises, and labor surplus area firms.

    (a) The non-Federal entity must take all necessary affirmative steps 
to assure that minority businesses, women's business enterprises, and 
labor surplus area firms are used when possible.
    (b) Affirmative steps must include:
    (1) Placing qualified small and minority businesses and women's 
business enterprises on solicitation lists;
    (2) Assuring that small and minority businesses, and women's 
business enterprises are solicited whenever they are potential sources;
    (3) Dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by small and 
minority businesses, and women's business enterprises;
    (4) Establishing delivery schedules, where the requirement permits, 
which encourage participation by small and minority businesses, and 
women's business enterprises;
    (5) Using the services and assistance, as appropriate, of such 
organizations as the Small Business Administration and the Minority 
Business Development Agency of the Department of Commerce; and
    (6) Requiring the prime contractor, if subcontracts are to be let, 
to take the affirmative steps listed in paragraphs (b)(1) through (5) of 
this section.



Sec.  75.331  Procurement of recovered materials.

    A non-Federal entity that is a state agency or agency of a political 
subdivision of a state and its contractors must comply with section 6002 
of the Solid Waste Disposal Act, as amended by the Resource Conservation 
and Recovery Act. The requirements of Section 6002 include procuring 
only items designated in guidelines of the Environmental Protection 
Agency (EPA) at 40 CFR part 247 that contain the highest percentage of 
recovered materials practicable, consistent with maintaining a 
satisfactory level of competition, where the purchase price of the item 
exceeds $10,000 or the value of the quantity acquired during the 
preceding fiscal year exceeded $10,000; procuring solid waste management 
services in a manner that maximizes energy and resource recovery; and 
establishing an affirmative procurement program for procurement of 
recovered materials identified in the EPA guidelines.



Sec.  75.332  Contract cost and price.

    (a) The non-Federal entity must perform a cost or price analysis in 
connection with every procurement action in excess of the Simplified 
Acquisition Threshold including contract modifications. The method and 
degree of analysis is dependent on the facts surrounding the particular 
procurement situation, but as a starting point, the non-Federal entity 
must make independent estimates before receiving bids or proposals.
    (b) The non-Federal entity must negotiate profit as a separate 
element of the price for each contract in which there is no price 
competition and in all cases where cost analysis is performed. To 
establish a fair and reasonable profit, consideration must be given to 
the

[[Page 290]]

complexity of the work to be performed, the risk borne by the 
contractor, the contractor's investment, the amount of subcontracting, 
the quality of its record of past performance, and industry profit rates 
in the surrounding geographical area for similar work.
    (c) Costs or prices based on estimated costs for contracts under the 
Federal award are allowable only to the extent that costs incurred or 
cost estimates included in negotiated prices would be allowable for the 
non-Federal entity under subpart E of this part. The non-Federal entity 
may reference its own cost principles that comply with the Federal cost 
principles.
    (d) The cost plus a percentage of cost and percentage of 
construction cost methods of contracting must not be used.



Sec.  75.333  HHS awarding agency or pass-through entity review.

    (a) The non-Federal entity must make available, upon request of the 
HHS awarding agency or pass-through entity, technical specifications on 
proposed procurements where the HHS awarding agency or pass-through 
entity believes such review is needed to ensure that the item or service 
specified is the one being proposed for acquisition. This review 
generally will take place prior to the time the specification is 
incorporated into a solicitation document. However, if the non-Federal 
entity desires to have the review accomplished after a solicitation has 
been developed, the HHS awarding agency or pass-through entity may still 
review the specifications, with such review usually limited to the 
technical aspects of the proposed purchase.
    (b) The non-Federal entity must make available upon request, for the 
HHS awarding agency or pass-through entity pre-procurement review, 
procurement documents, such as requests for proposals or invitations for 
bids, or independent cost estimates, when:
    (1) The non-Federal entity's procurement procedures or operation 
fails to comply with the procurement standards in this part;
    (2) The procurement is expected to exceed the Simplified Acquisition 
Threshold and is to be awarded without competition or only one bid or 
offer is received in response to a solicitation;
    (3) The procurement, which is expected to exceed the Simplified 
Acquisition Threshold, specifies a ``brand name'' product;
    (4) The proposed contract is more than the Simplified Acquisition 
Threshold and is to be awarded to other than the apparent low bidder 
under a sealed bid procurement; or
    (5) A proposed contract modification changes the scope of a contract 
or increases the contract amount by more than the Simplified Acquisition 
Threshold.
    (c) The non-Federal entity is exempt from the pre-procurement review 
in paragraph (b) of this section if the HHS awarding agency or pass-
through entity determines that its procurement systems comply with the 
standards of this part.
    (1) The non-Federal entity may request that its procurement system 
be reviewed by the HHS awarding agency or pass-through entity to 
determine whether its system meets these standards in order for its 
system to be certified. Generally, these reviews must occur where there 
is continuous high-dollar funding, and third party contracts are awarded 
on a regular basis;
    (2) The non-Federal entity may self-certify its procurement system. 
Such self-certification must not limit the HHS awarding agency's right 
to survey the system. Under a self-certification procedure, the HHS 
awarding agency may rely on written assurances from the non-Federal 
entity that it is complying with these standards. The non-Federal entity 
must cite specific policies, procedures, regulations, or standards as 
being in compliance with these requirements and have its system 
available for review.



Sec.  75.334  Bonding requirements.

    For construction or facility improvement contracts or subcontracts 
exceeding the Simplified Acquisition Threshold, the HHS awarding agency 
or pass-through entity may accept the bonding policy and requirements of 
the non-Federal entity provided that the HHS awarding agency or pass-
through entity has made a determination that the

[[Page 291]]

Federal interest is adequately protected. If such a determination has 
not been made, the minimum requirements must be as follows:
    (a) A bid guarantee from each bidder equivalent to five percent of 
the bid price. The ``bid guarantee'' must consist of a firm commitment 
such as a bid bond, certified check, or other negotiable instrument 
accompanying a bid as assurance that the bidder will, upon acceptance of 
the bid, execute such contractual documents as may be required within 
the time specified.
    (b) A performance bond on the part of the contractor for 100 percent 
of the contract price. A ``performance bond'' is one executed in 
connection with a contract to secure fulfillment of all the contractor's 
obligations under such contract.
    (c) A payment bond on the part of the contractor for 100 percent of 
the contract price. A ``payment bond'' is one executed in connection 
with a contract to assure payment as required by law of all persons 
supplying labor and material in the execution of the work provided for 
in the contract.
    (d) Where bonds are required in the situations described herein, the 
bonds shall be obtained from companies holding certificates of authority 
as acceptable sureties pursuant to 31 CFR part 223.



Sec.  75.335  Contract provisions.

    The non-Federal entity's contracts must contain the applicable 
provisions described in appendix II to this part.



Sec. Sec.  75.336-75.340  [Reserved]

           Performance and Financial Monitoring and Reporting



Sec.  75.341  Financial reporting.

    Unless otherwise approved by OMB, the HHS awarding agency may 
solicit only the standard, OMB-approved government-wide data elements 
for collection of financial information (at time of publication the 
Federal Financial Report or such future collections as may be approved 
by OMB and listed on the OMB Web site). This information must be 
collected with the frequency required by the terms and conditions of the 
Federal award, but no less frequently than annually nor more frequently 
than quarterly except in unusual circumstances, for example where more 
frequent reporting is necessary for the effective monitoring of the 
Federal award or could significantly affect program outcomes, and 
preferably in coordination with performance reporting.



Sec.  75.342  Monitoring and reporting program performance.

    (a) Monitoring by the non-Federal entity. The non-Federal entity is 
responsible for oversight of the operations of the Federal award 
supported activities. The non-Federal entity must monitor its activities 
under Federal awards to assure compliance with applicable Federal 
requirements and performance expectations are being achieved. Monitoring 
by the non-Federal entity must cover each program, function or activity. 
See also Sec.  75.352.
    (b) Non-construction performance reports. The HHS awarding agency 
must use standard, OMB-approved data elements for collection of 
performance information (including performance progress reports, 
Research Performance Progress Report, or such future collections as may 
be approved by OMB and listed on the OMB Web site).
    (1) The non-Federal entity must submit performance reports at the 
interval required by the HHS awarding agency or pass-through entity to 
best inform improvements in program outcomes and productivity. Intervals 
must be no less frequent than annually nor more frequent than quarterly 
except in unusual circumstances, for example where more frequent 
reporting is necessary for the effective monitoring of the Federal award 
or could significantly affect program outcomes. Annual reports must be 
due 90 calendar days after the reporting period; quarterly or semiannual 
reports must be due 30 calendar days after the reporting period. 
Alternatively, the HHS awarding agency or pass-through entity may 
require annual reports before the anniversary dates of multiple year 
Federal awards. The final performance report will be due 90 calendar 
days after the period of performance end date. If a justified request is 
submitted by a non-Federal entity, the HHS

[[Page 292]]

awarding agency may extend the due date for any performance report.
    (2) The non-Federal entity must submit performance reports using 
OMB-approved government-wide standard information collections when 
providing performance information. As appropriate in accordance with the 
above-mentioned information collections, these reports will contain, for 
each Federal award, brief information on the following unless other 
collections are approved by OMB:
    (i) A comparison of actual accomplishments to the objectives of the 
Federal award established for the period. Where the accomplishments of 
the Federal award can be quantified, a computation of the cost (for 
example, related to units of accomplishment) may be required if that 
information will be useful. Where performance trend data and analysis 
would be informative to the HHS awarding agency program, the HHS 
awarding agency should include this as a performance reporting 
requirement.
    (ii) The reasons why established goals were not met, if appropriate.
    (iii) Additional pertinent information including, when appropriate, 
analysis and explanation of cost overruns or high unit costs.
    (c) Construction performance reports. For the most part, onsite 
technical inspections and certified percentage of completion data are 
relied on heavily by HHS awarding agencies and pass-through entities to 
monitor progress under Federal awards and subawards for construction. 
The HHS awarding agency may require additional performance reports only 
when considered necessary.
    (d) Significant developments. Events may occur between the scheduled 
performance reporting dates that have significant impact upon the 
supported activity. In such cases, the non-Federal entity must inform 
the HHS awarding agency or pass-through entity as soon as the following 
types of conditions become known:
    (1) Problems, delays, or adverse conditions which will materially 
impair the ability to meet the objective of the Federal award. This 
disclosure must include a statement of the action taken, or 
contemplated, and any assistance needed to resolve the situation.
    (2) Favorable developments which enable meeting time schedules and 
objectives sooner or at less cost than anticipated or producing more or 
different beneficial results than originally planned.
    (e) The HHS awarding agency may make site visits as warranted by 
program needs.
    (f) The HHS awarding agency may waive any performance report 
required by this part if not needed.



Sec.  75.343  Reporting on real property.

    The HHS awarding agency or pass-through entity must require a non-
Federal entity to submit reports at least annually on the status of real 
property in which the Federal Government retains an interest, unless the 
Federal interest in the real property extends 15 years or longer. In 
those instances where the Federal interest attached is for a period of 
15 years or more, the HHS awarding agency or pass-through entity, at its 
option, may require the non-Federal entity to report at various multi-
year frequencies (e.g., every two years or every three years, not to 
exceed a five-year reporting period; or an HHS awarding agency or pass-
through entity may require annual reporting for the first three years of 
a Federal award and thereafter require reporting every five years).



Sec. Sec.  75.344-75.350  [Reserved]

                 Subrecipient Monitoring and Management



Sec.  75.351  Subrecipient and contractor determinations.

    The non-Federal entity may concurrently receive Federal awards as a 
recipient, a subrecipient, and a contractor, depending on the substance 
of its agreements with HHS awarding agencies and pass-through entities. 
Therefore, a pass-through entity must make case-by-case determinations 
whether each agreement it makes for the disbursement of Federal program 
funds casts the party receiving the funds in the role of a subrecipient 
or a contractor. The HHS awarding agency may supply and require 
recipients to comply with additional guidance to

[[Page 293]]

support these determinations provided such guidance does not conflict 
with this section.
    (a) Subrecipients. A subaward is for the purpose of carrying out a 
portion of a Federal award and creates a Federal assistance relationship 
with the subrecipient. See Sec.  75.2 Subaward. Characteristics which 
support the classification of the non-Federal entity as a subrecipient 
include when the non-Federal entity:
    (1) Determines who is eligible to receive what Federal assistance;
    (2) Has its performance measured in relation to whether objectives 
of a Federal program were met;
    (3) Has responsibility for programmatic decision making;
    (4) Is responsible for adherence to applicable Federal program 
requirements specified in the Federal award; and
    (5) In accordance with its agreement, uses the Federal funds to 
carry out a program for a public purpose specified in authorizing 
statute, as opposed to providing goods or services for the benefit of 
the pass-through entity.
    (b) Contractors. A contract is for the purpose of obtaining goods 
and services for the non-Federal entity's own use and creates a 
procurement relationship with the contractor. See Sec.  75.2 Contract. 
Characteristics indicative of a procurement relationship between the 
non-Federal entity and a contractor are when the contractor:
    (1) Provides the goods and services within normal business 
operations;
    (2) Provides similar goods or services to many different purchasers;
    (3) Normally operates in a competitive environment;
    (4) Provides goods or services that are ancillary to the operation 
of the Federal program; and
    (5) Is not subject to compliance requirements of the Federal program 
as a result of the agreement, though similar requirements may apply for 
other reasons.
    (c) Use of judgment in making determination. In determining whether 
an agreement between a pass-through entity and another non-Federal 
entity casts the latter as a subrecipient or a contractor, the substance 
of the relationship is more important than the form of the agreement. 
All of the characteristics listed above may not be present in all cases, 
and the pass-through entity must use judgment in classifying each 
agreement as a subaward or a procurement contract.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.352  Requirements for pass-through entities.

    All pass-through entities must:
    (a) Ensure that every subaward is clearly identified to the 
subrecipient as a subaward and includes the following information at the 
time of the subaward and if any of these data elements change, include 
the changes in subsequent subaward modification. When some of this 
information is not available, the pass-through entity must provide the 
best information available to describe the Federal award and subaward. 
Required information includes:
    (1) Federal Award Identification.
    (i) Subrecipient name (which must match the name associated with its 
unique entity identifier;
    (ii) Subrecipient's unique entity identifier;
    (iii) Federal Award Identification Number (FAIN);
    (iv) Federal Award Date (see Sec.  75.2 Federal award date) of award 
to the recipient by the HHS awarding agency;
    (v) Subaward Period of Performance Start and End Date;
    (vi) Amount of Federal Funds Obligated by this action by the pass-
through entity to the subrecipient;
    (vii) Total Amount of Federal Funds Obligated to the subrecipient by 
the pass-through entity including the current obligation;
    (viii) Total Amount of the Federal Award committed to the 
subrecipient by the pass-through entity;
    (ix) Federal award project description, as required to be responsive 
to the Federal Funding Accountability and Transparency Act (FFATA);
    (x) Name of HHS awarding agency, pass-through entity, and contract 
information for awarding official of the pass-through entity;
    (xi) CFDA Number and Name; the pass-through entity must identify the 
dollar amount made available under

[[Page 294]]

each Federal award and the CFDA number at time of disbursement;
    (xii) Identification of whether the award is R&D and
    (xiii) Indirect cost rate for the Federal award (including if the de 
minimis rate is charged per Sec.  75.414).
    (2) All requirements imposed by the pass-through entity on the 
subrecipient so that the Federal award is used in accordance with 
Federal statutes, regulations and the terms and conditions of the 
Federal award;
    (3) Any additional requirements that the pass-through entity imposes 
on the subrecipient in order for the pass-through entity to meet its own 
responsibility to the HHS awarding agency including identification of 
any required financial and performance reports;
    (4) An approved federally recognized indirect cost rate negotiated 
between the subrecipient and the Federal Government or, if no such rate 
exists, either a rate negotiated between the pass-through entity and the 
subrecipient (in compliance with this part), or a de minimis indirect 
cost rate as defined in Sec.  75.414(f);
    (5) A requirement that the subrecipient permit the pass-through 
entity and auditors to have access to the subrecipient's records and 
financial statements as necessary for the pass-through entity to meet 
the requirements of this part; and
    (6) Appropriate terms and conditions concerning closeout of the 
subaward.
    (b) Evaluate each subrecipient's risk of noncompliance with Federal 
statutes, regulations, and the terms and conditions of the subaward for 
purposes of determining the appropriate subrecipient monitoring 
described in paragraphs (d) and (e) of this section, which may include 
consideration of such factors as:
    (1) The subrecipient's prior experience with the same or similar 
subawards;
    (2) The results of previous audits including whether or not the 
subrecipient receives a Single Audit in accordance with subpart F, and 
the extent to which the same or similar subaward has been audited as a 
major program;
    (3) Whether the subrecipient has new personnel or new or 
substantially changed systems; and
    (4) The extent and results of HHS awarding agency monitoring (e.g., 
if the subrecipient also receives Federal awards directly from a HHS 
awarding agency).
    (c) Consider imposing specific subaward conditions upon a 
subrecipient if appropriate as described in Sec.  75.207.
    (d) Monitor the activities of the subrecipient as necessary to 
ensure that the subaward is used for authorized purposes, in compliance 
with Federal statutes, regulations, and the terms and conditions of the 
subaward; and that subaward performance goals are achieved. Pass-through 
entity monitoring of the subrecipient must include:
    (1) Reviewing financial and performance reports required by the 
pass-through entity.
    (2) Following-up and ensuring that the subrecipient takes timely and 
appropriate action on all deficiencies pertaining to the Federal award 
provided to the subrecipient from the pass-through entity detected 
through audits, on-site reviews, and other means.
    (3) Issuing a management decision for audit findings pertaining to 
the Federal award provided to the subrecipient from the pass-through 
entity as required by Sec.  75.521.
    (e) Depending upon the pass-through entity's assessment of risk 
posed by the subrecipient (as described in paragraph (b) of this 
section), the following monitoring tools may be useful for the pass-
through entity to ensure proper accountability and compliance with 
program requirements and achievement of performance goals:
    (1) Providing subrecipients with training and technical assistance 
on program-related matters; and
    (2) Performing on-site reviews of the subrecipient's program 
operations;
    (3) Arranging for agreed-upon-procedures engagements as described in 
Sec.  75.425.
    (f) Verify that every subrecipient is audited as required by subpart 
F of this part when it is expected that the subrecipient's Federal 
awards expended during the respective fiscal year

[[Page 295]]

equaled or exceeded the threshold set forth in Sec.  75.501.
    (g) Consider whether the results of the subrecipient's audits, on-
site reviews, or other monitoring indicate conditions that necessitate 
adjustments to the pass-through entity's own records.
    (h) Consider taking enforcement action against noncompliant 
subrecipients as described in Sec.  75.371 and in program regulations.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3016, Jan. 20, 2016]



Sec.  75.353  Fixed amount subawards.

    With prior written approval from the HHS awarding agency, a pass-
through entity may provide subawards based on fixed amounts up to the 
Simplified Acquisition Threshold, provided that the subawards meet the 
requirements for fixed amount awards in Sec.  75.201.



Sec. Sec.  75.354-75.360  [Reserved]

                       Record Retention and Access



Sec.  75.361  Retention requirements for records.

    Financial records, supporting documents, statistical records, and 
all other non-Federal entity records pertinent to a Federal award must 
be retained for a period of three years from the date of submission of 
the final expenditure report or, for Federal awards that are renewed 
quarterly or annually, from the date of the submission of the quarterly 
or annual financial report, respectively, as reported to the HHS 
awarding agency or pass-through entity in the case of a subrecipient. 
HHS awarding agencies and pass-through entities must not impose any 
other record retention requirements upon non-Federal entities. The only 
exceptions are the following:
    (a) If any litigation, claim, or audit is started before the 
expiration of the 3-year period, the records must be retained until all 
litigation, claims, or audit findings involving the records have been 
resolved and final action taken.
    (b) When the non-Federal entity is notified in writing by the HHS 
awarding agency, cognizant agency for audit, oversight agency for audit, 
cognizant agency for indirect costs, or pass-through entity to extend 
the retention period.
    (c) Records for real property and equipment acquired with Federal 
funds must be retained for 3 years after final disposition.
    (d) When records are transferred to or maintained by the HHS 
awarding agency or pass-through entity, the 3-year retention requirement 
is not applicable to the non-Federal entity.
    (e) Records for program income transactions after the period of 
performance. In some cases, recipients must report program income after 
the period of performance. Where there is such a requirement, the 
retention period for the records pertaining to the earning of the 
program income starts from the end of the non-Federal entity's fiscal 
year in which the program income is earned.
    (f) Indirect cost rate proposals and cost allocations plans. This 
paragraph applies to the following types of documents and their 
supporting records: Indirect cost rate computations or proposals, cost 
allocation plans, and any similar accounting computations of the rate at 
which a particular group of costs is chargeable (such as computer usage 
chargeback rates or composite fringe benefit rates).
    (1) If submitted for negotiation. If the proposal, plan, or other 
computation is required to be submitted to the Federal Government (or to 
the pass-through entity) to form the basis for negotiation of the rate, 
then the 3-year retention period for its supporting records starts from 
the date of such submission.
    (2) If not submitted for negotiation. If the proposal, plan, or 
other computation is not required to be submitted to the Federal 
Government (or to the pass-through entity) for negotiation purposes, 
then the 3-year retention period for the proposal, plan, or computation 
and its supporting records starts from the end of the fiscal year (or 
other accounting period) covered by the proposal, plan, or other 
computation.

[[Page 296]]



Sec.  75.362  Requests for transfer or records.

    The HHS awarding agency must request transfer of certain records to 
its custody from the non-Federal entity when it determines that the 
records possess long-term retention value. However, in order to avoid 
duplicate recordkeeping, the HHS awarding agency may make arrangements 
for the non-Federal entity to retain any records that are continuously 
needed for joint use.



Sec.  75.363  Methods for collection, transmission and storage of information.

    In accordance with the May 2013 Executive Order on Making Open and 
Machine readable the New Default for Government Information, the HHS 
awarding agency and the non-Federal entity should, whenever practicable, 
collect, transmit, and store Federal award-related information in open 
and machine readable formats rather than in closed formats or on paper.

[81 FR 3017, Jan. 20, 2016]



Sec.  75.364  Access to records.

    (a) Records of non-Federal entities. The HHS awarding agency, 
Inspectors General, the Comptroller General of the United States, and 
the pass-through entity, or any of their authorized representatives, 
must have the right of access to any documents, papers, or other records 
of the non-Federal entity which are pertinent to the Federal award, in 
order to make audits, examinations, excerpts, and transcripts. The right 
also includes timely and reasonable access to the non-Federal entity's 
personnel for the purpose of interview and discussion related to such 
documents.
    (b) Only under extraordinary and rare circumstances would such 
access include review of the true name of victims of a crime. Routine 
monitoring cannot be considered extraordinary and rare circumstances 
that would necessitate access to this information. When access to the 
true name of victims of a crime is necessary, appropriate steps to 
protect this sensitive information must be taken by both the non-Federal 
entity and the HHS awarding agency. Any such access, other than under a 
court order or subpoena pursuant to a bona fide confidential 
investigation, must be approved by the head of the HHS awarding agency 
or delegate.
    (c) Expiration of right of access. The rights of access in this 
section are not limited to the required retention period but last as 
long as the records are retained. HHS awarding agencies and pass-through 
entities must not impose any other access requirements upon non-Federal 
entities.



Sec.  75.365  Restrictions on public access to records.

    Consistent with Sec.  75.322, HHS awarding agencies may require 
recipients to permit public access to manuscripts, publications, and 
data produced under an award. However, no HHS awarding agency may place 
restrictions on the non-Federal entity that limits public access to the 
records of the non-Federal entity pertinent to a Federal award 
identified in Sec. Sec.  75.361 through 75.364, except for protected 
personally identifiable information (PII) or when the HHS awarding 
agency can demonstrate that such records will be kept confidential and 
would have been exempted from disclosure pursuant to the Freedom of 
Information Act (5 U.S.C. 552) (FOIA) or controlled unclassified 
information pursuant to Executive Order 13556 if the records had 
belonged to the HHS awarding agency. The FOIA does not apply to those 
records that remain under a non-Federal entity's control except as 
required under Sec.  75.322. Unless required by Federal, State, local, 
or tribal statute, non-Federal entities are not required to permit 
public access to their records identified in Sec. Sec.  75.361 through 
75.364. The non-Federal entity's records provided to a Federal agency 
generally will be subject to FOIA and applicable exemptions.

[86 FR 2278, Jan. 12, 2021]



Sec. Sec.  75.366-75.370  [Reserved]

                       Remedies for Noncompliance



Sec.  75.371  Remedies for noncompliance.

    If a non-Federal entity fails to comply with Federal statutes, 
regulations, or the terms and conditions of a Federal award, the HHS 
awarding agency

[[Page 297]]

or pass-through entity may impose additional conditions, as described in 
Sec.  75.207. If the HHS awarding agency or pass-through entity 
determines that noncompliance cannot be remedied by imposing additional 
conditions, the HHS awarding agency or pass-through entity may take one 
or more of the following actions, as appropriate in the circumstances:
    (a) Temporarily withhold cash payments pending correction of the 
deficiency by the non-Federal entity or more severe enforcement action 
by the HHS awarding agency or pass-through entity.
    (b) Disallow (that is, deny both use of funds and any applicable 
matching credit for) all or part of the cost of the activity or action 
not in compliance.
    (c) Wholly or partly suspend (suspension of award activities) or 
terminate the Federal award.
    (d) Initiate suspension or debarment proceedings as authorized under 
2 CFR part 180 and HHS awarding agency regulations at 2 CFR part 376 (or 
in the case of a pass-through entity, recommend such a proceeding be 
initiated by a HHS awarding agency).
    (e) Withhold further Federal awards for the project or program.
    (f) Take other remedies that may be legally available.



Sec.  75.372  Termination.

    (a) The Federal award may be terminated in whole or in part as 
follows:
    (1) By the HHS awarding agency or pass-through entity, if the non-
Federal entity fails to comply with the terms and conditions of the 
award;
    (2) By the HHS awarding agency or pass-through entity for cause;
    (3) By the HHS awarding agency or pass-through entity with the 
consent of the non-Federal entity, in which case the two parties must 
agree upon the termination conditions, including the effective date and, 
in the case of partial termination, the portion to be terminated; or
    (4) By the non-Federal entity upon sending to the HHS awarding 
agency or pass-through entity written notification setting forth the 
reasons for such termination, the effective date, and, in the case of 
partial termination, the portion to be terminated. However, if the HHS 
awarding agency or pass-through entity determines in the case of partial 
termination that the reduced or modified portion of the Federal award or 
subaward will not accomplish the purposes for which the Federal award 
was made, the HHS awarding agency or pass-through entity may terminate 
the Federal award in its entirety.
    (b) When an HHS awarding agency terminates a Federal award prior to 
the end of the period of performance due to the non-Federal entity's 
material failure to comply with the Federal award terms and conditions, 
the HHS awarding agency must report the termination to the OMB-
designated integrity and performance system accessible through SAM 
(currently FAPIIS).
    (1) The information required under this paragraph (b) is not to be 
reported to the designated integrity and performance system until after 
the non-Federal entity either--
    (i) Has exhausted its opportunities to object or challenge the 
decision, see Sec.  75.374; or
    (ii) Has not, within 30 calendar days after being notified of the 
termination, informed the HHS awarding agency that it intends to appeal 
the HHS awarding agency's decision to terminate.
    (2) If an HHS awarding agency, after entering information into the 
designated integrity and performance system about a termination, 
subsequently:
    (i) Learns that any of the information is erroneous, the HHS 
awarding agency must correct the information in the system within three 
business days;
    (ii) Obtains an update to that information that could be helpful to 
other Federal awarding agencies, the HHS awarding agency is strongly 
encouraged to amend the information in the system to incorporate the 
update in a timely way;
    (3) HHS awarding agencies shall not post any information that will 
be made publicly available in the non-public segment of the designated 
integrity and performance system that is covered by a disclosure 
exemption under the Freedom of Information Act. If the non-Federal 
entity asserts within

[[Page 298]]

seven calendar days to the HHS awarding agency who posted the 
information, that some of the information made publicly available is 
covered by a disclosure exemption under the Freedom of Information Act, 
the HHS awarding agency who posted the information must remove the 
posting within seven calendar days of receiving the assertion. Prior to 
reposting the releasable information, the HHS agency must resolve the 
issue in accordance with the agency's Freedom of Information Act 
procedures.
    (c) When a Federal award is terminated or partially terminated, both 
the HHS awarding agency or pass-through agency and the non-Federal 
entity remain responsible for compliance with the requirements of 
Sec. Sec.  75.381 and 75.386.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3017, Jan. 20, 2016; 85 
FR 72911, Nov. 16, 2020]



Sec.  75.373  Notification of termination requirement.

    (a) The HHS awarding agency or pass-through entity must provide to 
the non-Federal entity a notice of termination.
    (b) If the Federal award is terminated for the non-Federal entity's 
material failure to comply with the Federal statutes, regulations, or 
terms and conditions of the Federal award, the notification must state 
that--
    (1) The termination decision will be reported to the OMB-designated 
integrity and performance system accessible through SAM (currently 
FAPIIS);
    (2) The information will be available in the OMB-designated 
integrity and performance system for a period of five years from the 
date of the termination, then archived;
    (3) HHS awarding agencies that consider making a Federal award to 
the non-Federal entity during that five year period must consider that 
information in judging whether the non-Federal entity is qualified to 
receive the Federal award, when the Federal share of the Federal award 
is expected to exceed the simplified acquisition threshold over the 
period of performance;
    (4) The non-Federal entity may comment on any information the OMB-
designated integrity and performance system contains about the non-
Federal entity for future consideration by HHS awarding agencies. The 
non-Federal entity may submit comments to the awardee integrity and 
performance portal accessible through SAM (currently CPARS).
    (5) Federal awarding agencies will consider non-Federal entity 
comments when determining whether the non-Federal entity is qualified 
for a future Federal award.
    (c) Upon termination of a Federal award, the HHS awarding agency 
must provide the information required under FFATA to the Federal Web 
site established to fulfill the requirements of FFATA, and update or 
notify any other relevant government-wide systems or entities of any 
indications of poor performance as required by 41 U.S.C. 417b and 31 
U.S.C. 3321 and implementing guidance at 2 CFR part 77 (forthcoming at 
time of publication). See also the requirements for Suspension and 
Debarment at 2 CFR part 180.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3017, Jan. 20, 2016]



Sec.  75.374  Opportunities to object, hearings, and appeals.

    (a) Upon taking any remedy for non-compliance, the HHS awarding 
agency must provide the non-Federal entity an opportunity to object and 
provide information and documentation challenging the suspension or 
termination action, in accordance with written processes and procedures 
published by the HHS awarding agency. The HHS awarding agency or pass-
through entity must comply with any requirements for hearings, appeals 
or other administrative proceedings to which the non-Federal entity is 
entitled under any statute or regulation applicable to the action 
involved.
    (b) See also:
    (1) 42 CFR part 50, subpart D for the Public Health Service Appeals 
Procedures,
    (2) 45 CFR part 16 for the Procedures of the Departmental Appeals 
Board, and
    (3) 45 CFR part 95, subpart A for the time limits for states to file 
claims.
    (4) 45 CFR part 95, subpart E for the State cost allocation plan 
disapprovals.

[[Page 299]]



Sec.  75.375  Effects of suspension and termination.

    Costs to the non-Federal entity resulting from obligations incurred 
by the non-Federal entity during a suspension or after termination of a 
Federal award or subaward are not allowable unless the HHS awarding 
agency or pass-through entity expressly authorizes them in the notice of 
suspension or termination or subsequently. However, costs during 
suspension or after termination are allowable if:
    (a) The costs result from obligations which were properly incurred 
by the non-Federal entity before the effective date of suspension or 
termination, are not in anticipation of it; and
    (b) The costs would be allowable if the Federal award was not 
suspended or expired normally at the end of the period of performance in 
which the termination takes effect.



Sec. Sec.  75.376-75.380  [Reserved]

                                Closeout



Sec.  75.381  Closeout.

    The HHS awarding agency or pass-through entity will close-out the 
Federal award when it determines that all applicable administrative 
actions and all required work of the Federal award have been completed 
by the non-Federal entity. This section specifies the actions the non-
Federal entity and HHS awarding agency or pass-through entity must take 
to complete this process at the end of the period of performance.
    (a) The non-Federal entity must submit, no later than 90 calendar 
days after the end date of the period of performance, all financial, 
performance, and other reports as required by the terms and conditions 
of the Federal award. The HHS awarding agency or pass-through entity may 
approve extensions when requested by the non-Federal entity.
    (b) Unless the HHS awarding agency or pass-through entity authorizes 
an extension, a non-Federal entity must liquidate all obligations 
incurred under the Federal award not later than 90 calendar days after 
the end date of the period of performance as specified in the terms and 
conditions of the Federal award.
    (c) The HHS awarding agency or pass-through entity must make prompt 
payments to the non-Federal entity for allowable reimbursable costs 
under the Federal award being closed out.
    (d) The non-Federal entity must promptly refund any balances of 
unobligated cash that the HHS awarding agency or pass-through entity 
paid in advance or paid and that are not authorized to be retained by 
the non-Federal entity for use in other projects. See OMB Circular A-129 
and see Sec.  75.391 for requirements regarding unreturned amounts that 
become delinquent debts.
    (e) Consistent with the terms and conditions of the Federal award, 
the HHS awarding agency or pass-through entity must make a settlement 
for any upward or downward adjustments to the Federal share of costs 
after closeout reports are received.
    (f) The non-Federal entity must account for any real and personal 
property acquired with Federal funds or received from the Federal 
Government in accordance with Sec. Sec.  75.317 through 75.323 and 
75.343.
    (g) The HHS awarding agency or pass-through entity should complete 
all closeout actions for Federal awards no later than 180 calendar days 
after receipt and acceptance of all required final reports.



Sec. Sec.  75.382-75.385  [Reserved]

        Post-Closeout Adjustments and Continuing Responsibilities



Sec.  75.386  Post-closeout adjustments and continuing responsibilities.

    (a) The closeout of a Federal award does not affect any of the 
following:
    (1) The right of the HHS awarding agency or pass-through entity to 
disallow costs and recover funds on the basis of a later audit or other 
review. The HHS awarding agency or pass-through entity must make any 
cost disallowance determination and notify the non-Federal entity within 
the record retention period.
    (2) The obligation of the non-Federal entity to return any funds due 
as a result of later refunds, corrections, or other transactions 
including final indirect cost rate adjustments.

[[Page 300]]

    (3) Audit requirements in subpart F of this part.
    (4) Property management and disposition requirements in Sec. Sec.  
75.317 through 75.323.
    (5) Records retention as required in Sec. Sec.  75.361 through 
75.365.
    (b) After closeout of the Federal award, a relationship created 
under the Federal award may be modified or ended in whole or in part 
with the consent of the HHS awarding agency or pass-through entity and 
the non-Federal entity, provided the responsibilities of the non-Federal 
entity referred to in paragraph (a) of this section, including those for 
property management as applicable, are considered and provisions made 
for continuing responsibilities of the non-Federal entity, as 
appropriate.



Sec. Sec.  75.387-75.390  [Reserved]

                        Collection of Amounts Due



Sec.  75.391  Collection of amounts due.

    (a) Any funds paid to the non-Federal entity in excess of the amount 
to which the non-Federal entity is finally determined to be entitled 
under the terms of the Federal award constitute a debt to the Federal 
Government. If not paid within 90 calendar days after demand, the HHS 
awarding agency may reduce the debt by:
    (1) Making an administrative offset against other requests for 
reimbursements;
    (2) Withholding advance payments otherwise due to the non-Federal 
entity; or
    (3) Other action permitted by Federal statute.
    (b) Except where otherwise provided by statutes or regulations, the 
HHS awarding agency will charge interest on an overdue debt in 
accordance with the Federal Claims Collection Standards (31 CFR parts 
900 through 999). The date from which interest is computed is not 
extended by litigation or the filing of any form of appeal. (See also 
HHS Claims Collection regulations at 45 CFR part 30.)



                        Subpart E_Cost Principles

                           General Provisions



Sec.  75.400  Policy guide.

    The application of these cost principles is based on the fundamental 
premises that:
    (a) The non-Federal entity is responsible for the efficient and 
effective administration of the Federal award through the application of 
sound management practices.
    (b) The non-Federal entity assumes responsibility for administering 
Federal funds in a manner consistent with underlying agreements, program 
objectives, and the terms and conditions of the Federal award.
    (c) The non-Federal entity, in recognition of its own unique 
combination of staff, facilities, and experience, has the primary 
responsibility for employing whatever form of sound organization and 
management techniques may be necessary in order to assure proper and 
efficient administration of the Federal-award.
    (d) The application of these cost principles should require no 
significant changes in the internal accounting policies and practices of 
the non-Federal entity. However, the accounting practices of the non-
Federal entity must be consistent with these cost principles and support 
the accumulation of costs as required by the principles, and must 
provide for adequate documentation to support costs charged to the 
Federal award.
    (e) In reviewing, negotiating and approving cost allocation plans or 
indirect cost proposals, the cognizant agency for indirect costs should 
generally assure that the non-Federal entity is applying these cost 
accounting principles on a consistent basis during their review and 
negotiation of indirect cost proposals. Where wide variations exist in 
the treatment of a given cost item by the non-Federal entity, the 
reasonableness and equity of such treatments should be fully considered. 
See Sec.  75.2 Indirect (facilities & administrative (F&A)) costs.
    (f) For non-Federal entities that educate and engage students in 
research, the dual role of students as both trainees and employees 
(including pre- and

[[Page 301]]

post-doctoral staff) contributing to the completion of Federal awards 
for research must be recognized in the application of these principles.
    (g) The non-Federal entity may not earn or keep any profit resulting 
from Federal financial assistance, unless explicitly authorized by the 
terms and conditions of the Federal award. See also Sec.  75.307.



Sec.  75.401  Application.

    (a) General. These principles must be used in determining the 
allowable costs of work performed by the non-Federal entity under 
Federal awards. These principles also must be used by the non-Federal 
entity as a guide in the pricing of fixed-price contracts and 
subcontracts where costs are used in determining the appropriate price. 
The principles do not apply to:
    (1) Arrangements under which Federal financing is in the form of 
loans, scholarships, fellowships, traineeships, or other fixed amounts 
based on such items as education allowance or published tuition rates 
and fees.
    (2) For IHEs, capitation awards, which are awards based on case 
counts or number of beneficiaries according to the terms and conditions 
of the Federal award.
    (3) Fixed amount awards. See also Sec. Sec.  75.2 Fixed amount 
awards and 75.201.
    (4) Federal awards to hospitals (see appendix IX to part 75).
    (5) Other awards under which the non-Federal entity is not required 
to account to the Federal Government for actual costs incurred.
    (b) Federal Contract. Where a Federal contract awarded to a non-
Federal entity is subject to the Cost Accounting Standards (CAS), it 
incorporates the applicable CAS clauses, Standards, and CAS 
administration requirements per the 48 CFR Chapter 99 and 48 CFR part 30 
(FAR part 30). CAS applies directly to the CAS-covered contract and the 
Cost Accounting Standards at 48 CFR parts 9904 or 9905 takes precedence 
over the cost principles in this subpart E with respect to the 
allocation of costs. When a contract with a non-Federal entity is 
subject to full CAS coverage, the allowability of certain costs under 
the cost principles will be affected by the allocation provisions of the 
Cost Accounting Standards (e.g., CAS 414-48 CFR 9904.414, and CAS 417-48 
CFR 9904.417), apply rather the allowability provisions of Sec.  75.449. 
In complying with those requirements, the non-Federal entity's 
application of cost accounting practices for estimating, accumulating, 
and reporting costs for other Federal awards and other cost objectives 
under the CAS-covered contract still must be consistent with its cost 
accounting practices for the CAS-covered contracts. In all cases, only 
one set of accounting records needs to be maintained for the allocation 
of costs by the non-Federal entity.
    (c) Exemptions. Some nonprofit organizations, because of their size 
and nature of operations, can be considered to be similar to for-profit 
entities for purpose of applicability of cost principles. Such nonprofit 
organizations must operate under Federal cost principles applicable to 
for-profit entities located at 48 CFR 31.2. A listing of these 
organizations is contained in appendix VIII to part 75. Other 
organizations, as approved by the cognizant agency for indirect costs, 
may be added from time to time.

                          Basic Considerations



Sec.  75.402  Composition of costs.

    Total cost. The total cost of a Federal award is the sum of the 
allowable direct and allocable indirect costs less any applicable 
credits.



Sec.  75.403  Factors affecting allowability of costs.

    Except where otherwise authorized by statute, costs must meet the 
following general criteria in order to be allowable under Federal 
awards:
    (a) Be necessary and reasonable for the performance of the Federal 
award and be allocable thereto under these principles.
    (b) Conform to any limitations or exclusions set forth in these 
principles or in the Federal award as to types or amount of cost items.
    (c) Be consistent with policies and procedures that apply uniformly 
to both federally-financed and other activities of the non-Federal 
entity.

[[Page 302]]

    (d) Be accorded consistent treatment. A cost may not be assigned to 
a Federal award as a direct cost if any other cost incurred for the same 
purpose in like circumstances has been allocated to the Federal award as 
an indirect cost.
    (e) Be determined in accordance with generally accepted accounting 
principles (GAAP), except, for state and local governments and Indian 
tribes only, as otherwise provided for in this part.
    (f) Not be included as a cost or used to meet cost sharing or 
matching requirements of any other federally-financed program in either 
the current or a prior period. See also Sec.  75.306(b).
    (g) Be adequately documented. See also Sec. Sec.  75.300 through 
75.309.



Sec.  75.404  Reasonable costs.

    A cost is reasonable if, in its nature and amount, it does not 
exceed that which would be incurred by a prudent person under the 
circumstances prevailing at the time the decision was made to incur the 
cost. The question of reasonableness is particularly important when the 
non-Federal entity is predominantly federally-funded. In determining 
reasonableness of a given cost, consideration must be given to:
    (a) Whether the cost is of a type generally recognized as ordinary 
and necessary for the operation of the non-Federal entity or the proper 
and efficient performance of the Federal award.
    (b) The restraints or requirements imposed by such factors as: Sound 
business practices; arm's-length bargaining; Federal, state, local, 
tribal, and other laws and regulations; and terms and conditions of the 
Federal award.
    (c) Market prices for comparable goods or services for the 
geographic area.
    (d) Whether the individuals concerned acted with prudence in the 
circumstances considering their responsibilities to the non-Federal 
entity, its employees, where applicable its students or membership, the 
public at large, and the Federal Government.
    (e) Whether the non-Federal entity significantly deviates from its 
established practices and policies regarding the incurrence of costs, 
which may unjustifiably increase the Federal award's cost.



Sec.  75.405  Allocable costs.

    (a) A cost is allocable to a particular Federal award or other cost 
objective if the goods or services involved are chargeable or assignable 
to that Federal award or cost objective in accordance with relative 
benefits received. This standard is met if the cost:
    (1) Is incurred specifically for the Federal award;
    (2) Benefits both the Federal award and other work of the non-
Federal entity and can be distributed in proportions that may be 
approximated using reasonable methods; and
    (3) Is necessary to the overall operation of the non-Federal entity 
and is assignable in part to the Federal award in accordance with the 
principles in this subpart.
    (b) All activities which benefit from the non-Federal entity's 
indirect (F&A) cost, including unallowable activities and donated 
services by the non-Federal entity or third parties, will receive an 
appropriate allocation of indirect costs.
    (c) Any cost allocable to a particular Federal award under the 
principles provided for in this part may not be charged to other Federal 
awards to overcome fund deficiencies, to avoid restrictions imposed by 
Federal statutes, regulations, or terms and conditions of the Federal 
awards, or for other reasons. However, this prohibition would not 
preclude the non-Federal entity from shifting costs that are allowable 
under two or more Federal awards in accordance with existing Federal 
statutes, regulations, or the terms and conditions of the Federal 
awards.
    (d) Direct cost allocation principles. If a cost benefits two or 
more projects or activities in proportions that can be determined 
without undue effort or cost, the cost must be allocated to the projects 
based on the proportional benefit. If a cost benefits two or more 
projects or activities in proportions that cannot be determined because 
of the interrelationship of the work involved, then, notwithstanding 
paragraph (c) of this section, the costs may

[[Page 303]]

be allocated or transferred to benefitted projects on any reasonable 
documented basis. Where the purchase of equipment or other capital asset 
is specifically authorized under a Federal award, the costs are 
assignable to the Federal award regardless of the use that may be made 
of the equipment or other capital asset involved when no longer needed 
for the purpose for which it was originally required. See also 
Sec. Sec.  75.317 through 75.323 and 75.439.
    (e) If the contract is subject to CAS, costs must be allocated to 
the contract pursuant to the Cost Accounting Standards. To the extent 
that CAS is applicable, the allocation of costs in accordance with CAS 
takes precedence over the allocation provisions in this part.



Sec.  75.406  Applicable credits.

    (a) Applicable credits refer to those receipts or reduction-of-
expenditure-type transactions that offset or reduce expense items 
allocable to the Federal award as direct or indirect (F&A) costs. 
Examples of such transactions are: Purchase discounts, rebates or 
allowances, recoveries or indemnities on losses, insurance refunds or 
rebates, and adjustments of overpayments or erroneous charges. To the 
extent that such credits accruing to or received by the non-Federal 
entity relate to allowable costs, they must be credited to the Federal 
award either as a cost reduction or cash refund, as appropriate.
    (b) In some instances, the amounts received from the Federal 
Government to finance activities or service operations of the non-
Federal entity should be treated as applicable credits. Specifically, 
the concept of netting such credit items (including any amounts used to 
meet cost sharing or matching requirements) must be recognized in 
determining the rates or amounts to be charged to the Federal award. 
(See Sec. Sec.  75.436 and 75.468, for areas of potential application in 
the matter of Federal financing of activities.)



Sec.  75.407  Prior written approval (prior approval).

    (a) Under any given Federal award, the reasonableness and 
allocability of certain items of costs may be difficult to determine. In 
order to avoid subsequent disallowance or dispute based on 
unreasonableness or non-allocability, the non-Federal entity may seek 
the prior written approval of the cognizant agency for indirect costs or 
the HHS awarding agency in advance of the incurrence of special or 
unusual costs. Prior written approval should include the timeframe or 
scope of the agreement. The absence of prior written approval on any 
element of cost will not, in itself, affect the reasonableness or 
allocability of that element, unless prior approval is specifically 
required for allowability as described under certain circumstances in 
the following sections of this part:
    (1) Sec.  75.201 Use of grant agreements (including fixed amount 
awards), cooperative agreements, and contracts, paragraph (b)(5);
    (2) Sec.  75.306 Cost sharing or matching;
    (3) Sec.  75.307 Program income;
    (4) Sec.  75.308 Revision of budget and program plans;
    (5) Sec.  75.309 Period of performance and availability of funds;
    (6) Sec.  75.318 Real property;
    (7) Sec.  75.320 Equipment;
    (8) Sec.  75.353 Fixed amount subawards;
    (9) Sec.  75.413 Direct costs, paragraph (c);
    (10) Sec.  75.430 Compensation--personal services, paragraph (h);
    (11) Sec.  75.431 Compensation--fringe benefits;
    (12) Sec.  75.438 Entertainment costs;
    (13) Sec.  75.439 Equipment and other capital expenditures;
    (14) Sec.  75.440 Exchange rates;
    (15) Sec.  75.441 Fines, penalties, damages and other settlements;
    (16) Sec.  75.442 Fund raising and investment management costs;
    (17) Sec.  75.445 Goods or services for personal use;
    (18) Sec.  75.447 Insurance and indemnification;
    (19) Sec.  75.454 Memberships, subscriptions, and professional 
activity costs, paragraph (c);
    (20) Sec.  75.455 Organization costs;
    (21) Sec.  75.456 Participant support costs;
    (22) Sec.  75.458 Pre-award costs;
    (23) Sec.  75.462 Rearrangement and reconversion costs;
    (24) Sec.  75.467 Selling and marketing costs;
    (25) Sec.  75.470 Taxes (including Value Added Tax) paragraph (c); 
and

[[Page 304]]

    (26) Sec.  75.474 Travel costs.
    (b) A request by a subrecipient for prior approval will be addressed 
in writing to the recipient. The recipient will promptly review such 
request and shall approve or disapprove the request in writing. A 
recipient will not approve any budget or project revision which is 
inconsistent with the purpose or terms and conditions of the Federal-
award to the recipient. If the revision, requested by the subrecipient 
would result in a change to the recipient's approved project which 
requires Federal prior approval, the recipient will obtain the HHS 
awarding agency's approval before approving the subrecipient's request.
    (c) For cost-reimbursement contracts under the FAR, the recipient 
shall obtain prior written approval in accordance with FAR 52.244-2.



Sec.  75.408  Limitation on allowance of costs.

    The Federal award may be subject to statutory requirements that 
limit the allowability of costs. When the maximum amount allowable under 
a limitation is less than the total amount determined in accordance with 
the principles in this part, the amount not recoverable under the 
Federal award may not be charged to the Federal award.



Sec.  75.409  Special considerations.

    In addition to the basic considerations regarding the allowability 
of costs highlighted in this subtitle, other subtitles in this part 
describe special considerations and requirements applicable to states, 
local governments, Indian tribes, and IHEs. In addition, certain 
provisions among the items of cost in this subpart are only applicable 
to certain types of non-Federal entities, as specified in the following 
sections:
    (a) Direct and Indirect (F&A) Costs (Sec. Sec.  75.412 through 
75.415);
    (b) Special Considerations for States, Local Governments and Indian 
Tribes (Sec. Sec.  75.416 and 75.417); and
    (c) Special Considerations for Institutions of Higher Education 
(Sec. Sec.  75.418 and 75.419).

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3017, Jan. 20, 2016]



Sec.  75.410  Collection of unallowable costs.

    Payments made for costs determined to be unallowable by either the 
HHS awarding agency, cognizant agency for indirect costs, or pass-
through entity, either as direct or indirect costs, must be refunded 
(including interest) to the Federal Government in accordance with 
instructions from the Federal agency that determined the costs are 
unallowable unless Federal statute or regulation directs otherwise. See 
also subpart D of this part, Sec. Sec.  75.300 through 75.309.



Sec.  75.411  Adjustment of previously negotiated indirect (F&A) cost rates 
containing unallowable costs.

    (a) Negotiated indirect (F&A) cost rates based on a proposal later 
found to have included costs that:
    (1) Are unallowable as specified by Federal statutes, regulations or 
the terms and conditions of a Federal award; or
    (2) Are unallowable because they are not allocable to the Federal 
award(s), must be adjusted, or a refund must be made, in accordance with 
the requirements of this section. These adjustments or refunds are 
designed to correct the proposals used to establish the rates and do not 
constitute a reopening of the rate negotiation. The adjustments or 
refunds will be made regardless of the type of rate negotiated 
(predetermined, final, fixed, or provisional).
    (b) For rates covering a future fiscal year of the non-Federal 
entity, the unallowable costs will be removed from the indirect (F&A) 
cost pools and the rates appropriately adjusted.
    (c) For rates covering a past period, the Federal share of the 
unallowable costs will be computed for each year involved and a cash 
refund (including interest chargeable in accordance with applicable 
regulations) will be made to the Federal Government. If cash refunds are 
made for past periods covered by provisional or fixed rates, appropriate 
adjustments will be made when the rates are finalized to avoid duplicate 
recovery of the unallowable costs by the Federal Government.

[[Page 305]]

    (d) For rates covering the current period, either a rate adjustment 
or a refund, as described in paragraphs (b) and (c) of this section, 
must be required by the cognizant agency for indirect costs. The choice 
of method must be at the discretion of the cognizant agency for indirect 
costs, based on its judgment as to which method would be most practical.
    (e) The amount or proportion of unallowable costs included in each 
year's rate will be assumed to be the same as the amount or proportion 
of unallowable costs included in the base year proposal used to 
establish the rate.

                     Direct and Indirect (F&A) Costs



Sec.  75.412  Classification of costs.

    There is no universal rule for classifying certain costs as either 
direct or indirect (F&A) under every accounting system. A cost may be 
direct with respect to some specific service or function, but indirect 
with respect to the Federal award or other final cost objective. 
Therefore, it is essential that each item of cost incurred for the same 
purpose be treated consistently in like circumstances either as a direct 
or an indirect (F&A) cost in order to avoid possible double-charging of 
Federal awards. Guidelines for determining direct and indirect (F&A) 
costs charged to Federal awards are provided in this subpart.



Sec.  75.413  Direct costs.

    (a) General. Direct costs are those costs that can be identified 
specifically with a particular final cost objective, such as a Federal 
award, or other internally or externally funded activity, or that can be 
directly assigned to such activities relatively easily with a high 
degree of accuracy. Costs incurred for the same purpose in like 
circumstances must be treated consistently as either direct or indirect 
(F&A) costs. See also Sec.  75.405.
    (b) Application to Federal awards. Identification with the Federal 
award rather than the nature of the goods and services involved is the 
determining factor in distinguishing direct from indirect (F&A) costs of 
Federal awards. Typical costs charged directly to a Federal award are 
the compensation of employees who work on that award, their related 
fringe benefit costs, the costs of materials and other items of expense 
incurred for the Federal award. If directly related to a specific award, 
certain costs that otherwise would be treated as indirect costs may also 
include extraordinary utility consumption, the cost of materials 
supplied from stock or services rendered by specialized facilities or 
other institutional service operations.
    (c) The salaries of administrative and clerical staff should 
normally be treated as indirect (F&A) costs. Direct charging of these 
costs may be appropriate only if all of the following conditions are 
met:
    (1) Administrative or clerical services are integral to a project or 
activity;
    (2) Individuals involved can be specifically identified with the 
project or activity;
    (3) Such costs are explicitly included in the budget or have the 
prior written approval of the Federal awarding agency; and
    (4) The costs are not also recovered as indirect costs.
    (d) Minor items. Any direct cost of minor amount may be treated as 
an indirect (F&A) cost for reasons of practicality where such accounting 
treatment for that item of cost is consistently applied to all Federal 
and non-Federal cost objectives.
    (e) The costs of certain activities are not allowable as charges to 
Federal awards. However, even though these costs are unallowable for 
purposes of computing charges to Federal awards, they nonetheless must 
be treated as direct costs for purposes of determining indirect (F&A) 
cost rates and be allocated their equitable share of the non-Federal 
entity's indirect costs if they represent activities which:
    (1) Include the salaries of personnel,
    (2) Occupy space, and
    (3) Benefit from the non-Federal entity's indirect (F&A) costs.
    (f) For nonprofit organizations, the costs of activities performed 
by the non-Federal entity primarily as a service to members, clients, or 
the general public when significant and necessary to the non-Federal 
entity's mission must be treated as direct costs whether

[[Page 306]]

or not allowable, and be allocated an equitable share of indirect (F&A) 
costs. Some examples of these types of activities include:
    (1) Maintenance of membership rolls, subscriptions, publications, 
and related functions. See also Sec.  75.454.
    (2) Providing services and information to members, legislative or 
administrative bodies, or the public. See also Sec. Sec.  75.454 and 
75.450.
    (3) Promotion, lobbying, and other forms of public relations. See 
also Sec. Sec.  75.421 and 75.450.
    (4) Conferences except those held to conduct the general 
administration of the non-Federal entity. See also Sec.  75.432.
    (5) Maintenance, protection, and investment of special funds not 
used in operation of the non-Federal entity. See also Sec.  75.442.
    (6) Administration of group benefits on behalf of members or 
clients, including life and hospital insurance, annuity or retirement 
plans, and financial aid. See also Sec.  75.431.



Sec.  75.414  Indirect (F&A) costs.

    (a) Facilities and Administration Classification. For major IHEs and 
major nonprofit organizations, indirect (F&A) costs must be classified 
within two broad categories: ``Facilities'' and ``Administration.'' 
``Facilities'' is defined as depreciation on buildings, equipment and 
capital improvement, interest on debt associated with certain buildings, 
equipment and capital improvements, and operations and maintenance 
expenses. ``Administration'' is defined as general administration and 
general expenses such as the director's office, accounting, personnel 
and all other types of expenditures not listed specifically under one of 
the subcategories of ``Facilities'' (including cross allocations from 
other pools, where applicable). For nonprofit organizations, library 
expenses are included in the ``Administration'' category; for 
institutions of higher education, they are included in the 
``Facilities'' category. Major IHEs are defined as those required to use 
the Standard Format for Submission as noted in appendix III to part 
75.C. 11. Major nonprofit organizations are those which receive more 
than $10 million dollars in direct Federal funding.
    (b) Diversity of nonprofit organizations. Because of the diverse 
characteristics and accounting practices of nonprofit organizations, it 
is not possible to specify the types of cost which may be classified as 
indirect (F&A) cost in all situations. Identification with a Federal 
award rather than the nature of the goods and services involved is the 
determining factor in distinguishing direct from indirect (F&A) costs of 
Federal awards. However, typical examples of indirect (F&A) cost for 
many nonprofit organizations may include depreciation on buildings and 
equipment, the costs of operating and maintaining facilities, and 
general administration and general expenses, such as the salaries and 
expenses of executive officers, personnel administration, and 
accounting.
    (c) Federal Agency Acceptance of Negotiated Indirect Cost Rates. 
(See also Sec.  75.306.)
    (1) The negotiated rates must be accepted by all Federal awarding 
agencies. An HHS awarding agency may use a rate different from the 
negotiated rate for a class of Federal awards or a single Federal award 
only when required by Federal statute or regulation, or when approved by 
a Federal awarding agency head or delegate based on documented 
justification as described in paragraph (c)(3) of this section.
    (i) Indirect costs on Federal awards for training are limited to a 
fixed rate of eight percent of MTDC exclusive of tuition and related 
fees, direct expenditures for equipment, and subawards in excess of 
$25,000;
    (ii) Indirect costs on Federal awards to foreign organizations and 
foreign public entities performed fully outside of the territorial 
limits of the U.S. may be paid to support the costs of compliance with 
federal requirements at a fixed rate of eight percent of MTDC exclusive 
of tuition and related fees, direct expenditures for equipment, and 
subawards in excess of $25,000; and
    (iii) Negotiated indirect costs may be paid to the American 
University, Beirut, and the World Health Organization.

[[Page 307]]

    (2) The HHS awarding agency head or delegate must notify OMB of any 
approved deviations.
    (3) The HHS awarding agency must implement, and make publicly 
available, the policies, procedures and general decision making criteria 
that their programs will follow to seek and justify deviations from 
negotiated rates.
    (4) As required under Sec.  75.203(c), the HHS awarding agency must 
include in the notice of funding opportunity the policies relating to 
indirect cost rate reimbursement, matching, or cost share as approved. 
See also appendix I.C.2 and D.6 of this part. As appropriate, the HHS 
agency should incorporate discussion of these policies into their 
outreach activities with non-Federal entities prior to the posting of a 
notice of funding opportunity.
    (d) Pass-through entities are subject to the requirements in Sec.  
75.352(a)(4).
    (e) Requirements for development and submission of indirect (F&A) 
cost rate proposals and cost allocation plans are contained in 
appendices III-VII, and appendix IX as follows:
    (1) Appendix III to Part 75--Indirect (F&A) Costs Identification and 
Assignment, and Rate Determination for Institutions of Higher Education 
(IHEs);
    (2) Appendix IV to Part 75--Indirect (F&A) Costs Identification and 
Assignment, and Rate Determination for Nonprofit Organizations;
    (3) Appendix V to Part 75--State/Local Governmentwide Central 
Service Cost Allocation Plans;
    (4) Appendix VI to Part 75--Public Assistance Cost Allocation Plans;
    (5) Appendix VII to Part 75--States and Local Government and Indian 
Tribe Indirect Cost Proposals; and
    (6) Appendix IX to Part 75--Principles for Determining Costs 
Applicable to Research and Development Under Grants and Contracts with 
Hospitals.
    (f) In addition to the procedures outlined in the appendices in 
paragraph (e) of this section, any non-Federal entity that has never 
received a negotiated indirect cost rate, except for those non-Federal 
entities described in paragraphs (c)(1)(i) and (ii) of this section and 
section (D)(1)(b) of appendix VII to this part, may elect to charge a de 
minimis rate of 10% of modified total direct costs (MTDC) which may be 
used indefinitely. As described in Sec.  75.403, costs must be 
consistently charged as either indirect or direct costs, but may not be 
double charged or inconsistently charged as both. If chosen, this 
methodology once elected must be used consistently for all Federal 
awards until such time as a non-Federal entity chooses to negotiate for 
a rate, which the non-Federal entity may apply to do at any time.
    (g) Any non-Federal entity that has a current federally negotiated 
indirect cost rate may apply for a one-time extension of the rates in 
that agreement for a period of up to four years. This extension will be 
subject to the review and approval of the cognizant agency for indirect 
costs. If an extension is granted the non-Federal entity may not request 
a rate review until the extension period ends. At the end of the 4-year 
extension, the non-Federal entity must re-apply to negotiate a rate. 
Subsequent one-time extensions (up to four years) are permitted if a 
renegotiation is completed between each extension request.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3017, Jan. 20, 2016; 81 
FR 89395, Dec. 12, 2016; 86 FR 2278, Jan. 12, 2021]



Sec.  75.415  Required certifications.

    Required certifications include:
    (a) To assure that expenditures are proper and in accordance with 
the terms and conditions of the Federal award and approved project 
budgets, the annual and final fiscal reports or vouchers requesting 
payment under the agreements must include a certification, signed by an 
official who is authorized to legally bind the non-Federal entity, which 
reads as follows: ``By signing this report, I certify to the best of my 
knowledge and belief that the report is true, complete, and accurate, 
and the expenditures, disbursements and cash receipts are for the 
purposes and objectives set forth in the terms and conditions of the 
Federal award. I am aware that any false, fictitious, or fraudulent 
information, or the omission of any material fact, may subject me to 
criminal, civil or administrative penalties for fraud, false statements, 
false claims or otherwise. (U.S. Code

[[Page 308]]

Title 18, Section 1001 and Title 31, Sections 3729-3730 and 3801-
3812).''
    (b) Certification of cost allocation plan or indirect (F&A) cost 
rate proposal. Each cost allocation plan or indirect (F&A) cost rate 
proposal must comply with the following:
    (1) A proposal to establish a cost allocation plan or an indirect 
(F&A) cost rate, whether submitted to a Federal cognizant agency for 
indirect costs or maintained on file by the non-Federal entity, must be 
certified by the non-Federal entity using the Certificate of Cost 
Allocation Plan or Certificate of Indirect Costs as set forth in 
appendices III through VII, and appendix IX. The certificate must be 
signed on behalf of the non-Federal entity by an individual at a level 
no lower than vice president or chief financial officer of the non-
Federal entity that submits the proposal.
    (2) Unless the non-Federal entity has elected the option under Sec.  
75.414(f), the Federal Government may either disallow all indirect (F&A) 
costs or unilaterally establish such a plan or rate when the non-Federal 
entity fails to submit a certified proposal for establishing such a plan 
or rate in accordance with the requirements. Such a plan or rate may be 
based upon audited historical data or such other data that have been 
furnished to the cognizant agency for indirect costs and for which it 
can be demonstrated that all unallowable costs have been excluded. When 
a cost allocation plan or indirect cost rate is unilaterally established 
by the Federal Government because the non-Federal entity failed to 
submit a certified proposal, the plan or rate established will be set to 
ensure that potentially unallowable costs will not be reimbursed.
    (c) Certifications by non-profit organizations as appropriate that 
they did not meet the definition of a major non-profit organization as 
defined in Sec.  75.414(a).
    (d) See also Sec.  75.450 for another required certification.

 Special Considerations for States, Local Governments and Indian Tribes



Sec.  75.416  Cost allocation plans and indirect cost proposals.

    (a) For states, local governments and Indian tribes, certain 
services, such as motor pools, computer centers, purchasing, accounting, 
etc., are provided to operating agencies on a centralized basis. Since 
Federal awards are performed within the individual operating agencies, 
there needs to be a process whereby these central service costs can be 
identified and assigned to benefitted activities on a reasonable and 
consistent basis. The central service cost allocation plan provides that 
process.
    (b) Individual operating agencies (governmental department or 
agency), normally charge Federal awards for indirect costs through an 
indirect cost rate. A separate indirect cost rate(s) proposal for each 
operating agency is usually necessary to claim indirect costs under 
Federal-awards. Indirect costs include:
    (1) The indirect costs originating in each department or agency of 
the governmental unit carrying out Federal awards; and
    (2) The costs of central governmental services distributed through 
the central service cost allocation plan and not otherwise treated as 
direct costs.
    (c) The requirements for development and submission of cost 
allocation plans (for central service costs and public assistance 
programs) and indirect cost rate proposals are contained in appendices 
IV, V and VI to this part.



Sec.  75.417  Interagency service.

    The cost of services provided by one agency to another within the 
governmental unit may include allowable direct costs of the service plus 
a pro-rated share of indirect costs. A standard indirect cost allowance 
equal to ten percent of the direct salary and wage cost of providing the 
service (excluding overtime, shift premiums, and fringe benefits) may be 
used in lieu of determining the actual indirect costs of the service. 
These services do not include centralized services included in central 
service cost allocation plans as described in appendix V to this part.

[[Page 309]]

       Special Considerations for Institutions of Higher Education



Sec.  75.418  Costs incurred by states and local governments.

    Costs incurred or paid by a state or local government on behalf of 
its IHEs for fringe benefit programs, such as pension costs and FICA and 
any other costs specifically incurred on behalf of, and in direct 
benefit to, the IHEs, are allowable costs of such IHEs whether or not 
these costs are recorded in the accounting records of the institutions, 
subject to the following:
    (a) The costs meet the requirements of Sec. Sec.  75.402 through 
75.411;
    (b) The costs are properly supported by approved cost allocation 
plans in accordance with applicable Federal cost accounting principles 
in this part; and
    (c) The costs are not otherwise borne directly or indirectly by the 
Federal Government.



Sec.  75.419  Cost accounting standards and disclosure statement.

    (a) An IHE that receives aggregate Federal awards totaling $50 
million or more in Federal awards subject to this part in its most 
recently completed fiscal year must comply with the Cost Accounting 
Standards Board's cost accounting standards located at 48 CFR 9905.501, 
9905.502, 9905.505, and 9905.506. CAS-covered contracts awarded to the 
IHEs are subject to the CAS requirements at 48 CFR parts 9900 through 
9999 and 48 CFR part 30 (FAR part 30).
    (b) Disclosure statement. An IHE that receives aggregate Federal 
awards totaling $50 million or more subject to this part during its most 
recently completed fiscal year must disclose their cost accounting 
practices by filing a Disclosure Statement (DS-2), which is reproduced 
in appendix III to part 75. With the approval of the cognizant agency 
for indirect costs, an IHE may meet the DS-2 submission by submitting 
the DS-2 for each business unit that received $50 million or more in 
Federal awards.
    (1) The DS-2 must be submitted to the cognizant agency for indirect 
costs with a copy to the IHE's cognizant agency for audit.
    (2) An IHE is responsible for maintaining an accurate DS-2 and 
complying with disclosed cost accounting practices. An IHE must file 
amendments to the DS-2 to the cognizant agency for indirect costs six 
months in advance of a disclosed practice being changed to comply with a 
new or modified standard, or when a practice is changed for other 
reasons. An IHE may proceed with implementing the change only if it has 
not been notified by the Federal cognizant agency for indirect costs 
that either a longer period will be needed for review or there are 
concerns with the potential change within the six months period. 
Amendments of a DS-2 may be submitted at any time. Resubmission of a 
complete, updated DS-2 is discouraged except when there are extensive 
changes to disclosed practices.
    (3) Cost and funding adjustments. Cost adjustments must be made by 
the cognizant agency for indirect costs if an IHE fails to comply with 
the cost policies in this part or fails to consistently follow its 
established or disclosed cost accounting practices when estimating, 
accumulating or reporting the costs of Federal awards, and the aggregate 
cost impact on Federal awards is material. The cost adjustment must 
normally be made on an aggregate basis for all affected Federal awards 
through an adjustment of the IHE's future F&A costs rates or other means 
considered appropriate by the cognizant agency for indirect costs. Under 
the terms of CAS covered contracts, adjustments in the amount of funding 
provided may also be required when the estimated proposal costs were not 
determined in accordance with established cost accounting practices.
    (4) Overpayments. Excess amounts paid in the aggregate by the 
Federal Government under Federal awards due to a noncompliant cost 
accounting practice used to estimate, accumulate, or report costs must 
be credited or refunded, as deemed appropriate by the cognizant agency 
for indirect costs. Interest applicable to the excess amounts paid in 
the aggregate during the period of noncompliance must also be determined 
and collected in accordance with applicable HHS agency regulations.
    (5) Compliant cost accounting practice changes. Changes from one 
compliant cost accounting practice to another

[[Page 310]]

compliant practice that are approved by the cognizant agency for 
indirect costs may require cost adjustments if the change has a material 
effect on Federal awards and the changes are deemed appropriate by the 
cognizant agency for indirect costs.
    (6) Responsibilities. The cognizant agency for indirect cost must:
    (i) Determine cost adjustments for all Federal awards in the 
aggregate on behalf of the Federal Government. Actions of the cognizant 
agency for indirect cost in making cost adjustment determinations must 
be coordinated with all affected HHS awarding agencies to the extent 
necessary.
    (ii) Prescribe guidelines and establish internal procedures to 
promptly determine on behalf of the Federal Government that a DS-2 
adequately discloses the IHE's cost accounting practices and that the 
disclosed practices are compliant with applicable CAS and the 
requirements of this part.
    (iii) Distribute to all affected Federal awarding agencies any DS-2 
determination of adequacy or noncompliance.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3017, Jan. 20, 2016]

              General Provisions for Selected Items of Cost



Sec.  75.420  Considerations for selected items of cost.

    This section provides principles to be applied in establishing the 
allowability of certain items involved in determining cost, in addition 
to the requirements of Sec. Sec.  75.402 through 75.411. These 
principles apply whether or not a particular item of cost is properly 
treated as direct cost or indirect (F&A) cost. Failure to mention a 
particular item of cost is not intended to imply that it is either 
allowable or unallowable; rather, determination as to allowability in 
each case should be based on the treatment provided for similar or 
related items of cost, and based on the principles described in 
Sec. Sec.  75.402 through 75.411. In case of a discrepancy between the 
provisions of a specific Federal award and the provisions below, the 
Federal award governs. Criteria outlined in Sec.  75.403 must be applied 
in determining allowability. See also Sec.  75.102.



Sec.  75.421  Advertising and public relations.

    (a) The term advertising costs means the costs of advertising media 
and corollary administrative costs. Advertising media include magazines, 
newspapers, radio and television, direct mail, exhibits, electronic or 
computer transmittals, and the like.
    (b) The only allowable advertising costs are those which are solely 
for:
    (1) The recruitment of personnel required by the non-Federal entity 
for performance of a Federal award (See also Sec.  75.463);
    (2) The procurement of goods and services for the performance of a 
Federal award;
    (3) The disposal of scrap or surplus materials acquired in the 
performance of a Federal award except when non-Federal entities are 
reimbursed for disposal costs at a predetermined amount; or
    (4) Program outreach and other specific purposes necessary to meet 
the requirements of the Federal award.
    (c) The term ``public relations'' includes community relations and 
means those activities dedicated to maintaining the image of the non-
Federal entity or maintaining or promoting understanding and favorable 
relations with the community or public at large or any segment of the 
public.
    (d) The only allowable public relations costs are:
    (1) Costs specifically required by the Federal award;
    (2) Costs of communicating with the public and press pertaining to 
specific activities or accomplishments which result from performance of 
the Federal award (these costs are considered necessary as part of the 
outreach effort for the Federal award); or
    (3) Costs of conducting general liaison with news media and 
government public relations officers, to the extent that such activities 
are limited to communication and liaison necessary to keep the public 
informed on matters of public concern, such as notices of funding 
opportunities, financial matters, etc.
    (e) Unallowable advertising and public relations costs include the 
following:

[[Page 311]]

    (1) All advertising and public relations costs other than as 
specified in paragraphs (b) and (d) of this section;
    (2) Costs of meetings, conventions, convocations, or other events 
related to other activities of the entity (see also Sec.  75.432), 
including:
    (i) Costs of displays, demonstrations, and exhibits;
    (ii) Costs of meeting rooms, hospitality suites, and other special 
facilities used in conjunction with shows and other special events; and
    (iii) Salaries and wages of employees engaged in setting up and 
displaying exhibits, making demonstrations, and providing briefings;
    (3) Costs of promotional items and memorabilia, including models, 
gifts, and souvenirs;
    (4) Costs of advertising and public relations designed solely to 
promote the non-Federal entity.



Sec.  75.422  Advisory councils.

    Costs incurred by advisory councils or committees are unallowable 
unless authorized by statute, the HHS awarding agency or as an indirect 
cost where allocable to Federal awards. See Sec.  75.444, applicable to 
states, local governments and Indian tribes.



Sec.  75.423  Alcoholic beverages.

    Costs of alcoholic beverages are unallowable.



Sec.  75.424  Alumni/ae activities.

    Costs incurred by IHEs for, or in support of, alumni/ae activities 
are unallowable.



Sec.  75.425  Audit services.

    (a) A reasonably proportionate share of the costs of audits required 
by, and performed in accordance with, the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507), as implemented by requirements of this part, 
are allowable. However, the following audit costs are unallowable:
    (1) Any costs when audits required by the Single Audit Act and 
subpart F of this part--have not been conducted or have been conducted 
but not in accordance therewith; and
    (2) Any costs of auditing a non-Federal entity that is exempted from 
having an audit conducted under the Single Audit Act and subpart F of 
this part because its expenditures under Federal awards are less than 
$750,000 during the non-Federal entity's fiscal year.
    (b) The costs of a financial statement audit of a non-Federal entity 
that does not currently have a Federal award may be included in the 
indirect cost pool for a cost allocation plan or indirect cost proposal.
    (c) Pass-through entities may charge Federal awards for the cost of 
agreed-upon-procedures engagements to monitor subrecipients (in 
accordance with subpart D of this part, Sec. Sec.  75.351 through 
75.353) which are exempted from the requirements of the Single Audit Act 
and subpart F of this part. This cost is allowable only if the agreed-
upon-procedures engagements are:
    (1) Conducted in accordance with GAGAS attestation standards;
    (2) Paid for and arranged by the pass-through entity; and
    (3) Limited in scope to one or more of the following types of 
compliance requirements: activities allowed or unallowed; allowable 
costs/cost principles; eligibility; and reporting.



Sec.  75.426  Bad debts.

    Bad debts (debts which have been determined to be uncollectable), 
including losses (whether actual or estimated) arising from 
uncollectable accounts and other claims, are unallowable. Related 
collection costs, and related legal costs, arising from such debts after 
they have been determined to be uncollectable are also unallowable. See 
also Sec.  75.428.



Sec.  75.427  Bonding costs.

    (a) Bonding costs arise when the HHS awarding agency requires 
assurance against financial loss to itself or others by reason of the 
act or default of the non-Federal entity. They arise also in instances 
where the non-Federal entity requires similar assurance, including: 
Bonds as bid, performance, payment, advance payment, infringement, and 
fidelity bonds for employees and officials.
    (b) Costs of bonding required pursuant to the terms and conditions 
of the Federal award are allowable.

[[Page 312]]

    (c) Costs of bonding required by the non-Federal entity in the 
general conduct of its operations are allowable as an indirect cost to 
the extent that such bonding is in accordance with sound business 
practice and the rates and premiums are reasonable under the 
circumstances.



Sec.  75.428  Collections of improper payments.

    The costs incurred by a non-Federal entity to recover improper 
payments are allowable as either direct or indirect costs, as 
appropriate. Amounts collected may be used by the non-Federal entity in 
accordance with cash management standards set forth in Sec.  75.305.



Sec.  75.429  Commencement and convocation costs.

    For IHEs, costs incurred for commencements and convocations are 
unallowable, except as provided for in appendix III.B.9, as student 
activity costs.



Sec.  75.430  Compensation--personal services.

    (a) General. Compensation for personal services includes all 
remuneration, paid currently or accrued, for services of employees 
rendered during the period of performance under the Federal award, 
including but not necessarily limited to wages and salaries. 
Compensation for personal services may also include fringe benefits 
which are addressed in Sec.  75.431. Costs of compensation are allowable 
to the extent that they satisfy the specific requirements of this part, 
and that the total compensation for individual employees:
    (1) Is reasonable for the services rendered and conforms to the 
established written policy of the non-Federal entity consistently 
applied to both Federal and non-Federal activities;
    (2) Follows an appointment made in accordance with a non-Federal 
entity's laws and/or rules or written policies and meets the 
requirements of Federal statute, where applicable; and
    (3) Is determined and supported as provided in paragraph (i) of this 
section, when applicable.
    (b) Reasonableness. Compensation for employees engaged in work on 
Federal awards will be considered reasonable to the extent that it is 
consistent with that paid for similar work in other activities of the 
non-Federal entity. In cases where the kinds of employees required for 
Federal awards are not found in the other activities of the non-Federal 
entity, compensation will be considered reasonable to the extent that it 
is comparable to that paid for similar work in the labor market in which 
the non-Federal entity competes for the kind of employees involved.
    (c) Professional activities outside the non-Federal entity. Unless 
an arrangement is specifically authorized by an HHS awarding agency, a 
non-Federal entity must follow its written non-Federal entity-wide 
policies and practices concerning the permissible extent of professional 
services that can be provided outside the non-Federal entity for non-
organizational compensation. Where such non-Federal entity-wide written 
policies do not exist or do not adequately define the permissible extent 
of consulting or other non-organizational activities undertaken for 
extra outside pay, the Federal Government may require that the effort of 
professional staff working on Federal awards be allocated between:
    (1) Non-Federal entity activities, and
    (2) Non-organizational professional activities. If the HHS awarding 
agency considers the extent of non-organizational professional effort 
excessive or inconsistent with the conflicts-of-interest terms and 
conditions of the Federal award, appropriate arrangements governing 
compensation will be negotiated on a case-by-case basis.
    (d) Unallowable costs. (1) Costs which are unallowable under other 
sections of these principles must not be allowable under this section 
solely on the basis that they constitute personnel compensation.
    (2) The allowable compensation for certain employees is subject to a 
ceiling in accordance with statute. For the amount of the ceiling for 
cost-reimbursement contracts, the covered compensation subject to the 
ceiling, the covered employees, and other relevant provisions, see 10 
U.S.C. 2324(e)(1)(P), and 41 U.S.C. 1127 and 4304(a)(16). For

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other types of Federal awards, other statutory ceilings may apply.
    (e) Special considerations. Special considerations in determining 
allowability of compensation will be given to any change in a non-
Federal entity's compensation policy resulting in a substantial increase 
in its employees' level of compensation (particularly when the change 
was concurrent with an increase in the ratio of Federal awards to other 
activities) or any change in the treatment of allowability of specific 
types of compensation due to changes in Federal policy.
    (f) Incentive compensation. Incentive compensation to employees 
based on cost reduction, or efficient performance, suggestion awards, 
safety awards, etc., is allowable to the extent that the overall 
compensation is determined to be reasonable and such costs are paid or 
accrued pursuant to an agreement entered into in good faith between the 
non-Federal entity and the employees before the services were rendered, 
or pursuant to an established plan followed by the non-Federal entity so 
consistently as to imply, in effect, an agreement to make such payment.
    (g) Nonprofit organizations. For compensation to members of 
nonprofit organizations, trustees, directors, associates, officers, or 
the immediate families thereof, determination must be made that such 
compensation is reasonable for the actual personal services rendered 
rather than a distribution of earnings in excess of costs. This may 
include director's and executive committee member's fees, incentive 
awards, allowances for off-site pay, incentive pay, location allowances, 
hardship pay, and cost-of-living differentials.
    (h) Institutions of higher education (IHEs). (1) Certain conditions 
require special consideration and possible limitations in determining 
allowable personnel compensation costs under Federal awards. Among such 
conditions are the following:
    (i) Allowable activities. Charges to Federal awards may include 
reasonable amounts for activities contributing and directly related to 
work under an agreement, such as delivering special lectures about 
specific aspects of the ongoing activity, writing reports and articles, 
developing and maintaining protocols (human, animals, etc.), managing 
substances/chemicals, managing and securing project-specific data, 
coordinating research subjects, participating in appropriate seminars, 
consulting with colleagues and graduate students, and attending meetings 
and conferences.
    (ii) Incidental activities. Incidental activities for which 
supplemental compensation is allowable under written institutional 
policy (at a rate not to exceed institutional base salary) need not be 
included in the records described in paragraph (i) of this section to 
directly charge payments of incidental activities, such activities must 
either be specifically provided for in the Federal award budget or 
receive prior written approval by the HHS awarding agency.
    (2) Salary basis. Charges for work performed on Federal awards by 
faculty members during the academic year are allowable at the IBS rate. 
Except as noted in paragraph (h)(1)(ii) of this section, in no event 
will charges to Federal awards, irrespective of the basis of 
computation, exceed the proportionate share of the IBS for that period. 
This principle applies to all members of faculty at an institution. IBS 
is defined as the annual compensation paid by an IHE for an individual's 
appointment, whether that individual's time is spent on research, 
instruction, administration, or other activities. IBS excludes any 
income that an individual earns outside of duties performed for the IHE. 
Unless there is prior approval by the HHS awarding agency, charges of a 
faculty member's salary to a Federal award must not exceed the 
proportionate share of the IBS for the period during which the faculty 
member worked on the award.
    (3) Intra-Institution of Higher Education (IHE) consulting. Intra-
IHE consulting by faculty is assumed to be undertaken as an IHE 
obligation requiring no compensation in addition to IBS. However, in 
unusual cases where consultation is across departmental lines or 
involves a separate or remote operation, and the work performed by the 
faculty member is in addition to his or her regular responsibilities, 
any

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charges for such work representing additional compensation above IBS are 
allowable provided that such consulting arrangements are specifically 
provided for in the Federal award or approved in writing by the HHS 
awarding agency.
    (4) Extra Service Pay normally represents overload compensation, 
subject to institutional compensation policies for services above and 
beyond IBS. Where extra service pay is a result of Intra-IHE consulting, 
it is subject to the same requirements of paragraph (b) above. It is 
allowable if all of the following conditions are met:
    (i) The non-Federal entity establishes consistent written policies 
which apply uniformly to all faculty members, not just those working on 
Federal awards.
    (ii) The non-Federal entity establishes a consistent written 
definition of work covered by IBS which is specific enough to determine 
conclusively when work beyond that level has occurred. This may be 
described in appointment letters or other documentations.
    (iii) The supplementation amount paid is commensurate with the IBS 
rate of pay and the amount of additional work performed. See paragraph 
(h)(2) of this section.
    (iv) The salaries, as supplemented, fall within the salary structure 
and pay ranges established by and documented in writing or otherwise 
applicable to the non-Federal entity.
    (v) The total salaries charged to Federal awards including extra 
service pay are subject to the Standards of Documentation as described 
in paragraph (i) of this section.
    (5) Periods outside the academic year. (i) Except as specified for 
teaching activity in paragraph (h)(5)(ii) of this section, charges for 
work performed by faculty members on Federal awards during periods not 
included in the base salary period will be at a rate not in excess of 
the IBS.
    (ii) Charges for teaching activities performed by faculty members on 
Federal awards during periods not included in IBS period will be based 
on the normal written policy of the IHE governing compensation to 
faculty members for teaching assignments during such periods.
    (6) Part-time faculty. Charges for work performed on Federal awards 
by faculty members having only part-time appointments will be determined 
at a rate not in excess of that regularly paid for part-time 
assignments.
    (7) Sabbatical leave costs. Rules for sabbatical leave are as 
follow:
    (i) Costs of leaves of absence by employees for performance of 
graduate work or sabbatical study, travel, or research are allowable 
provided the IHE has a uniform written policy on sabbatical leave for 
persons engaged in instruction and persons engaged in research. Such 
costs will be allocated on an equitable basis among all related 
activities of the IHE.
    (ii) Where sabbatical leave is included in fringe benefits for which 
a cost is determined for assessment as a direct charge, the aggregate 
amount of such assessments applicable to all work of the institution 
during the base period must be reasonable in relation to the IHE's 
actual experience under its sabbatical leave policy.
    (8) Salary rates for non-faculty members. Non-faculty full-time 
professional personnel may also earn ``extra service pay'' in accordance 
with the non-Federal entity's written policy and consistent with 
paragraph (h)(1)(i) of this section.
    (i) Standards for documentation of personnel expenses. (1) Charges 
to Federal awards for salaries and wages must be based on records that 
accurately reflect the work performed. These records must:
    (i) Be supported by a system of internal control which provides 
reasonable assurance that the charges are accurate, allowable, and 
properly allocated;
    (ii) Be incorporated into the official records of the non-Federal 
entity;
    (iii) Reasonably reflect the total activity for which the employee 
is compensated by the non-Federal entity, not exceeding 100% of 
compensated activities (for IHE, this per the IHE's definition of IBS);
    (iv) Encompass both federally assisted and all other activities 
compensated by the non-Federal entity on an integrated basis, but may 
include the use of subsidiary records as defined in the non-Federal 
entity's written policy;

[[Page 315]]

    (v) Comply with the established accounting policies and practices of 
the non-Federal entity (See paragraph (h)(1)(ii) of this section for 
treatment of incidental work for IHEs.); and
    (vi) [Reserved]
    (vii) Support the distribution of the employee's salary or wages 
among specific activities or cost objectives if the employee works on 
more than one Federal award; a Federal award and non-Federal award; an 
indirect cost activity and a direct cost activity; two or more indirect 
activities which are allocated using different allocation bases; or an 
unallowable activity and a direct or indirect cost activity.
    (viii) Budget estimates (i.e., estimates determined before the 
services are performed) alone do not qualify as support for charges to 
Federal awards, but may be used for interim accounting purposes, 
provided that:
    (A) The system for establishing the estimates produces reasonable 
approximations of the activity actually performed;
    (B) Significant changes in the corresponding work activity (as 
defined by the non-Federal entity's written policies) are identified and 
entered into the records in a timely manner. Short term (such as one or 
two months) fluctuation between workload categories need not be 
considered as long as the distribution of salaries and wages is 
reasonable over the longer term; and
    (C) The non-Federal entity's system of internal controls includes 
processes to review after-the-fact interim charges made to a Federal 
awards based on budget estimates. All necessary adjustment must be made 
such that the final amount charged to the Federal award is accurate, 
allowable, and properly allocated.
    (ix) Because practices vary as to the activity constituting a full 
workload (for IHEs, IBS), records may reflect categories of activities 
expressed as a percentage distribution of total activities.
    (x) It is recognized that teaching, research, service, and 
administration are often inextricably intermingled in an academic 
setting. When recording salaries and wages charged to Federal awards for 
IHEs, a precise assessment of factors that contribute to costs is 
therefore not always feasible, nor is it expected.
    (2) For records which meet the standards required in paragraph 
(i)(1) of this section, the non-Federal entity will not be required to 
provide additional support or documentation for the work performed, 
other than that referenced in paragraph (i)(3) of this section.
    (3) In accordance with Department of Labor regulations implementing 
the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the 
salaries and wages of nonexempt employees, in addition to the supporting 
documentation described in this section, must also be supported by 
records indicating the total number of hours worked each day.
    (4) Salaries and wages of employees used in meeting cost sharing or 
matching requirements on Federal awards must be supported in the same 
manner as salaries and wages claimed for reimbursement from Federal 
awards.
    (5) For states, local governments and Indian tribes, substitute 
processes or systems for allocating salaries and wages to Federal awards 
may be used in place of or in addition to the records described in 
paragraph (i)(1) of this section if approved by the cognizant agency for 
indirect cost. Such systems may include, but are not limited to, random 
moment sampling, ``rolling'' time studies, case counts, or other 
quantifiable measures of work performed.
    (i) Substitute systems which use sampling methods (primarily for 
Temporary Assistance for Needy Families (TANF), the Supplemental 
Nutrition Assistance Program (SNAP), Medicaid, and other public 
assistance programs) must meet acceptable statistical sampling standards 
including:
    (A) The sampling universe must include all of the employees whose 
salaries and wages are to be allocated based on sample results except as 
provided in paragraph (i)(5)(iii) of this section;
    (B) The entire time period involved must be covered by the sample; 
and
    (C) The results must be statistically valid and applied to the 
period being sampled.
    (ii) Allocating charges for the sampled employees' supervisors, 
clerical and support staffs, based on the results

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of the sampled employees, will be acceptable.
    (iii) Less than full compliance with the statistical sampling 
standards noted in paragraph (i)(5)(i) of this section may be accepted 
by the cognizant agency for indirect costs if it concludes that the 
amounts to be allocated to Federal awards will be minimal, or if it 
concludes that the system proposed by the non-Federal entity will result 
in lower costs to Federal awards than a system which complies with the 
standards.
    (6) Cognizant agencies for indirect costs are encouraged to approve 
alternative proposals based on outcomes and milestones for program 
performance where these are clearly documented. Where approved by the 
Federal cognizant agency for indirect costs, these plans are acceptable 
as an alternative to the requirements of paragraph (i)(1) of this 
section.
    (7) For Federal awards of similar purpose activity or instances of 
approved blended funding, a non-Federal entity may submit performance 
plans that incorporate funds from multiple Federal awards and account 
for their combined use based on performance-oriented metrics, provided 
that such plans are approved in advance by all involved HHS awarding 
agencies. In these instances, the non-Federal entity must submit a 
request for waiver of the requirements based on documentation that 
describes the method of charging costs, relates the charging of costs to 
the specific activity that is applicable to all fund sources, and is 
based on quantifiable measures of the activity in relation to time 
charged.
    (8) For a non-Federal entity where the records do not meet the 
standards described in this section, the Federal Government may require 
personnel activity reports, including prescribed certifications, or 
equivalent documentation that support the records as required in this 
section.



Sec.  75.431  Compensation--fringe benefits.

    (a) Fringe benefits are allowances and services provided by 
employers to their employees as compensation in addition to regular 
salaries and wages. Fringe benefits include, but are not limited to, the 
costs of leave (vacation, family-related, sick or military), employee 
insurance, pensions, and unemployment benefit plans. Except as provided 
elsewhere in these principles, the costs of fringe benefits are 
allowable provided that the benefits are reasonable and are required by 
law, non-Federal entity-employee agreement, or an established policy of 
the non-Federal entity.
    (b) Leave. The cost of fringe benefits in the form of regular 
compensation paid to employees during periods of authorized absences 
from the job, such as for annual leave, family-related leave, sick 
leave, holidays, court leave, military leave, administrative leave, and 
other similar benefits, are allowable if all of the following criteria 
are met:
    (1) They are provided under established written leave policies;
    (2) The costs are equitably allocated to all related activities, 
including Federal awards; and,
    (3) The accounting basis (cash or accrual) selected for costing each 
type of leave is consistently followed by the non-Federal entity or 
specified grouping of employees.
    (i) When a non-Federal entity uses the cash basis of accounting, the 
cost of leave is recognized in the period that the leave is taken and 
paid for. Payments for unused leave when an employee retires or 
terminates employment are allowable in the year of payment.
    (ii) The accrual basis may be only used for those types of leave for 
which a liability as defined by GAAP exists when the leave is earned. 
When a non-Federal entity uses the accrual basis of accounting, 
allowable leave costs are the lesser of the amount accrued or funded.
    (c) The cost of fringe benefits in the form of employer 
contributions or expenses for social security; employee life, health, 
unemployment, and worker's compensation insurance (except as indicated 
in Sec.  75.447); pension plan costs (see paragraph (i) of this 
section); and other similar benefits are allowable, provided such 
benefits are granted under established written policies. Such benefits, 
must be allocated to Federal awards and all other activities

[[Page 317]]

in a manner consistent with the pattern of benefits attributable to the 
individuals or group(s) of employees whose salaries and wages are 
chargeable to such Federal awards and other activities, and charged as 
direct or indirect costs in accordance with the non-Federal entity's 
accounting practices.
    (d) Fringe benefits may be assigned to cost objectives by 
identifying specific benefits to specific individual employees or by 
allocating on the basis of entity-wide salaries and wages of the 
employees receiving the benefits. When the allocation method is used, 
separate allocations must be made to selective groupings of employees, 
unless the non-Federal entity demonstrates that costs in relationship to 
salaries and wages do not differ significantly for different groups of 
employees.
    (e) Insurance. See also Sec.  75.447(d)(1) and (2).
    (1) Provisions for a reserve under a self-insurance program for 
unemployment compensation or workers' compensation are allowable to the 
extent that the provisions represent reasonable estimates of the 
liabilities for such compensation, and the types of coverage, extent of 
coverage, and rates and premiums would have been allowable had insurance 
been purchased to cover the risks. However, provisions for self-insured 
liabilities which do not become payable for more than one year after the 
provision is made must not exceed the present value of the liability.
    (2) Costs of insurance on the lives of trustees, officers, or other 
employees holding positions of similar responsibility are allowable only 
to the extent that the insurance represents additional compensation. The 
costs of such insurance when the non-Federal entity is named as 
beneficiary are unallowable.
    (3) Actual claims paid to or on behalf of employees or former 
employees for workers' compensation, unemployment compensation, 
severance pay, and similar employee benefits (e.g., post-retirement 
health benefits), are allowable in the year of payment provided that the 
non-Federal entity follows a consistent costing policy.
    (f) Automobiles. That portion of automobile costs furnished by the 
entity that relates to personal use by employees (including 
transportation to and from work) is unallowable as fringe benefit or 
indirect (F&A) costs regardless of whether the cost is reported as 
taxable income to the employees.
    (g) Pension plan costs. Pension plan costs which are incurred in 
accordance with the established policies of the non-Federal entity are 
allowable, provided that:
    (1) Such policies meet the test of reasonableness.
    (2) The methods of cost allocation are not discriminatory.
    (3) For entities using accrual based accounting, the cost assigned 
to each fiscal year is determined in accordance with GAAP.
    (4) The costs assigned to a given fiscal year are funded for all 
plan participants within six months after the end of that year. However, 
increases to normal and past service pension costs caused by a delay in 
funding the actuarial liability beyond 30 calendar days after each 
quarter of the year to which such costs are assignable are unallowable. 
Non-Federal entity may elect to follow the ``Cost Accounting Standard 
for Composition and Measurement of Pension Costs'' (48 CFR 9904.412).
    (5) Pension plan termination insurance premiums paid pursuant to the 
Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C. 1301-
1461) are allowable. Late payment charges on such premiums are 
unallowable. Excise taxes on accumulated funding deficiencies and other 
penalties imposed under ERISA are unallowable.
    (6) Pension plan costs may be computed using a pay-as-you-go method 
or an acceptable actuarial cost method in accordance with established 
written policies of the non-Federal entity.
    (i) For pension plans financed on a pay-as-you-go method, allowable 
costs will be limited to those representing actual payments to retirees 
or their beneficiaries.
    (ii) Pension costs calculated using an actuarial cost-based method 
recognized by GAAP are allowable for a given fiscal year if they are 
funded for that year within six months after the end of that year. Costs 
funded after the six

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month period (or a later period agreed to by the cognizant agency for 
indirect costs) are allowable in the year funded. The cognizant agency 
for indirect costs may agree to an extension of the six month period if 
an appropriate adjustment is made to compensate for the timing of the 
charges to the Federal Government and related Federal reimbursement and 
the non-Federal entity's contribution to the pension fund. Adjustments 
may be made by cash refund or other equitable procedures to compensate 
the Federal Government for the time value of Federal reimbursements in 
excess of contributions to the pension fund.
    (iii) Amounts funded by the non-Federal entity in excess of the 
actuarially determined amount for a fiscal year may be used as the non-
Federal entity's contribution in future periods.
    (iv) When a non-Federal entity converts to an acceptable actuarial 
cost method, as defined by GAAP, and funds pension costs in accordance 
with this method, the unfunded liability at the time of conversion is 
allowable if amortized over a period of years in accordance with GAAP.
    (v) The Federal Government must receive an equitable share of any 
previously allowed pension costs (including earnings thereon) which 
revert or inure to the non-Federal entity in the form of a refund, 
withdrawal, or other credit.
    (h) Post-retirement health. Post-retirement health plans (PRHP) 
refers to costs of health insurance or health services not included in a 
pension plan covered by paragraph (g) of this section for retirees and 
their spouses, dependents, and survivors. PRHP costs may be computed 
using a pay-as-you-go method or an acceptable actuarial cost method in 
accordance with established written policies of the non-Federal entity.
    (1) For PRHP financed on a pay-as-you-go method, allowable costs 
will be limited to those representing actual payments to retirees or 
their beneficiaries.
    (2) PRHP costs calculated using an actuarial cost method recognized 
by GAAP are allowable if they are funded for that year within six months 
after the end of that year. Costs funded after the six month period (or 
a later period agreed to by the cognizant agency) are allowable in the 
year funded. The Federal cognizant agency for indirect costs may agree 
to an extension of the six month period if an appropriate adjustment is 
made to compensate for the timing of the charges to the Federal 
Government and related Federal reimbursements and the non-Federal 
entity's contributions to the PRHP fund. Adjustments may be made by cash 
refund, reduction in current year's PRHP costs, or other equitable 
procedures to compensate the Federal Government for the time value of 
Federal reimbursements in excess of contributions to the PRHP fund.
    (3) Amounts funded in excess of the actuarially determined amount 
for a fiscal year may be used as the non-Federal entity contribution in 
a future period.
    (4) When a non-Federal entity converts to an acceptable actuarial 
cost method and funds PRHP costs in accordance with this method, the 
initial unfunded liability attributable to prior years is allowable if 
amortized over a period of years in accordance with GAAP, or, if no such 
GAAP period exists, over a period negotiated with the cognizant agency 
for indirect costs.
    (5) To be allowable in the current year, the PRHP costs must be paid 
either to:
    (i) An insurer or other benefit provider as current year costs or 
premiums, or
    (ii) An insurer or trustee to maintain a trust fund or reserve for 
the sole purpose of providing post-retirement benefits to retirees and 
other beneficiaries.
    (6) The Federal Government must receive an equitable share of any 
amounts of previously allowed post-retirement benefit costs (including 
earnings thereon) which revert or inure to the non-Federal entity in the 
form of a refund, withdrawal, or other credit.
    (i) Severance pay. (1) Severance pay, also commonly referred to as 
dismissal wages, is a payment in addition to regular salaries and wages, 
by non-Federal entities to workers whose employment is being terminated. 
Costs of severance pay are allowable only to the extent that in each 
case, it is required by:
    (i) Law;

[[Page 319]]

    (ii) Employer-employee agreement;
    (iii) Established policy that constitutes, in effect, an implied 
agreement on the non-Federal entity's part; or
    (iv) Circumstances of the particular employment.
    (2) Costs of severance payments are divided into two categories as 
follows:
    (i) Actual normal turnover severance payments must be allocated to 
all activities; or, where the non-Federal entity provides for a reserve 
for normal severances, such method will be acceptable if the charge to 
current operations is reasonable in light of payments actually made for 
normal severances over a representative past period, and if amounts 
charged are allocated to all activities of the non-Federal entity.
    (ii) Measurement of costs of abnormal or mass severance pay by means 
of an accrual will not achieve equity to both parties. Thus, accruals 
for this purpose are not allowable. However, the Federal Government 
recognizes its obligation to participate, to the extent of its fair 
share, in any specific payment. Prior approval by the Federal awarding 
agency or cognizant agency for indirect cost, as appropriate, is 
required.
    (3) Costs incurred in certain severance pay packages which are in an 
amount in excess of the normal severance pay paid by the non-Federal 
entity to an employee upon termination of employment and are paid to the 
employee contingent upon a change in management control over, or 
ownership of, the non-Federal entity's assets, are unallowable.
    (4) Severance payments to foreign nationals employed by the non-
Federal entity outside the United States, to the extent that the amount 
exceeds the customary or prevailing practices for the non-Federal entity 
in the United States, are unallowable, unless they are necessary for the 
performance of Federal programs and approved by the HHS awarding agency.
    (5) Severance payments to foreign nationals employed by the non-
Federal entity outside the United States due to the termination of the 
foreign national as a result of the closing of, or curtailment of 
activities by, the non-Federal entity in that country, are unallowable, 
unless they are necessary for the performance of Federal programs and 
approved by the HHS awarding agency.
    (j) For IHEs only. (1) Fringe benefits in the form of undergraduate 
and graduate tuition or remission of tuition for individual employees 
are allowable, provided such benefits are granted in accordance with 
established non-federal entity policies, and are distributed to all non-
Federal entity activities on an equitable basis. Tuition benefits for 
family members other than the employee are unallowable.
    (2) Fringe benefits in the form of tuition or remission of tuition 
for individual employees not employed by IHEs are limited to the tax-
free amount allowed per section 127 of the Internal Revenue Code as 
amended.
    (3) IHEs may offer employees tuition waivers or tuition reductions, 
provided that the benefit does not discriminate in favor of highly 
compensated employees. Employees can exercise these benefits at other 
institutions according to institutional policy. See Sec.  75.466 for 
treatment of tuition remission provided to students.
    (k) For IHEs whose costs are paid by state or local governments, 
fringe benefit programs (such as pension costs and FICA) and any other 
benefits costs specifically incurred on behalf of, and in direct benefit 
to, the non-Federal entity, are allowable costs of such non-Federal 
entities whether or not these costs are recorded in the accounting 
records of the non-Federal entities, subject to the following:
    (1) The costs meet the requirements of Basic Considerations in 
Sec. Sec.  75.402 through 75.411;
    (2) The costs are properly supported by approved cost allocation 
plans in accordance with applicable Federal cost accounting principles; 
and
    (3) The costs are not otherwise borne directly or indirectly by the 
Federal Government.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3017, Jan. 20, 2016]



Sec.  75.432  Conferences.

    A conference is defined as a meeting, retreat, seminar, symposium, 
workshop or event whose primary purpose is

[[Page 320]]

the dissemination of technical information beyond the non-Federal entity 
and is necessary and reasonable for successful performance under the 
Federal award. Allowable conference costs paid by the non-Federal entity 
as a sponsor or host of the conference may include rental of facilities, 
speakers' fees, costs of meals and refreshments, local transportation, 
and other items incidental to such conferences unless further restricted 
by the terms and conditions of the Federal award. As needed, the costs 
of identifying, but not providing, locally available dependent-care 
resources are allowable. Conference hosts/sponsors must exercise 
discretion and judgment in ensuring that conference costs are 
appropriate, necessary and managed in a manner that minimizes costs to 
the Federal award. The HHS awarding agency may authorize exceptions 
where appropriate for programs including Indian tribes, children, and 
the elderly. See also Sec. Sec.  75.438, 75.456, 75.474, and 75.475.



Sec.  75.433  Contingency provisions.

    (a) Contingency is that part of a budget estimate of future costs 
(typically of large construction projects, IT systems, or other items as 
approved by the HHS awarding agency) which is associated with possible 
events or conditions arising from causes the precise outcome of which is 
indeterminable at the time of estimate, and that experience shows will 
likely result, in aggregate, in additional costs for the approved 
activity or project. Amounts for major project scope changes, unforeseen 
risks, or extraordinary events may not be included.
    (b) It is permissible for contingency amounts other than those 
excluded in paragraph (a) of this section to be explicitly included in 
budget estimates, to the extent they are necessary to improve the 
precision of those estimates. Amounts must be estimated using broadly-
accepted cost estimating methodologies, specified in the budget 
documentation of the Federal award, and accepted by the HHS awarding 
agency. As such, contingency amounts are to be included in the Federal 
award. In order for actual costs incurred to be allowable, they must 
comply with the cost principles and other requirements in this part (see 
also Sec. Sec.  75.300 through 75.309 of subpart D of this part and 
75.403); be necessary and reasonable for proper and efficient 
accomplishment of project or program objectives, and be verifiable from 
the non-Federal entity's records.
    (c) Payments made by the HHS awarding agency to the non-Federal 
entity's ``contingency reserve'' or any similar payment made for events 
the occurrence of which cannot be foretold with certainty as to the time 
or intensity, or with an assurance of their happening, are unallowable, 
except as noted in Sec. Sec.  75.431 and 75.447.



Sec.  75.434  Contributions and donations.

    (a) Costs of contributions and donations, including cash, property, 
and services, from the non-Federal entity to other entities, are 
unallowable.
    (b) The value of services and property donated to the non-Federal 
entity may not be charged to the Federal award either as a direct or 
indirect (F&A) cost. The value of donated services and property may be 
used to meet cost sharing or matching requirements (see Sec.  75.306). 
Depreciation on donated assets is permitted in accordance with Sec.  
75.436, as long as the donated property is not counted towards cost 
sharing or matching requirements.
    (c) Services donated or volunteered to the non-Federal entity may be 
furnished to a non-Federal entity by professional and technical 
personnel, consultants, and other skilled and unskilled labor. The value 
of these services may not be charged to the Federal award either as a 
direct or indirect cost. However, the value of donated services may be 
used to meet cost sharing or matching requirements in accordance with 
the provisions of Sec.  75.306.
    (d) To the extent feasible, services donated to the non-Federal 
entity will be supported by the same methods used to support the 
allocability of regular personnel services.
    (e) The following provisions apply to nonprofit organizations. The 
value of services donated to the nonprofit organization utilized in the 
performance of a direct cost activity must be considered in the 
determination of the non-Federal entity's indirect cost rate(s) and, 
accordingly, must be allocated a

[[Page 321]]

proportionate share of applicable indirect costs when the following 
circumstances exist:
    (1) The aggregate value of the services is material;
    (2) The services are supported by a significant amount of the 
indirect costs incurred by the non-Federal entity;
    (i) In those instances where there is no basis for determining the 
fair market value of the services rendered, the non-Federal entity and 
the cognizant agency for indirect costs must negotiate an appropriate 
allocation of indirect cost to the services.
    (ii) Where donated services directly benefit a project supported by 
the Federal award, the indirect costs allocated to the services will be 
considered as a part of the total costs of the project. Such indirect 
costs may be reimbursed under the Federal award or used to meet cost 
sharing or matching requirements.
    (f) Fair market value of donated services must be computed as 
described in Sec.  75.306.
    (g) Personal property and use of space. (1) Donated personal 
property and use of space may be furnished to a non-Federal entity. The 
value of the personal property and space may not be charged to the 
Federal award either as a direct or indirect cost.
    (2) The value of the donations may be used to meet cost sharing or 
matching share requirements under the conditions described in Sec. Sec.  
75.300 through 75.309 of subpart D of this part. The value of the 
donations must be determined in accordance with Sec. Sec.  75.300 
through 75.309. Where donations are treated as indirect costs, indirect 
cost rates will separate the value of the donations so that 
reimbursement will not be made.



Sec.  75.435  Defense and prosecution of criminal and civil proceedings, 
claims, appeals, and patent infringements.

    (a) Definitions for the purposes of this section. (1) Conviction 
means a judgment or conviction of a criminal offense by any court of 
competent jurisdiction, whether entered upon verdict or a plea, 
including a conviction due to a plea of nolo contendere.
    (2) Costs include the services of in-house or private counsel, 
accountants, consultants, or others engaged to assist the non-Federal 
entity before, during, and after commencement of a judicial or 
administrative proceeding, that bear a direct relationship to the 
proceeding.
    (3) Fraud means:
    (i) Acts of fraud or corruption or attempts to defraud the Federal 
Government or to corrupt its agents,
    (ii) Acts that constitute a cause for debarment or suspension (as 
specified in agency regulations), and
    (iii) Acts which violate the False Claims Act (31 U.S.C. 3729-3732) 
or the Anti-kickback Act (41 U.S.C. 1320a-7b(b)).
    (4) Penalty does not include restitution, reimbursement, or 
compensatory damages.
    (5) Proceeding includes an investigation.
    (b) Costs. (1) Except as otherwise described herein, costs incurred 
in connection with any criminal, civil or administrative proceeding 
(including filing of a false certification) commenced by the Federal 
Government, a state, local government, or foreign government, or joined 
by the Federal Government (including a proceeding under the False Claims 
Act), against the non-Federal entity, (or commenced by third parties or 
a current or former employee of the non-Federal entity who submits a 
whistleblower complaint of reprisal in accordance with 10 U.S.C. 2409 or 
41 U.S.C. 4712), are not allowable if the proceeding:
    (i) Relates to a violation of, or failure to comply with, a Federal, 
state, local or foreign statute, regulation or the terms and conditions 
of the Federal award, by the non-Federal entity (including its agents 
and employees); and
    (ii) Results in any of the following dispositions:
    (A) In a criminal proceeding, a conviction.
    (B) In a civil or administrative proceeding involving an allegation 
of fraud or similar misconduct, a determination of non-Federal entity 
liability.
    (C) In the case of any civil or administrative proceeding, the 
disallowance

[[Page 322]]

of costs or the imposition of a monetary penalty, or an order issued by 
the HHS awarding agency head or delegate to the non-Federal entity to 
take corrective action under 10 U.S.C. 2409 or 41 U.S.C. 4712.
    (D) A final decision by an appropriate Federal official to debar or 
suspend the non-Federal entity, to rescind or void a Federal award, or 
to terminate a Federal award by reason of a violation or failure to 
comply with a statute, regulation, or the terms and conditions of the 
Federal award.
    (E) A disposition by consent or compromise, if the action could have 
resulted in any of the dispositions described in paragraphs 
(b)(1)(ii)(A) through (D) of this section.
    (2) If more than one proceeding involves the same alleged 
misconduct, the costs of all such proceedings are unallowable if any 
results in one of the dispositions shown in paragraph (b) of this 
section.
    (c) If a proceeding referred to in paragraph (b) of this section is 
commenced by the Federal Government and is resolved by consent or 
compromise pursuant to an agreement by the non-Federal entity and the 
Federal Government, then the costs incurred may be allowed to the extent 
specifically provided in such agreement.
    (d) If a proceeding referred to in paragraph (b) of this section is 
commenced by a state, local or foreign government, the authorized 
Federal official may allow the costs incurred if such authorized 
official determines that the costs were incurred as a result of:
    (1) A specific term or condition of the Federal award, or
    (2) Specific written direction of an authorized official of the HHS 
awarding agency.
    (e) Costs incurred in connection with proceedings described in 
paragraph (b) of this section, which are not made unallowable by that 
subsection, may be allowed but only to the extent that:
    (1) The costs are reasonable and necessary in relation to the 
administration of the Federal award and activities required to deal with 
the proceeding and the underlying cause of action;
    (2) Payment of the reasonable, necessary, allocable and otherwise 
allowable costs incurred is not prohibited by any other provision(s) of 
the Federal award;
    (3) The costs are not recovered from the Federal Government or a 
third party, either directly as a result of the proceeding or otherwise; 
and,
    (4) An authorized Federal official must determine the percentage of 
costs allowed considering the complexity of litigation, generally 
accepted principles governing the award of legal fees in civil actions 
involving the United States, and such other factors as may be 
appropriate. Such percentage must not exceed 80 percent. However, if an 
agreement reached under paragraph (c) of this section has explicitly 
considered this 80 percent limitation and permitted a higher percentage, 
then the full amount of costs resulting from that agreement are 
allowable.
    (f) Costs incurred by the non-Federal entity in connection with the 
defense of suits brought by its employees or ex-employees under section 
2 of the Major Fraud Act of 1988 (18 U.S.C. 1031), including the cost of 
all relief necessary to make such employee whole, where the non-Federal 
entity was found liable or settled, are unallowable.
    (g) Costs of prosecution of claims against the Federal Government, 
including appeals of final HHS agency decisions, are unallowable.
    (h) Costs of legal, accounting, and consultant services, and related 
costs, incurred in connection with patent infringement litigation, are 
unallowable unless otherwise provided for in the Federal award.
    (i) Costs which may be unallowable under this section, including 
directly associated costs, must be segregated and accounted for 
separately. During the pendency of any proceeding covered by paragraphs 
(b) and (f) of this section, the Federal Government must generally 
withhold payment of such costs. However, if in its best interests, the 
Federal Government may provide for conditional payment upon provision of 
adequate security, or other adequate assurance, and agreement to repay 
all unallowable costs, plus interest, if the costs are subsequently 
determined to be unallowable.

[[Page 323]]



Sec.  75.436  Depreciation.

    (a) Depreciation is the method for allocating the cost of fixed 
assets to periods benefitting from asset use. The non-Federal entity may 
be compensated for the use of its buildings, capital improvements, 
equipment, and software projects capitalized in accordance with GAAP, 
provided that they are used, needed in the non-Federal entity's 
activities, and properly allocated to Federal awards. Such compensation 
must be made by computing depreciation.
    (b) The allocation for depreciation must be made in accordance with 
appendices III through IX.
    (c) Depreciation is computed applying the following rules. The 
computation of depreciation must be based on the acquisition cost of the 
assets involved. For an asset donated to the non-Federal entity by a 
third party, its fair market value at the time of the donation must be 
considered as the acquisition cost. Such assets may be depreciated or 
claimed as matching but not both. For the purpose of computing 
depreciation, the acquisition cost will exclude:
    (1) The cost of land;
    (2) Any portion of the cost of buildings and equipment borne by or 
donated by the Federal Government, irrespective of where title was 
originally vested or where it is presently located;
    (3) Any portion of the cost of buildings and equipment contributed 
by or for the non-Federal entity, where law or agreement prohibits 
recovery; and
    (4) Any asset acquired solely for the performance of a non-Federal 
award.
    (d) When computing depreciation charges, the following must be 
observed:
    (1) The period of useful service or useful life established in each 
case for usable capital assets must take into consideration such factors 
as type of construction, nature of the equipment, technological 
developments in the particular area, historical data, and the renewal 
and replacement policies followed for the individual items or classes of 
assets involved.
    (2) The depreciation method used to charge the cost of an asset (or 
group of assets) to accounting periods must reflect the pattern of 
consumption of the asset during its useful life. In the absence of clear 
evidence indicating that the expected consumption of the asset will be 
significantly greater in the early portions than in the later portions 
of its useful life, the straight-line method must be presumed to be the 
appropriate method. Depreciation methods once used may not be changed 
unless approved in advance by the cognizant agency. The depreciation 
methods used to calculate the depreciation amounts for indirect (F&A) 
rate purposes must be the same methods used by the non-Federal entity 
for its financial statements.
    (3) The entire building, including the shell and all components, may 
be treated as a single asset and depreciated over a single useful life. 
A building may also be divided into multiple components. Each component 
item may then be depreciated over its estimated useful life. The 
building components must be grouped into three general components of a 
building: building shell (including construction and design costs), 
building services systems (e.g., elevators, HVAC, plumbing system and 
heating and air-conditioning system) and fixed equipment (e.g., 
sterilizers, casework, fume hoods, cold rooms and glassware/washers). In 
exceptional cases, a cognizant agency may authorize a non-Federal entity 
to use more than these three groupings. When a non-Federal entity elects 
to depreciate its buildings by its components, the same depreciation 
methods must be used for indirect (F&A) purposes and financial 
statements purposes, as described in paragraphs (d)(1) and (2) of this 
section.
    (4) No depreciation may be allowed on any assets that have outlived 
their depreciable lives.
    (5) Where the depreciation method is introduced to replace the use 
allowance method, depreciation must be computed as if the asset had been 
depreciated over its entire life (i.e., from the date the asset was 
acquired and ready for use to the date of disposal or withdrawal from 
service). The total amount of use allowance and depreciation for an 
asset (including imputed depreciation applicable to periods prior to the 
conversion from the use allowance method as well as depreciation

[[Page 324]]

after the conversion) may not exceed the total acquisition cost of the 
asset.
    (e) Charges for depreciation must be supported by adequate property 
records, and physical inventories must be taken at least once every two 
years to ensure that the assets exist and are usable, used, and needed. 
Statistical sampling techniques may be used in taking these inventories. 
In addition, adequate depreciation records showing the amount of 
depreciation taken each period must also be maintained.



Sec.  75.437  Employee health and welfare costs.

    (a) Costs incurred in accordance with the non-Federal entity's 
documented policies for the improvement of working conditions, employer-
employee relations, employee health, and employee performance are 
allowable.
    (b) Such costs will be equitably apportioned to all activities of 
the non-Federal entity. Income generated from any of these activities 
will be credited to the cost thereof unless such income has been 
irrevocably sent to employee welfare organizations.
    (c) Losses resulting from operating food services are allowable only 
if the non-Federal entity's objective is to operate such services on a 
break-even basis. Losses sustained because of operating objectives other 
than the above are allowable only:
    (1) Where the non-Federal entity can demonstrate unusual 
circumstances; and
    (2) With the approval of the cognizant agency for indirect costs.



Sec.  75.438  Entertainment costs.

    Costs of entertainment, including amusement, diversion, and social 
activities and any associated costs are unallowable, except where 
specific costs that might otherwise be considered entertainment have a 
programmatic purpose and are authorized either in the approved budget 
for the Federal award or with prior written approval of the HHS awarding 
agency.



Sec.  75.439  Equipment and other capital expenditures.

    (a) See Sec.  75.2 for the definitions of Capital expenditures, 
Equipment, Special purpose equipment, General purpose equipment, 
Acquisition cost, and Capital assets.
    (b) The following rules of allowability must apply to equipment and 
other capital expenditures:
    (1) Capital expenditures for general purpose equipment, buildings, 
and land are unallowable as direct charges, except with the prior 
written approval of the HHS awarding agency or pass-through entity.
    (2) Capital expenditures for special purpose equipment are allowable 
as direct costs, provided that items with a unit cost of $5,000 or more 
have the prior written approval of the HHS awarding agency or pass-
through entity.
    (3) Capital expenditures for improvements to land, buildings, or 
equipment which materially increase their value or useful life are 
unallowable as a direct cost except with the prior written approval of 
the HHS awarding agency, or pass-through entity. See Sec.  75.436 for 
rules on the allowability of depreciation on buildings, capital 
improvements, and equipment. See also Sec.  75.465.
    (4) When approved as a direct charge pursuant to paragraphs (b)(1) 
through (3) of this section, capital expenditures will be charged in the 
period in which the expenditure is incurred, or as otherwise determined 
appropriate and negotiated with the HHS awarding agency.
    (5) The unamortized portion of any equipment written off as a result 
of a change in capitalization levels may be recovered by continuing to 
claim the otherwise allowable depreciation on the equipment, or by 
amortizing the amount to be written off over a period of years 
negotiated with the Federal cognizant agency for indirect cost.
    (6) Cost of equipment disposal. If the non-Federal entity is 
instructed by the HHS awarding agency to otherwise dispose of or 
transfer the equipment the costs of such disposal or transfer are 
allowable.
    (7) Equipment and other capital expenditures are unallowable as 
indirect costs. See Sec.  75.436.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]

[[Page 325]]



Sec.  75.440  Exchange rates.

    (a) Cost increases for fluctuations in exchange rates are allowable 
costs subject to the availability of funding. Prior approval of exchange 
rate fluctuations is required only when the change results in the need 
for additional Federal funding, or the increased costs result in the 
need to significantly reduce the scope of the project. The HHS awarding 
agency must however ensure that adequate funds are available to cover 
currency fluctuations in order to avoid a violation of the Anti-
Deficiency Act.
    (b) The non-Federal entity is required to make reviews of local 
currency gains to determine the need for additional federal funding 
before the expiration date of the Federal award. Subsequent adjustments 
for currency increases may be allowable only when the non-Federal entity 
provides the HHS awarding agency with adequate source documentation from 
a commonly used source in effect at the time the expense was made, and 
to the extent that sufficient Federal funds are available.



Sec.  75.441  Fines, penalties, damages and other settlements.

    Costs resulting from non-Federal entity violations of, alleged 
violations of, or failure to comply with, Federal, state, tribal, local 
or foreign laws and regulations are unallowable, except when incurred as 
a result of compliance with specific provisions of the Federal award, or 
with prior written approval of the HHS awarding agency. See also Sec.  
75.435.



Sec.  75.442  Fund raising and investment management costs.

    (a) Costs of organized fund raising, including financial campaigns, 
endowment drives, solicitation of gifts and bequests, and similar 
expenses incurred to raise capital or obtain contributions are 
unallowable. Fund raising costs for the purposes of meeting the Federal 
program objectives are allowable with prior written approval from the 
Federal awarding agency. Proposal costs are covered in Sec.  75.460.
    (b) Costs of investment counsel and staff and similar expenses 
incurred to enhance income from investments are unallowable except when 
associated with investments covering pension, self-insurance, or other 
funds which include Federal participation allowed by this part.
    (c) Costs related to the physical custody and control of monies and 
securities are allowable.
    (d) Both allowable and unallowable fund raising and investment 
activities must be allocated an appropriate share of indirect costs 
under the conditions described in Sec.  75.413.



Sec.  75.443  Gains and losses on disposition of depreciable assets.

    (a) Gains and losses on the sale, retirement, or other disposition 
of depreciable property must be included in the year in which they occur 
as credits or charges to the asset cost grouping(s) in which the 
property was included. The amount of the gain or loss to be included as 
a credit or charge to the appropriate asset cost grouping(s) is the 
difference between the amount realized on the property and the 
undepreciated basis of the property.
    (b) Gains and losses from the disposition of depreciable property 
must not be recognized as a separate credit or charge under the 
following conditions:
    (1) The gain or loss is processed through a depreciation account and 
is reflected in the depreciation allowable under Sec. Sec.  75.436 and 
75.439.
    (2) The property is given in exchange as part of the purchase price 
of a similar item and the gain or loss is taken into account in 
determining the depreciation cost basis of the new item.
    (3) A loss results from the failure to maintain permissible 
insurance, except as otherwise provided in Sec.  75.447.
    (4) Compensation for the use of the property was provided through 
use allowances in lieu of depreciation.
    (5) Gains and losses arising from mass or extraordinary sales, 
retirements, or other dispositions must be considered on a case-by-case 
basis.
    (c) Gains or losses of any nature arising from the sale or exchange 
of property other than the property covered in paragraph (a) of this 
section, e.g., land, must be excluded in computing Federal award costs.

[[Page 326]]

    (d) When assets acquired with Federal funds, in part or wholly, are 
disposed of, the distribution of the proceeds must be made in accordance 
with Sec. Sec.  75.317 through 75.323.



Sec.  75.444  General costs of government.

    (a) For states, local governments, and Indian Tribes, the general 
costs of government are unallowable (except as provided in Sec.  
75.474). Unallowable costs include:
    (1) Salaries and expenses of the Office of the Governor of a state 
or the chief executive of a local government or the chief executive of 
an Indian tribe;
    (2) Salaries and other expenses of a state legislature, tribal 
council, or similar local governmental body, such as a county 
supervisor, city council, school board, etc., whether incurred for 
purposes of legislation or executive direction;
    (3) Costs of the judicial branch of a government;
    (4) Costs of prosecutorial activities unless treated as a direct 
cost to a specific program if authorized by statute or regulation 
(however, this does not preclude the allowability of other legal 
activities of the Attorney General as described in Sec.  75.435); and
    (5) Costs of other general types of government services normally 
provided to the general public, such as fire and police, unless provided 
for as a direct cost under a program statute or regulation.
    (b) For Indian tribes and Councils of Governments (COGs) (see Sec.  
75.2 Local government), up to 50% of salaries and expenses directly 
attributable to managing and operating Federal programs by the chief 
executive and his or her staff can be included in the indirect cost 
calculation without documentation.



Sec.  75.445  Goods or services for personal use.

    (a) Costs of goods or services for personal use of the non-Federal 
entity's employees are unallowable regardless of whether the cost is 
reported as taxable income to the employees.
    (b) Costs of housing (e.g., depreciation, maintenance, utilities, 
furnishings, rent), housing allowances and personal living expenses are 
only allowable as direct costs regardless of whether reported as taxable 
income to the employees. In addition, to be allowable direct costs must 
be approved in advance by an HHS awarding agency.



Sec.  75.446  Idle facilities and idle capacity.

    (a) As used in this section the following terms have the meanings 
set forth in this section:
    (1) Facilities means land and buildings or any portion thereof, 
equipment individually or collectively, or any other tangible capital 
asset, wherever located, and whether owned or leased by the non-Federal 
entity.
    (2) Idle facilities means completely unused facilities that are 
excess to the non-Federal entity's current needs.
    (3) Idle capacity means the unused capacity of partially used 
facilities. It is the difference between:
    (i) That which a facility could achieve under 100 percent operating 
time on a one-shift basis less operating interruptions resulting from 
time lost for repairs, setups, unsatisfactory materials, and other 
normal delays and;
    (ii) The extent to which the facility was actually used to meet 
demands during the accounting period. A multi-shift basis should be used 
if it can be shown that this amount of usage would normally be expected 
for the type of facility involved.
    (4) Cost of idle facilities or idle capacity means costs such as 
maintenance, repair, housing, rent, and other related costs, e.g., 
insurance, interest, and depreciation. These costs could include the 
costs of idle public safety emergency facilities, telecommunications, or 
information technology system capacity that is built to withstand major 
fluctuations in load, e.g., consolidated data centers.
    (b) The costs of idle facilities are unallowable except to the 
extent that:
    (1) They are necessary to meet workload requirements which may 
fluctuate and are allocated appropriately to all benefiting programs; or
    (2) Although not necessary to meet fluctuations in workload, they 
were necessary when acquired and are now idle because of changes in 
program requirements, efforts to achieve more economical operations, 
reorganization,

[[Page 327]]

termination, or other causes which could not have been reasonably 
foreseen. Under the exception stated in this subsection, costs of idle 
facilities are allowable for a reasonable period of time, ordinarily not 
to exceed one year, depending on the initiative taken to use, lease, or 
dispose of such facilities.
    (c) The costs of idle capacity are normal costs of doing business 
and are a factor in the normal fluctuations of usage or indirect cost 
rates from period to period. Such costs are allowable, provided that the 
capacity is reasonably anticipated to be necessary to carry out the 
purpose of the Federal award or was originally reasonable and is not 
subject to reduction or elimination by use on other Federal awards, 
subletting, renting, or sale, in accordance with sound business, 
economic, or security practices. Widespread idle capacity throughout an 
entire facility or among a group of assets having substantially the same 
function may be considered idle facilities.



Sec.  75.447  Insurance and indemnification.

    (a) Costs of insurance required or approved and maintained, pursuant 
to the Federal award, are allowable.
    (b) Costs of other insurance in connection with the general conduct 
of activities are allowable subject to the following limitations:
    (1) Types and extent and cost of coverage are in accordance with the 
non-Federal entity's policy and sound business practice.
    (2) Costs of insurance or of contributions to any reserve covering 
the risk of loss of, or damage to, Federal Government property are 
unallowable except to the extent that the HHS awarding agency has 
specifically required or approved such costs.
    (3) Costs allowed for business interruption or other similar 
insurance must exclude coverage of management fees.
    (4) Costs of insurance on the lives of trustees, officers, or other 
employees holding positions of similar responsibilities are allowable 
only to the extent that the insurance represents additional compensation 
(see Sec.  75.431). The cost of such insurance when the non-Federal 
entity is identified as the beneficiary is unallowable.
    (5) Insurance against defects. Costs of insurance with respect to 
any costs incurred to correct defects in the non-Federal entity's 
materials or workmanship are unallowable.
    (6) Medical liability (malpractice) insurance. Medical liability 
insurance is an allowable cost of Federal research programs only to the 
extent that the Federal research programs involve human subjects or 
training of participants in research techniques. Medical liability 
insurance costs must be treated as a direct cost and must be assigned to 
individual projects based on the manner in which the insurer allocates 
the risk to the population covered by the insurance.
    (c) Actual losses which could have been covered by permissible 
insurance (through a self-insurance program or otherwise) are 
unallowable, unless expressly provided for in the Federal award. 
However, costs incurred because of losses not covered under nominal 
deductible insurance coverage provided in keeping with sound management 
practice, and minor losses not covered by insurance, such as spoilage, 
breakage, and disappearance of small hand tools, which occur in the 
ordinary course of operations, are allowable.
    (d) Contributions to a reserve for certain self-insurance programs 
including workers' compensation, unemployment compensation, and 
severance pay are allowable subject to the following provisions:
    (1) The type of coverage and the extent of coverage and the rates 
and premiums would have been allowed had insurance (including 
reinsurance) been purchased to cover the risks. However, provision for 
known or reasonably estimated self-insured liabilities, which do not 
become payable for more than one year after the provision is made, must 
not exceed the discounted present value of the liability. The rate used 
for discounting the liability must be determined by giving consideration 
to such factors as the non-Federal entity's settlement rate for those 
liabilities and its investment rate of return.
    (2) Earnings or investment income on reserves must be credited to 
those reserves.

[[Page 328]]

    (3)(i) Contributions to reserves must be based on sound actuarial 
principles using historical experience and reasonable assumptions. 
Reserve levels must be analyzed and updated at least biennially for each 
major risk being insured and take into account any reinsurance, 
coinsurance, etc. Reserve levels related to employee-related coverages 
will normally be limited to the value of claims:
    (A) Submitted and adjudicated but not paid;
    (B) Submitted but not adjudicated; and
    (C) Incurred but not submitted.
    (ii) Reserve levels in excess of the amounts based on the above must 
be identified and justified in the cost allocation plan or indirect cost 
rate proposal.
    (4) Accounting records, actuarial studies, and cost allocations (or 
billings) must recognize any significant differences due to types of 
insured risk and losses generated by the various insured activities or 
agencies of the non-Federal entity. If individual departments or 
agencies of the non-Federal entity experience significantly different 
levels of claims for a particular risk, those differences are to be 
recognized by the use of separate allocations or other techniques 
resulting in an equitable allocation.
    (5) Whenever funds are transferred from a self-insurance reserve to 
other accounts (e.g., general fund or unrestricted account), refunds 
must be made to the Federal Government for its share of funds 
transferred, including earned or imputed interest from the date of 
transfer and debt interest, if applicable, chargeable in accordance with 
applicable Federal cognizant agency for indirect cost, claims collection 
regulations.
    (e) Insurance refunds must be credited against insurance costs in 
the year the refund is received.
    (f) Indemnification includes securing the non-Federal entity against 
liabilities to third persons and other losses not compensated by 
insurance or otherwise. The Federal Government is obligated to indemnify 
the non-Federal entity only to the extent expressly provided for in the 
Federal award, except as provided in paragraph (c) of this section.



Sec.  75.448  Intellectual property.

    (a) Patent costs. (1) The following costs related to securing 
patents and copyrights are allowable:
    (i) Costs of preparing disclosures, reports, and other documents 
required by the Federal award, and of searching the art to the extent 
necessary to make such disclosures;
    (ii) Costs of preparing documents and any other patent costs in 
connection with the filing and prosecution of a United States patent 
application where title or royalty-free license is required by the 
Federal Government to be conveyed to the Federal Government; and
    (iii) General counseling services relating to patent and copyright 
matters, such as advice on patent and copyright laws, regulations, 
clauses, and employee intellectual property agreements (See also Sec.  
75.459).
    (2) The following costs related to securing patents and copyrights 
are unallowable:
    (i) Costs of preparing disclosures, reports, and other documents, 
and of searching the art to make disclosures not required by the Federal 
award;
    (ii) Costs in connection with filing and prosecuting any foreign 
patent application, or any United States patent application, where the 
Federal award does not require conveying title or a royalty-free license 
to the Federal Government.
    (b) Royalties and other costs for use of patents and copyrights. (1) 
Royalties on a patent or copyright or amortization of the cost of 
acquiring by purchase a copyright, patent, or rights thereto, necessary 
for the proper performance of the Federal award are allowable unless:
    (i) The Federal Government already has a license or the right to 
free use of the patent or copyright.
    (ii) The patent or copyright has been adjudicated to be invalid, or 
has been administratively determined to be invalid.
    (iii) The patent or copyright is considered to be unenforceable.
    (iv) The patent or copyright is expired.

[[Page 329]]

    (2) Special care should be exercised in determining reasonableness 
where the royalties may have been arrived at as a result of less-than-
arm's-length bargaining, such as:
    (i) Royalties paid to persons, including corporations, affiliated 
with the non-Federal entity.
    (ii) Royalties paid to unaffiliated parties, including corporations, 
under an agreement entered into in contemplation that a Federal award 
would be made.
    (iii) Royalties paid under an agreement entered into after a Federal 
award is made to a non-Federal entity.
    (3) In any case involving a patent or copyright formerly owned by 
the non-Federal entity, the amount of royalty allowed must not exceed 
the cost which would have been allowed had the non-Federal entity 
retained title thereto.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.449  Interest.

    (a) General. Costs incurred for interest on borrowed capital, 
temporary use of endowment funds, or the use of the non-Federal entity's 
own funds, however represented, are unallowable. Financing costs 
(including interest) to acquire, construct, or replace capital assets 
are allowable, subject to the conditions in this section.
    (b)(1) Capital assets is defined as noted in Sec.  75.2 Capital 
assets. An asset cost includes (as applicable) acquisition costs, 
construction costs, and other costs capitalized in accordance with GAAP.
    (2) For non-Federal entity fiscal years beginning on or after 
January 1, 2016, intangible assets include patents and computer 
software. For software development projects, only interest attributable 
to the portion of the project costs capitalized in accordance with GAAP 
is allowable.
    (c) Conditions for all non-Federal entities. (1) The non-Federal 
entity uses the capital assets in support of Federal awards;
    (2) The allowable asset costs to acquire facilities and equipment 
are limited to a fair market value available to the non-Federal entity 
from an unrelated (arm's length) third party.
    (3) The non-Federal entity obtains the financing via an arm's-length 
transaction (that is, a transaction with an unrelated third party); or 
claims reimbursement of actual interest cost at a rate available via 
such a transaction.
    (4) The non-Federal entity limits claims for Federal reimbursement 
of interest costs to the least expensive alternative. For example, a 
capital lease may be determined less costly than purchasing through debt 
financing, in which case reimbursement must be limited to the amount of 
interest determined if leasing had been used.
    (5) The non-Federal entity expenses or capitalizes allowable 
interest cost in accordance with GAAP.
    (6) Earnings generated by the investment of borrowed funds pending 
their disbursement for the asset costs are used to offset the current 
period's allowable interest cost, whether that cost is expensed or 
capitalized. Earnings subject to being reported to the Federal Internal 
Revenue Service under arbitrage requirements are excludable.
    (7) The following conditions must apply to debt arrangements over $1 
million to purchase or construct facilities, unless the non-Federal 
entity makes an initial equity contribution to the purchase of 25 
percent or more. For this purpose, ``initial equity contribution'' means 
the amount or value of contributions made by the non-Federal entity for 
the acquisition of facilities prior to occupancy.
    (i) The non-Federal entity must reduce claims for reimbursement of 
interest cost by an amount equal to imputed interest earnings on excess 
cash flow attributable to the portion of the facility used for Federal 
awards.
    (ii) The non-Federal entity must impute interest on excess cash flow 
as follows:
    (A) Annually, the non-Federal entity must prepare a cumulative (from 
the inception of the project) report of monthly cash inflows and 
outflows, regardless of the funding source. For this purpose, inflows 
consist of Federal reimbursement for depreciation, amortization of 
capitalized construction interest, and annual interest cost. Outflows 
consist of initial equity contributions, debt principal payments (less 
the

[[Page 330]]

pro-rata share attributable to the cost of land), and interest payments.
    (B) To compute monthly cash inflows and outflows, the non-Federal 
entity must divide the annual amounts determined in step (i) by the 
number of months in the year (usually 12) that the building is in 
service.
    (C) For any month in which cumulative cash inflows exceed cumulative 
outflows, interest must be calculated on the excess inflows for that 
month and be treated as a reduction to allowable interest cost. The rate 
of interest to be used must be the three-month Treasury bill closing 
rate as of the last business day of that month.
    (8) Interest attributable to a fully depreciated asset is 
unallowable.
    (d) Additional conditions for states, local governments and Indian 
tribes. For costs to be allowable, the non-Federal entity must have 
incurred the interest costs for buildings after October 1, 1980, or for 
land and equipment after September 1, 1995.
    (1) The requirement to offset interest earned on borrowed funds 
against current allowable interest cost (paragraph (c)(5) of this 
section) also applies to earnings on debt service reserve funds.
    (2) The non-Federal entity will negotiate the amount of allowable 
interest cost related to the acquisition of facilities with asset costs 
of $1 million or more, as outlined in paragraph (c)(7) of this section. 
For this purpose, a non-Federal entity must consider only cash inflows 
and outflows attributable to that portion of the real property used for 
Federal awards.
    (e) Additional conditions for IHEs. For costs to be allowable, the 
IHE must have incurred the interest costs after July 1, 1982, in 
connection with acquisitions of capital assets that occurred after that 
date.
    (f) Additional condition for nonprofit organizations. For costs to 
be allowable, the nonprofit organization incurred the interest costs 
after September 29, 1995, in connection with acquisitions of capital 
assets that occurred after that date.
    (g) The interest allowability provisions of this section do not 
apply to a nonprofit organization subject to ``full coverage'' under the 
Cost Accounting Standards (CAS), as defined at 48 CFR 9903.201-2(a). The 
non-Federal entity's Federal awards are instead subject to CAS 414 (48 
CFR 9904.414), and CAS 417 (48 CFR 9904.417).

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.450  Lobbying.

    (a) The cost of certain influencing activities associated with 
obtaining grants, contracts, cooperative agreements, or loans is an 
unallowable cost. Lobbying with respect to certain grants, contracts, 
cooperative agreements, and loans is governed by relevant statutes, 
including among others, the provisions of 31 U.S.C. 1352, as well as the 
common rule, ``New Restrictions on Lobbying'' published at 55 FR 6736 
(February 26, 1990), including definitions, and the Office of Management 
and Budget ``Government-wide Guidance for New Restrictions on Lobbying'' 
and notices published at 54 FR 52306 (December 20, 1989), 55 FR 24540 
(June 15, 1990), 57 FR 1772 (January 15, 1992), and 61 FR 1412 (January 
19, 1996).
    (b) Executive lobbying costs. Costs incurred in attempting to 
improperly influence either directly or indirectly, an employee or 
officer of the executive branch of the Federal Government to give 
consideration or to act regarding a Federal award or a regulatory matter 
are unallowable. Improper influence means any influence that induces or 
tends to induce a Federal employee or officer to give consideration or 
to act regarding a Federal award or regulatory matter on any basis other 
than the merits of the matter.
    (c) In addition to the above, the following restrictions are 
applicable to nonprofit organizations and IHEs:
    (1) Costs associated with the following activities are unallowable:
    (i) Attempts to influence the outcomes of any Federal, state, or 
local election, referendum, initiative, or similar procedure, through 
in-kind or cash contributions, endorsements, publicity, or similar 
activity;
    (ii) Establishing, administering, contributing to, or paying the 
expenses of a political party, campaign, political action committee, or 
other organization established for the purpose of influencing the 
outcomes of elections in the United States;

[[Page 331]]

    (iii) Any attempt to influence:
    (A) The introduction of Federal or state legislation;
    (B) The enactment or modification of any pending Federal or state 
legislation through communication with any member or employee of the 
Congress or state legislature (including efforts to influence state or 
local officials to engage in similar lobbying activity);
    (C) The enactment or modification of any pending Federal or state 
legislation by preparing, distributing, or using publicity or 
propaganda, or by urging members of the general public, or any segment 
thereof, to contribute to or participate in any mass demonstration, 
march, rally, fund raising drive, lobbying campaign or letter writing or 
telephone campaign; or
    (D) Any government official or employee in connection with a 
decision to sign or veto enrolled legislation;
    (iv) Legislative liaison activities, including attendance at 
legislative sessions or committee hearings, gathering information 
regarding legislation, and analyzing the effect of legislation, when 
such activities are carried on in support of or in knowing preparation 
for an effort to engage in unallowable lobbying.
    (2) The following activities are excepted from the coverage of 
paragraph (c)(1) of this section:
    (i) Technical and factual presentations on topics directly related 
to the performance of a grant, contract, or other agreement (through 
hearing testimony, statements, or letters to the Congress or a state 
legislature, or subdivision, member, or cognizant staff member thereof), 
in response to a documented request (including a Congressional Record 
notice requesting testimony or statements for the record at a regularly 
scheduled hearing) made by the non-Federal entity's member of congress, 
legislative body or a subdivision, or a cognizant staff member thereof, 
provided such information is readily obtainable and can be readily put 
in deliverable form, and further provided that costs under this section 
for travel, lodging or meals are unallowable unless incurred to offer 
testimony at a regularly scheduled Congressional hearing pursuant to a 
written request for such presentation made by the Chairman or Ranking 
Minority Member of the Committee or Subcommittee conducting such 
hearings;
    (ii) Any lobbying made unallowable by paragraph (c)(1)(iii) of this 
section to influence state legislation in order to directly reduce the 
cost, or to avoid material impairment of the non-Federal entity's 
authority to perform the grant, contract, or other agreement; or
    (iii) Any activity specifically authorized by statute to be 
undertaken with funds from the Federal award.
    (iv) Any activity excepted from the definitions of ``lobbying'' or 
``influencing legislation'' by the Internal Revenue Code provisions that 
require nonprofit organizations to limit their participation in direct 
and ``grass roots'' lobbying activities in order to retain their 
charitable deduction status and avoid punitive excise taxes, I.R.C. 
sections 501(c)(3), 501(h), 4911(a), including:
    (A) Nonpartisan analysis, study, or research reports;
    (B) Examinations and discussions of broad social, economic, and 
similar problems; and
    (C) Information provided upon request by a legislator for technical 
advice and assistance, as defined by IRC sec. 4911(d)(2) and 26 CFR 
56.4911-2(c)(1)-(c)(3).
    (v) When a non-Federal entity seeks reimbursement for indirect (F&A) 
costs, total lobbying costs must be separately identified in the 
indirect (F&A) cost rate proposal, and thereafter treated as other 
unallowable activity costs in accordance with the procedures of Sec.  
75.413.
    (vi) The non-Federal entity must submit as part of its annual 
indirect (F&A) cost rate proposal a certification that the requirements 
and standards of this section have been complied with. (See also Sec.  
75.415.)
    (vii)(A) Time logs, calendars, or similar records are not required 
to be created for purposes of complying with the record keeping 
requirements in Sec.  75.302 with respect to lobbying costs during any 
particular calendar month when:
    (1) The employee engages in lobbying (as defined in paragraphs 
(c)(1) and (c)(2) of this section) 25 percent or less of the employee's 
compensated hours of

[[Page 332]]

employment during that calendar month; and
    (2) Within the preceding five-year period, the non-Federal entity 
has not materially misstated allowable or unallowable costs of any 
nature, including legislative lobbying costs.
    (B) When conditions in paragraph (c)(2)(vii)(A)(1) and (2) of this 
section are met, non-Federal entities are not required to establish 
records to support the allowability of claimed costs in addition to 
records already required or maintained. Also, when conditions in 
paragraphs (c)(2)(vii)(A)(1) and (2) of this section are met, the 
absence of time logs, calendars, or similar records will not serve as a 
basis for disallowing costs by contesting estimates of lobbying time 
spent by employees during a calendar month.
    (viii) The HHS awarding agency must establish procedures for 
resolving in advance, in consultation with OMB, any significant 
questions or disagreements concerning the interpretation or application 
of this section. Any such advance resolutions must be binding in any 
subsequent settlements, audits, or investigations with respect to that 
grant or contract for purposes of interpretation of this part, provided, 
however, that this must not be construed to prevent a contractor or non-
Federal entity from contesting the lawfulness of such a determination.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.451  Losses on other awards or contracts.

    Any excess of costs over income under any other award or contract of 
any nature is unallowable. This includes, but is not limited to, the 
non-Federal entity's contributed portion by reason of cost-sharing 
agreements or any under-recoveries through negotiation of flat amounts 
for indirect (F&A) costs. Also, any excess of costs over authorized 
funding levels transferred from any award or contract to another award 
or contract is unallowable. All losses are not allowable indirect (F&A) 
costs and are required to be included in the appropriate indirect cost 
rate base for allocation of indirect costs.



Sec.  75.452  Maintenance and repair costs.

    Costs incurred for utilities, insurance, security, necessary 
maintenance, janitorial services, repair, or upkeep of buildings and 
equipment (including Federal property unless otherwise provided for) 
which neither add to the permanent value of the property nor appreciably 
prolong its intended life, but keep it in an efficient operating 
condition, are allowable. Costs incurred for improvements which add to 
the permanent value of the buildings and equipment or appreciably 
prolong their intended life must be treated as capital expenditures (see 
Sec.  75.439). These costs are only allowable to the extent not paid 
through rental or other agreements.



Sec.  75.453  Materials and supplies costs, including costs 
of computing devices.

    (a) Costs incurred for materials, supplies, and fabricated parts 
necessary to carry out a Federal award are allowable.
    (b) Purchased materials and supplies must be charged at their actual 
prices, net of applicable credits. Withdrawals from general stores or 
stockrooms must be charged at their actual net cost under any recognized 
method of pricing inventory withdrawals, consistently applied. Incoming 
transportation charges are a proper part of materials and supplies 
costs.
    (c) Materials and supplies used for the performance of a Federal 
award may be charged as direct costs. In the specific case of computing 
devices, charging as direct costs is allowable for devices that are 
essential and allocable, but not solely dedicated, to the performance of 
a Federal award.
    (d) Where federally-donated or furnished materials are used in 
performing the Federal award, such materials will be used without 
charge.



Sec.  75.454  Memberships, subscriptions, and professional activity costs.

    (a) Costs of the non-Federal entity's membership in business, 
technical, and professional organizations are allowable.
    (b) Costs of the non-Federal entity's subscriptions to business, 
professional, and technical periodicals are allowable.

[[Page 333]]

    (c) Costs of membership in any civic or community organization are 
allowable with prior approval by the HHS awarding agency or pass-through 
entity.
    (d) Costs of membership in any country club or social or dining club 
or organization are unallowable.
    (e) Costs of membership in organizations whose primary purpose is 
lobbying are unallowable. See also Sec.  75.450.



Sec.  75.455  Organization costs.

    Costs such as incorporation fees, brokers' fees, fees to promoters, 
organizers or management consultants, attorneys, accountants, or 
investment counselor, whether or not employees of the non-Federal entity 
in connection with establishment or reorganization of an organization, 
are unallowable except with prior approval of the HHS awarding agency.



Sec.  75.456  Participant support costs.

    Participant support costs as defined in Sec.  75.2 are allowable 
with the prior approval of the HHS awarding agency.

[81 FR 3018, Jan. 20, 2016]



Sec.  75.457  Plant and security costs.

    Necessary and reasonable expenses incurred for protection and 
security of facilities, personnel, and work products are allowable. Such 
costs include, but are not limited to, wages and uniforms of personnel 
engaged in security activities; equipment; barriers; protective (non-
military) gear, devices, and equipment; contractual security services; 
and consultants. Capital expenditures for plant security purposes are 
subject to Sec.  75.439.



Sec.  75.458  Pre-award costs.

    Pre-award costs are those incurred prior to the effective date of 
the Federal award directly pursuant to the negotiation and in 
anticipation of the Federal award where such costs are necessary for 
efficient and timely performance of the scope of work. Such costs are 
allowable only to the extent that they would have been allowable if 
incurred after the date of the Federal award and only with the written 
approval of the HHS awarding agency.



Sec.  75.459  Professional service costs.

    (a) Costs of professional and consultant services rendered by 
persons who are members of a particular profession or possess a special 
skill, and who are not officers or employees of the non-Federal entity, 
are allowable, subject to paragraphs (b) and (c) of this section when 
reasonable in relation to the services rendered and when not contingent 
upon recovery of the costs from the Federal Government. In addition, 
legal and related services are limited under Sec.  75.435.
    (b) In determining the allowability of costs in a particular case, 
no single factor or any special combination of factors is necessarily 
determinative. However, the following factors are relevant:
    (1) The nature and scope of the service rendered in relation to the 
service required.
    (2) The necessity of contracting for the service, considering the 
non-Federal entity's capability in the particular area.
    (3) The past pattern of such costs, particularly in the years prior 
to Federal awards.
    (4) The impact of Federal awards on the non-Federal entity's 
business (i.e., what new problems have arisen).
    (5) Whether the proportion of Federal work to the non-Federal 
entity's total business is such as to influence the non-Federal entity 
in favor of incurring the cost, particularly where the services rendered 
are not of a continuing nature and have little relationship to work 
under Federal awards.
    (6) Whether the service can be performed more economically by direct 
employment rather than contracting.
    (7) The qualifications of the individual or concern rendering the 
service and the customary fees charged, especially on non-federally 
funded activities.
    (8) Adequacy of the contractual agreement for the service (e.g., 
description of the service, estimate of time required, rate of 
compensation, and termination provisions).
    (c) In addition to the factors in paragraph (b) of this section, to 
be allowable, retainer fees must be supported by evidence of bona fide 
services available or rendered.

[[Page 334]]



Sec.  75.460  Proposal costs.

    Proposal costs are the costs of preparing bids, proposals, or 
applications on potential Federal and non-Federal awards or projects, 
including the development of data necessary to support the non-Federal 
entity's bids or proposals. Proposal costs of the current accounting 
period of both successful and unsuccessful bids and proposals normally 
should be treated as indirect (F&A) costs and allocated currently to all 
activities of the non-Federal entity. No proposal costs of past 
accounting periods will be allocable to the current period.



Sec.  75.461  Publication and printing costs.

    (a) Publication costs for electronic and print media, including 
distribution, promotion, and general handling are allowable. If these 
costs are not identifiable with a particular cost objective, they should 
be allocated as indirect costs to all benefiting activities of the non-
Federal entity.
    (b) Page charges for professional journal publications are allowable 
where:
    (1) The publications report work supported by the Federal 
Government; and
    (2) The charges are levied impartially on all items published by the 
journal, whether or not under a Federal award.
    (3) The non-Federal entity may charge the Federal award before 
closeout for the costs of publication or sharing of research results if 
the costs are not incurred during the period of performance of the 
Federal award.
    (c) The non-Federal entity may charge the Federal award before 
closeout for the costs of publication as prescribed in paragraphs (a) or 
(b) of this section or sharing of research results if the costs are not 
incurred during the period of performance of the Federal award.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.462  Rearrangement and reconversion costs.

    (a) Costs incurred for ordinary and normal rearrangement and 
alteration of facilities are allowable as indirect costs. Special 
arrangements and alterations costs incurred specifically for a Federal 
award are allowable as a direct cost with the prior approval of the HHS 
awarding agency or pass-through entity.
    (b) Costs incurred in the restoration or rehabilitation of the non-
Federal entity's facilities to approximately the same condition existing 
immediately prior to commencement of Federal awards, less costs related 
to normal wear and tear, are allowable.



Sec.  75.463  Recruiting costs.

    (a) Subject to paragraphs (b) and (c) of this section, and provided 
that the size of the staff recruited and maintained is in keeping with 
workload requirements, costs of ``help wanted'' advertising, operating 
costs of an employment office necessary to secure and maintain an 
adequate staff, costs of operating an aptitude and educational testing 
program, travel costs of employees while engaged in recruiting 
personnel, travel costs of applicants for interviews for prospective 
employment, and relocation costs incurred incident to recruitment of new 
employees, are allowable to the extent that such costs are incurred 
pursuant to the non-Federal entity's standard recruitment program. Where 
the non-Federal entity uses employment agencies, costs not in excess of 
standard commercial rates for such services are allowable.
    (b) Special emoluments, fringe benefits, and salary allowances 
incurred to attract professional personnel that do not meet the test of 
reasonableness or do not conform with the established practices of the 
non-Federal entity, are unallowable.
    (c) Where relocation costs incurred incident to recruitment of a new 
employee have been funded in whole or in part to a Federal award, and 
the newly hired employee resigns for reasons within the employee's 
control within 12 months after hire, the non-Federal entity will be 
required to refund or credit the Federal share of such relocation costs 
to the Federal Government. See also Sec.  75.464.
    (d) Short-term, travel visa costs (as opposed to longer-term, 
immigration visas) are generally allowable expenses that may be proposed 
as a direct cost.

[[Page 335]]

Since short-term visas are issued for a specific period and purpose, 
they can be clearly identified as directly connected to work performed 
on a Federal award. For these costs to be directly charged to a Federal 
award, they must:
    (1) Be critical and necessary for the conduct of the project;
    (2) Be allowable under the applicable cost principles;
    (3) Be consistent with the non-Federal entity's cost accounting 
practices and non-Federal entity policy; and
    (4) Meet the definition of ``direct cost'' as described in the 
applicable cost principles.



Sec.  75.464  Relocation costs of employees.

    (a) Relocation costs are costs incident to the permanent change of 
duty assignment (for an indefinite period or for a stated period of not 
less than 12 months) of an existing employee or upon recruitment of a 
new employee. Relocation costs are allowable, subject to the limitations 
described in paragraphs (b), (c), and (d) of this section, provided 
that:
    (1) The move is for the benefit of the employer.
    (2) Reimbursement to the employee is in accordance with an 
established written policy consistently followed by the employer.
    (3) The reimbursement does not exceed the employee's actual (or 
reasonably estimated) expenses.
    (b) Allowable relocation costs for current employees are limited to 
the following:
    (1) The costs of transportation of the employee, members of his or 
her immediate family and his household, and personal effects to the new 
location.
    (2) The costs of finding a new home, such as advance trips by 
employees and spouses to locate living quarters and temporary lodging 
during the transition period, up to maximum period of 30 calendar days.
    (3) Closing costs, such as brokerage, legal, and appraisal fees, 
incident to the disposition of the employee's former home. These costs, 
together with those described in (4), are limited to 8 per cent of the 
sales price of the employee's former home.
    (4) The continuing costs of ownership (for up to six months) of the 
vacant former home after the settlement or lease date of the employee's 
new permanent home, such as maintenance of buildings and grounds 
(exclusive of fixing-up expenses), utilities, taxes, and property 
insurance.
    (5) Other necessary and reasonable expenses normally incident to 
relocation, such as the costs of canceling an unexpired lease, 
transportation of personal property, and purchasing insurance against 
loss of or damages to personal property. The cost of canceling an 
unexpired lease is limited to three times the monthly rental.
    (c) Allowable relocation costs for new employees are limited to 
those described in paragraphs (b)(1) and (2) of this section. When 
relocation costs incurred incident to the recruitment of new employees 
have been charged to a Federal award and the employee resigns for 
reasons within the employee's control within 12 months after hire, the 
non-Federal entity must refund or credit the Federal Government for its 
share of the cost. However, the costs of travel to an overseas location 
must be considered travel costs in accordance with Sec.  75.474, and not 
Sec.  75.464, for the purpose of this paragraph if dependents are not 
permitted at the location for any reason and the costs do not include 
costs of transporting household goods.
    (d) The following costs related to relocation are unallowable:
    (1) Fees and other costs associated with acquiring a new home.
    (2) A loss on the sale of a former home.
    (3) Continuing mortgage principal and interest payments on a home 
being sold.
    (4) Income taxes paid by an employee related to reimbursed 
relocation costs.



Sec.  75.465  Rental costs of real property and equipment.

    (a) Subject to the limitations described in paragraphs (b) and (c) 
of this section, rental costs are allowable to the extent that the rates 
are reasonable in light of such factors as: Rental costs of comparable 
property, if any; market conditions in the area; alternatives available; 
and the type, life expectancy, condition, and value of the property 
leased. Rental arrangements

[[Page 336]]

should be reviewed periodically to determine if circumstances have 
changed and other options are available.
    (b) Rental costs under ``sale and lease back'' arrangements are 
allowable only up to the amount that would be allowed had the non-
Federal entity continued to own the property. This amount would include 
expenses such as depreciation, maintenance, taxes, and insurance.
    (c) Rental costs under ``less-than-arm's-length'' leases are 
allowable only up to the amount as explained in paragraph (b) of this 
section. For this purpose, a less-than-arm's-length lease is one under 
which one party to the lease agreement is able to control or 
substantially influence the actions of the other. Such leases include, 
but are not limited to those between:
    (1) Divisions of the non-Federal entity;
    (2) The non-Federal entity under common control through common 
officers, directors, or members; and
    (3) The non-Federal entity and a director, trustee, officer, or key 
employee of the non-Federal entity or an immediate family member, either 
directly or through corporations, trusts, or similar arrangements in 
which they hold a controlling interest. For example, the non-Federal 
entity may establish a separate corporation for the sole purpose of 
owning property and leasing it back to the non-Federal entity.
    (4) Family members include one party with any of the following 
relationships to another party:
    (i) Spouse, and parents thereof;
    (ii) Children, and spouses thereof;
    (iii) Parents, and spouses thereof;
    (iv) Siblings, and spouses thereof;
    (v) Grandparents and grandchildren, and spouses thereof;
    (vi) Domestic partner and parents thereof, including domestic 
partners of any individual in 2 through 5 of this definition; and
    (vii) Any individual related by blood or affinity whose close 
association with the employee is the equivalent of a family 
relationship.
    (5) Rental costs under leases which are required to be treated as 
capital leases under GAAP are allowable only up to the amount (as 
explained in paragraph (b) of this section) that would be allowed had 
the non-Federal entity purchased the property on the date the lease 
agreement was executed. The provisions of GAAP must be used to determine 
whether a lease is a capital lease. Interest costs related to capital 
leases are allowable to the extent they meet the criteria in Sec.  
75.449. Unallowable costs include amounts paid for profit, management 
fees, and taxes that would not have been incurred had the non-Federal 
entity purchased the property.
    (6) The rental of any property owned by any individuals or entities 
affiliated with the non-Federal entity, to include commercial or 
residential real estate, for purposes such as the home office workspace 
is unallowable.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.466  Scholarships and student aid costs.

    (a) Costs of scholarships, fellowships, and other programs of 
student aid at IHEs are allowable only when the purpose of the Federal 
award is to provide training to selected participants and the charge is 
approved by the HHS awarding agency. However, tuition remission and 
other forms of compensation paid as, or in lieu of, wages to students 
performing necessary work are allowable provided that:
    (1) The individual is conducting activities necessary to the Federal 
award;
    (2) Tuition remission and other support are provided in accordance 
with established policy of the IHE and consistently provided in a like 
manner to students in return for similar activities conducted under 
Federal awards as well as other activities; and
    (3) During the academic period, the student is enrolled in an 
advanced degree program at a non-Federal entity or affiliated 
institution and the activities of the student in relation to the Federal 
award are related to the degree program;
    (4) The tuition or other payments are reasonable compensation for 
the work performed and are conditioned explicitly upon the performance 
of necessary work; and
    (5) It is the IHE's practice to similarly compensate students under 
Federal awards as well as other activities.

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    (b) Charges for tuition remission and other forms of compensation 
paid to students as, or in lieu of, salaries and wages must be subject 
to the reporting requirements in Sec.  75.430, and must be treated as 
direct or indirect cost in accordance with the actual work being 
performed. Tuition remission may be charged on an average rate basis. 
See also Sec.  75.431.



Sec.  75.467  Selling and marketing costs.

    Costs of selling and marketing any products or services of the non-
Federal entity (unless allowed under Sec.  75.421) are unallowable, 
except as direct costs, with prior approval by the HHS awarding agency 
when necessary for the performance of the Federal award.



Sec.  75.468  Specialized service facilities.

    (a) The costs of services provided by highly complex or specialized 
facilities operated by the non-Federal entity, such as computing 
facilities, wind tunnels, and reactors are allowable, provided the 
charges for the services meet the conditions of either paragraphs (b) or 
(c) of this section, and, in addition, take into account any items of 
income or Federal financing that qualify as applicable credits under 
Sec.  75.406.
    (b) The costs of such services, when material, must be charged 
directly to applicable awards based on actual usage of the services on 
the basis of a schedule of rates or established methodology that:
    (1) Does not discriminate between activities under Federal awards 
and other activities of the non-Federal entity, including usage by the 
non-Federal entity for internal purposes, and
    (2) Is designed to recover only the aggregate costs of the services. 
The costs of each service must consist normally of both its direct costs 
and its allocable share of all indirect (F&A) costs. Rates must be 
adjusted at least biennially, and must take into consideration over/
under applied costs of the previous period(s).
    (c) Where the costs incurred for a service are not material, they 
may be allocated as indirect (F&A) costs.
    (d) Under some extraordinary circumstances, where it is in the best 
interest of the Federal Government and the non-Federal entity to 
establish alternative costing arrangements, such arrangements may be 
worked out with the Federal cognizant agency for indirect costs.



Sec.  75.469  Student activity costs.

    Costs incurred for intramural activities, student publications, 
student clubs, and other student activities, are unallowable, unless 
specifically provided for in the Federal award.



Sec.  75.470  Taxes (including Value Added Tax).

    (a) For states, local governments and Indian tribes:
    (1) Taxes that a governmental unit is legally required to pay are 
allowable, except for self-assessed taxes that disproportionately affect 
Federal programs or changes in tax policies that disproportionately 
affect Federal programs.
    (2) Gasoline taxes, motor vehicle fees, and other taxes that are in 
effect user fees for benefits provided to the Federal Government are 
allowable.
    (3) This provision does not restrict the authority of the HHS 
awarding agency to identify taxes where Federal participation is 
inappropriate. Where the identification of the amount of unallowable 
taxes would require an inordinate amount of effort, the cognizant agency 
for indirect costs may accept a reasonable approximation thereof.
    (b) For nonprofit organizations and IHEs:
    (1) In general, taxes which the non-Federal entity is required to 
pay and which are paid or accrued in accordance with GAAP, and payments 
made to local governments in lieu of taxes which are commensurate with 
the local government services received are allowable, except for:
    (i) Taxes from which exemptions are available to the non-Federal 
entity directly or which are available to the non-Federal entity based 
on an exemption afforded the Federal Government and, in the latter case, 
when the HHS awarding agency makes available the necessary exemption 
certificates,
    (ii) Special assessments on land which represent capital 
improvements, and
    (iii) Federal income taxes.

[[Page 338]]

    (2) Any refund of taxes, and any payment to the non-Federal entity 
of interest thereon, which were allowed as Federal award costs, will be 
credited either as a cost reduction or cash refund, as appropriate, to 
the Federal Government. However, any interest actually paid or credited 
to an non-Federal entity incident to a refund of tax, interest, and 
penalty will be paid or credited to the Federal Government only to the 
extent that such interest accrued over the period during which the non-
Federal entity has been reimbursed by the Federal Government for the 
taxes, interest, and penalties.
    (c) Value Added Tax (VAT) Foreign taxes charged for the purchase of 
goods or services that a non-Federal entity is legally required to pay 
in country is an allowable expense under Federal awards. Foreign tax 
refunds or applicable credits under Federal awards refer to receipts, or 
reduction of expenditures, which operate to offset or reduce expense 
items that are allocable to Federal awards as direct or indirect costs. 
To the extent that such credits accrued or received by the non-Federal 
entity relate to allowable cost, these costs must be credited to the HHS 
awarding agency either as costs or cash refunds. If the costs are 
credited back to the Federal award, the non-Federal entity may reduce 
the Federal share of costs by the amount of the foreign tax 
reimbursement, or where Federal award has not expired, use the foreign 
government tax refund for approved activities under the Federal award 
with prior approval of the HHS awarding agency.



Sec.  75.471  Termination costs.

    Termination of a Federal award generally gives rise to the 
incurrence of costs, or the need for special treatment of costs, which 
would not have arisen had the Federal award not been terminated. Cost 
principles covering these items are set forth in this section. They are 
to be used in conjunction with the other provisions of this part in 
termination situations.
    (a) The cost of items reasonably usable on the non-Federal entity's 
other work must not be allowable unless the non-Federal entity submits 
evidence that it would not retain such items at cost without sustaining 
a loss. In deciding whether such items are reasonably usable on other 
work of the non-Federal entity, the HHS awarding agency should consider 
the non-Federal entity's plans and orders for current and scheduled 
activity. Contemporaneous purchases of common items by the non-Federal 
entity must be regarded as evidence that such items are reasonably 
usable on the non-Federal entity's other work. Any acceptance of common 
items as allocable to the terminated portion of the Federal award must 
be limited to the extent that the quantities of such items on hand, in 
transit, and on order are in excess of the reasonable quantitative 
requirements of other work.
    (b) If in a particular case, despite all reasonable efforts by the 
non-Federal entity, certain costs cannot be discontinued immediately 
after the effective date of termination, such costs are generally 
allowable within the limitations set forth in this part, except that any 
such costs continuing after termination due to the negligent or willful 
failure of the non-Federal entity to discontinue such costs must be 
unallowable.
    (c) Loss of useful value of special tooling, machinery, and 
equipment is generally allowable if:
    (1) Such special tooling, special machinery, or equipment is not 
reasonably capable of use in the other work of the non-Federal entity,
    (2) The interest of the Federal Government is protected by transfer 
of title or by other means deemed appropriate by the HHS awarding agency 
(see also Sec.  75.320(d)), and
    (3) The loss of useful value for any one terminated Federal award is 
limited to that portion of the acquisition cost which bears the same 
ratio to the total acquisition cost as the terminated portion of the 
Federal award bears to the entire terminated Federal award and other 
Federal awards for which the special tooling, machinery, or equipment 
was acquired.
    (d) Rental costs under unexpired leases are generally allowable 
where clearly shown to have been reasonably necessary for the 
performance of the terminated Federal award less the residual value of 
such leases, if:

[[Page 339]]

    (1) The amount of such rental claimed does not exceed the reasonable 
use value of the property leased for the period of the Federal award and 
such further period as may be reasonable, and
    (2) The non-Federal entity makes all reasonable efforts to 
terminate, assign, settle, or otherwise reduce the cost of such lease. 
There also may be included the cost of alterations of such leased 
property, provided such alterations were necessary for the performance 
of the Federal award, and of reasonable restoration required by the 
provisions of the lease.
    (e) Settlement expenses including the following are generally 
allowable:
    (1) Accounting, legal, clerical, and similar costs reasonably 
necessary for:
    (i) The preparation and presentation to the Federal awarding agency 
of settlement claims and supporting data with respect to the terminated 
portion of the Federal award, unless the termination is for cause (see 
subpart D of this part, Sec. Sec.  75.371 through 75.375); and
    (ii) The termination and settlement of subawards.
    (2) Reasonable costs for the storage, transportation, protection, 
and disposition of property provided by the Federal Government or 
acquired or produced for the Federal award.
    (f) Claims under subawards, including the allocable portion of 
claims which are common to the Federal award and to other work of the 
non-Federal entity, are generally allowable. An appropriate share of the 
non-Federal entity's indirect costs may be allocated to the amount of 
settlements with contractors and/or subrecipients, provided that the 
amount allocated is otherwise consistent with the basic guidelines 
contained in Sec.  75.414. The indirect costs so allocated must exclude 
the same and similar costs claimed directly or indirectly as settlement 
expenses.



Sec.  75.472  Training and education costs.

    The cost of training and education provided for employee development 
is allowable.



Sec.  75.473  Transportation costs.

    Costs incurred for freight, express, cartage, postage, and other 
transportation services relating either to goods purchased, in process, 
or delivered, are allowable. When such costs can readily be identified 
with the items involved, they may be charged directly as transportation 
costs or added to the cost of such items. Where identification with the 
materials received cannot readily be made, inbound transportation cost 
may be charged to the appropriate indirect (F&A) cost accounts if the 
non-Federal entity follows a consistent, equitable procedure in this 
respect. Outbound freight, if reimbursable under the terms and 
conditions of the Federal award, should be treated as a direct cost.



Sec.  75.474  Travel costs.

    (a) General. Travel costs are the expenses for transportation, 
lodging, subsistence, and related items incurred by employees who are in 
travel status on official business of the non-Federal entity. Such costs 
may be charged on an actual cost basis, on a per diem or mileage basis 
in lieu of actual costs incurred, or on a combination of the two, 
provided the method used is applied to an entire trip and not to 
selected days of the trip, and results in charges consistent with those 
normally allowed in like circumstances in the non-Federal entity's non-
federally-funded activities and in accordance with non-Federal entity's 
written travel reimbursement policies. Notwithstanding the provisions of 
Sec.  75.444, travel costs of officials covered by that section are 
allowable with the prior written approval of the Federal awarding agency 
or pass-through entity when they are specifically related to the Federal 
award.
    (b) Lodging and subsistence. Costs incurred by employees and 
officers for travel, including costs of lodging, other subsistence, and 
incidental expenses, must be considered reasonable and otherwise 
allowable only to the extent such costs do not exceed charges normally 
allowed by the non-Federal entity in its regular operations as the 
result of the non-Federal entity's written travel policy. In addition, 
if these costs are charged directly to the Federal award documentation 
must justify that:
    (1) Participation of the individual is necessary to the Federal 
award; and

[[Page 340]]

    (2) The costs are reasonable and consistent with non-Federal 
entity's established travel policy.
    (c)(1) Temporary dependent care costs (as dependent is defined in 26 
U.S.C. 152) above and beyond regular dependent care that directly 
results from travel to conferences is allowable provided that:
    (i) The costs are a direct result of the individual's travel for the 
Federal award;
    (ii) The costs are consistent with the non-Federal entity's 
documented travel policy for all entity travel; and
    (iii) Are only temporary during the travel period.
    (2) Travel costs for dependents are unallowable, except for travel 
of duration of six months or more with prior approval of the HHS 
awarding agency. See also Sec.  75.432.
    (d) In the absence of an acceptable, written non-Federal entity 
policy regarding travel costs, the rates and amounts established under 5 
U.S.C. 5701-11 (``Travel and Subsistence Expenses: Mileage Allowance''), 
or by the Administrator of General Services, or by the President (or his 
or her designee) pursuant to any provisions of such subchapter must 
apply to travel under Federal awards (48 CFR 31.205-46(a)).
    (e) Commercial air travel. (1) Airfare costs in excess of the basic 
least expensive unrestricted accommodations class offered by commercial 
airlines are unallowable except when such accommodations would:
    (i) Require circuitous routing;
    (ii) Require travel during unreasonable hours;
    (iii) Excessively prolong travel;
    (iv) Result in additional costs that would offset the transportation 
savings; or
    (v) Offer accommodations not reasonably adequate for the traveler's 
medical needs. The non-Federal entity must justify and document these 
conditions on a case-by-case basis in order for the use of first-class 
or business-class airfare to be allowable in such cases.
    (2) Unless a pattern of avoidance is detected, the Federal 
Government will generally not question a non-Federal entity's 
determinations that customary standard airfare or other discount airfare 
is unavailable for specific trips if the non-Federal entity can 
demonstrate that such airfare was not available in the specific case.
    (f) Air travel by other than commercial carrier. Costs of travel by 
non-Federal entity-owned, -leased, or -chartered aircraft include the 
cost of lease, charter, operation (including personnel costs), 
maintenance, depreciation, insurance, and other related costs. The 
portion of such costs that exceeds the cost of airfare as provided for 
in paragraph (d) of this section, is unallowable.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.475  Trustees.

    Travel and subsistence costs of trustees (or directors) at IHEs and 
nonprofit organizations are allowable. See also Sec.  75.474.

                       HHS Selected Items of Cost



Sec.  75.476  Independent research and development costs.

    Independent research and development is research and development 
which is conducted by an organization, and which is not sponsored by 
Federal or non-Federal awards, contracts, or other agreements. 
Independent research and development shall be allocated its 
proportionate share of indirect costs on the same basis as the 
allocation of indirect costs to sponsored research and development. The 
cost of independent research and development, including their 
proportionate share of indirect costs, are unallowable.



Sec.  75.477  Shared responsibility payments.

    (a) Payments for failure to maintain minimum essential health 
coverage. Any payments or assessments imposed on an individual or 
individuals pursuant to 26 U.S.C. 5000A(b) as a result of any failure to 
maintain minimum essential coverage as required by 26 U.S.C. 5000A(a) 
with respect to any period prior to January 1, 2019, are not allowable 
expenses under Federal awards from an HHS awarding agency.
    (b) Payments for failure to offer health coverage to employees. Any 
payments or

[[Page 341]]

assessments imposed on an employer pursuant to 26 U.S.C. 4980H as a 
result of the employer's failure to offer to its full-time employees 
(and their dependents) the opportunity to enroll in minimum essential 
coverage under an eligible employer-sponsored plan are not allowable 
expenses under Federal awards from an HHS awarding agency.

[86 FR 2278, Jan. 12, 2021]



                      Subpart F_Audit Requirements

                                 General



Sec.  75.500  Purpose.

    This part sets forth standards for obtaining consistency and 
uniformity among HHS agencies for the audit of non-Federal entities 
expending Federal awards.

                                 Audits



Sec.  75.501  Audit requirements.

    (a) Audit required. A non-Federal entity that expends $750,000 or 
more during the non-Federal entity's fiscal year in Federal awards must 
have a single or program-specific audit conducted for that year in 
accordance with the provisions of this part.
    (b) Single audit. A non-Federal entity that expends $750,000 or more 
during the non-Federal entity's fiscal year in Federal awards must have 
a single audit conducted in accordance with Sec.  75.514 except when it 
elects to have a program-specific audit conducted in accordance with 
paragraph (c) of this section.
    (c) Program-specific audit election. When an auditee expends Federal 
awards under only one Federal program (excluding R&D) and the Federal 
program's statutes, regulations, or the terms and conditions of the 
Federal award do not require a financial statement audit of the auditee, 
the auditee may elect to have a program-specific audit conducted in 
accordance with Sec.  75.507. A program-specific audit may not be 
elected for R&D unless all of the Federal awards expended were received 
from the same Federal agency, or the same Federal agency and the same 
pass-through entity, and that Federal agency, or pass-through entity in 
the case of a subrecipient, approves in advance a program-specific 
audit.
    (d) Exemption when Federal awards expended are less than $750,000. A 
non-Federal entity that expends less than $750,000 during the non-
Federal entity's fiscal year in Federal awards is exempt from Federal 
audit requirements for that year, except as noted in Sec.  75.503, but 
records must be available for review or audit by appropriate officials 
of the Federal agency, pass-through entity, and Government 
Accountability Office (GAO).
    (e) Federally Funded Research and Development Centers (FFRDC). 
Management of an auditee that owns or operates a FFRDC may elect to 
treat the FFRDC as a separate entity for purposes of this part.
    (f) Subrecipients and contractors. An auditee may simultaneously be 
a recipient, a subrecipient, and a contractor. Federal awards expended 
as a recipient or a subrecipient are subject to audit under this part. 
The payments received for goods or services provided as a contractor are 
not Federal awards. Section 75.351 sets forth the considerations in 
determining whether payments constitute a Federal award or a payment for 
goods or services provided as a contractor.
    (g) Compliance responsibility for contractors. In most cases, the 
auditee's compliance responsibility for contractors is only to ensure 
that the procurement, receipt, and payment for goods and services comply 
with Federal statutes, regulations, and the terms and conditions of 
Federal awards. Federal award compliance requirements normally do not 
pass through to contractors. However, the auditee is responsible for 
ensuring compliance for procurement transactions which are structured 
such that the contractor is responsible for program compliance or the 
contractor's records must be reviewed to determine program compliance. 
Also, when these procurement transactions relate to a major program, the 
scope of the audit must include determining whether these transactions 
are in compliance with Federal statutes, regulations, and the terms and 
conditions of Federal awards.

[[Page 342]]

    (h) For-profit subrecipient. Since this part does not apply to for-
profit subrecipients, the pass-through entity is responsible for 
establishing requirements, as necessary, to ensure compliance by for-
profit subrecipients. The agreement with the for-profit subrecipient 
must describe applicable compliance requirements and the for-profit 
subrecipient's compliance responsibility. Methods to ensure compliance 
for Federal awards made to for-profit subrecipients may include pre-
award audits, monitoring during the agreement, and post-award audits. 
See also Sec.  75.352.
    (i) Recipients and subrecipients that are commercial organizations 
(including for-profit hospitals) have two options regarding audits:
    (1) A financial related audit (as defined in the Government Auditing 
Standards, GPO Stock 020-000-00-265-4) of a particular award in 
accordance with Government Auditing Standards, in those cases where the 
recipient receives awards under only one HHS program; or, if awards are 
received under multiple HHS programs, a financial related audit of all 
HHS awards in accordance with Government Auditing Standards; or
    (2) An audit that meets the requirements contained in this subpart.
    (j) Commercial organizations that receive annual HHS awards totaling 
less than $750,000 are exempt from requirements for a non-Federal audit 
for that year, but records must be available for review by appropriate 
officials of Federal agencies.
    (k) See also Sec.  75.216.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.502  Basis for determining Federal awards expended.

    (a) Determining Federal awards expended. The determination of when a 
Federal award is expended must be based on when the activity related to 
the Federal award occurs. Generally, the activity pertains to events 
that require the non-Federal entity to comply with Federal statutes, 
regulations, and the terms and conditions of Federal awards, such as: 
expenditure/expense transactions associated with awards including 
grants, cost-reimbursement contracts under the FAR, compacts with Indian 
Tribes, cooperative agreements, and direct appropriations; the 
disbursement of funds to subrecipients; the use of loan proceeds under 
loan and loan guarantee programs; the receipt of property; the receipt 
of surplus property; the receipt or use of program income; the 
distribution or use of food commodities; the disbursement of amounts 
entitling the non-Federal entity to an interest subsidy; and the period 
when insurance is in force.
    (b) Loan and loan guarantees (loans). Since the Federal Government 
is at risk for loans until the debt is repaid, the following guidelines 
must be used to calculate the value of Federal awards expended under 
loan programs, except as noted in paragraphs (c) and (d) of this 
section:
    (1) Value of new loans made or received during the audit period; 
plus
    (2) Beginning of the audit period balance of loans from previous 
years for which the Federal Government imposes continuing compliance 
requirements; plus
    (3) Any interest subsidy, cash, or administrative cost allowance 
received.
    (c) Loan and loan guarantees (loans) at IHEs. When loans are made to 
students of an IHE but the IHE does not make the loans, then only the 
value of loans made during the audit period must be considered Federal 
awards expended in that audit period. The balance of loans for previous 
audit periods is not included as Federal awards expended because the 
lender accounts for the prior balances.
    (d) Prior loan and loan guarantees (loans). Loans, the proceeds of 
which were received and expended in prior years, are not considered 
Federal awards expended under this part when the Federal statutes, 
regulations, and the terms and conditions of Federal awards pertaining 
to such loans impose no continuing compliance requirements other than to 
repay the loans.
    (e) Endowment funds. The cumulative balance of Federal awards for 
endowment funds that are federally restricted are considered Federal 
awards expended in each audit period in which the funds are still 
restricted.
    (f) Free rent. Free rent received by itself is not considered a 
Federal award

[[Page 343]]

expended under this part. However, free rent received as part of a 
Federal award to carry out a Federal program must be included in 
determining Federal awards expended and subject to audit under this 
part.
    (g) Valuing non-cash assistance. Federal non-cash assistance, such 
as free rent, food commodities, donated property, or donated surplus 
property, must be valued at fair market value at the time of receipt or 
the assessed value provided by the HHS agency.
    (h) Medicare. Medicare payments to a non-Federal entity for 
providing patient care services to Medicare-eligible individuals are not 
considered Federal awards expended under this part.
    (i) Medicaid. Medicaid payments to a subrecipient for providing 
patient care services to Medicaid-eligible individuals are not 
considered Federal awards expended under this part unless a state 
requires the funds to be treated as Federal awards expended because 
reimbursement is on a cost-reimbursement basis.
    (j) Certain loans provided by the National Credit Union 
Administration. For purposes of this part, loans made from the National 
Credit Union Share Insurance Fund and the Central Liquidity Facility 
that are funded by contributions from insured non-Federal entities are 
not considered Federal awards expended.



Sec.  75.503  Relation to other audit requirements.

    (a) An audit conducted in accordance with this part must be in lieu 
of any financial audit of Federal awards which a non-Federal entity is 
required to undergo under any other Federal statute or regulation. To 
the extent that such audit provides a Federal agency with the 
information it requires to carry out its responsibilities under Federal 
statute or regulation, a Federal agency must rely upon and use that 
information.
    (b) Notwithstanding paragraph (a) of this section, a Federal agency, 
Inspectors General, or GAO may conduct or arrange for additional audits 
which are necessary to carry out its responsibilities under Federal 
statute or regulation. The provisions of this part do not authorize any 
non-Federal entity to constrain, in any manner, such Federal agency from 
carrying out or arranging for such additional audits, except that the 
Federal agency must plan such audits to not be duplicative of other 
audits of Federal awards. Prior to commencing such an audit, the Federal 
agency or pass-through entity must review the FAC for recent audits 
submitted by the non-Federal entity, and to the extent such audits meet 
a Federal agency or pass-through entity's needs, the Federal agency or 
pass-through entity must rely upon and use such audits. Any additional 
audits must be planned and performed in such a way as to build upon work 
performed, including the audit documentation, sampling, and testing 
already performed, by other auditors.
    (c) The provisions of this part do not limit the authority of 
Federal agencies to conduct, or arrange for the conduct of, audits and 
evaluations of Federal awards, nor limit the authority of any Federal 
agency Inspector General or other Federal official. For example, 
requirements that may be applicable under the FAR or CAS and the terms 
and conditions of a cost-reimbursement contract may include additional 
applicable audits to be conducted or arranged for by Federal agencies.
    (d) Federal agency to pay for additional audits. A Federal agency 
that conducts or arranges for additional audits must, consistent with 
other applicable Federal statutes and regulations, arrange for funding 
the full cost of such additional audits.
    (e) Request for a program to be audited as a major program. An HHS 
awarding agency may request that an auditee have a particular Federal 
program audited as a major program in lieu of the HHS awarding agency 
conducting or arranging for the additional audits. To allow for 
planning, such requests should be made at least 180 calendar days prior 
to the end of the fiscal year to be audited. The auditee, after 
consultation with its auditor, should promptly respond to such a request 
by informing the HHS awarding agency whether the program would otherwise 
be audited as a major program using the risk-based audit approach 
described in Sec.  75.518 and, if not, the estimated incremental cost. 
The HHS

[[Page 344]]

awarding agency must then promptly confirm to the auditee whether it 
wants the program audited as a major program. If the program is to be 
audited as a major program based upon this HHS awarding agency request, 
and the HHS awarding agency agrees to pay the full incremental costs, 
then the auditee must have the program audited as a major program. A 
pass-through entity may use the provisions of this paragraph for a 
subrecipient.



Sec.  75.504  Frequency of audits.

    Except for the provisions for biennial audits provided in paragraphs 
(a) and (b) of this section, audits required by this part must be 
performed annually. Any biennial audit must cover both years within the 
biennial period.
    (a) A state, local government, or Indian tribe that is required by 
constitution or statute, in effect on January 1, 1987, to undergo its 
audits less frequently than annually, is permitted to undergo its audits 
pursuant to this part biennially. This requirement must still be in 
effect for the biennial period.
    (b) Any nonprofit organization that had biennial audits for all 
biennial periods ending between July 1, 1992, and January 1, 1995, is 
permitted to undergo its audits pursuant to this part biennially.



Sec.  75.505  Sanctions.

    In cases of continued inability or unwillingness to have an audit 
conducted in accordance with this part, Federal agencies and pass-
through entities must take appropriate action as provided in Sec.  
75.371.



Sec.  75.506  Audit costs.

    See Sec.  75.425.



Sec.  75.507  Program-specific audits.

    (a) Program-specific audit guide available. In many cases, a 
program-specific audit guide will be available to provide specific 
guidance to the auditor with respect to internal controls, compliance 
requirements, suggested audit procedures, and audit reporting 
requirements. A listing of current program-specific audit guides can be 
found in the compliance supplement beginning with the 2014 supplement 
including HHS awarding agency contact information and a Web site where a 
copy of the guide can be obtained. When a current program-specific audit 
guide is available, the auditor must follow GAGAS and the guide when 
performing a program-specific audit.
    (b) Program-specific audit guide not available. (1) When a current 
program-specific audit guide is not available, the auditee and auditor 
must have basically the same responsibilities for the Federal program as 
they would have for an audit of a major program in a single audit.
    (2) The auditee must prepare the financial statement(s) for the 
Federal program that includes, at a minimum, a schedule of expenditures 
of Federal awards for the program and notes that describe the 
significant accounting policies used in preparing the schedule, a 
summary schedule of prior audit findings consistent with the 
requirements of Sec.  75.511(b), and a corrective action plan consistent 
with the requirements of Sec.  75.511(c).
    (3) The auditor must:
    (i) Perform an audit of the financial statement(s) for the Federal 
program in accordance with GAGAS;
    (ii) Obtain an understanding of internal controls and perform tests 
of internal controls over the Federal program consistent with the 
requirements of Sec.  75.514(c) for a major program;
    (iii) Perform procedures to determine whether the auditee has 
complied with Federal statutes, regulations, and the terms and 
conditions of Federal awards that could have a direct and material 
effect on the Federal program consistent with the requirements of Sec.  
75.514(d) for a major program;
    (iv) Follow up on prior audit findings, perform procedures to assess 
the reasonableness of the summary schedule of prior audit findings 
prepared by the auditee in accordance with the requirements of Sec.  
75.511, and report, as a current year audit finding, when the auditor 
concludes that the summary schedule of prior audit findings materially 
misrepresents the status of any prior audit finding; and
    (v) Report any audit findings consistent with the requirements of 
Sec.  75.516.

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    (4) The auditor's report(s) may be in the form of either combined or 
separate reports and may be organized differently from the manner 
presented in this section. The auditor's report(s) must state that the 
audit was conducted in accordance with this part and include the 
following:
    (i) An opinion (or disclaimer of opinion) as to whether the 
financial statement(s) of the Federal program is presented fairly in all 
material respects in accordance with the stated accounting policies;
    (ii) A report on internal control related to the Federal program, 
which must describe the scope of testing of internal control and the 
results of the tests;
    (iii) A report on compliance which includes an opinion (or 
disclaimer of opinion) as to whether the auditee complied with laws, 
regulations, and the terms and conditions of Federal awards which could 
have a direct and material effect on the Federal program; and
    (iv) A schedule of findings and questioned costs for the Federal 
program that includes a summary of the auditor's results relative to the 
Federal program in a format consistent with Sec.  75.515(d)(1) and 
findings and questioned costs consistent with the requirements of Sec.  
75.515(d)(3).
    (c) Report submission for program-specific audits. (1) The audit 
must be completed and the reporting required by paragraph (c)(2) or 
(c)(3) of this section submitted within the earlier of 30 calendar days 
after receipt of the auditor's report(s), or nine months after the end 
of the audit period, unless a different period is specified in a 
program-specific audit guide. Unless restricted by Federal law or 
regulation, the auditee must make report copies available for public 
inspection. Auditees and auditors must ensure that their respective 
parts of the reporting package do not include protected personally 
identifiable information.
    (2) When a program-specific audit guide is available, the auditee 
must electronically submit to the FAC the data collection form prepared 
in accordance with Sec.  75.512(b), as applicable to a program-specific 
audit, and the reporting required by the program-specific audit guide.
    (3) When a program-specific audit guide is not available, the 
reporting package for a program-specific audit must consist of the 
financial statement(s) of the Federal program, a summary schedule of 
prior audit findings, and a corrective action plan as described in 
paragraph (b)(2) of this section, and the auditor's report(s) described 
in paragraph (b)(4) of this section. The data collection form prepared 
in accordance with Sec.  75.512(b), as applicable to a program-specific 
audit, and one copy of this reporting package must be electronically 
submitted to the FAC.
    (d) Other sections of this part may apply. Program-specific audits 
are subject to:
    (1) Sec.  75.500 through Sec.  75.503(d);
    (2) Sec.  75.504 through Sec.  75.506;
    (3) Sec.  75.508 through Sec.  75.509;
    (4) Sec.  75.511;
    (5) Sec.  75.512(e) through (h);
    (6) Sec.  75.513;
    (7) Sec.  75.516 through Sec.  75.517;
    (8) Sec.  75.521, and
    (9) Other referenced provisions of this part unless contrary to the 
provisions of this section, a program-specific audit guide, or program 
statutes and regulations.

                                Auditees



Sec.  75.508  Auditee responsibilities.

    The auditee must:
    (a) Procure or otherwise arrange for the audit required by this part 
in accordance with Sec.  75.509, and ensure it is properly performed and 
submitted when due in accordance with Sec.  75.512.
    (b) Prepare appropriate financial statements, including the schedule 
of expenditures of Federal awards in accordance with Sec.  75.510.
    (c) Promptly follow up and take corrective action on audit findings, 
including preparation of a summary schedule of prior audit findings and 
a corrective action plan in accordance with Sec.  75.511(b) and Sec.  
75.511(c), respectively.
    (d) Provide the auditor with access to personnel, accounts, books, 
records, supporting documentation, and other information as needed for 
the auditor

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to perform the audit required by this part.



Sec.  75.509  Auditor selection.

    (a) Auditor procurement. In procuring audit services, the auditee 
must follow the procurement standards prescribed by the Procurement 
Standards in Sec. Sec.  75.326 through 75.335 of subpart D of this part 
or the FAR (48 CFR part 42), as applicable. When procuring audit 
services, the objective is to obtain high-quality audits. In requesting 
proposals for audit services, the objectives and scope of the audit must 
be made clear and the non-Federal entity must request a copy of the 
audit organization's peer review report which the auditor is required to 
provide under GAGAS. Factors to be considered in evaluating each 
proposal for audit services include the responsiveness to the request 
for proposal, relevant experience, availability of staff with 
professional qualifications and technical abilities, the results of peer 
and external quality control reviews, and price. Whenever possible, the 
auditee must make positive efforts to utilize small businesses, 
minority-owned firms, and women's business enterprises, in procuring 
audit services as stated in Sec.  75.330, or the FAR (48 CFR part 42), 
as applicable.
    (b) Restriction on auditor preparing indirect cost proposals. An 
auditor who prepares the indirect cost proposal or cost allocation plan 
may not also be selected to perform the audit required by this part when 
the indirect costs recovered by the auditee during the prior year 
exceeded $1 million. This restriction applies to the base year used in 
the preparation of the indirect cost proposal or cost allocation plan 
and any subsequent years in which the resulting indirect cost agreement 
or cost allocation plan is used to recover costs.
    (c) Use of Federal auditors. Federal auditors may perform all or 
part of the work required under this part if they comply fully with the 
requirements of this part.



Sec.  75.510  Financial statements.

    (a) Financial statements. The auditee must prepare financial 
statements that reflect its financial position, results of operations or 
changes in net assets, and, where appropriate, cash flows for the fiscal 
year audited. The financial statements must be for the same 
organizational unit and fiscal year that is chosen to meet the 
requirements of this part. However, non-Federal entity-wide financial 
statements may also include departments, agencies, and other 
organizational units that have separate audits in accordance with Sec.  
75.514(a) and prepare separate financial statements.
    (b) Schedule of expenditures of Federal awards. The auditee must 
also prepare a schedule of expenditures of Federal awards for the period 
covered by the auditee's financial statements which must include the 
total Federal awards expended as determined in accordance with Sec.  
75.502. While not required, the auditee may choose to provide 
information requested by HHS awarding agencies and pass-through entities 
to make the schedule easier to use. For example, when a Federal program 
has multiple Federal award years, the auditee may list the amount of 
Federal awards expended for each Federal award year separately. At a 
minimum, the schedule must:
    (1) List individual Federal programs by Federal agency. For a 
cluster of programs, provide the cluster name, list individual Federal 
programs within the cluster of programs, and provide the applicable 
Federal agency name. For R&D, total Federal awards expended must be 
shown either by individual Federal award or by Federal agency and major 
subdivision within the Federal agency. For example, the National 
Institutes of Health is a major subdivision in the Department of Health 
and Human Services.
    (2) For Federal awards received as a subrecipient, the name of the 
pass-through entity and identifying number assigned by the pass-through 
entity must be included.
    (3) Provide total Federal awards expended for each individual 
Federal program and the CFDA number or other identifying number when the 
CFDA information is not available. For a cluster of programs also 
provide the total for the cluster.
    (4) Include the total amount provided to subrecipients from each 
Federal program.

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    (5) For loan or loan guarantee programs described in Sec.  
75.502(b), identify in the notes to the schedule the balances 
outstanding at the end of the audit period. This is in addition to 
including the total Federal awards expended for loan or loan guarantee 
programs in the schedule.
    (6) Include notes that describe that significant accounting policies 
used in preparing the schedule, and note whether or not the auditee 
elected to use the 10% de minimis cost rate as covered in Sec.  75.414.



Sec.  75.511  Audit findings follow-up.

    (a) General. The auditee is responsible for follow-up and corrective 
action on all audit findings. As part of this responsibility, the 
auditee must prepare a summary schedule of prior audit findings. The 
auditee must also prepare a corrective action plan for current year 
audit findings. The summary schedule of prior audit findings and the 
corrective action plan must include the reference numbers the auditor 
assigns to audit findings under Sec.  75.516(c). Since the summary 
schedule may include audit findings from multiple years, it must include 
the fiscal year in which the finding initially occurred. The corrective 
action plan and summary schedule of prior audit findings must include 
findings relating to the financial statements which are required to be 
reported in accordance with GAGAS.
    (b) Summary schedule of prior audit findings. The summary schedule 
of prior audit findings must report the status of all audit findings 
included in the prior audit's schedule of findings and questioned costs. 
The summary schedule must also include audit findings reported in the 
prior audit's summary schedule of prior audit findings except audit 
findings listed as corrected in accordance with paragraph (b)(1) of this 
section, or no longer valid or not warranting further action in 
accordance with paragraph (b)(3) of this section.
    (1) When audit findings were fully corrected, the summary schedule 
need only list the audit findings and state that corrective action was 
taken.
    (2) When audit findings were not corrected or were only partially 
corrected, the summary schedule must describe the reasons for the 
finding's recurrence and planned corrective action, and any partial 
corrective action taken. When corrective action taken is significantly 
different from corrective action previously reported in a corrective 
action plan or in the Federal agency's or pass-through entity's 
management decision, the summary schedule must provide an explanation.
    (3) When the auditee believes the audit findings are no longer valid 
or do not warrant further action, the reasons for this position must be 
described in the summary schedule. A valid reason for considering an 
audit finding as not warranting further action is that all of the 
following have occurred:
    (i) Two years have passed since the audit report in which the 
finding occurred was submitted to the FAC;
    (ii) The Federal agency or pass-through entity is not currently 
following up with the auditee on the audit finding; and
    (iii) A management decision was not issued.
    (c) Corrective action plan. At the completion of the audit, the 
auditee must prepare, in a document separate from the auditor's findings 
described in Sec.  75.516, a corrective action plan to address each 
audit finding included in the current year auditor's reports. The 
corrective action plan must provide the name(s) of the contact person(s) 
responsible for corrective action, the corrective action planned, and 
the anticipated completion date. If the auditee does not agree with the 
audit findings or believes corrective action is not required, then the 
corrective action plan must include an explanation and specific reasons.



Sec.  75.512  Report submission.

    (a) General. (1) The audit must be completed and the data collection 
form described in paragraph (b) of this section and reporting package 
described in paragraph (c) of this section must be submitted within the 
earlier of 30 calendar days after receipt of the auditor's report(s), or 
nine months after the end of the audit period. If the due date falls on 
a Saturday, Sunday, or Federal holiday, the reporting package is due the 
next business day.

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    (2) Unless restricted by Federal statutes or regulations, the 
auditee must make copies available for public inspection. Auditees and 
auditors must ensure that their respective parts of the reporting 
package do not include protected personally identifiable information.
    (b) Data collection. The FAC is the repository of record for subpart 
F of this part reporting packages and the data collection form. All 
Federal agencies, pass-through entities and others interested in a 
reporting package and data collection form must obtain it by accessing 
the FAC.
    (1) The auditee must submit required data elements described in 
appendix X to part 75, which state whether the audit was completed in 
accordance with this part and provides information about the auditee, 
its Federal programs, and the results of the audit. The data must 
include information available from the audit required by this part that 
is necessary for Federal agencies to use the audit to ensure integrity 
for Federal programs. The data elements and format must be approved by 
OMB, available from the FAC, and include collections of information from 
the reporting package described in paragraph (c) of this section. A 
senior level representative of the auditee (e.g., state controller, 
director of finance, chief executive officer, or chief financial 
officer) must sign a statement to be included as part of the data 
collection that says that the auditee complied with the requirements of 
this part, the data were prepared in accordance with this part (and the 
instructions accompanying the form), the reporting package does not 
include protected personally identifiable information, the information 
included in its entirety is accurate and complete, and that the FAC is 
authorized to make the reporting package and the form publicly available 
on a Web site.
    (2) Exception for Indian Tribes and Tribal Organizations. An auditee 
that is an Indian tribe or a tribal organization (as defined in the 
Indian Self-Determination, Education and Assistance Act (ISDEAA), 25 
U.S.C. 450b(l)) may opt not to authorize the FAC to make the reporting 
package publicly available on a Web site, by excluding the authorization 
for the FAC publication in the statement described in paragraph (b)(1) 
of this section. If this option is exercised, the auditee becomes 
responsible for submitting the reporting package directly to any pass-
through entities through which it has received a Federal award and to 
pass-through entities for which the summary schedule of prior audit 
findings reported the status of any findings related to Federal awards 
that the pass-through entity provided. Unless restricted by Federal 
statute or regulation, if the auditee opts not to authorize publication, 
it must make copies of the reporting package available for public 
inspection.
    (3) Using the information included in the reporting package 
described in paragraph (c) of this section, the auditor must complete 
the applicable data elements of the data collection form. The auditor 
must sign a statement to be included as part of the data collection form 
that indicates, at a minimum, the source of the information included in 
the form, the auditor's responsibility for the information, that the 
form is not a substitute for the reporting package described in 
paragraph (c) of this section, and that the content of the form is 
limited to the collection of information prescribed by OMB.
    (c) Reporting package. The reporting package must include the:
    (1) Financial statements and schedule of expenditures of Federal 
awards discussed in Sec.  75.510(a) and (b), respectively;
    (2) Summary schedule of prior audit findings discussed in Sec.  
75.511(b);
    (3) Auditor's report(s) discussed in Sec.  75.515; and
    (4) Corrective action plan discussed in Sec.  75.511(c).
    (d) Submission to FAC. The auditee must electronically submit to the 
FAC the data collection form described in paragraph (b) of this section 
and the reporting package described in paragraph (c) of this section.
    (e) Requests for management letters issued by the auditor. In 
response to requests by a Federal agency or pass-through entity, 
auditees must submit a copy of any management letters issued by the 
auditor.

[[Page 349]]

    (f) Report retention requirements. Auditees must keep one copy of 
the data collection form described in paragraph (b) of this section and 
one copy of the reporting package described in paragraph (c) of this 
section on file for three years from the date of submission to the FAC.
    (g) FAC responsibilities. The FAC must make available the reporting 
packages received in accordance with paragraph (c) of this section and 
Sec.  75.507(c) to the public, except for Indian tribes exercising the 
option in (b)(2) of this section, and maintain a data base of completed 
audits, provide appropriate information to Federal agencies, and follow 
up with known auditees that have not submitted the required data 
collection forms and reporting packages.
    (h) Electronic filing. Nothing in this part must preclude electronic 
submissions to the FAC in such manner as may be approved by OMB.

                            Federal Agencies



Sec.  75.513  Responsibilities.

    (a)(1) Cognizant agency for audit responsibilities. A non-Federal 
entity expending more than $50 million a year in Federal awards must 
have a cognizant agency for audit. The designated cognizant agency for 
audit must be the Federal awarding agency that provides the predominant 
amount of direct funding to a non-Federal entity unless OMB designates a 
specific cognizant agency for audit.
    (2) To provide for continuity of cognizance, the determination of 
the predominant amount of direct funding must be based upon direct 
Federal awards expended in the non-Federal entity's fiscal years ending 
in 2009, 2014, 2019 and every fifth year thereafter. For example, audit 
cognizance for periods ending in 2011 through 2015 will be determined 
based on Federal awards expended in 2009.
    (3) Notwithstanding the manner in which audit cognizance is 
determined, a Federal awarding agency with cognizance for an auditee may 
reassign cognizance to another Federal awarding agency that provides 
substantial funding and agrees to be the cognizant agency for audit. 
Within 30 calendar days after any reassignment, both the old and the new 
cognizant agency for audit must provide notice of the change to the FAC, 
the auditee, and, if known, the auditor. The cognizant agency for audit 
must:
    (i) Provide technical audit advice and liaison assistance to 
auditees and auditors.
    (ii) Obtain or conduct quality control reviews on selected audits 
made by non-Federal auditors, and provide the results to other 
interested organizations. Cooperate and provide support to the Federal 
agency designated by OMB to lead a government-wide project to determine 
the quality of single audits by providing a statistically reliable 
estimate of the extent that single audits conform to applicable 
requirements, standards, and procedures; and to make recommendations to 
address noted audit quality issues, including recommendations for any 
changes to applicable requirements, standards and procedures indicated 
by the results of the project. This government-wide audit quality 
project must be performed once every 6 years beginning in 2018 or at 
such other interval as determined by OMB, and the results must be 
public.
    (iii) Promptly inform other affected Federal agencies and 
appropriate Federal law enforcement officials of any direct reporting by 
the auditee or its auditor required by GAGAS or statutes and 
regulations.
    (iv) Advise the community of independent auditors of any noteworthy 
or important factual trends related to the quality of audits stemming 
from quality control reviews. Significant problems or quality issues 
consistently identified through quality control reviews of audit reports 
must be referred to appropriate state licensing agencies and 
professional bodies.
    (v) Advise the auditor, HHS awarding agencies, and, where 
appropriate, the auditee of any deficiencies found in the audits when 
the deficiencies require corrective action by the auditor. When advised 
of deficiencies, the auditee must work with the auditor to take 
corrective action. If corrective action is not taken, the cognizant 
agency for audit must notify the auditor, the auditee, and applicable 
HHS awarding agencies and pass-through entities of

[[Page 350]]

the facts and make recommendations for follow-up action. Major 
inadequacies or repetitive substandard performance by auditors must be 
referred to appropriate state licensing agencies and professional bodies 
for disciplinary action.
    (vi) Coordinate, to the extent practical, audits or reviews made by 
or for Federal agencies that are in addition to the audits made pursuant 
to this part, so that the additional audits or reviews build upon rather 
than duplicate audits performed in accordance with this part.
    (vii) Coordinate a management decision for cross-cutting audit 
findings (as defined in Sec.  75.2 Cross-cutting audit finding) that 
affect the Federal programs of more than one agency when requested by 
any Federal awarding agency whose awards are included in the audit 
finding of the auditee.
    (viii) Coordinate the audit work and reporting responsibilities 
among auditors to achieve the most cost-effective audit.
    (ix) Provide advice to auditees as to how to handle changes in 
fiscal years.
    (b) Oversight agency for audit responsibilities. An auditee who does 
not have a designated cognizant agency for audit will be under the 
general oversight of the Federal agency determined in accordance with 
Sec.  75.2 Oversight agency for audit. A Federal agency with oversight 
for an auditee may reassign oversight to another Federal agency that 
agrees to be the oversight agency for audit. Within 30 calendar days 
after any reassignment, both the old and the new oversight agency for 
audit must provide notice of the change to the FAC, the auditee, and, if 
known, the auditor. The oversight agency for audit:
    (1) Must provide technical advice to auditees and auditors as 
requested.
    (2) May assume all or some of the responsibilities normally 
performed by a cognizant agency for audit.
    (c) HHS awarding agency responsibilities. The HHS awarding agency 
must perform the following for the Federal awards it makes (See also the 
requirements of Sec.  75.210):
    (1) Ensure that audits are completed and reports are received in a 
timely manner and in accordance with the requirements of this part.
    (2) Provide technical advice and counsel to auditees and auditors as 
requested.
    (3) Follow-up on audit findings to ensure that the recipient takes 
appropriate and timely corrective action. As part of audit follow-up, 
the HHS awarding agency must:
    (i) Issue a management decision as prescribed in Sec.  75.521;
    (ii) Monitor the recipient taking appropriate and timely corrective 
action;
    (iii) Use cooperative audit resolution mechanisms (see Sec.  75.2 
Cooperative audit resolution) to improve Federal program outcomes 
through better audit resolution, follow-up, and corrective action; and
    (iv) Develop a baseline, metrics, and targets to track, over time, 
the effectiveness of the Federal agency's process to follow-up on audit 
findings and on the effectiveness of Single Audits in improving non-
Federal entity accountability and their use by HHS awarding agencies in 
making award decisions.
    (4) Provide OMB annual updates to the compliance supplement and work 
with OMB to ensure that the compliance supplement focuses the auditor to 
test the compliance requirements most likely to cause improper payments, 
fraud, waste, abuse or generate audit finding for which the Federal 
awarding agency will take sanctions.
    (5) Provide OMB with the name of a single audit accountable official 
from among the senior policy officials of the HHS awarding agency who 
must be:
    (i) Responsible for ensuring that the agency fulfills all the 
requirements of paragraph (c) of this section and effectively uses the 
single audit process to reduce improper payments and improve Federal 
program outcomes.
    (ii) Held accountable to improve the effectiveness of the single 
audit process based upon metrics as described in paragraph (c)(3)(iv) of 
this section.
    (iii) Responsible for designating the Federal agency's key 
management single audit liaison.
    (6) Provide OMB with the name of a key management single audit 
liaison who must:
    (i) Serve as the Federal awarding agency's management point of 
contact

[[Page 351]]

for the single audit process both within and outside the Federal 
Government.
    (ii) Promote interagency coordination, consistency, and sharing in 
areas such as coordinating audit follow-up; identifying higher-risk non-
Federal entities; providing input on single audit and follow-up policy; 
enhancing the utility of the FAC; and studying ways to use single audit 
results to improve Federal award accountability and best practices.
    (iii) Oversee training for the HHS awarding agency's program 
management personnel related to the single audit process.
    (iv) Promote the HHS awarding agency's use of cooperative audit 
resolution mechanisms.
    (v) Coordinate the HHS awarding agency's activities to ensure 
appropriate and timely follow-up and corrective action on audit 
findings.
    (vi) Organize the Federal cognizant agency for audit's follow-up on 
cross-cutting audit findings that affect the Federal programs of more 
than one HHS awarding agency.
    (vii) Ensure the HHS awarding agency provides annual updates of the 
compliance supplement to OMB.
    (viii) Support the HHS awarding agency's single audit accountable 
official's mission.

                                Auditors



Sec.  75.514  Scope of audit.

    (a) General. The audit must be conducted in accordance with GAGAS. 
The audit must cover the entire operations of the auditee, or, at the 
option of the auditee, such audit must include a series of audits that 
cover departments, agencies, and other organizational units that 
expended or otherwise administered Federal awards during such audit 
period, provided that each such audit must encompass the financial 
statements and schedule of expenditures of Federal awards for each such 
department, agency, and other organizational unit, which must be 
considered to be a non-Federal entity. The financial statements and 
schedule of expenditures of Federal awards must be for the same audit 
period.
    (b) Financial statements. The auditor must determine whether the 
financial statements of the auditee are presented fairly in all material 
respects in accordance with generally accepted accounting principles. 
The auditor must also determine whether the schedule of expenditures of 
Federal awards is stated fairly in all material respects in relation to 
the auditee's financial statements as a whole.
    (c) Internal control. (1) The compliance supplement provides 
guidance on internal controls over Federal programs based upon the 
guidance in Standards for Internal Control in the Federal Government 
issued by the Comptroller General of the United States and the Internal 
Control--Integrated Framework, issued by the Committee of Sponsoring 
Organizations of the Treadway Commission (COSO).
    (2) In addition to the requirements of GAGAS, the auditor must 
perform procedures to obtain an understanding of internal control over 
Federal programs sufficient to plan the audit to support a low assessed 
level of control risk of noncompliance for major programs.
    (3) Except as provided in paragraph (c)(4) of this section, the 
auditor must:
    (i) Plan the testing of internal control over compliance for major 
programs to support a low assessed level of control risk for the 
assertions relevant to the compliance requirements for each major 
program; and
    (ii) Perform testing of internal control as planned in paragraph 
(c)(3)(i) of this section.
    (4) When internal control over some or all of the compliance 
requirements for a major program are likely to be ineffective in 
preventing or detecting noncompliance, the planning and performing of 
testing described in paragraph (c)(3) of this section are not required 
for those compliance requirements. However, the auditor must report a 
significant deficiency or material weakness in accordance with Sec.  
75.516, assess the related control risk at the maximum, and consider 
whether additional compliance tests are required because of ineffective 
internal control.
    (d) Compliance. (1) In addition to the requirements of GAGAS, the 
auditor must determine whether the auditee has complied with Federal 
statutes,

[[Page 352]]

regulations, and the terms and conditions of Federal awards that may 
have a direct and material effect on each of its major programs.
    (2) The principal compliance requirements applicable to most Federal 
programs and the compliance requirements of the largest Federal programs 
are included in the compliance supplement.
    (3) For the compliance requirements related to Federal programs 
contained in the compliance supplement, an audit of these compliance 
requirements will meet the requirements of this part. Where there have 
been changes to the compliance requirements and the changes are not 
reflected in the compliance supplement, the auditor must determine the 
current compliance requirements and modify the audit procedures 
accordingly. For those Federal programs not covered in the compliance 
supplement, the auditor must follow the compliance supplement's guidance 
for programs not included in the supplement.
    (4) The compliance testing must include tests of transactions and 
such other auditing procedures necessary to provide the auditor 
sufficient appropriate audit evidence to support an opinion on 
compliance.
    (e) Audit follow-up. The auditor must follow-up on prior audit 
findings, perform procedures to assess the reasonableness of the summary 
schedule of prior audit findings prepared by the auditee in accordance 
with Sec.  75.511(b), and report, as a current year audit finding, when 
the auditor concludes that the summary schedule of prior audit findings 
materially misrepresents the status of any prior audit finding. The 
auditor must perform audit follow-up procedures regardless of whether a 
prior audit finding relates to a major program in the current year.
    (f) Data collection form. As required in Sec.  75.512(b)(3), the 
auditor must complete and sign specified sections of the data collection 
form.



Sec.  75.515  Audit reporting.

    The auditor's report(s) may be in the form of either combined or 
separate reports and may be organized differently from the manner 
presented in this section. The auditor's report(s) must state that the 
audit was conducted in accordance with this part and include the 
following:
    (a) An opinion (or disclaimer of opinion) as to whether the 
financial statements are presented fairly in all material respects in 
accordance with generally accepted accounting principles and an opinion 
(or disclaimer of opinion) as to whether the schedule of expenditures of 
Federal awards is fairly stated in all material respects in relation to 
the financial statements as a whole.
    (b) A report on internal control over financial reporting and 
compliance with provisions of laws, regulations, contracts, and award 
agreements, noncompliance with which could have a material effect on the 
financial statements. This report must describe the scope of testing of 
internal control and compliance and the results of the tests, and, where 
applicable, it will refer to the separate schedule of findings and 
questioned costs described in paragraph (d) of this section.
    (c) A report on compliance for each major program and a report on 
internal control over compliance. This report must describe the scope of 
testing of internal control over compliance, include an opinion or 
disclaimer of opinion as to whether the auditee complied with Federal 
statutes, regulations, and the terms and conditions of Federal awards 
which could have a direct and material effect on each major program and 
refer to the separate schedule of findings and questioned costs 
described in paragraph (d) of this section.
    (d) A schedule of findings and questioned costs which must include 
the following three components:
    (1) A summary of the auditor's results, which must include:
    (i) The type of report the auditor issued on whether the financial 
statements audited were prepared in accordance with GAAP (i.e., 
unmodified opinion, qualified opinion, adverse opinion, or disclaimer of 
opinion);
    (ii) Where applicable, a statement about whether significant 
deficiencies or material weaknesses in internal control were disclosed 
by the audit of the financial statements;
    (iii) A statement as to whether the audit disclosed any 
noncompliance

[[Page 353]]

that is material to the financial statements of the auditee;
    (iv) Where applicable, a statement about whether significant 
deficiencies or material weaknesses in internal control over major 
programs were disclosed by the audit;
    (v) The type of report the auditor issued on compliance for major 
programs (i.e., unmodified opinion, qualified opinion, adverse opinion, 
or disclaimer of opinion);
    (vi) A statement as to whether the audit disclosed any audit 
findings that the auditor is required to report under Sec.  75.516(a);
    (vii) An identification of major programs by listing each individual 
major program; however in the case of a cluster of programs only the 
cluster name as shown on the Schedule of Expenditures of Federal Awards 
is required;
    (viii) The dollar threshold used to distinguish between Type A and 
Type B programs, as described in Sec.  75.518(b)(1), or (b)(3) when a 
recalculation of the Type A threshold is required for large loan or loan 
guarantees; and
    (ix) A statement as to whether the auditee qualified as a low-risk 
auditee under Sec.  75.520.
    (2) Findings relating to the financial statements which are required 
to be reported in accordance with GAGAS.
    (3) Findings and questioned costs for Federal awards which must 
include audit findings as defined in Sec.  75.516(a).
    (i) Audit findings (e.g., internal control findings, compliance 
findings, questioned costs, or fraud) that relate to the same issue must 
be presented as a single audit finding. Where practical, audit findings 
should be organized by Federal agency or pass-through entity.
    (ii) Audit findings that relate to both the financial statements and 
Federal awards, as reported under paragraphs (d)(2) and (d)(3) of this 
section, respectively, must be reported in both sections of the 
schedule. However, the reporting in one section of the schedule may be 
in summary form with a reference to a detailed reporting in the other 
section of the schedule.
    (e) Nothing in this part precludes combining of the audit reporting 
required by this section with the reporting required by Sec.  75.512(b) 
when allowed by GAGAS and appendix X to part 75.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec.  75.516  Audit findings.

    (a) Audit findings reported. The auditor must report the following 
as audit findings in a schedule of findings and questioned costs:
    (1) Significant deficiencies and material weaknesses in internal 
control over major programs and significant instances of abuse relating 
to major programs. The auditor's determination of whether a deficiency 
in internal control is a significant deficiency or material weakness for 
the purpose of reporting an audit finding is in relation to a type of 
compliance requirement for a major program identified in the Compliance 
Supplement.
    (2) Material noncompliance with the provisions of Federal statutes, 
regulations, or the terms and conditions of Federal awards related to a 
major program. The auditor's determination of whether a noncompliance 
with the provisions of Federal statutes, regulations, or the terms and 
conditions of Federal awards is material for the purpose of reporting an 
audit finding is in relation to a type of compliance requirement for a 
major program identified in the compliance supplement.
    (3) Known questioned costs that are greater than $25,000 for a type 
of compliance requirement for a major program. Known questioned costs 
are those specifically identified by the auditor. In evaluating the 
effect of questioned costs on the opinion on compliance, the auditor 
considers the best estimate of total costs questioned (likely questioned 
costs), not just the questioned costs specifically identified (known 
questioned costs). The auditor must also report known questioned costs 
when likely questioned costs are greater than $25,000 for a type of 
compliance requirement for a major program. In reporting questioned 
costs, the auditor must include information to provide proper 
perspective for judging the prevalence and consequences of the 
questioned costs.
    (4) Known questioned costs that are greater than $25,000 for a 
Federal program which is not audited as a major

[[Page 354]]

program. Except for audit follow-up, the auditor is not required under 
this part to perform audit procedures for such a Federal program; 
therefore, the auditor will normally not find questioned costs for a 
program that is not audited as a major program. However, if the auditor 
does become aware of questioned costs for a Federal program that is not 
audited as a major program (e.g., as part of audit follow-up or other 
audit procedures) and the known questioned costs are greater than 
$25,000, then the auditor must report this as an audit finding.
    (5) The circumstances concerning why the auditor's report on 
compliance for each major program is other than an unmodified opinion, 
unless such circumstances are otherwise reported as audit findings in 
the schedule of findings and questioned costs for Federal awards.
    (6) Known or likely fraud affecting a Federal award, unless such 
fraud is otherwise reported as an audit finding in the schedule of 
findings and questioned costs for Federal awards. This paragraph does 
not require the auditor to report publicly information which could 
compromise investigative or legal proceedings or to make an additional 
reporting when the auditor confirms that the fraud was reported outside 
the auditor's reports under the direct reporting requirements of GAGAS.
    (7) Instances where the results of audit follow-up procedures 
disclosed that the summary schedule of prior audit findings prepared by 
the auditee in accordance with Sec.  75.511(b) materially misrepresents 
the status of any prior audit finding.
    (b) Audit finding detail and clarity. Audit findings must be 
presented in sufficient detail and clarity for the auditee to prepare a 
corrective action plan and take corrective action, and for Federal 
agencies and pass-through entities to arrive at a management decision. 
The following specific information must be included, as applicable, in 
audit findings:
    (1) Federal program and specific Federal award identification 
including the CFDA title and number, Federal award identification number 
and year, name of Federal agency, and name of the applicable pass-
through entity. When information, such as the CFDA title and number or 
Federal award identification number, is not available, the auditor must 
provide the best information available to describe the Federal award.
    (2) The criteria or specific requirement upon which the audit 
finding is based, including the Federal statutes, regulations, or the 
terms and conditions of the Federal awards. Criteria generally identify 
the required or desired state or expectation with respect to the program 
or operation. Criteria provide a context for evaluating evidence and 
understanding findings.
    (3) The condition found, including facts that support the deficiency 
identified in the audit finding.
    (4) A statement of cause that identifies the reason or explanation 
for the condition or the factors responsible for the difference between 
the situation that exists (condition) and the required or desired state 
(criteria), which may also serve as a basis for recommendations for 
corrective action.
    (5) The possible asserted effect to provide sufficient information 
to the auditee and Federal agency, or pass-through entity in the case of 
a subrecipient, to permit them to determine the cause and effect to 
facilitate prompt and proper corrective action. A statement of the 
effect or potential effect should provide a clear, logical link to 
establish the impact or potential impact of the difference between the 
condition and the criteria.
    (6) Identification of questioned costs and how they were computed. 
Known questioned costs must be identified by applicable CFDA number(s) 
and applicable Federal award identification number(s).
    (7) Information to provide proper perspective for judging the 
prevalence and consequences of the audit findings, such as whether the 
audit findings represent an isolated instance or a systemic problem. 
Where appropriate, instances identified must be related to the universe 
and the number of cases examined and be quantified in terms of dollar 
value. The auditor should report whether the sampling was a 
statistically valid sample.
    (8) Identification of whether the audit finding was a repeat of a 
finding

[[Page 355]]

in the immediately prior audit and if so any applicable prior year audit 
finding numbers.
    (9) Recommendations to prevent future occurrences of the deficiency 
identified in the audit finding.
    (10) Views of responsible officials of the auditee.
    (c) Reference numbers. Each audit finding in the schedule of 
findings and questioned costs must include a reference number in the 
format meeting the requirements of the data collection form submission 
required by Sec.  75.512(b) to allow for easy referencing of the audit 
findings during follow-up.



Sec.  75.517  Audit documentation.

    (a) Retention of audit documentation. The auditor must retain audit 
documentation and reports for a minimum of three years after the date of 
issuance of the auditor's report(s) to the auditee, unless the auditor 
is notified in writing by the cognizant agency for audit, oversight 
agency for audit, cognizant agency for indirect costs, or pass-through 
entity to extend the retention period. When the auditor is aware that 
the Federal agency, pass-through entity, or auditee is contesting an 
audit finding, the auditor must contact the parties contesting the audit 
finding for guidance prior to destruction of the audit documentation and 
reports.
    (b) Access to audit documentation. Audit documentation must be made 
available upon request to the cognizant or oversight agency for audit or 
its designee, cognizant agency for indirect cost, a Federal agency, or 
GAO at the completion of the audit, as part of a quality review, to 
resolve audit findings, or to carry out oversight responsibilities 
consistent with the purposes of this part. Access to audit documentation 
includes the right of Federal agencies to obtain copies of audit 
documentation, as is reasonable and necessary.



Sec.  75.518  Major program determination.

    (a) General. The auditor must use a risk-based approach to determine 
which Federal programs are major programs. This risk-based approach must 
include consideration of: Current and prior audit experience, oversight 
by Federal agencies and pass-through entities, and the inherent risk of 
the Federal this program. The process in paragraphs (b) through (h) of 
this section must be followed.
    (b) Step one. (1) The auditor must identify the larger Federal 
programs, which must be labeled Type A programs. Type A programs are 
defined as Federal programs with Federal awards expended during the 
audit period exceeding the levels outlined in the table in this 
paragraph (b)(1):

------------------------------------------------------------------------
     Total Federal awards expended              Type A/B threshold
------------------------------------------------------------------------
(i) Equal to or exceed $750,000 but      $750,000.
 less than or equal to $25 million.
(ii) Exceed $25 million but less than    Total Federal awards expended
 or equal to $100 million.                times .03.
(iii) Exceed $100 million but less than  $3 million.
 or equal to $1 billion.
(iv) Exceed $1 billion but less than or  Total Federal awards expended
 equal to $10 billion.                    times .003.
(v) Exceed $10 billion but less than or  $30 million.
 equal to $20 billion.
(vi) Exceed $20 billion................  Total Federal awards expended
                                          times .0015.
------------------------------------------------------------------------

    (2) Federal programs not labeled Type A under paragraph (b)(1) of 
this section must be labeled Type B programs.
    (3) The inclusion of large loan and loan guarantees (loans) must not 
result in the exclusion of other programs as Type A programs. When a 
Federal program providing loans exceeds four times the largest non-loan 
program it is considered a large loan program, and the auditor must 
consider this Federal program as a Type A program and exclude its values 
in determining other Type A programs. This recalculation of the Type A 
program is performed after removing the total of all large loan 
programs. For the purposes of this paragraph a program is only 
considered to be a Federal program providing loans if the value of 
Federal awards expended for loans within the program comprises fifty 
percent or more of the total Federal awards expended for the

[[Page 356]]

program. A cluster of programs is treated as one program and the value 
of Federal awards expended under a loan program is determined as 
described in Sec.  75.502.
    (4) For biennial audits permitted under Sec.  75.504, the 
determination of Type A and Type B programs must be based upon the 
Federal awards expended during the two-year period.
    (c) Step two. (1) The auditor must identify Type A programs which 
are low-risk. In making this determination, the auditor must consider 
whether the requirements in Sec.  75.519(c), the results of audit 
follow-up, or any changes in personnel or systems affecting the program 
indicate significantly increased risk and preclude the program from 
being low risk. For a Type A program to be considered low-risk, it must 
have been audited as a major program in at least one of the two most 
recent audit periods (in the most recent audit period in the case of a 
biennial audit), and, in the most recent audit period, the program must 
have not had:
    (i) Internal control deficiencies which were identified as material 
weaknesses in the auditor's report on internal control for major 
programs as required under Sec.  75.515(c);
    (ii) A modified opinion on the program in the auditor's report on 
major programs as required under Sec.  75.515(c); or
    (iii) Known or likely questioned costs that exceed five percent of 
the total Federal awards expended for the program.
    (2) Notwithstanding paragraph (c)(1) of this section, OMB may 
approve an HHS awarding agency's request that a Type A program may not 
be considered low risk for a certain recipient. For example, it may be 
necessary for a large Type A program to be audited as a major program 
each year at a particular recipient to allow the HHS awarding agency to 
comply with 31 U.S.C. 3515. The HHS awarding agency must notify the 
recipient and, if known, the auditor of OMB's approval at least 180 
calendar days prior to the end of the fiscal year to be audited.
    (d) Step three. (1) The auditor must identify Type B programs which 
are high-risk using professional judgment and the criteria in Sec.  
75.519. However, the auditor is not required to identify more high-risk 
Type B programs than at least one fourth the number of low-risk Type A 
programs identified as low-risk under Step 2 (paragraph (c) of this 
section). Except for known material weakness in internal control or 
compliance problems as discussed in Sec.  75.519(b)(1), (b)(2), and 
(c)(1), a single criteria in risk would seldom cause a Type B program to 
be considered high-risk. When identifying which Type B programs to risk 
assess, the auditor is encouraged to use an approach which provides an 
opportunity for different high-risk Type B programs to be audited as 
major over a period of time.
    (2) The auditor is not expected to perform risk assessments on 
relatively small Federal programs. Therefore, the auditor is only 
required to perform risk assessments on Type B programs that exceed 
twenty-five percent (0.25) of the Type A threshold determined in Step 1 
(paragraph (b) of this section).
    (e) Step four. At a minimum, the auditor must audit all of the 
following as major programs:
    (1) All Type A programs not identified as low risk under step two 
(paragraph (c)(1) of this section).
    (2) All Type B programs identified as high-risk under step three 
(paragraph (d) of this section).
    (3) Such additional programs as may be necessary to comply with the 
percentage of coverage rule discussed in paragraph (f) of this section. 
This may require the auditor to audit more programs as major programs 
than the number of Type A programs.
    (f) Percentage of coverage rule. If the auditee meets the criteria 
in Sec.  75.520, the auditor need only audit the major programs 
identified in Step 4 (paragraph (e)(1) and (2) of this section) and such 
additional Federal programs with Federal awards expended that, in 
aggregate, all major programs encompass at least 20 percent (0.20) of 
total Federal awards expended. Otherwise, the auditor must audit the 
major programs identified in Step 4 (paragraphs (e)(1) and (2) of this 
section) and such additional Federal programs with Federal awards 
expended that, in aggregate, all major programs encompass at least 40

[[Page 357]]

percent (0.40) of total Federal awards expended.
    (g) Documentation of risk. The auditor must include in the audit 
documentation the risk analysis process used in determining major 
programs.
    (h) Auditor's judgment. When the major program determination was 
performed and documented in accordance with this subpart, the auditor's 
judgment in applying the risk-based approach to determine major programs 
must be presumed correct. Challenges by Federal agencies and pass-
through entities must only be for clearly improper use of the 
requirements in this part. However, Federal agencies and pass-through 
entities may provide auditors guidance about the risk of a particular 
Federal program and the auditor must consider this guidance in 
determining major programs in audits not yet completed.



Sec.  75.519  Criteria for Federal program risk.

    (a) General. The auditor's determination should be based on an 
overall evaluation of the risk of noncompliance occurring that could be 
material to the Federal program. The auditor must consider criteria, 
such as described in paragraphs (b), (c), and (d) of this section, to 
identify risk in Federal programs. Also, as part of the risk analysis, 
the auditor may wish to discuss a particular Federal program with 
auditee management and the Federal agency or pass-through entity.
    (b) Current and prior audit experience. (1) Weaknesses in internal 
control over Federal programs would indicate higher risk. Consideration 
should be given to the control environment over Federal programs and 
such factors as the expectation of management's adherence to Federal 
statutes, regulations, and the terms and conditions of Federal awards 
and the competence and experience of personnel who administer the 
Federal programs.
    (i) A Federal program administered under multiple internal control 
structures may have higher risk. When assessing risk in a large single 
audit, the auditor must consider whether weaknesses are isolated in a 
single operating unit (e.g., one college campus) or pervasive throughout 
the entity.
    (ii) When significant parts of a Federal program are passed through 
to subrecipients, a weak system for monitoring subrecipients would 
indicate higher risk.
    (2) Prior audit findings would indicate higher risk, particularly 
when the situations identified in the audit findings could have a 
significant impact on a Federal program or have not been corrected.
    (3) Federal programs not recently audited as major programs may be 
of higher risk than Federal programs recently audited as major programs 
without audit findings.
    (c) Oversight exercised by Federal agencies and pass-through 
entities. (1) Oversight exercised by Federal agencies or pass-through 
entities could be used to assess risk. For example, recent monitoring or 
other reviews performed by an oversight entity that disclosed no 
significant problems would indicate lower risk, whereas monitoring that 
disclosed significant problems would indicate higher risk.
    (2) Federal agencies, with the concurrence of OMB, may identify 
Federal programs that are higher risk. OMB will provide this 
identification in the compliance supplement.
    (d) Inherent risk of the Federal program. (1) The nature of a 
Federal program may indicate risk. Consideration should be given to the 
complexity of the program and the extent to which the Federal program 
contracts for goods and services. For example, Federal programs that 
disburse funds through third party contracts or have eligibility 
criteria may be of higher risk. Federal programs primarily involving 
staff payroll costs may have high risk for noncompliance with 
requirements of Sec.  75.430, but otherwise be at low risk.
    (2) The phase of a Federal program in its life cycle at the Federal 
agency may indicate risk. For example, a new Federal program with new or 
interim regulations may have higher risk than an established program 
with time-tested regulations. Also, significant changes in Federal 
programs, statutes, regulations, or the terms and conditions of Federal 
awards may increase risk.

[[Page 358]]

    (3) The phase of a Federal program in its life cycle at the auditee 
may indicate risk. For example, during the first and last years that an 
auditee participates in a Federal program, the risk may be higher due to 
start-up or closeout of program activities and staff.
    (4) Type B programs with larger Federal awards expended would be of 
higher risk than programs with substantially smaller Federal awards 
expended.



Sec.  75.520  Criteria for a low-risk auditee.

    An auditee that meets all of the following conditions for each of 
the preceding two audit periods must qualify as a low-risk auditee and 
be eligible for reduced audit coverage in accordance with Sec.  75.518.
    (a) Single audits were performed on an annual basis in accordance 
with the provisions of this subpart, including submitting the data 
collection form and the reporting package to the FAC within the 
timeframe specified in Sec.  75.512 . A non-Federal entity that has 
biennial audits does not qualify as a low-risk auditee.
    (b) The auditor's opinion on whether the financial statements were 
prepared in accordance with GAAP, or a basis of accounting required by 
state law, and the auditor's in relation to opinion on the schedule of 
expenditures of Federal awards were unmodified.
    (c) There were no deficiencies in internal control which were 
identified as material weaknesses under the requirements of GAGAS.
    (d) The auditor did not report a substantial doubt about the 
auditee's ability to continue as a going concern.
    (e) None of the Federal programs had audit findings from any of the 
following in either of the preceding two audit periods in which they 
were classified as Type A programs:
    (1) Internal control deficiencies that were identified as material 
weaknesses in the auditor's report on internal control for major 
programs as required under Sec.  75.515(c);
    (2) A modified opinion on a major program in the auditor's report on 
major programs as required under Sec.  75.515(c); or
    (3) Known or likely questioned costs that exceeded five percent of 
the total Federal awards expended for a Type A program during the audit 
period.

                          Management Decisions



Sec.  75.521  Management decision.

    (a) General. The management decision must clearly state whether or 
not the audit finding is sustained, the reasons for the decision, and 
the expected auditee action to repay disallowed costs, make financial 
adjustments, or take other action. If the auditee has not completed 
corrective action, a timetable for follow-up should be given. Prior to 
issuing the management decision, the Federal agency or pass-through 
entity may request additional information or documentation from the 
auditee, including a request for auditor assurance related to the 
documentation, as a way of mitigating disallowed costs. The management 
decision should describe any appeal process available to the auditee. 
While not required, the Federal agency or pass-through entity may also 
issue a management decision on findings relating to the financial 
statements which are required to be reported in accordance with GAGAS.
    (b) Federal agency. As provided in Sec.  75.513(a)(3)(vii), the 
cognizant agency for audit must be responsible for coordinating a 
management decision for audit findings that affect the programs of more 
than one Federal agency. As provided in Sec.  75.513(c)(3), a Federal 
awarding agency is responsible for issuing a management decision for 
findings that relate to Federal awards it makes to non-Federal entities.
    (c) Pass-through entity. As provided in Sec.  75.352(d), the pass-
through entity must be responsible for issuing a management decision for 
audit findings that relate to Federal awards it makes to subrecipients.
    (d) Time requirements. The HHS awarding agency or pass-through 
entity responsible for issuing a management decision must do so within 
six months of acceptance of the audit report by the FAC. The auditee 
must initiate and proceed with corrective action as rapidly as possible 
and corrective action should begin no later than upon receipt of the 
audit report.

[[Page 359]]

    (e) Reference numbers. Management decisions must include the 
reference numbers the auditor assigned to each audit finding in 
accordance with Sec.  75.516(c).



 Sec. Appendix I to Part 75--Full Text of Notice of Funding Opportunity

    The full text of the notice of funding opportunity is organized in 
sections. The required format outlined in this appendix indicates 
immediately following the title of each section whether that section is 
required in every announcement or is an HHS awarding agency option. The 
format is designed so that similar types of information will appear in 
the same sections in announcements of different Federal funding 
opportunities. Toward that end, there is text in each of the following 
sections to describe the types of information that an HHS awarding 
agency would include in that section of an actual announcement.
    An HHS awarding agency that wishes to include information that the 
format does not specifically discuss may address that subject in 
whatever section(s) is most appropriate. For example, if an HHS awarding 
agency chooses to address performance goals in the announcement, it 
might do so in the funding opportunity description, the application 
content, or the reporting requirements.
    Similarly, when this format calls for a type of information to be in 
a particular section, an HHS awarding agency wishing to address that 
subject in other sections may elect to repeat the information in those 
sections or use cross references between the sections (there should be 
hyperlinks for cross-references in any electronic versions of the 
announcement). For example, an HHS awarding agency may want to include 
in Section A information about the types of non-Federal entities who are 
eligible to apply. The format specifies a standard location for that 
information in Section C.1 but that does not preclude repeating the 
information in Section I or creating a cross reference between Sections 
A and C.1, as long as a potential applicant can find the information 
quickly and easily from the standard location.
    The sections of the full text of the announcement are described in 
the following paragraphs.

                    A. Program Description--Required

    This section contains the full program description of the funding 
opportunity. It may be as long as needed to adequately communicate to 
potential applicants the areas in which funding may be provided. It 
describes the HHS awarding agency's funding priorities or the technical 
or focus areas in which the HHS awarding agency intends to provide 
assistance. As appropriate, it may include any program history (e.g., 
whether this is a new program or a new or changed area of program 
emphasis). This section may communicate indicators of successful 
projects (e.g., if the program encourages collaborative efforts) and may 
include examples of projects that have been funded previously. This 
section also may include other information the HHS awarding agency deems 
necessary, and must at a minimum include citations for authorizing 
statutes and regulations for the funding opportunity.

                 B. Federal Award Information--Required

    This section provides sufficient information to help an applicant 
make an informed decision about whether to submit a proposal. Relevant 
information could include the total amount of funding that the HHS 
awarding agency expects to award through the announcement; the 
anticipated number of Federal awards; the expected amounts of individual 
Federal awards (which may be a range); the amount of funding per Federal 
award, on average, experienced in previous years; and the anticipated 
start dates and periods of performance for new Federal awards. This 
section also should address whether applications for renewal or 
supplementation of existing projects are eligible to compete with 
applications for new Federal awards.
    This section also must indicate the type(s) of assistance instrument 
(e.g., grant, cooperative agreement) that may be awarded if applications 
are successful. If cooperative agreements may be awarded, this section 
either should describe the ``substantial involvement'' that the HHS 
awarding agency expects to have or should reference where the potential 
applicant can find that information (e.g., in the funding opportunity 
description in section A. or Federal award administration information in 
Section D. If procurement contracts also may be awarded, this must be 
stated.

                       C. Eligibility Information

    This section addresses the considerations or factors that determine 
applicant or application eligibility. This includes the eligibility of 
particular types of applicant organizations, any factors affecting the 
eligibility of the principal investigator or project director, and any 
criteria that make particular projects ineligible. HHS agencies should 
make clear whether an applicant's failure to meet an eligibility 
criterion by the time of an application deadline will result in the HHS 
awarding agency returning the application without review or, even though 
an application may be reviewed, will preclude the HHS awarding agency 
from making a Federal award. Key elements to be addressed are:

[[Page 360]]

    1. Eligible Applicants--Required. Announcements must clearly 
identify the types of entities that are eligible to apply. If there are 
no restrictions on eligibility, this section may simply indicate that 
all potential applicants are eligible. If there are restrictions on 
eligibility, it is important to be clear about the specific types of 
entities that are eligible, not just the types that are ineligible. For 
example, if the program is limited to nonprofit organizations subject to 
26 U.S.C. 501(c)(3) of the tax code (26 U.S.C. 501(c)(3)), the 
announcement should say so. Similarly, it is better to state explicitly 
that Native American tribal organizations are eligible than to assume 
that they can unambiguously infer that from a statement that nonprofit 
organizations may apply. Eligibility also can be expressed by exception, 
(e.g., open to all types of domestic applicants other than individuals). 
This section should refer to any portion of Section D. specifying 
documentation that must be submitted to support an eligibility 
determination (e.g., proof of 501(c)(3) status as determined by the 
Internal Revenue Service or an authorizing tribal resolution). To the 
extent that any funding restriction in Section D.6 could affect the 
eligibility of an applicant or project, the announcement must either 
restate that restriction in this section or provide a cross-reference to 
its description in Section D.6.
    2. Cost Sharing or Matching--Required. Announcements must state 
whether there is required cost sharing, matching, or cost participation 
without which an application would be ineligible (if cost sharing is not 
required, the announcement must explicitly say so). Required cost 
sharing may be a certain percentage or amount, or may be in the form of 
contributions of specified items or activities (e.g., provision of 
equipment). It is important that the announcement be clear about any 
restrictions on the types of cost (e.g., in-kind contributions) that are 
acceptable as cost sharing. Cost sharing as an eligibility criterion 
includes requirements based in statute or regulation, as described in 
Sec.  75.306. This section should refer to the appropriate portion(s) of 
section D. stating any pre-award requirements for submission of letters 
or other documentation to verify commitments to meet cost-sharing 
requirements if a Federal award is made.
    3. Other--Required, if applicable. If there are other eligibility 
criteria (i.e., criteria that have the effect of making an application 
or project ineligible for Federal awards, whether referred to as 
``responsiveness'' criteria, ``go-no go'' criteria, ``threshold'' 
criteria, or in other ways), must be clearly stated and must include a 
reference to the regulation of requirement that describes the 
restriction, as applicable. For example, if entities that have been 
found to be in violation of a particular Federal statute are ineligible, 
it is important to say so. This section must also state any limit on the 
number of applications an applicant may submit under the announcement 
and make clear whether the limitation is on the submitting organization, 
individual investigator/program director, or both. This section should 
also address any eligibility criteria for beneficiaries or for program 
participants other than Federal award recipients.

                D. Application and Submission Information

    1. Address to Request Application Package--Required. Potential 
applicants must be told how to get application forms, kits, or other 
materials needed to apply (if this announcement contains everything 
needed, this section need only say so). An Internet address where the 
materials can be accessed is acceptable. However, since high-speed 
Internet access is not yet universally available for downloading 
documents, and applicants may have additional accessibility 
requirements, there also should be a way for potential applicants to 
request paper copies of materials, such as a U.S. Postal Service mailing 
address, telephone or FAX number, Telephone Device for the Deaf (TDD), 
Text Telephone (TTY) number, and/or Federal Information Relay Service 
(FIRS) number.
    2. Content and Form of Application Submission--Required. This 
section must identify the required content of an application and the 
forms or formats that an applicant must use to submit it. If any 
requirements are stated elsewhere because they are general requirements 
that apply to multiple programs or funding opportunities, this section 
should refer to where those requirements may be found. This section also 
should include required forms or formats as part of the announcement or 
state where the applicant may obtain them.
    This section should specifically address content and form or format 
requirements for:
    i. Pre-applications, letters of intent, or white papers required or 
encouraged (see Section D.4), including any limitations on the number of 
pages or other formatting requirements similar to those for full 
applications.
    ii. The application as a whole. For all submissions, this would 
include any limitations on the number of pages, font size and typeface, 
margins, paper size, number of copies, and sequence or assembly 
requirements. If electronic submission is permitted or required, this 
could include special requirements for formatting or signatures.
    iii. Component pieces of the application (e.g., if all copies of the 
application must bear original signatures on the face page or the 
program narrative may not exceed 10 pages). This includes any pieces 
that may be submitted separately by third parties (e.g.,

[[Page 361]]

references or letters confirming commitments from third parties that 
will be contributing a portion of any required cost sharing).
    iv. Information that successful applicants must submit after 
notification of intent to make a Federal award, but prior to a Federal 
award. This could include evidence of compliance with requirements 
relating to human subjects or information needed to comply with the 
National Environmental Policy Act (NEPA) (42 U.S.C. 4321-4370h).
    3. Unique Entity Identifier and System for Award Management (SAM)--
Required.
    This paragraph must state clearly that each applicant (unless the 
applicant is an individual or Federal awarding agency that is excepted 
from those requirements under 2 CFR 25.110(b) or (c), or has an 
exception approved by the Federal awarding agency under 2 CFR 25.110(d)) 
is required to:
    (i) Be registered in SAM before submitting its application;
    (ii) provide a valid unique entity identifier in its application; 
and
    (iii) continue to maintain an active SAM registration with current 
information at all times during which it has an active Federal award or 
an application or plan under consideration by a Federal awarding agency.
    It also must state that the Federal awarding agency may not make a 
Federal award to an applicant until the applicant has complied with all 
applicable unique entity identifier and SAM requirements and, if an 
applicant has not fully complied with the requirements by the time the 
Federal awarding agency is ready to make a Federal award, the Federal 
awarding agency may determine that the applicant is not qualified to 
receive a Federal award and use that determination as a basis for making 
a Federal award to another applicant.
    4. Submission Dates and Times--Required. Announcements must identify 
due dates and times for all submissions. This includes not only the full 
applications but also any preliminary submissions (e.g., letters of 
intent, white papers, or pre-applications). It also includes any other 
submissions of information before Federal award that are separate from 
the full application. If the funding opportunity is a general 
announcement that is open for a period of time with no specific due 
dates for applications, this section should say so. Note that the 
information on dates that is included in this section also must appear 
with other overview information in a location preceding the full text of 
the announcement (see Sec.  75.203).
    Each type of submission should be designated as encouraged or 
required and, if required, any deadline date (or dates, if the Federal 
awarding agency plans more than one cycle of application submission, 
review, and Federal award under the announcement) should be specified. 
The announcement must state (or provide a reference to another document 
that states):
    i. Any deadline in terms of a date and local time. If the due date 
falls on a Saturday, Sunday, or Federal holiday, the reporting package 
is due the next business day.
    ii. What the deadline means (e.g., whether it is the date and time 
by which the Federal awarding agency must receive the application, the 
date by which the application must be postmarked, or something else) and 
how that depends, if at all, on the submission method (e.g., mail, 
electronic, or personal/courier delivery).
    iii. The effect of missing a deadline (e.g., whether late 
applications are neither reviewed nor considered or are reviewed and 
considered under some circumstances).
    iv. How the receiving Federal office determines whether an 
application or pre-application has been submitted before the deadline. 
This includes the form of acceptable proof of mailing or system-
generated documentation of receipt date and time.
    This section also may indicate whether, when, and in what form the 
applicant will receive an acknowledgement of receipt. This information 
should be displayed in ways that will be easy to understand and use. It 
can be difficult to extract all needed information from narrative 
paragraphs, even when they are well written. A tabular form for 
providing a summary of the information may help applicants for some 
programs and give them what effectively could be a checklist to verify 
the completeness of their application package before submission.
    5. Intergovernmental Review--Required, if applicable. If the funding 
opportunity is subject to Executive Order 12372, ``Intergovernmental 
Review of Federal Programs,'' the notice must say so. In alerting 
applicants that they must contact their state's Single Point of Contact 
(SPOC) to find out about and comply with the state's process under 
Executive Order 12372, it may be useful to inform potential applicants 
that the names and addresses of the SPOCs are listed in the Office of 
Management and Budget's Web site. www.whitehouse.gov/omb/grants/
spoc.html.
    6. Funding Restrictions--Required. Notices must include information 
on funding restrictions in order to allow an applicant to develop an 
application and budget consistent with program requirements. Examples 
are whether construction is an allowable activity, if there are any 
limitations on direct costs such as foreign travel or equipment 
purchases, and if there are any limits on indirect costs (or facilities 
and administrative costs). Applicants must be advised if Federal awards 
will not allow reimbursement of pre-Federal award costs.
    7. Other Submission Requirements-- Required. This section must 
address any other submission requirements not included in the other

[[Page 362]]

paragraphs of this section. This might include the format of submission, 
i.e., paper or electronic, for each type of required submission. 
Applicants should not be required to submit in more than one format and 
this section should indicate whether they may choose whether to submit 
applications in hard copy or electronically, may submit only in hard 
copy, or may submit only electronically.
    This section also must indicate where applications (and any pre-
applications) must be submitted if sent by postal mail, electronic 
means, or hand-delivery. For postal mail submission, this must include 
the name of an office, official, individual or function (e.g., 
application receipt center) and a complete mailing address. For 
electronic submission, this must include the URL or email address; 
whether a password(s) is required; whether particular software or other 
electronic capabilities are required; what to do in the event of system 
problems and a point of contact who will be available in the event the 
applicant experiences technical difficulties.\1\
---------------------------------------------------------------------------

    \1\With respect to electronic methods for providing information 
about funding opportunities or accepting applicants' submissions of 
information, each HHS awarding agency is responsible for compliance with 
Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d).
---------------------------------------------------------------------------

                    E. Application Review Information

    1. Criteria--Required. This section must address the criteria that 
the Federal awarding agency will use to evaluate applications. This 
includes the merit and other review criteria that evaluators will use to 
judge applications, including any statutory, regulatory, or other 
preferences (e.g., minority status or Native American tribal 
preferences) that will be applied in the review process. These criteria 
are distinct from eligibility criteria that are addressed before an 
application is accepted for review and any program policy or other 
factors that are applied during the selection process, after the review 
process is completed. The intent is to make the application process 
transparent so applicants can make informed decisions when preparing 
their applications to maximize fairness of the process. The announcement 
should clearly describe all criteria, including any sub-criteria. If 
criteria vary in importance, the announcement should specify the 
relative percentages, weights, or other means used to distinguish among 
them. For statutory, regulatory, or other preferences, the announcement 
should provide a detailed explanation of those preferences with an 
explicit indication of their effect (e.g., whether they result in 
additional points being assigned).
    If an applicant's proposed cost sharing will be considered in the 
review process (as opposed to being an eligibility criterion described 
in Section C.2), the announcement must specifically address how it will 
be considered (e.g., to assign a certain number of additional points to 
applicants who offer cost sharing, or to break ties among applications 
with equivalent scores after evaluation against all other factors). If 
cost sharing will not be considered in the evaluation, the announcement 
should say so, so that there is no ambiguity for potential applicants. 
Vague statements that cost sharing is encouraged, without clarification 
as to what that means, are unhelpful to applicants. It also is important 
that the announcement be clear about any restrictions on the types of 
cost (e.g., in-kind contributions) that are acceptable as cost sharing.
    2. Review and Selection Process--Required. This section may vary in 
the level of detail provided. The announcement must list any program 
policy or other factors or elements, other than merit criteria, that the 
selecting official may use in selecting applications for Federal award 
(e.g., geographical dispersion, program balance, or diversity). The HHS 
awarding agency may also include other appropriate details. For example, 
this section may indicate who is responsible for evaluation against the 
merit criteria (e.g., peers external to the HHS awarding agency or HHS 
awarding agency personnel) and/or who makes the final selections for 
Federal awards. If there is a multi-phase review process (e.g., an 
external panel advising internal HHS awarding agency personnel who make 
final recommendations to the deciding official), the announcement may 
describe the phases. It also may include: the number of people on an 
evaluation panel and how it operates, the way reviewers are selected, 
reviewer qualifications, and the way that conflicts of interest are 
avoided. With respect to electronic methods for providing information 
about funding opportunities or accepting applicants' submissions of 
information, each HHS awarding agency is responsible for compliance with 
Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d).
    In addition, if the HHS awarding agency permits applicants to 
nominate suggested reviewers of their applications or suggest those they 
feel may be inappropriate due to a conflict of interest, that 
information should be included in this section.
    3. For any Federal award under a notice of funding opportunity, if 
the HHS awarding agency anticipates that the total Federal share will be 
greater than the simplified acquisition threshold on any Federal award 
under a notice of funding opportunity may include, over the period of 
performance (see Sec.  75.2 Simplified Acquisition Threshold), this 
section must also inform applicants:
    i. That the HHS awarding agency, prior to making a Federal award 
with a total amount of Federal share greater than the simplified

[[Page 363]]

acquisition threshold, is required to review and consider any 
information about the applicant that is in the designated integrity and 
performance system accessible through SAM (currently FAPIIS) (see 41 
U.S.C. 2313);
    ii. That an applicant, at its option, may review information in the 
designated integrity and performance systems accessible through SAM and 
comment on any information about itself that the HHS awarding agency 
previously entered and is currently in the designated integrity and 
performance system accessible through SAM;
    iii. That the HHS awarding agency will consider any comments by the 
applicant, in addition to the other information in the designated 
integrity and performance system, in making a judgment about the 
applicant's integrity, business ethics, and record of performance under 
Federal awards when completing the review of risk posed by applicants as 
described in Sec.  75.205.
    4. Anticipated Announcement and Federal Award Dates--Optional. This 
section is intended to provide applicants with information they can use 
for planning purposes. If there is a single application deadline 
followed by the simultaneous review of all applications, the HHS 
awarding agency can include in this section information about the 
anticipated dates for announcing or notifying successful and 
unsuccessful applicants and for having Federal awards in place. If 
applications are received and evaluated on a ``rolling'' basis at 
different times during an extended period, it may be appropriate to give 
applicants an estimate of the time needed to process an application and 
notify the applicant of the HHS awarding agency's decision.

               F. Federal Award Administration Information

    1. Federal Award Notices--Required. This section must address what a 
successful applicant can expect to receive following selection. If the 
HHS awarding agency's practice is to provide a separate notice stating 
that an application has been selected before it actually makes the 
Federal award, this section would be the place to indicate that the 
letter is not an authorization to begin performance (to the extent that 
it allows charging to Federal awards of pre-award costs at the non-
Federal entity's own risk). This section should indicate that the notice 
of Federal award signed by the grants officer (or equivalent) is the 
authorizing document, and whether it is provided through postal mail or 
by electronic means and to whom. It also may address the timing, form, 
and content of notifications to unsuccessful applicants. See also Sec.  
75.210.
    2. Administrative and National Policy Requirements--Required. This 
section must identify the usual administrative and national policy 
requirements the HHS awarding agency's Federal awards may include. 
Providing this information lets a potential applicant identify any 
requirements with which it would have difficulty complying if its 
application is successful. In those cases, early notification about the 
requirements allows the potential applicant to decide not to apply or to 
take needed actions before receiving the Federal award. The announcement 
need not include all of the terms and conditions of the Federal-award, 
but may refer to a document (with information about how to obtain it) or 
Internet site where applicants can see the terms and conditions. If this 
funding opportunity will lead to Federal awards with some specific terms 
and conditions that differ from the HHS awarding agency's usual 
(sometimes called ``general'') terms and conditions, this section should 
highlight those specific terms and conditions. Doing so will alert 
applicants that have received Federal awards from the HHS awarding 
agency previously and might not otherwise expect different terms and 
conditions. For the same reason, the announcement should inform 
potential applicants about special requirements that could apply to 
particular Federal awards after the review of applications and other 
information, based on the particular circumstances of the effort to be 
supported (e.g., if human subjects were to be involved or if some 
situations may justify special terms on intellectual property, data 
sharing or security requirements).
    3. Reporting--Required. This section must include general 
information about the type (e.g., financial or performance), frequency, 
and means of submission (paper or electronic) of post-Federal award 
reporting requirements. Highlight any special reporting requirements for 
Federal awards under this funding opportunity that differ (e.g., by 
report type, frequency, form/format, or circumstances for use) from what 
the HHS awarding agency's Federal awards usually require. HHS agencies 
must also describe in this section all relevant requirements such as 
those at 2 CFR 180.335 and 2 CFR 180.350. If the Federal share of any 
Federal award may include more than $500,000 over the period of 
performance, this section must inform potential applicants about the 
post award reporting requirements in Appendix XII.

               G. HHS Awarding Agency Contact(s)--Required

    The announcement must give potential applicants a point(s) of 
contact for answering questions or helping with problems while the 
funding opportunity is open. The intent of this requirement is to be as 
helpful as possible to potential applicants, so the HHS awarding agency 
should consider approaches such as giving:

[[Page 364]]

    1. Points of contact who may be reached in multiple ways (e.g., by 
telephone, FAX, and/or email, as well as regular mail).
    2. A fax or email address that multiple people access, so that 
someone will respond even if others are unexpectedly absent during 
critical periods.
    3. Different contacts for distinct kinds of help (e.g., one for 
questions of programmatic content and a second for administrative 
questions).

                     H. Other Information--Optional

    This section may include any additional information that will assist 
a potential applicant. For example, the section might:
    1. Indicate whether this is a new program or a one-time initiative.
    2. Mention related programs or other upcoming or ongoing HHS 
awarding agency funding opportunities for similar activities.
    3. Include current Internet addresses for the HHS awarding agency 
Web sites that may be useful to an applicant in understanding the 
program.
    4. Alert applicants to the need to identify proprietary information 
and inform them about the way the HHS awarding agency will handle it.
    5. Include certain routine notices to applicants (e.g., that the 
Federal Government is not obligated to make any Federal award as a 
result of the announcement or that only grants officers can bind the 
Federal Government to the expenditure of funds).

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



Sec. Appendix II to Part 75--Contract Provisions for Non-Federal Entity 
                     Contracts Under Federal Awards

    In addition to other provisions required by the HHS agency or non-
Federal entity, all contracts made by the non-Federal entity under the 
Federal award must contain provisions covering the following, as 
applicable.
    A. Contracts for more than the simplified acquisition threshold 
currently set at $150,000, which is the inflation adjusted amount 
determined by the Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) as authorized by 41 U.S.C. 
1908, must address administrative, contractual, or legal remedies in 
instances where contractors violate or breach contract terms, and 
provide for such sanctions and penalties as appropriate.
    B. All contracts in excess of $10,000 must address termination for 
cause and for convenience by the non-Federal entity including the manner 
by which it will be effected and the basis for settlement.
    C. Equal Employment Opportunity. Except as otherwise provided under 
41 CFR part 60, all contracts that meet the definition of ``federally 
assisted construction contract'' in 41 CFR part 60-1.3 must include the 
equal opportunity clause provided under 41 CFR 60-1.4(b), in accordance 
with Executive Order 11246, Equal Employment Opportunity (30 FR 12319, 
12935, 3 CFR 1964-1965 Comp., p. 339) as amended by Executive Order 
11375 amending Executive Order 11246 Relating to Equal Employment 
Opportunity, and implementing regulations at 41 CFR part 60.
    D. Davis-Bacon Act, as amended (40 U.S.C. 3141-3148). When required 
by Federal program legislation, all prime construction contracts in 
excess of $2,000 awarded by non-Federal entities must include a 
provision for compliance with the Davis-Bacon Act (40 U.S.C. 3141-3144, 
and 3146-3148) as supplemented by Department of Labor regulations (29 
CFR part 5). In accordance with the statute, contractors must be 
required to pay wages to laborers and mechanics at a rate not less than 
the prevailing wages specified in a wage determination made by the 
Secretary of Labor. In addition, contractors must be required to pay 
wages not less than once a week. The non-Federal entity must place a 
copy of the current prevailing wage determination issued by the 
Department of Labor in each solicitation. The decision to award a 
contract or subcontract must be conditioned upon the acceptance of the 
wage determination. The non-Federal entity must report all suspected or 
reported violations to the Federal awarding agency. The contracts must 
also include a provision for compliance with the Copeland ``Anti-
Kickback'' Act (40 U.S.C. 3145), as supplemented by Department of Labor 
regulations (29 CFR part 3). The Act provides that each contractor or 
subrecipient must be prohibited from inducing, by any means, any person 
employed in the construction, completion, or repair of public work, to 
give up any part of the compensation to which he or she is otherwise 
entitled. The non-Federal entity must report all suspected or reported 
violations to the Federal awarding agency.
    E. Contract Work Hours and Safety Standards Act (40 U.S.C. 3701-
3708). Where applicable, all contracts awarded by the non-Federal entity 
in excess of $100,000 that involve the employment of mechanics or 
laborers must include a provision for compliance with 40 U.S.C. 3702 and 
3704, as supplemented by Department of Labor regulations (29 CFR part 
5). Under 40 U.S.C. 3702 of the Act, each contractor must be required to 
compute the wages of every mechanic and laborer on the basis of a 
standard work week of 40 hours. Work in excess of the standard work week 
is permissible provided that the worker is compensated at a rate of not 
less than one and a half times the basic rate of pay for all hours 
worked in excess of 40 hours in the work week. The requirements of 40 
U.S.C. 3704 are applicable to construction work and provide

[[Page 365]]

that no laborer or mechanic must be required to work in surroundings or 
under working conditions which are unsanitary, hazardous or dangerous. 
These requirements do not apply to the purchases of supplies or 
materials or articles ordinarily available on the open market, or 
contracts for transportation or transmission of intelligence.
    F. Rights to Inventions Made Under a Contract or Agreement. If the 
Federal award meets the definition of ``funding agreement'' under 37 CFR 
401.2 (a) and the recipient or subrecipient wishes to enter into a 
contract with a small business firm or nonprofit organization regarding 
the substitution of parties, assignment or performance of experimental, 
developmental, or research work under that ``funding agreement,'' the 
recipient or subrecipient must comply with the requirements of 37 CFR 
part 401 and any implementing regulations issued by the awarding agency.
    G. Clean Air Act (42 U.S.C. 7401-7671q.) and the Federal Water 
Pollution Control Act (33 U.S.C. 1251-1387), as amended--Contracts and 
subgrants of amounts in excess of $150,000 must contain a provision that 
requires the non-Federal award to agree to comply with all applicable 
standards, orders or regulations issued pursuant to the Clean Air Act 
(42 U.S.C. 7401-7671q) and the Federal Water Pollution Control Act as 
amended (33 U.S.C. 1251-1387). Violations must be reported to the 
Federal awarding agency and the Regional Office of the Environmental 
Protection Agency (EPA).
    H. Debarment and Suspension (Executive Orders 12549 and 12689)--A 
contract award (see 2 CFR 180.220) must not be made to parties listed on 
the government-wide exclusions in the System for Award Management (SAM), 
in accordance with the OMB guidelines at 2 CFR part 180 that implement 
Executive Orders 12549 (3 CFR part 1986 Comp., p. 189) and 12689 (3 CFR 
part 1989 Comp., p. 235), ``Debarment and Suspension.'' SAM Exclusions 
contains the names of parties debarred, suspended, or otherwise excluded 
by agencies, as well as parties declared ineligible under statutory or 
regulatory authority other than Executive Order 12549.
    I. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)--Contractors that 
apply or bid for an award exceeding $100,000 must file the required 
certification. Each tier certifies to the tier above that it will not 
and has not used Federal appropriated funds to pay any person or 
organization for influencing or attempting to influence an officer or 
employee of any agency, a member of Congress, officer or employee of 
Congress, or an employee of a member of Congress in connection with 
obtaining any Federal contract, grant or any other award covered by 31 
U.S.C. 1352. Each tier must also disclose any lobbying with non-Federal 
funds that takes place in connection with obtaining any Federal award. 
Such disclosures are forwarded from tier to tier up to the non-Federal 
award.
    J. See Sec.  75.331 Procurement of recovered materials.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 19044, Apr. 4, 2016]



 Sec. Appendix III to Part 75--Indirect (F&A) Costs Identification and 
Assignment, and Rate Determination for Institutions of Higher Education 
                                 (IHEs)

                               A. General

    This appendix provides criteria for identifying and computing 
indirect (or indirect (F&A)) rates at IHEs (institutions). Indirect 
(F&A) costs are those that are incurred for common or joint objectives 
and therefore cannot be identified readily and specifically with a 
particular sponsored project, an instructional activity, or any other 
institutional activity. See subsection B.1, for a discussion of the 
components of indirect (F&A) costs.

                  1. Major Functions of an Institution

    Refers to instruction, organized research, other sponsored 
activities and other institutional activities as defined in this 
section:
    a. Instruction means the teaching and training activities of an 
institution. Except for research training as provided in subsection b, 
this term includes all teaching and training activities, whether they 
are offered for credits toward a degree or certificate or on a non-
credit basis, and whether they are offered through regular academic 
departments or separate divisions, such as a summer school division or 
an extension division. Also considered part of this major function are 
departmental research, and, where agreed to, university research.
    (1) Sponsored instruction and training means specific instructional 
or training activity established by grant, contract, or cooperative 
agreement. For purposes of the cost principles, this activity may be 
considered a major function even though an institution's accounting 
treatment may include it in the instruction function.
    (2) Departmental research means research, development and scholarly 
activities that are not organized research and, consequently, are not 
separately budgeted and accounted for. Departmental research, for 
purposes of this document, is not considered as a major function, but as 
a part of the instruction function of the institution.
    (3) Only mandatory cost sharing or cost sharing specifically 
committed in the project budget must be included in the organized 
research base for computing the indirect (F&A)

[[Page 366]]

cost rate or reflected in any allocation of indirect costs. Salary costs 
above statutory limits are not considered cost sharing.
    b. Organized research means all research and development activities 
of an institution that are separately budgeted and accounted for. It 
includes:
    (1) Sponsored research means all research and development activities 
that are sponsored by Federal and non-Federal agencies and 
organizations. This term includes activities involving the training of 
individuals in research techniques (commonly called research training) 
where such activities utilize the same facilities as other research and 
development activities and where such activities are not included in the 
instruction function.
    (2) University research means all research and development 
activities that are separately budgeted and accounted for by the 
institution under an internal application of institutional funds. 
University research, for purposes of this document, must be combined 
with sponsored research under the function of organized research.
    c. Other sponsored activities means programs and projects financed 
by Federal and non-Federal agencies and organizations which involve the 
performance of work other than instruction and organized research. 
Examples of such programs and projects are health service projects and 
community service programs. However, when any of these activities are 
undertaken by the institution without outside support, they may be 
classified as other institutional activities.
    d. Other institutional activities means all activities of an 
institution except for instruction, departmental research, organized 
research, and other sponsored activities, as defined in this section; 
indirect (F&A) cost activities identified in this Appendix paragraph B, 
Identification and assignment of indirect (F&A) costs; and specialized 
services facilities described in Sec.  75.468 of this part.
    Examples of other institutional activities include operation of 
residence halls, dining halls, hospitals and clinics, student unions, 
intercollegiate athletics, bookstores, faculty housing, student 
apartments, guest houses, chapels, theaters, public museums, and other 
similar auxiliary enterprises. This definition also includes any other 
categories of activities, costs of which are ``unallowable'' to Federal 
awards, unless otherwise indicated in an award.

                      2. Criteria for Distribution

    a. Base period. A base period for distribution of indirect (F&A) 
costs is the period during which the costs are incurred. The base period 
normally should coincide with the fiscal year established by the 
institution, but in any event the base period should be so selected as 
to avoid inequities in the distribution of costs.
    b. Need for cost groupings. The overall objective of the indirect 
(F&A) cost allocation process is to distribute the indirect (F&A) costs 
described in Section B, Identification and assignment of indirect (F&A) 
costs, to the major functions of the institution in proportions 
reasonably consistent with the nature and extent of their use of the 
institution's resources. In order to achieve this objective, it may be 
necessary to provide for selective distribution by establishing separate 
groupings of cost within one or more of the indirect (F&A) cost 
categories referred to in subsection B.1. In general, the cost groupings 
established within a category should constitute, in each case, a pool of 
those items of expense that are considered to be of like nature in terms 
of their relative contribution to (or degree of remoteness from) the 
particular cost objectives to which distribution is appropriate. Cost 
groupings should be established considering the general guides provided 
in subsection c of this section. Each such pool or cost grouping should 
then be distributed individually to the related cost objectives, using 
the distribution base or method most appropriate in light of the 
guidelines set forth in subsection d of this section.
    c. General considerations on cost groupings. The extent to which 
separate cost groupings and selective distribution would be appropriate 
at an institution is a matter of judgment to be determined on a case-by-
case basis. Typical situations which may warrant the establishment of 
two or more separate cost groupings (based on account classification or 
analysis) within an indirect (F&A) cost category include but are not 
limited to the following:
    (1) If certain items or categories of expense relate solely to one 
of the major functions of the institution or to less than all functions, 
such expenses should be set aside as a separate cost grouping for direct 
assignment or selective allocation in accordance with the guides 
provided in subsections b and d.
    (2) If any types of expense ordinarily treated as general 
administration or departmental administration are charged to Federal 
awards as direct costs, expenses applicable to other activities of the 
institution when incurred for the same purposes in like circumstances 
must, through separate cost groupings, be excluded from the indirect 
(F&A) costs allocable to those Federal awards and included in the direct 
cost of other activities for cost allocation purposes.
    (3) If it is determined that certain expenses are for the support of 
a service unit or facility whose output is susceptible of measurement on 
a workload or other quantitative basis, such expenses should be set 
aside as a separate cost grouping for distribution on such basis to 
organized research, instructional, and other activities at the 
institution or within the department.

[[Page 367]]

    (4) If activities provide their own purchasing, personnel 
administration, building maintenance or similar service, the 
distribution of general administration and general expenses, or 
operation and maintenance expenses to such activities should be 
accomplished through cost groupings which include only that portion of 
central indirect (F&A) costs (such as for overall management) which are 
properly allocable to such activities.
    (5) If the institution elects to treat fringe benefits as indirect 
(F&A) charges, such costs should be set aside as a separate cost 
grouping for selective distribution to related cost objectives.
    (6) The number of separate cost groupings within a category should 
be held within practical limits, after taking into consideration the 
materiality of the amounts involved and the degree of precision 
attainable through less selective methods of distribution.
    d. Selection of distribution method.
    (1) Actual conditions must be taken into account in selecting the 
method or base to be used in distributing individual cost groupings. The 
essential consideration in selecting a base is that it be the one best 
suited for assigning the pool of costs to cost objectives in accordance 
with benefits derived; with a traceable cause-and-effect relationship; 
or with logic and reason, where neither benefit nor a cause-and-effect 
relationship is determinable.
    (2) If a cost grouping can be identified directly with the cost 
objective benefitted, it should be assigned to that cost objective.
    (3) If the expenses in a cost grouping are more general in nature, 
the distribution may be based on a cost analysis study which results in 
an equitable distribution of the costs. Such cost analysis studies may 
take into consideration weighting factors, population, or space occupied 
if appropriate. Cost analysis studies, however, must (a) be 
appropriately documented in sufficient detail for subsequent review by 
the cognizant agency for indirect costs, (b) distribute the costs to the 
related cost objectives in accordance with the relative benefits 
derived, (c) be statistically sound, (d) be performed specifically at 
the institution at which the results are to be used, and (e) be reviewed 
periodically, but not less frequently than rate negotiations, updated if 
necessary, and used consistently. Any assumptions made in the study must 
be stated and explained. The use of cost analysis studies and periodic 
changes in the method of cost distribution must be fully justified.
    (4) If a cost analysis study is not performed, or if the study does 
not result in an equitable distribution of the costs, the distribution 
must be made in accordance with the appropriate base cited in Section B, 
unless one of the following conditions is met:
    (a) It can be demonstrated that the use of a different base would 
result in a more equitable allocation of the costs, or that a more 
readily available base would not increase the costs charged to Federal 
awards, or
    (b) The institution qualifies for, and elects to use, the simplified 
method for computing indirect (F&A) cost rates described in Section D.
    (5) Notwithstanding subsection (3), effective July 1, 1998, a cost 
analysis or base other than that in Section B must not be used to 
distribute utility or student services costs. Instead, subsections B.4.c 
may be used in the recovery of utility costs.
    e. Order of distribution.
    (1) Indirect (F&A) costs are the broad categories of costs discussed 
in Section B.1.
    (2) Depreciation, interest expenses, operation and maintenance 
expenses, and general administrative and general expenses should be 
allocated in that order to the remaining indirect (F&A) cost categories 
as well as to the major functions and specialized service facilities of 
the institution. Other cost categories may be allocated in the order 
determined to be most appropriate by the institutions. When cross 
allocation of costs is made as provided in subsection (3), this order of 
allocation does not apply.
    (3) Normally an indirect (F&A) cost category will be considered 
closed once it has been allocated to other cost objectives, and costs 
may not be subsequently allocated to it. However, a cross allocation of 
costs between two or more indirect (F&A) cost categories may be used if 
such allocation will result in a more equitable allocation of costs. If 
a cross allocation is used, an appropriate modification to the 
composition of the indirect (F&A) cost categories described in Section B 
is required.

        B. Identification and Assignment of Indirect (F&A) Costs

             1. Definition of Facilities and Administration

    See Sec.  75.414 which provides the basis for these indirect cost 
requirements.

                             2. Depreciation

    a. The expenses under this heading are the portion of the costs of 
the institution's buildings, capital improvements to land and buildings, 
and equipment which are computed in accordance with Sec.  75.436.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated in the 
following manner:
    (1) Depreciation on buildings used exclusively in the conduct of a 
single function, and on capital improvements and equipment used in such 
buildings, must be assigned to that function.

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    (2) Depreciation on buildings used for more than one function, and 
on capital improvements and equipment used in such buildings, must be 
allocated to the individual functions performed in each building on the 
basis of usable square feet of space, excluding common areas such as 
hallways, stairwells, and rest rooms.
    (3) Depreciation on buildings, capital improvements and equipment 
related to space (e.g., individual rooms, laboratories) used jointly by 
more than one function (as determined by the users of the space) must be 
treated as follows. The cost of each jointly used unit of space must be 
allocated to benefitting functions on the basis of:
    (a) The employee full-time equivalents (FTEs) or salaries and wages 
of those individual functions benefitting from the use of that space; or
    (b) Institution-wide employee FTEs or salaries and wages applicable 
to the benefitting major functions (see Section A.1) of the institution.
    (4) Depreciation on certain capital improvements to land, such as 
paved parking areas, fences, sidewalks, and the like, not included in 
the cost of buildings, must be allocated to user categories of students 
and employees on a full-time equivalent basis. The amount allocated to 
the student category must be assigned to the instruction function of the 
institution. The amount allocated to the employee category must be 
further allocated to the major functions of the institution in 
proportion to the salaries and wages of all employees applicable to 
those functions.

                               3. Interest

    Interest on debt associated with certain buildings, equipment and 
capital improvements, as defined in Sec.  75.449, must be classified as 
an expenditure under the category Facilities. These costs must be 
allocated in the same manner as the depreciation on the buildings, 
equipment and capital improvements to which the interest relates.

                  4. Operation and Maintenance Expenses

    a. The expenses under this heading are those that have been incurred 
for the administration, supervision, operation, maintenance, 
preservation, and protection of the institution's physical plant. They 
include expenses normally incurred for such items as janitorial and 
utility services; repairs and ordinary or normal alterations of 
buildings, furniture and equipment; care of grounds; maintenance and 
operation of buildings and other plant facilities; security; earthquake 
and disaster preparedness; environmental safety; hazardous waste 
disposal; property, liability and all other insurance relating to 
property; space and capital leasing; facility planning and management; 
and central receiving. The operation and maintenance expense category 
should also include its allocable share of fringe benefit costs, 
depreciation, and interest costs.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated in the same 
manner as described in subsection 2.b for depreciation.
    c. A utility cost adjustment of up to 1.3 percentage points may be 
included in the negotiated indirect cost rate of the IHE for organized 
research, per the computation alternatives in paragraphs (c)(1) and (2) 
of this section:
    (1) Where space is devoted to a single function and metering allows 
unambiguous measurement of usage related to that space, costs must be 
assigned to the function located in that space.
    (2) Where space is allocated to different functions and metering 
does not allow unambiguous measurement of usage by function, costs must 
be allocated as follows:
    (i) Utilities costs should be apportioned to functions in the same 
manner as depreciation, based on the calculated difference between the 
site or building actual square footage for monitored research laboratory 
space (site, building, floor, or room), and a separate calculation 
prepared by the IHE using the ``effective square footage'' described in 
subsection (c)(2)(ii) of this section.
    (ii) ``Effective square footage'' allocated to research laboratory 
space must be calculated as the actual square footage times the relative 
energy utilization index (REUI) posted on the OMB Web site at the time 
of a rate determination.
    A. This index is the ratio of a laboratory energy use index (lab 
EUI) to the corresponding index for overall average college or 
university space (college EUI).
    B. In July 2012, values for these two indices (taken respectively 
from the Lawrence Berkeley Laboratory ``Labs for the 21st Century'' 
benchmarking tool http://labs21benchmarking.lbl.gov /CompareData.php and 
the US Department of Energy ``Buildings Energy Databook'' and http://
buildingsdatabook.eren .doe.gov/CBECS.aspx) were 310 kBtu/sq ft-yr. and 
155 kBtu/sq ft-yr., so that the adjustment ratio is 2.0 by this 
methodology. To retain currency, OMB will adjust the EUI numbers from 
time to time (no more often than annually nor less often than every 5 
years), using reliable and publicly disclosed data. Current values of 
both the EUIs and the REUI will be posted on the OMB Web site.

             5. General Administration and General Expenses

    a. The expenses under this heading are those that have been incurred 
for the general executive and administrative offices of educational 
institutions and other expenses of a

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general character which do not relate solely to any major function of 
the institution; i.e., solely to (1) instruction, (2) organized 
research, (3) other sponsored activities, or (4) other institutional 
activities. The general administration and general expense category 
should also include its allocable share of fringe benefit costs, 
operation and maintenance expense, depreciation, and interest costs. 
Examples of general administration and general expenses include: Those 
expenses incurred by administrative offices that serve the entire 
university system of which the institution is a part; central offices of 
the institution such as the President's or Chancellor's office, the 
offices for institution-wide financial management, business services, 
budget and planning, personnel management, and safety and risk 
management; the office of the General Counsel; and the operations of the 
central administrative management information systems. General 
administration and general expenses must not include expenses incurred 
within non-university-wide deans' offices, academic departments, 
organized research units, or similar organizational units. (See 
subsection 6.)
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be grouped first according 
to common major functions of the institution to which they render 
services or provide benefits. The aggregate expenses of each group must 
then be allocated to serviced or benefitted functions on the modified 
total cost basis. Modified total costs consist of the same elements as 
those in Section C.2. When an activity included in this indirect (F&A) 
cost category provides a service or product to another institution or 
organization, an appropriate adjustment must be made to either the 
expenses or the basis of allocation or both, to assure a proper 
allocation of costs.

                 6. Departmental Administration Expenses

    a. The expenses under this heading are those that have been incurred 
for administrative and supporting services that benefit common or joint 
departmental activities or objectives in academic deans' offices, 
academic departments and divisions, and organized research units. 
Organized research units include such units as institutes, study 
centers, and research centers. Departmental administration expenses are 
subject to the following limitations.
    (1) Academic deans' offices. Salaries and operating expenses are 
limited to those attributable to administrative functions.
    (2) Academic departments:
    (a) Salaries and fringe benefits attributable to the administrative 
work (including bid and proposal preparation) of faculty (including 
department heads) and other professional personnel conducting research 
and/or instruction, must be allowed at a rate of 3.6 percent of modified 
total direct costs. This category does not include professional business 
or professional administrative officers. This allowance must be added to 
the computation of the indirect (F&A) cost rate for major functions in 
Section C; the expenses covered by the allowance must be excluded from 
the departmental administration cost pool. No documentation is required 
to support this allowance.
    (b) Other administrative and supporting expenses incurred within 
academic departments are allowable provided they are treated 
consistently in like circumstances. This would include expenses such as 
the salaries of secretarial and clerical staffs, the salaries of 
administrative officers and assistants, travel, office supplies, 
stockrooms, and the like.
    (3) Other fringe benefit costs applicable to the salaries and wages 
included in subsections (1) and (2) are allowable, as well as an 
appropriate share of general administration and general expenses, 
operation and maintenance expenses, and depreciation.
    (4) Federal agencies may authorize reimbursement of additional costs 
for department heads and faculty only in exceptional cases where an 
institution can demonstrate undue hardship or detriment to project 
performance.
    b. The following guidelines apply to the determination of 
departmental administrative costs as direct or indirect (F&A) costs.
    (1) In developing the departmental administration cost pool, special 
care should be exercised to ensure that costs incurred for the same 
purpose in like circumstances are treated consistently as either direct 
or indirect (F&A) costs. For example, salaries of technical staff, 
laboratory supplies (e.g., chemicals), telephone toll charges, animals, 
animal care costs, computer costs, travel costs, and specialized shop 
costs must be treated as direct costs wherever identifiable to a 
particular cost objective. Direct charging of these costs may be 
accomplished through specific identification of individual costs to 
benefitting cost objectives, or through recharge centers or specialized 
service facilities, as appropriate under the circumstances. See 
Sec. Sec.  75.413(c) and 75.468.
    (2) Items such as office supplies, postage, local telephone costs, 
and memberships must normally be treated as indirect (F&A) costs.
    c. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated as follows:
    (1) The administrative expenses of the dean's office of each college 
and school must be allocated to the academic departments within that 
college or school on the modified total cost basis.
    (2) The administrative expenses of each academic department, and the 
department's share of the expenses allocated in subsection

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(1) must be allocated to the appropriate functions of the department on 
the modified total cost basis.

                  7. Sponsored Projects Administration

    a. The expenses under this heading are limited to those incurred by 
a separate organization(s) established primarily to administer sponsored 
projects, including such functions as grant and contract administration 
(Federal and non-Federal), special security, purchasing, personnel, 
administration, and editing and publishing of research and other 
reports. They include the salaries and expenses of the head of such 
organization, assistants, and immediate staff, together with the 
salaries and expenses of personnel engaged in supporting activities 
maintained by the organization, such as stock rooms, print shops, and 
the like. This category also includes an allocable share of fringe 
benefit costs, general administration and general expenses, operation 
and maintenance expenses, and depreciation. Appropriate adjustments will 
be made for services provided to other functions or organizations.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated to the major 
functions of the institution under which the sponsored projects are 
conducted on the basis of the modified total cost of sponsored projects.
    c. An appropriate adjustment must be made to eliminate any duplicate 
charges to Federal awards when this category includes similar or 
identical activities as those included in the general administration and 
general expense category or other indirect (F&A) cost items, such as 
accounting, procurement, or personnel administration.

                           8. Library Expenses

    a. The expenses under this heading are those that have been incurred 
for the operation of the library, including the cost of books and 
library materials purchased for the library, less any items of library 
income that qualify as applicable credits under Sec.  75.406. The 
library expense category should also include the fringe benefits 
applicable to the salaries and wages included therein, an appropriate 
share of general administration and general expense, operation and 
maintenance expense, and depreciation. Costs incurred in the purchases 
of rare books (museum-type books) with no value to Federal awards should 
not be allocated to them.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses included in this category must be allocated first on the 
basis of primary categories of users, including students, professional 
employees, and other users.
    (1) The student category must consist of full-time equivalent 
students enrolled at the institution, regardless of whether they earn 
credits toward a degree or certificate.
    (2) The professional employee category must consist of all faculty 
members and other professional employees of the institution, on a full-
time equivalent basis. This category may also include post-doctorate 
fellows and graduate students.
    (3) The other users category must consist of a reasonable factor as 
determined by institutional records to account for all other users of 
library facilities.
    c. Amount allocated in paragraph b of this section must be assigned 
further as follows:
    (1) The amount in the student category must be assigned to the 
instruction function of the institution.
    (2) The amount in the professional employee category must be 
assigned to the major functions of the institution in proportion to the 
salaries and wages of all faculty members and other professional 
employees applicable to those functions.
    (3) The amount in the other users category must be assigned to the 
other institutional activities function of the institution.

                 9. Student Administration and Services

    a. The expenses under this heading are those that have been incurred 
for the administration of student affairs and for services to students, 
including expenses of such activities as deans of students, admissions, 
registrar, counseling and placement services, student advisers, student 
health and infirmary services, catalogs, and commencements and 
convocations. The salaries of members of the academic staff whose 
responsibilities to the institution require administrative work that 
benefits sponsored projects may also be included to the extent that the 
portion charged to student administration is determined in accordance 
with Subpart E of this part. This expense category also includes the 
fringe benefit costs applicable to the salaries and wages included 
therein, an appropriate share of general administration and general 
expenses, operation and maintenance, interest expense, and depreciation.
    b. In the absence of the alternatives provided for in Section A.2.d, 
the expenses in this category must be allocated to the instruction 
function, and subsequently to Federal awards in that function.

  10. Offset for Indirect (F&A) Expenses Otherwise Provided for by the 
                           Federal Government

    a. The items to be accumulated under this heading are the 
reimbursements and other payments from the Federal Government which are 
made to the institution to support solely, specifically, and directly, 
in whole or in part, any of the administrative or service activities 
described in subsections 2 through 9.

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    b. The items in this group must be treated as a credit to the 
affected individual indirect (F&A) cost category before that category is 
allocated to benefitting functions.

  C. Determination and Application of Indirect (F&A) Cost Rate or Rates

                      1. Indirect (F&A) Cost Pools

    a. (1) Subject to subsection b, the separate categories of indirect 
(F&A) costs allocated to each major function of the institution as 
prescribed in Section B of this paragraph C.1-, must be aggregated and 
treated as a common pool for that function. The amount in each pool must 
be divided by the distribution base described in subsection 2 to arrive 
at a single indirect (F&A) cost rate for each function.
    (2) The rate for each function is used to distribute indirect (F&A) 
costs to individual Federal awards of that function. Since a common pool 
is established for each major function of the institution, a separate 
indirect (F&A) cost rate would be established for each of the major 
functions described in Section A.1 under which Federal awards are 
carried out.
    (3) Each institution's indirect (F&A) cost rate process must be 
appropriately designed to ensure that Federal sponsors do not in any way 
subsidize the indirect (F&A) costs of other sponsors, specifically 
activities sponsored by industry and foreign governments. Accordingly, 
each allocation method used to identify and allocate the indirect (F&A) 
cost pools, as described in Sections A.2, and B.2 through B.9, must 
contain the full amount of the institution's modified total costs or 
other appropriate units of measurement used to make the computations. In 
addition, the final rate distribution base (as defined in subsection 2) 
for each major function (organized research, instruction, etc., as 
described in Section A.1) must contain all the programs or activities 
which utilize the indirect (F&A) costs allocated to that major function. 
At the time an indirect (F&A) cost proposal is submitted to a cognizant 
agency for indirect costs, each institution must describe the process it 
uses to ensure that Federal funds are not used to subsidize industry and 
foreign government funded programs.
    b. In some instances a single rate basis for use across the board on 
all work within a major function at an institution may not be 
appropriate. A single rate for research, for example, might not take 
into account those different environmental factors and other conditions 
which may affect substantially the indirect (F&A) costs applicable to a 
particular segment of research at the institution. A particular segment 
of research may be that performed under a single sponsored agreement or 
it may consist of research under a group of Federal awards performed in 
a common environment. The environmental factors are not limited to the 
physical location of the work. Other important factors are the level of 
the administrative support required, the nature of the facilities or 
other resources employed, the scientific disciplines or technical skills 
involved, the organizational arrangements used, or any combination 
thereof. If a particular segment of a sponsored agreement is performed 
within an environment which appears to generate a significantly 
different level of indirect (F&A) costs, provisions should be made for a 
separate indirect (F&A) cost pool applicable to such work. The separate 
indirect (F&A) cost pool should be developed during the regular course 
of the rate determination process and the separate indirect (F&A) cost 
rate resulting therefrom should be utilized; provided it is determined 
that (1) such indirect (F&A) cost rate differs significantly from that 
which would have been obtained under subsection a, and (2) the volume of 
work to which such rate would apply is material in relation to other 
Federal awards at the institution.

                        2. The Distribution Basis

    Indirect (F&A) costs must be distributed to applicable Federal 
awards and other benefitting activities within each major function (see 
section A.1, Major functions of an institution) on the basis of modified 
total direct costs (MTDC), consisting of all salaries and wages, fringe 
benefits, materials and supplies, services, travel, and up to the first 
$25,000 of each subaward (regardless of the period covered by the 
subaward). MTDC is defined in Sec.  75.2. For this purpose, an indirect 
(F&A) cost rate should be determined for each of the separate indirect 
(F&A) cost pools developed pursuant to subsection 1. The rate in each 
case should be stated as the percentage which the amount of the 
particular indirect (F&A) cost pool is of the modified total direct 
costs identified with such pool.

             3. Negotiated Lump Sum for Indirect (F&A) Costs

    A negotiated fixed amount in lieu of indirect (F&A) costs may be 
appropriate for self-contained, off-campus, or primarily subcontracted 
activities where the benefits derived from an institution's indirect 
(F&A) services cannot be readily determined. Such negotiated indirect 
(F&A) costs will be treated as an offset before allocation to 
instruction, organized research, other sponsored activities, and other 
institutional activities. The base on which such remaining expenses are 
allocated should be appropriately adjusted.

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             4. Predetermined Rates for Indirect (F&A) Costs

    Public Law 87-638 (76 Stat. 437) as amended (41 U.S.C. 4708) 
authorizes the use of predetermined rates in determining the ``indirect 
costs'' (indirect (F&A) costs) applicable under research agreements with 
educational institutions. The stated objectives of the law are to 
simplify the administration of cost-type research and development 
contracts (including grants) with educational institutions, to 
facilitate the preparation of their budgets, and to permit more 
expeditious closeout of such contracts when the work is completed. In 
view of the potential advantages offered by this procedure, negotiation 
of predetermined rates for indirect (F&A) costs for a period of two to 
four years should be the norm in those situations where the cost 
experience and other pertinent facts available are deemed sufficient to 
enable the parties involved to reach an informed judgment as to the 
probable level of indirect (F&A) costs during the ensuing accounting 
periods.

         5. Negotiated Fixed Rates and Carry-Forward Provisions

    When a fixed rate is negotiated in advance for a fiscal year (or 
other time period), the over- or under-recovery for that year may be 
included as an adjustment to the indirect (F&A) cost for the next rate 
negotiation. When the rate is negotiated before the carry-forward 
adjustment is determined, the carry-forward amount may be applied to the 
next subsequent rate negotiation. When such adjustments are to be made, 
each fixed rate negotiated in advance for a given period will be 
computed by applying the expected indirect (F&A) costs allocable to 
Federal awards for the forecast period plus or minus the carry-forward 
adjustment (over- or under-recovery) from the prior period, to the 
forecast distribution base. Unrecovered amounts under lump-sum 
agreements or cost-sharing provisions of prior years must not be carried 
forward for consideration in the new rate negotiation. There must, 
however, be an advance understanding in each case between the 
institution and the cognizant agency for indirect costs as to whether 
these differences will be considered in the rate negotiation rather than 
making the determination after the differences are known. Further, 
institutions electing to use this carry-forward provision may not 
subsequently change without prior approval of the cognizant agency for 
indirect costs. In the event that an institution returns to a post-
determined rate, any over- or under-recovery during the period in which 
negotiated fixed rates and carry-forward provisions were followed will 
be included in the subsequent post-determined rates. Where multiple 
rates are used, the same procedure will be applicable for determining 
each rate.

         6. Provisional and Final Rates for Indirect (F&A) Costs

    Where the cognizant agency for indirect costs determines that cost 
experience and other pertinent facts do not justify the use of 
predetermined rates, or a fixed rate with a carry-forward, or if the 
parties cannot agree on an equitable rate, a provisional rate must be 
established. To prevent substantial overpayment or underpayment, the 
provisional rate may be adjusted by the cognizant agency for indirect 
costs during the institution's fiscal year. Predetermined or fixed rates 
may replace provisional rates at any time prior to the close of the 
institution's fiscal year. If a provisional rate is not replaced by a 
predetermined or fixed rate prior to the end of the institution's fiscal 
year, a final rate will be established and upward or downward 
adjustments will be made based on the actual allowable costs incurred 
for the period involved.

         7. Fixed Rates for the Life of the Sponsored Agreement

    a. Except as provided in paragraph (c)(1) of Sec.  75.414 Federal 
agencies must use the negotiated rates for indirect (F&A) costs in 
effect at the time of the initial award throughout the life of the 
Federal award. Award levels for Federal awards may not be adjusted in 
future years as a result of changes in negotiated rates. ``Negotiated 
rates'' per the rate agreement include final, fixed, and predetermined 
rates and exclude provisional rates. ``Life'' for the purpose of this 
subsection means each competitive segment of a project. A competitive 
segment is a period of years approved by the Federal awarding agency at 
the time of the Federal award. If negotiated rate agreements do not 
extend through the life of the Federal award at the time of the initial 
award, then the negotiated rate for the last year of the Federal award 
must be extended through the end of the life of the Federal award.
    b. Except as provided in Sec.  75.414, when an educational 
institution does not have a negotiated rate with the Federal Government 
at the time of an award (because the educational institution is a new 
recipient or the parties cannot reach agreement on a rate), the 
provisional rate used at the time of the award must be adjusted once a 
rate is negotiated and approved by the cognizant agency for indirect 
costs.

         8. Limitation on Reimbursement of Administrative Costs

    a. Notwithstanding the provisions of subsection C.1.a, the 
administrative costs charged to Federal awards awarded or

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amended (including continuation and renewal awards) with effective dates 
beginning on or after the start of the institution's first fiscal year 
which begins on or after October 1, 1991, must be limited to 26% of 
modified total direct costs (as defined in subsection 2) for the total 
of General Administration and General Expenses, Departmental 
Administration, Sponsored Projects Administration, and Student 
Administration and Services (including their allocable share of 
depreciation, interest costs, operation and maintenance expenses, and 
fringe benefits costs, as provided by Section B, Identification and 
assignment of indirect (F&A) costs, and all other types of expenditures 
not listed specifically under one of the subcategories of facilities in 
Section B.
    b. Institutions should not change their accounting or cost 
allocation methods if the effect is to change the charging of a 
particular type of cost from F&A to direct, or to reclassify costs, or 
increase allocations from the administrative pools identified in 
paragraph B.1 of this Appendix to the other F&A cost pools or fringe 
benefits. Cognizant agencies for indirect cost are authorized to allow 
changes where an institution's charging practices are at variance with 
acceptable practices followed by a substantial majority of other 
institutions.

             9. Alternative Method for Administrative Costs

    a. Notwithstanding the provisions of subsection C.1.a, an 
institution may elect to claim a fixed allowance for the 
``Administration'' portion of indirect (F&A) costs. The allowance could 
be either 24% of modified total direct costs or a percentage equal to 
95% of the most recently negotiated fixed or predetermined rate for the 
cost pools included under ``Administration'' as defined in Section B.1, 
whichever is less. Under this alternative, no cost proposal need be 
prepared for the ``Administration'' portion of the indirect (F&A) cost 
rate nor is further identification or documentation of these costs 
required (see subsection c). Where a negotiated indirect (F&A) cost 
agreement includes this alternative, an institution must make no further 
charges for the expenditure categories described in Section B.5, Section 
B.6, Section B.7, and Section B.9.
    b. In negotiations of rates for subsequent periods, an institution 
that has elected the option of subsection a may continue to exercise it 
at the same rate without further identification or documentation of 
costs.
    c. If an institution elects to accept a threshold rate as defined in 
subsection a of this section, it is not required to perform a detailed 
analysis of its administrative costs. However, in order to compute the 
facilities components of its indirect (F&A) cost rate, the institution 
must reconcile its indirect (F&A) cost proposal to its financial 
statements and make appropriate adjustments and reclassifications to 
identify the costs of each major function as defined in Section A.1, as 
well as to identify and allocate the facilities components. 
Administrative costs that are not identified as such by the 
institution's accounting system (such as those incurred in academic 
departments) will be classified as instructional costs for purposes of 
reconciling indirect (F&A) cost proposals to financial statements and 
allocating facilities costs.

                     10. Individual Rate Components

    In order to provide mutually agreed-upon information for management 
purposes, each indirect (F&A) cost rate negotiation or determination 
must include development of a rate for each indirect (F&A) cost pool as 
well as the overall indirect (F&A) cost rate.

           11. Negotiation and Approval of Indirect (F&A) Rate

    a. Cognizant agency for indirect costs is defined in Sec.  75.2.
    (1) Cost negotiation cognizance is assigned to the Department of 
Health and Human Services (HHS) or the Department of Defense's Office of 
Naval Research (DOD), normally depending on which of the two agencies 
(HHS or DOD) provides more funds to the educational institution for the 
most recent three years. Information on funding must be derived from 
relevant data gathered by the National Science Foundation. In cases 
where neither HHS nor DOD provides Federal funding to an educational 
institution, the cognizant agency for indirect costs assignment must 
default to HHS. Notwithstanding the method for cognizance determination 
described in this section, other arrangements for cognizance of a 
particular educational institution may also be based in part on the 
types of research performed at the educational institution and must be 
decided based on mutual agreement between HHS and DOD. Where a non-
Federal entity only receives funds as a subrecipient, see the 
requirements of Sec.  75.352.
    (2) After cognizance is established, it must continue for a five-
year period.
    b. Acceptance of rates. See Sec.  75.414.
    c. Correcting deficiencies. The cognizant agency for indirect costs 
must negotiate changes needed to correct systems deficiencies relating 
to accountability for Federal awards. Cognizant agencies for indirect 
costs must address the concerns of other affected agencies, as 
appropriate, and must negotiate special rates for Federal agencies that 
are required to limit recovery of indirect costs by statute.

[[Page 374]]

    d. Resolving questioned costs. The cognizant agency for indirect 
costs must conduct any necessary negotiations with an educational 
institution regarding amounts questioned by audit that are due the 
Federal Government related to costs covered by a negotiated agreement.
    e. Reimbursement. Reimbursement to cognizant agencies for indirect 
costs for work performed under this Part may be made by reimbursement 
billing under the Economy Act, 31 U.S.C. 1535.
    f. Procedure for establishing facilities and administrative rates 
must be established by one of the following methods:
    (1) Formal negotiation. The cognizant agency for indirect costs is 
responsible for negotiating and approving rates for an educational 
institution on behalf of all Federal agencies. Federal awarding agencies 
that do not have cognizance for indirect costs must notify the cognizant 
agency for indirect costs of specific concerns (i.e., a need to 
establish special cost rates) which could affect the negotiation 
process. The cognizant agency for indirect costs must address the 
concerns of all interested agencies, as appropriate. A pre-negotiation 
conference may be scheduled among all interested agencies, if necessary. 
The cognizant agency for indirect costs must then arrange a negotiation 
conference with the educational institution.
    (2) Other than formal negotiation. The cognizant agency for indirect 
costs and educational institution may reach an agreement on rates 
without a formal negotiation conference; for example, through 
correspondence or use of the simplified method described in this section 
D of this Appendix.
    g. Formalizing determinations and agreements. The cognizant agency 
for indirect costs must formalize all determinations or agreements 
reached with an educational institution and provide copies to other 
agencies having an interest. Determinations should include a description 
of any adjustments, the actual amount, both dollar and percentage 
adjusted, and the reason for making adjustments.
    h. Disputes and disagreements. Where the cognizant agency for 
indirect costs is unable to reach agreement with an educational 
institution with regard to rates or audit resolution, the appeal system 
of the cognizant agency for indirect costs must be followed for 
resolution of the disagreement.

                   12. Standard Format for Submission

    For facilities and administrative (indirect (F&A)) rate proposals, 
educational institutions must use the standard format, shown in section 
E of this appendix, to submit their indirect (F&A) rate proposal to the 
cognizant agency for indirect costs. The cognizant agency for indirect 
costs may, on an institution-by-institution basis, grant exceptions from 
all or portions of Part II of the standard format requirement. This 
requirement does not apply to educational institutions that use the 
simplified method for calculating indirect (F&A) rates, as described in 
Section D of this Appendix.
    As provided in section C.10, each F&A cost rate negotiation or 
determination must include development of a rate for each F&A cost pool 
as well as the overall F&A rate.

               D. Simplified Method for Small Institutions

                               1. General

    a. Where the total direct cost of work covered by this part 75 at an 
institution does not exceed $10 million in a fiscal year, the simplified 
procedure described in subsections 2 or 3 may be used in determining 
allowable indirect (F&A) costs. Under this simplified procedure, the 
institution's most recent annual financial report and immediately 
available supporting information must be utilized as a basis for 
determining the indirect (F&A) cost rate applicable to all Federal 
awards. The institution may use either the salaries and wages (see 
subsection 2) or modified total direct costs (see subsection 3) as the 
distribution basis.
    b. The simplified procedure should not be used where it produces 
results which appear inequitable to the Federal Government or the 
institution. In any such case, indirect (F&A) costs should be determined 
through use of the regular procedure.

            2. Simplified Procedure--Salaries and Wages Base

    a. Establish the total amount of salaries and wages paid to all 
employees of the institution.
    b. Establish an indirect (F&A) cost pool consisting of the 
expenditures (exclusive of capital items and other costs specifically 
identified as unallowable) which customarily are classified under the 
following titles or their equivalents:
    (1) General administration and general expenses (exclusive of costs 
of student administration and services, student activities, student aid, 
and scholarships).
    (2) Operation and maintenance of physical plant and depreciation 
(after appropriate adjustment for costs applicable to other 
institutional activities).
    (3) Library.
    (4) Department administration expenses, which will be computed as 20 
percent of the salaries and expenses of deans and heads of departments.
    In those cases where expenditures classified under subsection (1) 
have previously been allocated to other institutional activities, they 
may be included in the indirect (F&A) cost pool. The total amount of 
salaries and wages included in the indirect (F&A) cost pool must be 
separately identified.

[[Page 375]]

    c. Establish a salary and wage distribution base, determined by 
deducting from the total of salaries and wages as established in 
subsection a. from the amount of salaries and wages included under 
subsection b.
    d. Establish the indirect (F&A) cost rate, determined by dividing 
the amount in the indirect (F&A) cost pool, subsection b, by the amount 
of the distribution base, subsection c.
    e. Apply the indirect (F&A) cost rate to direct salaries and wages 
for individual agreements to determine the amount of indirect (F&A) 
costs allocable to such agreements.

        3. Simplified Procedure--Modified Total Direct Cost Base

    a. Establish the total costs incurred by the institution for the 
base period.
    b. Establish an indirect (F&A) cost pool consisting of the 
expenditures (exclusive of capital items and other costs specifically 
identified as unallowable) which customarily are classified under the 
following titles or their equivalents:
    (1) General administration and general expenses (exclusive of costs 
of student administration and services, student activities, student aid, 
and scholarships).
    (2) Operation and maintenance of physical plant and depreciation 
(after appropriate adjustment for costs applicable to other 
institutional activities).
    (3) Library.
    (4) Department administration expenses, which will be computed as 20 
percent of the salaries and expenses of deans and heads of departments. 
In those cases where expenditures classified under subsection (1) have 
previously been allocated to other institutional activities, they may be 
included in the indirect (F&A) cost pool. The modified total direct 
costs amount included in the indirect (F&A) cost pool must be separately 
identified.
    c. Establish a modified total direct cost distribution base, as 
defined in Section C.2, that consists of all institution's direct 
functions.
    d. Establish the indirect (F&A) cost rate, determined by dividing 
the amount in the indirect (F&A) cost pool, subsection b, by the amount 
of the distribution base, subsection c.
    e. Apply the indirect (F&A) cost rate to the modified total direct 
costs for individual agreements to determine the amount of indirect 
(F&A) costs allocable to such agreements.

                      E. Documentation Requirements

    The standard format for documentation requirements for indirect 
(indirect (F&A)) rate proposals for claiming costs under the regular 
method is available on the OMB Web site here: http://www.whitehouse.gov/
omb /grants_forms.

                            F. Certification

                       1. Certification of Charges

    To assure that expenditures for Federal awards are proper and in 
accordance with the agreement documents and approved project budgets, 
the annual and/or final fiscal reports or vouchers requesting payment 
under the agreements will include a certification, signed by an 
authorized official of the university, which reads ``By signing this 
report, I certify to the best of my knowledge and belief that the report 
is true, complete, and accurate, and the expenditures, disbursements and 
cash receipts are for the purposes and intent set forth in the award 
documents. I am aware that any false, fictitious, or fraudulent 
information, or the omission of any material fact, may subject me to 
criminal, civil or administrative penalties for fraud, false statements, 
false claims or otherwise. (U.S. Code, Title 18, Section 1001 and Title 
31, Sections 3729-3733 and 3801-3812)''.

                2. Certification of Indirect (F&A) Costs

    a. Policy. Cognizant agencies must not accept a proposed indirect 
cost rate unless such costs have been certified by the educational 
institution using the Certificate of indirect (F&A) Costs set forth in 
subsection F.2.c
    b. The certificate must be signed on behalf of the institution by 
the chief financial officer or an individual designated by an individual 
at a level no lower than vice president or chief financial officer.
    An indirect (F&A) cost rate is not binding upon the Federal 
Government if the most recent required proposal from the institution has 
not been certified. Where it is necessary to establish indirect (F&A) 
cost rates, and the institution has not submitted a certified proposal 
for establishing such rates in accordance with the requirements of this 
section, the Federal Government must unilaterally establish such rates. 
Such rates may be based upon audited historical data or such other data 
that have been furnished to the cognizant agency for indirect costs and 
for which it can be demonstrated that all unallowable costs have been 
excluded. When indirect (F&A) cost rates are unilaterally established by 
the Federal Government because of failure of the institution to submit a 
certified proposal for establishing such rates in accordance with this 
section, the rates established will be set at a level low enough to 
ensure that potentially unallowable costs will not be reimbursed.
    c. Certificate. The certificate required by this section must be in 
the following form:

[[Page 376]]

                   Certificate of Indirect (F&A) Costs

    This is to certify that to the best of my knowledge and belief:
    (1) I have reviewed the indirect (F&A) cost proposal submitted 
herewith;
    (2) All costs included in this proposal [identify date] to establish 
billing or final indirect (F&A) costs rate for [identify period covered 
by rate] are allowable in accordance with the requirements of the 
Federal agreement(s) to which they apply and with the cost principles 
applicable to those agreements.
    (3) This proposal does not include any costs which are unallowable 
under applicable cost principles such as (without limitation): public 
relations costs, contributions and donations, entertainment costs, fines 
and penalties, lobbying costs, and defense of fraud proceedings; and
    (4) All costs included in this proposal are properly allocable to 
Federal agreements on the basis of a beneficial or causal relationship 
between the expenses incurred and the agreements to which they are 
allocated in accordance with applicable requirements.
    I declare that the foregoing is true and correct.
    Institution of Higher Education:
    Signature:
    Name of Official:
    Title:
    Date of Execution:

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]



  Sec. Appendix IV to Part 75--Indirect (F&A) Costs Identification and 
     Assignment, and Rate Determination for Nonprofit Organizations

                               A. General

    1. Indirect costs are those that have been incurred for common or 
joint objectives and cannot be readily identified with a particular 
final cost objective. Direct cost of minor amounts may be treated as 
indirect costs under the conditions described in Sec.  75.413(d). After 
direct costs have been determined and assigned directly to awards or 
other work as appropriate, indirect costs are those remaining to be 
allocated to benefitting cost objectives. A cost may not be allocated to 
a Federal award as an indirect cost if any other cost incurred for the 
same purpose, in like circumstances, has been assigned to a Federal 
award as a direct cost.
    2. ``Major nonprofit organizations'' are defined in Sec.  75.414(a). 
See indirect cost rate reporting requirements in sections B.2.e and 
B.3.g. of this appendix.

B. Allocation of Indirect Costs and Determination of Indirect Cost Rates

                               1. General

    a. If a nonprofit organization has only one major function, or where 
all its major functions benefit from its indirect costs to approximately 
the same degree, the allocation of indirect costs and the computation of 
an indirect cost rate may be accomplished through simplified allocation 
procedures, as described in section B.2 of this Appendix.
    b. If an organization has several major functions which benefit from 
its indirect costs in varying degrees, allocation of indirect costs may 
require the accumulation of such costs into separate cost groupings 
which then are allocated individually to benefitting functions by means 
of a base which best measures the relative degree of benefit. The 
indirect costs allocated to each function are then distributed to 
individual Federal awards and other activities included in that function 
by means of an indirect cost rate(s).
    c. The determination of what constitutes an organization's major 
functions will depend on its purpose in being; the types of services it 
renders to the public, its clients, and its members; and the amount of 
effort it devotes to such activities as fundraising, public information 
and membership activities.
    d. Specific methods for allocating indirect costs and computing 
indirect cost rates along with the conditions under which each method 
should be used are described in section B.2 through B.5 of this 
Appendix.
    e. The base period for the allocation of indirect costs is the 
period in which such costs are incurred and accumulated for allocation 
to work performed in that period. The base period normally should 
coincide with the organization's fiscal year but, in any event, must be 
so selected as to avoid inequities in the allocation of the costs.

                     2. Simplified Allocation Method

    a. Where an organization's major functions benefit from its indirect 
costs to approximately the same degree, the allocation of indirect costs 
may be accomplished by (i) separating the organization's total costs for 
the base period as either direct or indirect, and (ii) dividing the 
total allowable indirect costs (net of applicable credits) by an 
equitable distribution base. The result of this process is an indirect 
cost rate which is used to distribute indirect costs to individual 
Federal awards. The rate should be expressed as the percentage which the 
total amount of allowable indirect costs bears to the base selected. 
This method should also be used where an organization has only one major 
function encompassing a number of individual projects or activities, and 
may be

[[Page 377]]

used where the level of Federal awards to an organization is relatively 
small.
    b. Both the direct costs and the indirect costs must exclude capital 
expenditures and unallowable costs. However, unallowable costs which 
represent activities must be included in the direct costs under the 
conditions described in Sec.  75.413(e).
    c. The distribution base may be total direct costs (excluding 
capital expenditures and other distorting items, such as subawards for 
$25,000 or more), direct salaries and wages, or other base which results 
in an equitable distribution. The distribution base must exclude 
participant support costs as defined in Sec.  75.2.
    d. Except where a special rate(s) is required in accordance with 
section B.5 of this Appendix, the indirect cost rate developed under the 
above principles is applicable to all Federal awards of the 
organization. If a special rate(s) is required, appropriate 
modifications must be made in order to develop the special rate(s).
    e. For an organization that receives more than $10 million in direct 
Federal funding in a fiscal year, a breakout of the indirect cost 
component into two broad categories, Facilities and Administration as 
defined in Sec.  75.414(a), is required. The rate in each case must be 
stated as the percentage which the amount of the particular indirect 
cost category (i.e., Facilities or Administration) is of the 
distribution base identified with that category.

                   3. Multiple Allocation Base Method

    a. General. Where an organization's indirect costs benefit its major 
functions in varying degrees, indirect costs must be accumulated into 
separate cost groupings, as described in subparagraph b. Each grouping 
must then be allocated individually to benefitting functions by means of 
a base which best measures the relative benefits. The default allocation 
bases by cost pool are described in section B.3.c of this Appendix.
    b. Identification of indirect costs. Cost groupings must be 
established so as to permit the allocation of each grouping on the basis 
of benefits provided to the major functions. Each grouping must 
constitute a pool of expenses that are of like character in terms of 
functions they benefit and in terms of the allocation base which best 
measures the relative benefits provided to each function. The groupings 
are classified within the two broad categories: ``Facilities'' and 
``Administration,'' as described in section A.3 of this Appendix. The 
indirect cost pools are defined as follows:
    (1) Depreciation. The expenses under this heading are the portion of 
the costs of the organization's buildings, capital improvements to land 
and buildings, and equipment which are computed in accordance with Sec.  
75.436 .
    (2) Interest. Interest on debt associated with certain buildings, 
equipment and capital improvements are computed in accordance with Sec.  
75.449.
    (3) Operation and maintenance expenses. The expenses under this 
heading are those that have been incurred for the administration, 
operation, maintenance, preservation, and protection of the 
organization's physical plant. They include expenses normally incurred 
for such items as: janitorial and utility services; repairs and ordinary 
or normal alterations of buildings, furniture and equipment; care of 
grounds; maintenance and operation of buildings and other plant 
facilities; security; earthquake and disaster preparedness; 
environmental safety; hazardous waste disposal; property, liability and 
other insurance relating to property; space and capital leasing; 
facility planning and management; and central receiving. The operation 
and maintenance expenses category must also include its allocable share 
of fringe benefit costs, depreciation, and interest costs.
    (4) General administration and general expenses. The expenses under 
this heading are those that have been incurred for the overall general 
executive and administrative offices of the organization and other 
expenses of a general nature which do not relate solely to any major 
function of the organization. This category must also include its 
allocable share of fringe benefit costs, operation and maintenance 
expense, depreciation, and interest costs. Examples of this category 
include central offices, such as the director's office, the office of 
finance, business services, budget and planning, personnel, safety and 
risk management, general counsel, management information systems, and 
library costs.
    In developing this cost pool, special care should be exercised to 
ensure that costs incurred for the same purpose in like circumstances 
are treated consistently as either direct or indirect costs. For 
example, salaries of technical staff, project supplies, project 
publication, telephone toll charges, computer costs, travel costs, and 
specialized services costs must be treated as direct costs wherever 
identifiable to a particular program. The salaries and wages of 
administrative and pooled clerical staff should normally be treated as 
indirect costs. Direct charging of these costs may be appropriate as 
described in Sec.  75.413. Items such as office supplies, postage, local 
telephone costs, periodicals and memberships should normally be treated 
as indirect costs.
    c. Allocation bases. Actual conditions must be taken into account in 
selecting the base to be used in allocating the expenses in each 
grouping to benefitting functions. The essential consideration in 
selecting a method or a base is that it is the one best suited for 
assigning the pool of costs to cost objectives

[[Page 378]]

in accordance with benefits derived; a traceable cause and effect 
relationship; or logic and reason, where neither the cause nor the 
effect of the relationship is determinable. When an allocation can be 
made by assignment of a cost grouping directly to the function 
benefitted, the allocation must be made in that manner. When the 
expenses in a cost grouping are more general in nature, the allocation 
must be made through the use of a selected base which produces results 
that are equitable to both the Federal Government and the organization. 
The distribution must be made in accordance with the bases described 
herein unless it can be demonstrated that the use of a different base 
would result in a more equitable allocation of the costs, or that a more 
readily available base would not increase the costs charged to Federal 
awards. The results of special cost studies (such as an engineering 
utility study) must not be used to determine and allocate the indirect 
costs to Federal awards.
    (1) Depreciation. Depreciation expenses must be allocated in the 
following manner:
    (a) Depreciation on buildings used exclusively in the conduct of a 
single function, and on capital improvements and equipment used in such 
buildings, must be assigned to that function.
    (b) Depreciation on buildings used for more than one function, and 
on capital improvements and equipment used in such buildings, must be 
allocated to the individual functions performed in each building on the 
basis of usable square feet of space, excluding common areas, such as 
hallways, stairwells, and restrooms.
    (c) Depreciation on buildings, capital improvements and equipment 
related space (e.g., individual rooms, and laboratories) used jointly by 
more than one function (as determined by the users of the space) must be 
treated as follows. The cost of each jointly used unit of space must be 
allocated to the benefitting functions on the basis of:
    (i) the employees and other users on a full-time equivalent (FTE) 
basis or salaries and wages of those individual functions benefitting 
from the use of that space; or
    (ii) organization-wide employee FTEs or salaries and wages 
applicable to the benefitting functions of the organization.
    (d) Depreciation on certain capital improvements to land, such as 
paved parking areas, fences, sidewalks, and the like, not included in 
the cost of buildings, must be allocated to user categories on a FTE 
basis and distributed to major functions in proportion to the salaries 
and wages of all employees applicable to the functions.
    (2) Interest. Interest costs must be allocated in the same manner as 
the depreciation on the buildings, equipment and capital equipment to 
which the interest relates.
    (3) Operation and maintenance expenses. Operation and maintenance 
expenses must be allocated in the same manner as the depreciation.
    (4) General administration and general expenses. General 
administration and general expenses must be allocated to benefitting 
functions based on modified total costs (MTC). The MTC is the modified 
total direct costs (MTDC), as described in Sec.  75.2, plus the 
allocated indirect cost proportion. The expenses included in this 
category could be grouped first according to major functions of the 
organization to which they render services or provide benefits. The 
aggregate expenses of each group must then be allocated to benefitting 
functions based on MTC.
    d. Order of distribution.
    (1) Indirect cost categories consisting of depreciation, interest, 
operation and maintenance, and general administration and general 
expenses must be allocated in that order to the remaining indirect cost 
categories as well as to the major functions of the organization. Other 
cost categories should be allocated in the order determined to be most 
appropriate by the organization. This order of allocation does not apply 
if cross allocation of costs is made as provided in section B.3.d.2 of 
this Appendix.
    (2) Normally, an indirect cost category will be considered closed 
once it has been allocated to other cost objectives, and costs must not 
be subsequently allocated to it. However, a cross allocation of costs 
between two or more indirect costs categories could be used if such 
allocation will result in a more equitable allocation of costs. If a 
cross allocation is used, an appropriate modification to the composition 
of the indirect cost categories is required.
    e. Application of indirect cost rate or rates. Except where a 
special indirect cost rate(s) is required in accordance with section B.5 
of this Appendix, the separate groupings of indirect costs allocated to 
each major function must be aggregated and treated as a common pool for 
that function. The costs in the common pool must then be distributed to 
individual Federal awards included in that function by use of a single 
indirect cost rate.
    f. Distribution basis. Indirect costs must be distributed to 
applicable Federal awards and other benefitting activities within each 
major function on the basis of MTDC (see definition in Sec.  75.2).
    g. Individual Rate Components. An indirect cost rate must be 
determined for each separate indirect cost pool developed. The rate in 
each case must be stated as the percentage which the amount of the 
particular indirect cost pool is of the distribution base identified 
with that pool. Each indirect cost rate negotiation or determination 
agreement must include development of the rate for each indirect cost 
pool as well as the overall indirect cost rate. The indirect cost pools

[[Page 379]]

must be classified within two broad categories: ``Facilities'' and 
``Administration,'' as described in Sec.  75.414(a).

                       4. Direct Allocation Method

    a. Some nonprofit organizations treat all costs as direct costs 
except general administration and general expenses. These organizations 
generally separate their costs into three basic categories: (i) General 
administration and general expenses, (ii) fundraising, and (iii) other 
direct functions (including projects performed under Federal awards). 
Joint costs, such as depreciation, rental costs, operation and 
maintenance of facilities, telephone expenses, and the like are prorated 
individually as direct costs to each category and to each Federal award 
or other activity using a base most appropriate to the particular cost 
being prorated.
    b. This method is acceptable, provided each joint cost is prorated 
using a base which accurately measures the benefits provided to each 
Federal award or other activity. The bases must be established in 
accordance with reasonable criteria, and be supported by current data. 
This method is compatible with the Standards of Accounting and Financial 
Reporting for Voluntary Health and Welfare Organizations issued jointly 
by the National Health Council, Inc., the National Assembly of Voluntary 
Health and Social Welfare Organizations, and the United Way of America.
    c. Under this method, indirect costs consist exclusively of general 
administration and general expenses. In all other respects, the 
organization's indirect cost rates must be computed in the same manner 
as that described in section B.2 of this Appendix.

                     5. Special Indirect Cost Rates

    In some instances, a single indirect cost rate for all activities of 
an organization or for each major function of the organization may not 
be appropriate, since it would not take into account those different 
factors which may substantially affect the indirect costs applicable to 
a particular segment of work. For this purpose, a particular segment of 
work may be that performed under a single Federal award or it may 
consist of work under a group of Federal awards performed in a common 
environment. These factors may include the physical location of the 
work, the level of administrative support required, the nature of the 
facilities or other resources employed, the scientific disciplines or 
technical skills involved, the organizational arrangements used, or any 
combination thereof. When a particular segment of work is performed in 
an environment which appears to generate a significantly different level 
of indirect costs, provisions should be made for a separate indirect 
cost pool applicable to such work. The separate indirect cost pool 
should be developed during the course of the regular allocation process, 
and the separate indirect cost rate resulting therefrom should be used, 
provided it is determined that (i) the rate differs significantly from 
that which would have been obtained under sections B.2, B.3, and B.4 of 
this Appendix, and (ii) the volume of work to which the rate would apply 
is material.

           C. Negotiation and Approval of Indirect Cost Rates

                             1. Definitions

    As used in this section, the following terms have the meanings set 
forth in this section:
    a. Cognizant agency for indirect costs means the Federal agency 
responsible for negotiating and approving indirect cost rates for a 
nonprofit organization on behalf of all Federal agencies.
    b. Predetermined rate means an indirect cost rate, applicable to a 
specified current or future period, usually the organization's fiscal 
year. The rate is based on an estimate of the costs to be incurred 
during the period. A predetermined rate is not subject to adjustment.
    c. Fixed rate means an indirect cost rate which has the same 
characteristics as a predetermined rate, except that the difference 
between the estimated costs and the actual costs of the period covered 
by the rate is carried forward as an adjustment to the rate computation 
of a subsequent period.
    d. Final rate means an indirect cost rate applicable to a specified 
past period which is based on the actual costs of the period. A final 
rate is not subject to adjustment.
    e. Provisional rate or billing rate means a temporary indirect cost 
rate applicable to a specified period which is used for funding, interim 
reimbursement, and reporting indirect costs on Federal awards pending 
the establishment of a final rate for the period.
    f. Indirect cost proposal means the documentation prepared by an 
organization to substantiate its claim for the reimbursement of indirect 
costs. This proposal provides the basis for the review and negotiation 
leading to the establishment of an organization's indirect cost rate.
    g. Cost objective means a function, organizational subdivision, 
contract, Federal award, or other work unit for which cost data are 
desired and for which provision is made to accumulate and measure the 
cost of processes, projects, jobs and capitalized projects.

                  2. Negotiation and Approval of Rates

    a. Unless different arrangements are agreed to by the Federal 
agencies concerned, the Federal agency with the largest dollar value of 
Federal awards with an organization will be designated as the cognizant 
agency for indirect costs for the negotiation and approval of the 
indirect cost rates and, where necessary, other rates such as fringe 
benefit

[[Page 380]]

and computer charge-out rates. Once an agency is assigned cognizance for 
a particular nonprofit organization, the assignment will not be changed 
unless there is a shift in the dollar volume of the Federal awards to 
the organization for at least three years. All concerned Federal 
agencies must be given the opportunity to participate in the negotiation 
process but, after a rate has been agreed upon, it will be accepted by 
all Federal agencies. When a Federal agency has reason to believe that 
special operating factors affecting its Federal awards necessitate 
special indirect cost rates in accordance with section B.5 of this 
Appendix, it will, prior to the time the rates are negotiated, notify 
the cognizant agency for indirect costs. (See also Sec.  75.414.) Where 
a non-Federal entity only receives funds as a subrecipient, see the 
requirements of Sec.  75.352.
    b. Except as otherwise provided in Sec.  75.414(f), a nonprofit 
organization which has not previously established an indirect cost rate 
with a Federal agency must submit its initial indirect cost proposal 
immediately after the organization is advised that a Federal award will 
be made and, in no event, later than three months after the effective 
date of the Federal award.
    c. Unless approved by the cognizant agency for indirect costs in 
accordance with Sec.  75.414(g), organizations that have previously 
established indirect cost rates must submit a new indirect cost proposal 
to the cognizant agency for indirect costs within six months after the 
close of each fiscal year.
    d. A predetermined rate may be negotiated for use on Federal awards 
where there is reasonable assurance, based on past experience and 
reliable projection of the organization's costs, that the rate is not 
likely to exceed a rate based on the organization's actual costs.
    e. Fixed rates may be negotiated where predetermined rates are not 
considered appropriate. A fixed rate, however, must not be negotiated if 
(i) all or a substantial portion of the organization's Federal awards 
are expected to expire before the carry-forward adjustment can be made; 
(ii) the mix of Federal and non-Federal work at the organization is too 
erratic to permit an equitable carry-forward adjustment; or (iii) the 
organization's operations fluctuate significantly from year to year.
    f. Provisional and final rates must be negotiated where neither 
predetermined nor fixed rates are appropriate. Predetermined or fixed 
rates may replace provisional rates at any time prior to the close of 
the organization's fiscal year. If that event does not occur, a final 
rate will be established and upward or downward adjustments will be made 
based on the actual allowable costs incurred for the period involved.
    g. The results of each negotiation must be formalized in a written 
agreement between the cognizant agency for indirect costs and the 
nonprofit organization. The cognizant agency for indirect costs must 
make available copies of the agreement to all concerned Federal 
agencies.
    h. If a dispute arises in a negotiation of an indirect cost rate 
between the cognizant agency for indirect costs and the nonprofit 
organization, the dispute must be resolved in accordance with the 
appeals procedures of the cognizant agency for indirect costs.
    i. To the extent that problems are encountered among the Federal 
agencies in connection with the negotiation and approval process, OMB 
will lend assistance as required to resolve such problems in a timely 
manner.

                D. Certification of Indirect (F&A) Costs

    1. Required Certification. No proposal to establish indirect (F&A) 
cost rates must be acceptable unless such costs have been certified by 
the non-profit organization using the Certificate of Indirect (F&A) 
Costs set forth in subsection 2., below. The certificate must be signed 
on behalf of the organization by an individual at a level no lower than 
vice president or chief financial officer for the organization.
    2. Each indirect cost rate proposal must be accompanied by a 
certification in the following form:
    Certificate of Indirect (F&A) Costs
    This is to certify that to the best of my knowledge and belief:
    (1) I have reviewed the indirect (F&A) cost proposal submitted 
herewith;
    (2) All costs included in this proposal [identify date] to establish 
billing or final indirect (F&A) costs rate for [identify period covered 
by rate] are allowable in accordance with the requirements of the 
Federal awards to which they apply and with Subpart E of part 75.
    (3) This proposal does not include any costs which are unallowable 
under Subpart E of part 75 such as (without limitation): public 
relations costs, contributions and donations, entertainment costs, fines 
and penalties, lobbying costs, and defense of fraud proceedings; and
    (4) All costs included in this proposal are properly allocable to 
Federal awards on the basis of a beneficial or causal relationship 
between the expenses incurred and the Federal awards to which they are 
allocated in accordance with applicable requirements.
    I declare that the foregoing is true and correct.
Nonprofit Organization:
Signature:
Name of Official:
Title:
Date of Execution:

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3018, Jan. 20, 2016]

[[Page 381]]



 Sec. Appendix V to Part 75--State/Local Governmentwide Central Service 
                          Cost Allocation Plans

                               A. General

    1. Most governmental units provide certain services, such as motor 
pools, computer centers, purchasing, accounting, etc., to operating 
agencies on a centralized basis. Since federally-supported awards are 
performed within the individual operating agencies, there needs to be a 
process whereby these central service costs can be identified and 
assigned to benefitted activities on a reasonable and consistent basis. 
The central service cost allocation plan provides that process. All 
costs and other data used to distribute the costs included in the plan 
should be supported by formal accounting and other records that will 
support the propriety of the costs assigned to Federal awards.
    2. Guidelines and illustrations of central service cost allocation 
plans are provided in a brochure published by the Department of Health 
and Human Services entitled ``A Guide for State, Local and Indian Tribal 
Governments: Cost Principles and Procedures for Developing Cost 
Allocation Plans and Indirect Cost Rates for Agreements with the Federal 
Government.'' A copy of this brochure may be obtained from the HHS' Cost 
Allocation Services or at their Web site at https://rates.psc.gov.

                             B. Definitions

    1. Agency or operating agency means an organizational unit or sub-
division within a governmental unit that is responsible for the 
performance or administration of Federal awards or activities of the 
governmental unit.
    2. Allocated central services means central services that benefit 
operating agencies but are not billed to the agencies on a fee-for-
service or similar basis. These costs are allocated to benefitted 
agencies on some reasonable basis. Examples of such services might 
include general accounting, personnel administration, purchasing, etc.
    3. Billed central services means central services that are billed to 
benefitted agencies or programs on an individual fee-for-service or 
similar basis. Typical examples of billed central services include 
computer services, transportation services, insurance, and fringe 
benefits.
    4. Cognizant agency for indirect costs is defined in Sec.  75.2. The 
determination of cognizant agency for indirect costs for states and 
local governments is described in section F.1.
    5. Major local government means local government that receives more 
than $100 million in direct Federal awards subject to this part.

          C. Scope of the Central Service Cost Allocation Plans

    The central service cost allocation plan will include all central 
service costs that will be claimed (either as a billed or an allocated 
cost) under Federal awards and will be documented as described in 
section E. Costs of central services omitted from the plan will not be 
reimbursed.

                       D. Submission Requirements

    1. Each state will submit a plan to the Department of Health and 
Human Services for each year in which it claims central service costs 
under Federal awards. The plan should include (a) a projection of the 
next year's allocated central service cost (based either on actual costs 
for the most recently completed year or the budget projection for the 
coming year), and (b) a reconciliation of actual allocated central 
service costs to the estimated costs used for either the most recently 
completed year or the year immediately preceding the most recently 
completed year.
    2. Each major local government is also required to submit a plan to 
its cognizant agency for indirect costs annually.
    3. All other local governments claiming central service costs must 
develop a plan in accordance with the requirements described in this 
Part and maintain the plan and related supporting documentation for 
audit. These local governments are not required to submit their plans 
for Federal approval unless they are specifically requested to do so by 
the cognizant agency for indirect costs. Where a local government only 
receives funds as a subrecipient, the pass-through entity will be 
responsible for monitoring the subrecipient's plan.
    4. All central service cost allocation plans will be prepared and, 
when required, submitted within six months prior to the beginning of 
each of the governmental unit's fiscal years in which it proposes to 
claim central service costs. Extensions may be granted by the cognizant 
agency for indirect costs on a case-by-case basis.

            E. Documentation Requirements for Submitted Plans

    The documentation requirements described in this section may be 
modified, expanded, or reduced by the cognizant agency for indirect 
costs on a case-by-case basis. For example, the requirements may be 
reduced for those central services which have little or no impact on 
Federal awards. Conversely, if a review of a plan indicates that certain 
additional information is needed, and will likely be needed in future 
years, it may be routinely requested in future plan submissions. Items 
marked with an asterisk (*) should be submitted only once; subsequent 
plans should merely indicate any changes since the last plan.

[[Page 382]]

                               1. General

    All proposed plans must be accompanied by the following: An 
organization chart sufficiently detailed to show operations including 
the central service activities of the state/local government whether or 
not they are shown as benefitting from central service functions; a copy 
of the Comprehensive Annual Financial Report (or a copy of the Executive 
Budget if budgeted costs are being proposed) to support the allowable 
costs of each central service activity included in the plan; and, a 
certification (see subsection 4.) that the plan was prepared in 
accordance with this Part, contains only allowable costs, and was 
prepared in a manner that treated similar costs consistently among the 
various Federal awards and between Federal and non-Federal awards/
activities.

                      2. Allocated Central Services

    For each allocated central service*, the plan must also include the 
following: a brief description of the service, an identification of the 
unit rendering the service and the operating agencies receiving the 
service, the items of expense included in the cost of the service, the 
method used to distribute the cost of the service to benefitted 
agencies, and a summary schedule showing the allocation of each service 
to the specific benefitted agencies. If any self-insurance funds or 
fringe benefits costs are treated as allocated (rather than billed) 
central services, documentation discussed in subsections 3.b. and c. 
must also be included.

                           3. Billed Services

    a. General. The information described in this section must be 
provided for all billed central services, including internal service 
funds, self-insurance funds, and fringe benefit funds.
    b. Internal service funds.
    (1) For each internal service fund or similar activity with an 
operating budget of $5 million or more, the plan must include: A brief 
description of each service; a balance sheet for each fund based on 
individual accounts contained in the governmental unit's accounting 
system; a revenue/expenses statement, with revenues broken out by 
source, e.g., regular billings, interest earned, etc.; a listing of all 
non-operating transfers (as defined by Generally Accepted Accounting 
Principles (GAAP)) into and out of the fund; a description of the 
procedures (methodology) used to charge the costs of each service to 
users, including how billing rates are determined; a schedule of current 
rates; and, a schedule comparing total revenues (including imputed 
revenues) generated by the service to the allowable costs of the 
service, as determined under this Part, with an explanation of how 
variances will be handled.
    (2) Revenues must consist of all revenues generated by the service, 
including unbilled and uncollected revenues. If some users were not 
billed for the services (or were not billed at the full rate for that 
class of users), a schedule showing the full imputed revenues associated 
with these users must be provided. Expenses must be broken out by object 
cost categories (e.g., salaries, supplies, etc.).
    c. Self-insurance funds. For each self-insurance fund, the plan must 
include: The fund balance sheet; a statement of revenue and expenses 
including a summary of billings and claims paid by agency; a listing of 
all non-operating transfers into and out of the fund; the type(s) of 
risk(s) covered by the fund (e.g., automobile liability, workers' 
compensation, etc.); an explanation of how the level of fund 
contributions are determined, including a copy of the current actuarial 
report (with the actuarial assumptions used) if the contributions are 
determined on an actuarial basis; and, a description of the procedures 
used to charge or allocate fund contributions to benefitted activities. 
Reserve levels in excess of claims (1) submitted and adjudicated but not 
paid, (2) submitted but not adjudicated, and (3) incurred but not 
submitted must be identified and explained.
    d. Fringe benefits. For fringe benefit costs, the plan must include: 
A listing of fringe benefits provided to covered employees, and the 
overall annual cost of each type of benefit; current fringe benefit 
policies; and procedures used to charge or allocate the costs of the 
benefits to benefitted activities. In addition, for pension and post-
retirement health insurance plans, the following information must be 
provided: the governmental unit's funding policies, e.g., legislative 
bills, trust agreements, or state-mandated contribution rules, if 
different from actuarially determined rates; the pension plan's costs 
accrued for the year; the amount funded, and date(s) of funding; a copy 
of the current actuarial report (including the actuarial assumptions); 
the plan trustee's report; and, a schedule from the activity showing the 
value of the interest cost associated with late funding.

                        4. Required Certification

    Each central service cost allocation plan will be accompanied by a 
certification in the following form:

                   Certificate of Cost Allocation Plan

    This is to certify that I have reviewed the cost allocation plan 
submitted herewith and to the best of my knowledge and belief:
    (1) All costs included in this proposal [identify date] to establish 
cost allocations or billings for [identify period covered by plan] are 
allowable in accordance with the requirements of this Part and the 
Federal award(s)

[[Page 383]]

to which they apply. Unallowable costs have been adjusted for in 
allocating costs as indicated in the cost allocation plan.
    (2) All costs included in this proposal are properly allocable to 
Federal awards on the basis of a beneficial or causal relationship 
between the expenses incurred and the Federal awards to which they are 
allocated in accordance with applicable requirements. Further, the same 
costs that have been treated as indirect costs have not been claimed as 
direct costs. Similar types of costs have been accounted for 
consistently.
    I declare that the foregoing is true and correct.
Governmental Unit:
Signature:
Name of Official:
Title:
Date of Execution:

          F. Negotiation and Approval of Central Service Plans

  1. Federal Cognizant Agency for Indirect Costs Assignments for Cost 
                               Negotiation

    In general, unless different arrangements are agreed to by the 
concerned Federal agencies, for central service cost allocation plans, 
the cognizant agency responsible for review and approval is the Federal 
agency with the largest dollar value of total Federal awards with a 
governmental unit. For indirect cost rates and departmental indirect 
cost allocation plans, the cognizant agency is the Federal agency with 
the largest dollar value of direct Federal awards with a governmental 
unit or component, as appropriate. Once designated as the cognizant 
agency for indirect costs, the Federal agency must remain so for a 
period of five years. In addition, the following Federal agencies 
continue to be responsible for the indicated governmental entities:
    Department of Health and Human Services--Public assistance and 
state-wide cost allocation plans for all states (including the District 
of Columbia and Puerto Rico), state and local hospitals, libraries and 
health districts.
    Department of the Interior--Indian tribal governments, territorial 
governments, and state and local park and recreational districts.
    Department of Labor--State and local labor departments.
    Department of Education--School districts and state and local 
education agencies.
    Department of Agriculture--State and local agriculture departments.
    Department of Transportation--State and local airport and port 
authorities and transit districts.
    Department of Commerce--State and local economic development 
districts.
    Department of Housing and Urban Development--State and local housing 
and development districts.
    Environmental Protection Agency--State and local water and sewer 
districts.

                                2. Review

    All proposed central service cost allocation plans that are required 
to be submitted will be reviewed, negotiated, and approved by the 
cognizant agency for indirect costs on a timely basis. The cognizant 
agency for indirect costs will review the proposal within six months of 
receipt of the proposal and either negotiate/approve the proposal or 
advise the governmental unit of the additional documentation needed to 
support/evaluate the proposed plan or the changes required to make the 
proposal acceptable. Once an agreement with the governmental unit has 
been reached, the agreement will be accepted and used by all Federal 
agencies, unless prohibited or limited by statute. Where a Federal 
awarding agency has reason to believe that special operating factors 
affecting its Federal awards necessitate special consideration, the 
funding agency will, prior to the time the plans are negotiated, notify 
the cognizant agency for indirect costs.

                              3. Agreement

    The results of each negotiation must be formalized in a written 
agreement between the cognizant agency for indirect costs and the 
governmental unit. This agreement will be subject to re-opening if the 
agreement is subsequently found to violate a statute or the information 
upon which the plan was negotiated is later found to be materially 
incomplete or inaccurate. The results of the negotiation must be made 
available to all Federal agencies for their use.

                             4. Adjustments

    Negotiated cost allocation plans based on a proposal later found to 
have included costs that: (a) Are unallowable (i) as specified by law or 
regulation, (ii) as identified in subpart F, General Provisions for 
selected Items of Cost of this Part, or (iii) by the terms and 
conditions of Federal awards, or (b) are unallowable because they are 
clearly not allocable to Federal awards, must be adjusted, or a refund 
must be made at the option of the cognizant agency for indirect costs, 
including earned or imputed interest from the date of transfer and debt 
interest, if applicable, chargeable in accordance with applicable 
Federal cognizant agency for indirect costs regulations. Adjustments or 
cash refunds may include, at the option of the cognizant agency for 
indirect costs, earned or imputed interest from the date of expenditure 
and delinquent debt interest, if applicable, chargeable in accordance 
with applicable cognizant agency claims collection regulations. These

[[Page 384]]

adjustments or refunds are designed to correct the plans and do not 
constitute a reopening of the negotiation.

                            G. Other Policies

                  1. Billed Central Service Activities

    Each billed central service activity must separately account for all 
revenues (including imputed revenues) generated by the service, expenses 
incurred to furnish the service, and profit/loss.

                       2. Working Capital Reserves

    Internal service funds are dependent upon a reasonable level of 
working capital reserve to operate from one billing cycle to the next. 
Charges by an internal service activity to provide for the establishment 
and maintenance of a reasonable level of working capital reserve, in 
addition to the full recovery of costs, are allowable. A working capital 
reserve as part of retained earnings of up to 60 calendar days cash 
expenses for normal operating purposes is considered reasonable. A 
working capital reserve exceeding 60 calendar days may be approved by 
the cognizant agency for indirect costs in exceptional cases.

     3. Carry-Forward Adjustments of Allocated Central Service Costs

    Allocated central service costs are usually negotiated and approved 
for a future fiscal year on a ``fixed with carry-forward'' basis. Under 
this procedure, the fixed amounts for the future year covered by 
agreement are not subject to adjustment for that year. However, when the 
actual costs of the year involved become known, the differences between 
the fixed amounts previously approved and the actual costs will be 
carried forward and used as an adjustment to the fixed amounts 
established for a later year. This ``carry-forward'' procedure applies 
to all central services whose costs were fixed in the approved plan. 
However, a carry-forward adjustment is not permitted, for a central 
service activity that was not included in the approved plan, or for 
unallowable costs that must be reimbursed immediately.

                4. Adjustments of Billed Central Services

    Billing rates used to charge Federal awards must be based on the 
estimated costs of providing the services, including an estimate of the 
allocable central service costs. A comparison of the revenue generated 
by each billed service (including total revenues whether or not billed 
or collected) to the actual allowable costs of the service will be made 
at least annually, and an adjustment will be made for the difference 
between the revenue and the allowable costs. These adjustments will be 
made through one of the following adjustment methods: (a) A cash refund 
including earned or imputed interest from the date of transfer and debt 
interest, if applicable, chargeable in accordance with applicable 
Federal cognizant agency for indirect costs regulations to the Federal 
Government for the Federal share of the adjustment, (b) credits to the 
amounts charged to the individual programs, (c) adjustments to future 
billing rates, or (d) adjustments to allocated central service costs. 
Adjustments to allocated central services will not be permitted where 
the total amount of the adjustment for a particular service (Federal 
share and non-Federal) share exceeds $500,000. Adjustment methods may 
include, at the option of the cognizant agency, earned or imputed 
interest from the date of expenditure and delinquent debt interest, if 
applicable, chargeable in accordance with applicable cognizant agency 
claims collection regulations.

                          5. Records Retention

    All central service cost allocation plans and related documentation 
used as a basis for claiming costs under Federal awards must be retained 
for audit in accordance with the records retention requirements 
contained in Subpart D of part 75.

                               6. Appeals

    If a dispute arises in the negotiation of a plan between the 
cognizant agency for indirect costs and the governmental unit, the 
dispute must be resolved in accordance with the appeals procedures of 
the cognizant agency for indirect costs.

                            7. OMB Assistance

    To the extent that problems are encountered among the Federal 
agencies or governmental units in connection with the negotiation and 
approval process, OMB will lend assistance, as required, to resolve such 
problems in a timely manner.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016]



  Sec. Appendix VI to Part 75--Public Assistance Cost Allocation Plans

                               A. General

    Federally-financed programs administered by state public assistance 
agencies are funded predominately by the Department of Health and Human 
Services (HHS). In support of its stewardship requirements, HHS has 
published requirements for the development, documentation, submission, 
negotiation, and approval of public assistance cost allocation plans in 
Subpart E of 45 CFR part 95. All administrative costs (direct and 
indirect) are normally charged to Federal awards by implementing the 
public assistance cost allocation plan. This Appendix extends these

[[Page 385]]

requirements to all Federal awarding agencies whose programs are 
administered by a state public assistance agency. Major federally-
financed programs typically administered by state public assistance 
agencies include: Temporary Aid for Needy Families (TANF), Medicaid, 
Food Stamps, Child Support Enforcement, Adoption Assistance and Foster 
Care, and Social Services Block Grant.

                             B. Definitions

    1. State public assistance agency means a state agency administering 
or supervising the administration of one or more public assistance 
programs operated by the state as identified in Subpart E of 45 CFR part 
95. For the purpose of this Appendix, these programs include all 
programs administered by the state public assistance agency.
    2. State public assistance agency costs means all costs incurred by, 
or allocable to, the state public assistance agency, except expenditures 
for financial assistance, medical contractor payments, food stamps, and 
payments for services and goods provided directly to program recipients.

                                C. Policy

    State public assistance agencies will develop, document and 
implement, and the Federal Government will review, negotiate, and 
approve, public assistance cost allocation plans in accordance with 
Subpart E of 45 CFR part 95. The plan will include all programs 
administered by the state public assistance agency. Where a letter of 
approval or disapproval is transmitted to a state public assistance 
agency in accordance with Subpart E, the letter will apply to all 
Federal agencies and programs. The remaining sections of this Appendix 
(except for the requirement for certification) summarize the provisions 
of Subpart E of 45 CFR part 95.

  D. Submission, Documentation, and Approval of Public Assistance Cost 
                            Allocation Plans

    1. State public assistance agencies are required to promptly submit 
amendments to the cost allocation plan to HHS for review and approval.
    2. Under the coordination process outlined in section E, Review of 
Implementation of Approved Plans, affected Federal agencies will review 
all new plans and plan amendments and provide comments, as appropriate, 
to HHS. The effective date of the plan or plan amendment will be the 
first day of the calendar quarter following the event that required the 
amendment, unless another date is specifically approved by HHS. HHS, as 
the cognizant agency for indirect costs acting on behalf of all affected 
Federal agencies, will, as necessary, conduct negotiations with the 
state public assistance agency and will inform the state agency of the 
action taken on the plan or plan amendment.

              E. Review of Implementation of Approved Plans

    1. Since public assistance cost allocation plans are of a narrative 
nature, the review during the plan approval process consists of 
evaluating the appropriateness of the proposed groupings of costs (cost 
centers) and the related allocation bases. As such, the Federal 
Government needs some assurance that the cost allocation plan has been 
implemented as approved. This is accomplished by reviews by the Federal 
awarding agencies, single audits, or audits conducted by the cognizant 
agency for indirect costs.
    2. Where inappropriate charges affecting more than one Federal 
awarding agency are identified, the cognizant HHS cost negotiation 
office will be advised and will take the lead in resolving the issue(s) 
as provided for in Subpart E of 45 CFR part 95.
    3. If a dispute arises in the negotiation of a plan or from a 
disallowance involving two or more Federal awarding agencies, the 
dispute must be resolved in accordance with the appeals procedures set 
out in 45 CFR part 16. Disputes involving only one Federal awarding 
agency will be resolved in accordance with the Federal awarding agency's 
appeal process.
    4. To the extent that problems are encountered among the Federal 
awarding agencies or governmental units in connection with the 
negotiation and approval process, the Office of Management and Budget 
will lend assistance, as required, to resolve such problems in a timely 
manner.

                          F. Unallowable Costs

    Claims developed under approved cost allocation plans will be based 
on allowable costs as identified in this Part. Where unallowable costs 
have been claimed and reimbursed, they will be refunded to the program 
that reimbursed the unallowable cost using one of the following methods: 
(a) A cash refund, (b) offset to a subsequent claim, or (c) credits to 
the amounts charged to individual Federal awards. Cash refunds, offsets, 
and credits may include at the option of the cognizant agency for 
indirect cost, earned or imputed interest from the date of expenditure 
and delinquent debt interest, if applicable, chargeable in accordance 
with applicable cognizant agency for indirect cost claims collection 
regulations.



  Sec. Appendix VII to Part 75--States and Local Government and Indian 
                      Tribe Indirect Cost Proposals

                               A. General

    1. Indirect costs are those that have been incurred for common or 
joint purposes.

[[Page 386]]

These costs benefit more than one cost objective and cannot be readily 
identified with a particular final cost objective without effort 
disproportionate to the results achieved. After direct costs have been 
determined and assigned directly to Federal awards and other activities 
as appropriate, indirect costs are those remaining to be allocated to 
benefitted cost objectives. A cost may not be allocated to a Federal 
award as an indirect cost if any other cost incurred for the same 
purpose, in like circumstances, has been assigned to a Federal award as 
a direct cost.
    2. Indirect costs include (a) the indirect costs originating in each 
department or agency of the governmental unit carrying out Federal 
awards and (b) the costs of central governmental services distributed 
through the central service cost allocation plan (as described in 
Appendix V to part) and not otherwise treated as direct costs.
    3. Indirect costs are normally charged to Federal awards by the use 
of an indirect cost rate. A separate indirect cost rate(s) is usually 
necessary for each department or agency of the governmental unit 
claiming indirect costs under Federal awards. Guidelines and 
illustrations of indirect cost proposals are provided in a brochure 
published by the Department of Health and Human Services entitled ``A 
Guide for States and Local Government Agencies: Cost Principles and 
Procedures for Establishing Cost Allocation Plans and Indirect Cost 
Rates for Grants and Contracts with the Federal Government.'' A copy of 
this brochure may be obtained from the HHS' Cost Allocation Services or 
at their Web site at https://rates.psc.gov.
    4. Because of the diverse characteristics and accounting practices 
of governmental units, the types of costs which may be classified as 
indirect costs cannot be specified in all situations. However, typical 
examples of indirect costs may include certain state/local-wide central 
service costs, general administration of the non-Federal entity 
accounting and personnel services performed within the non-Federal 
entity, depreciation on buildings and equipment, the costs of operating 
and maintaining facilities.
    5. This Appendix does not apply to state public assistance agencies. 
These agencies should refer instead to Appendix VI to part 75.

                             B. Definitions

    1. Base means the accumulated direct costs (normally either total 
direct salaries and wages or total direct costs exclusive of any 
extraordinary or distorting expenditures) used to distribute indirect 
costs to individual Federal awards. The direct cost base selected should 
result in each Federal award bearing a fair share of the indirect costs 
in reasonable relation to the benefits received from the costs.
    2. Base period for the allocation of indirect costs is the period in 
which such costs are incurred and accumulated for allocation to 
activities performed in that period. The base period normally should 
coincide with the governmental unit's fiscal year, but in any event, 
must be so selected as to avoid inequities in the allocation of costs.
    3. Cognizant agency for indirect costs means the Federal agency 
responsible for reviewing and approving the governmental unit's indirect 
cost rate(s) on the behalf of the Federal Government. The cognizant 
agency for indirect costs assignment is described in Appendix V, section 
F.
    4. Final rate means an indirect cost rate applicable to a specified 
past period which is based on the actual allowable costs of the period. 
A final audited rate is not subject to adjustment.
    5. Fixed rate means an indirect cost rate which has the same 
characteristics as a predetermined rate, except that the difference 
between the estimated costs and the actual, allowable costs of the 
period covered by the rate is carried forward as an adjustment to the 
rate computation of a subsequent period.
    6. Indirect cost pool is the accumulated costs that jointly benefit 
two or more programs or other cost objectives.
    7. Indirect cost rate is a device for determining in a reasonable 
manner the proportion of indirect costs each program should bear. It is 
the ratio (expressed as a percentage) of the indirect costs to a direct 
cost base.
    8. Indirect cost rate proposal means the documentation prepared by a 
governmental unit or subdivision thereof to substantiate its request for 
the establishment of an indirect cost rate.
    9. Predetermined rate means an indirect cost rate, applicable to a 
specified current or future period, usually the governmental unit's 
fiscal year. This rate is based on an estimate of the costs to be 
incurred during the period. Except under very unusual circumstances, a 
predetermined rate is not subject to adjustment. (Because of legal 
constraints, predetermined rates are not permitted for Federal 
contracts; they may, however, be used for grants or cooperative 
agreements.) Predetermined rates may not be used by governmental units 
that have not submitted and negotiated the rate with the cognizant 
agency for indirect costs. In view of the potential advantages offered 
by this procedure, negotiation of predetermined rates for indirect costs 
for a period of two to four years should be the norm in those situations 
where the cost experience and other pertinent facts available are deemed 
sufficient to enable the parties involved to reach an informed judgment 
as to the probable level of indirect costs during the ensuing accounting 
periods.
    10. Provisional rate means a temporary indirect cost rate applicable 
to a specified period

[[Page 387]]

which is used for funding, interim reimbursement, and reporting indirect 
costs on Federal awards pending the establishment of a ``final'' rate 
for that period.

C. Allocation of Indirect Costs and Determination of Indirect Cost Rates

                               1. General

    a. Where a governmental unit's department or agency has only one 
major function, or where all its major functions benefit from the 
indirect costs to approximately the same degree, the allocation of 
indirect costs and the computation of an indirect cost rate may be 
accomplished through simplified allocation procedures as described in 
subsection 2.
    b. Where a governmental unit's department or agency has several 
major functions which benefit from its indirect costs in varying 
degrees, the allocation of indirect costs may require the accumulation 
of such costs into separate cost groupings which then are allocated 
individually to benefitted functions by means of a base which best 
measures the relative degree of benefit. The indirect costs allocated to 
each function are then distributed to individual Federal awards and 
other activities included in that function by means of an indirect cost 
rate(s).
    c. Specific methods for allocating indirect costs and computing 
indirect cost rates along with the conditions under which each method 
should be used are described in subsections 2, 3 and 4.

                          2. Simplified Method

    a. Where a non-Federal entity's major functions benefit from its 
indirect costs to approximately the same degree, the allocation of 
indirect costs may be accomplished by (1) classifying the non-Federal 
entity's total costs for the base period as either direct or indirect, 
and (2) dividing the total allowable indirect costs (net of applicable 
credits) by an equitable distribution base. The result of this process 
is an indirect cost rate which is used to distribute indirect costs to 
individual Federal awards. The rate should be expressed as the 
percentage which the total amount of allowable indirect costs bears to 
the base selected. This method should also be used where a governmental 
unit's department or agency has only one major function encompassing a 
number of individual projects or activities, and may be used where the 
level of Federal awards to that department or agency is relatively 
small.
    b. Both the direct costs and the indirect costs must exclude capital 
expenditures and unallowable costs. However, unallowable costs must be 
included in the direct costs if they represent activities to which 
indirect costs are properly allocable.
    c. The distribution base may be (1) total direct costs (excluding 
capital expenditures and other distorting items, such as pass-through 
funds, subawards in excess of $25,000, participant support costs, etc.), 
(2) direct salaries and wages, or (3) another base which results in an 
equitable distribution.

                   3. Multiple Allocation Base Method

    a. Where a non-Federal entity's indirect costs benefit its major 
functions in varying degrees, such costs must be accumulated into 
separate cost groupings. Each grouping must then be allocated 
individually to benefitted functions by means of a base which best 
measures the relative benefits.
    b. The cost groupings should be established so as to permit the 
allocation of each grouping on the basis of benefits provided to the 
major functions. Each grouping should constitute a pool of expenses that 
are of like character in terms of the functions they benefit and in 
terms of the allocation base which best measures the relative benefits 
provided to each function. The number of separate groupings should be 
held within practical limits, taking into consideration the materiality 
of the amounts involved and the degree of precision needed.
    c. Actual conditions must be taken into account in selecting the 
base to be used in allocating the expenses in each grouping to 
benefitted functions. When an allocation can be made by assignment of a 
cost grouping directly to the function benefitted, the allocation must 
be made in that manner. When the expenses in a grouping are more general 
in nature, the allocation should be made through the use of a selected 
base which produces results that are equitable to both the Federal 
Government and the governmental unit. In general, any cost element or 
related factor associated with the governmental unit's activities is 
potentially adaptable for use as an allocation base provided that: (1) 
It can readily be expressed in terms of dollars or other quantitative 
measures (total direct costs, direct salaries and wages, staff hours 
applied, square feet used, hours of usage, number of documents 
processed, population served, and the like), and (2) it is common to the 
benefitted functions during the base period.
    d. Except where a special indirect cost rate(s) is required in 
accordance with paragraph (C)(4) of this Appendix, the separate 
groupings of indirect costs allocated to each major function must be 
aggregated and treated as a common pool for that function. The costs in 
the common pool must then be distributed to individual Federal awards 
included in that function by use of a single indirect cost rate.
    e. The distribution base used in computing the indirect cost rate 
for each function may be (1) total direct costs (excluding capital 
expenditures and other distorting items such as pass-through funds, 
subawards in excess of $25,000, participant support costs, etc.), (2)

[[Page 388]]

direct salaries and wages, or (3) another base which results in an 
equitable distribution. An indirect cost rate should be developed for 
each separate indirect cost pool developed. The rate in each case should 
be stated as the percentage relationship between the particular indirect 
cost pool and the distribution base identified with that pool.

                     4. Special Indirect Cost Rates

    a. In some instances, a single indirect cost rate for all activities 
of a non-Federal entity or for each major function of the agency may not 
be appropriate. It may not take into account those different factors 
which may substantially affect the indirect costs applicable to a 
particular program or group of programs. The factors may include the 
physical location of the work, the level of administrative support 
required, the nature of the facilities or other resources employed, the 
organizational arrangements used, or any combination thereof. When a 
particular Federal award is carried out in an environment which appears 
to generate a significantly different level of indirect costs, 
provisions should be made for a separate indirect cost pool applicable 
to that Federal award. The separate indirect cost pool should be 
developed during the course of the regular allocation process, and the 
separate indirect cost rate resulting therefrom should be used, provided 
that: (1) The rate differs significantly from the rate which would have 
been developed under paragraphs (C)(2) and (C)(3) of this Appendix, and 
(2) the Federal award to which the rate would apply is material in 
amount.
    b. Where Federal statutes restrict the reimbursement of certain 
indirect costs, it may be necessary to develop a special rate for the 
affected Federal award. Where a ``restricted rate'' is required, the 
same procedure for developing a non-restricted rate will be used except 
for the additional step of the elimination from the indirect cost pool 
those costs for which the law prohibits reimbursement.

              D. Submission and Documentation of Proposals

              1. Submission of Indirect Cost Rate Proposals

    a. All departments or agencies of the governmental unit desiring to 
claim indirect costs under Federal awards must prepare an indirect cost 
rate proposal and related documentation to support those costs. The 
proposal and related documentation must be retained for audit in 
accordance with the records retention requirements contained in Sec.  
75.361.
    b. A governmental department or agency unit that receives more than 
$35 million in direct Federal funding must submit its indirect cost rate 
proposal to its cognizant agency for indirect costs. Other governmental 
department or agency must develop an indirect cost proposal in 
accordance with the requirements of this Part and maintain the proposal 
and related supporting documentation for audit. These governmental 
departments or agencies are not required to submit their proposals 
unless they are specifically requested to do so by the cognizant agency 
for indirect costs. Where a non-Federal entity only receives funds as a 
subrecipient, the pass-through entity will be responsible for 
negotiating and/or monitoring the subrecipient's indirect costs.
    c. Each Indian tribal government desiring reimbursement of indirect 
costs must submit its indirect cost proposal to the Department of the 
Interior (its cognizant agency for indirect costs).
    d. Indirect cost proposals must be developed (and, when required, 
submitted) within six months after the close of the governmental unit's 
fiscal year, unless an exception is approved by the cognizant agency for 
indirect costs. If the proposed central service cost allocation plan for 
the same period has not been approved by that time, the indirect cost 
proposal may be prepared including an amount for central services that 
is based on the latest federally-approved central service cost 
allocation plan. The difference between these central service amounts 
and the amounts ultimately approved will be compensated for by an 
adjustment in a subsequent period.

                      2. Documentation of Proposals

    The following must be included with each indirect cost proposal:
    a. The rates proposed, including subsidiary work sheets and other 
relevant data, cross referenced and reconciled to the financial data 
noted in subsection b. Allocated central service costs will be supported 
by the summary table included in the approved central service cost 
allocation plan. This summary table is not required to be submitted with 
the indirect cost proposal if the central service cost allocation plan 
for the same fiscal year has been approved by the cognizant agency for 
indirect costs and is available to the funding agency.
    b. A copy of the financial data (financial statements, comprehensive 
annual financial report, executive budgets, accounting reports, etc.) 
upon which the rate is based. Adjustments resulting from the use of 
unaudited data will be recognized, where appropriate, by the Federal 
cognizant agency for indirect costs in a subsequent proposal.
    c. The approximate amount of direct base costs incurred under 
Federal awards. These costs should be broken out between salaries and 
wages and other direct costs.
    d. A chart showing the organizational structure of the agency during 
the period for which the proposal applies, along with a

[[Page 389]]

functional statement(s) noting the duties and/or responsibilities of all 
units that comprise the agency. (Once this is submitted, only revisions 
need be submitted with subsequent proposals.)

                       3. Required Certification.

    Each indirect cost rate proposal must be accompanied by a 
certification in the following form:

                      Certificate of Indirect Costs

    This is to certify that I have reviewed the indirect cost rate 
proposal submitted herewith and to the best of my knowledge and belief:
    (1) All costs included in this proposal [identify date] to establish 
billing or final indirect costs rates for [identify period covered by 
rate] are allowable in accordance with the requirements of the Federal 
award(s) to which they apply and the provisions of this 45 CFR part 75. 
Unallowable costs have been adjusted for in allocating costs as 
indicated in the indirect cost proposal.
    (2) All costs included in this proposal are properly allocable to 
Federal awards on the basis of a beneficial or causal relationship 
between the expenses incurred and the agreements to which they are 
allocated in accordance with applicable requirements. Further, the same 
costs that have been treated as indirect costs have not been claimed as 
direct costs. Similar types of costs have been accounted for 
consistently and the Federal Government will be notified of any 
accounting changes that would affect the predetermined rate.
    I declare that the foregoing is true and correct.
Governmental Unit:
Signature:
Name of Official:
Title:
Date of Execution:

                  E. Negotiation and Approval of Rates

    1. Indirect cost rates will be reviewed, negotiated, and approved by 
the cognizant agency on a timely basis. Once a rate has been agreed 
upon, it will be accepted and used by all Federal agencies unless 
prohibited or limited by statute. Where a Federal awarding agency has 
reason to believe that special operating factors affecting its Federal 
awards necessitate special indirect cost rates, the funding agency will, 
prior to the time the rates are negotiated, notify the cognizant agency 
for indirect costs.
    2. The use of predetermined rates, if allowed, is encouraged where 
the cognizant agency for indirect costs has reasonable assurance based 
on past experience and reliable projection of the non-Federal entity's 
costs, that the rate is not likely to exceed a rate based on actual 
costs. Long-term agreements utilizing predetermined rates extending over 
two or more years are encouraged, where appropriate.
    3. The results of each negotiation must be formalized in a written 
agreement between the cognizant agency for indirect costs and the 
governmental unit. This agreement will be subject to re-opening if the 
agreement is subsequently found to violate a statute, or the information 
upon which the plan was negotiated is later found to be materially 
incomplete or inaccurate. The agreed upon rates must be made available 
to all Federal agencies for their use.
    4. Refunds must be made if proposals are later found to have 
included costs that (a) are unallowable (i) as specified by law or 
regulation, (ii) as identified in Sec.  75.420 of this part, or (iii) by 
the terms and conditions of Federal awards, or (b) are unallowable 
because they are clearly not allocable to Federal awards. These 
adjustments or refunds will be made regardless of the type of rate 
negotiated (predetermined, final, fixed, or provisional).

                            F. Other Policies

                         1. Fringe Benefit Rates

    If overall fringe benefit rates are not approved for the 
governmental unit as part of the central service cost allocation plan, 
these rates will be reviewed, negotiated and approved for individual 
recipient agencies during the indirect cost negotiation process. In 
these cases, a proposed fringe benefit rate computation should accompany 
the indirect cost proposal. If fringe benefit rates are not used at the 
recipient agency level (i.e., the agency specifically identifies fringe 
benefit costs to individual employees), the governmental unit should so 
advise the cognizant agency for indirect costs.

           2. Billed Services Provided by the Recipient Agency

    In some cases, governmental departments or agencies (components of 
the governmental unit) provide and bill for services similar to those 
covered by central service cost allocation plans (e.g., computer 
centers). Where this occurs, the governmental departments or agencies 
(components of the governmental unit) should be guided by the 
requirements in Appendix V relating to the development of billing rates 
and documentation requirements, and should advise the cognizant agency 
for indirect costs of any billed services. Reviews of these types of 
services (including reviews of costing/billing methodology, profits or 
losses, etc.) will be made on a case-by-case basis as warranted by the 
circumstances involved.

[[Page 390]]

              3. Indirect Cost Allocations Not Using Rates

    In certain situations, governmental departments or agencies 
(components of the governmental unit), because of the nature of their 
Federal awards, may be required to develop a cost allocation plan that 
distributes indirect (and, in some cases, direct) costs to the specific 
funding sources. In these cases, a narrative cost allocation methodology 
should be developed, documented, maintained for audit, or submitted, as 
appropriate, to the cognizant agency for indirect costs for review, 
negotiation, and approval.

                               4. Appeals

    If a dispute arises in a negotiation of an indirect cost rate (or 
other rate) between the cognizant agency for indirect costs and the 
governmental unit, the dispute must be resolved in accordance with the 
appeals procedures of the cognizant agency for indirect costs.

        5. Collection of Unallowable Costs and Erroneous Payments

    Costs specifically identified as unallowable and charged to Federal 
awards either directly or indirectly will be refunded (including 
interest chargeable in accordance with applicable Federal cognizant 
agency for indirect costs regulations).

                            6. OMB Assistance

    To the extent that problems are encountered among the Federal 
agencies or governmental units in connection with the negotiation and 
approval process, OMB will lend assistance, as required, to resolve such 
problems in a timely manner.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016]



  Sec. Appendix VIII to Part 75--Nonprofit Organizations Exempted from 
                          Subpart E of Part 75

1. Advance Technology Institute (ATI), Charleston, South Carolina
2. Aerospace Corporation, El Segundo, California
3. American Institutes of Research (AIR), Washington, DC
4. Argonne National Laboratory, Chicago, Illinois
5. Atomic Casualty Commission, Washington, DC
6. Battelle Memorial Institute, Headquartered in Columbus, Ohio
7. Brookhaven National Laboratory, Upton, New York
8. Charles Stark Draper Laboratory, Incorporated, Cambridge, 
Massachusetts
9. CNA Corporation (CNAC), Alexandria, Virginia
10. Environmental Institute of Michigan, Ann Arbor, Michigan
11. Georgia Institute of Technology/Georgia Tech Applied Research 
Corporation/Georgia Tech Research Institute, Atlanta, Georgia
12. Hanford Environmental Health Foundation, Richland, Washington
13. IIT Research Institute, Chicago, Illinois
14. Institute of Gas Technology, Chicago, Illinois
15. Institute for Defense Analysis, Alexandria, Virginia
16. LMI, McLean, Virginia
17. Mitre Corporation, Bedford, Massachusetts
18. Noblis, Inc., Falls Church, Virginia
19. National Radiological Astronomy Observatory, Green Bank, West 
Virginia
20. National Renewable Energy Laboratory, Golden, Colorado
21. Oak Ridge Associated Universities, Oak Ridge, Tennessee
22. Rand Corporation, Santa Monica, California
23. Research Triangle Institute, Research Triangle Park, North Carolina
24. Riverside Research Institute, New York, New York
25. South Carolina Research Authority (SCRA), Charleston, South Carolina
26. Southern Research Institute, Birmingham, Alabama
27. Southwest Research Institute, San Antonio, Texas
28. SRI International, Menlo Park, California
29. Syracuse Research Corporation, Syracuse, New York
30. Universities Research Association, Incorporated (National 
Acceleration Lab), Argonne, Illinois
31. Urban Institute, Washington DC
32. Non-profit insurance companies, such as Blue Cross and Blue Shield 
Organizations
33. Other non-profit organizations as negotiated with Federal awarding 
agencies

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016]



Sec. Appendix IX to Part 75--Principles for Determining Costs Applicable 
  to Research and Development Under Grants and Contracts with Hospitals

                          A. Purpose and Scope

                              1. Objectives

    This appendix provides principles for determining the costs 
applicable to research and development work performed by hospitals under 
grants and contracts with the Department of Health and Human Services. 
These principles are confined to the subject of cost determination and 
make no attempt to identify the circumstances or dictate the extent

[[Page 391]]

of hospital participation in the financing of a particular research or 
development project. The principles are designed to provide recognition 
of the full allocated costs of such research work under generally 
accepted accounting principles. These principles will be applicable to 
both proprietary and non-profit hospitals. No provision for profit or 
other increment above cost is provided for in these principles. However, 
this is not to be interpreted as precluding a negotiated fee between 
contracting parties when a fee is appropriate.

                            2. Policy Guides

    The successful application of these principles requires development 
of mutual understanding between representatives of hospitals and of the 
Department of Health and Human Services as to their scope, applicability 
and interpretation. It is recognized that:
    a. The arrangements for hospital participation in the financing of a 
research and development project are properly subject to negotiation 
between the agency and the hospital concerned in accordance with such 
Government-wide criteria as may be applicable.
    b. Each hospital, possessing its own unique combination of staff, 
facilities and experience, should be encouraged to conduct research in a 
manner consonant with its own institutional philosophies and objectives.
    c. Each hospital in the fulfillment of its contractual obligations 
should be expected to employ sound management practices.
    d. The application of the principles established herein shall be in 
conformance with the generally accepted accounting practices of 
hospitals.
    e. Hospitals receive reimbursements from the Federal Government for 
differing types of services under various programs such as support of 
Research and Development (including discrete clinical centers) Health 
Services Projects, Medicare, etc. It is essential that consistent 
procedures for determining reimbursable costs for similar services be 
employed without regard to program differences. Therefore, both the 
direct and indirect costs of research programs must be identified as a 
cost center(s) for the cost finding and step-down requirements of the 
Medicare program, or in its absence the Medicaid program.

                             3. Application

    All operating agencies within the Department of Health and Human 
Services that sponsor research and development work in hospitals will 
apply these principles and related policy guides in determining the 
costs incurred for such work under grants and cost-reimbursement type 
contracts and subcontracts. These principles will also be used as a 
guide in the pricing of fixed-price contracts and subcontracts.

                         B. Definition of Terms

    1. Organized research means all research activities of a hospital 
that may be identified whether the support for such research is from a 
federal, non-federal or internal source.
    2. Departmental research means research activities that are not 
separately budgeted and accounted for. Such work, which includes all 
research activities not encompassed under the term organized research, 
is regarded for purposes of this document as a part of the patient care 
activities of the hospital.
    3. Research agreement means any valid arrangement to perform 
federally-sponsored research or development including grants, cost-
reimbursement type contracts, cost-reimbursement type subcontracts, and 
fixed-price contracts and subcontracts.
    4. Instruction and training means the formal or informal programs of 
educating and training technical and professional health services 
personnel, primarily medical and nursing training. This activity, if 
separately budgeted or identifiable with specific costs, should be 
considered as a cost objective for purposes of indirect cost allocations 
and the development of patient care costs.
    5. Other hospital activities means all organized activities of a 
hospital not immediately related to the patient care, research, and 
instructional and training functions which produce identifiable revenue 
from the performance of these activities. If a non-related activity does 
not produce identifiable revenue, it may be necessary to allocate this 
expense using an appropriate basis. In such a case, the activity may be 
included as an allocable cost (See paragraph C.4 below.) Also included 
under this definition is any category of cost treated as 
``Unallowable,'' provided such category of cost identifies a function or 
activity to which a portion of the institution's indirect cost (as 
defined in paragraph E.1.) are properly allocable.
    6. Patient care means those departments or cost centers which render 
routine or ancillary services to in-patients and/or out-patients. As 
used in paragraph I.2.w, it means the cost of these services applicable 
to patients involved in research programs.
    7. Allocation means the process by which the indirect costs are 
assigned as between:
    a. Organized research,
    b. Patient care including departmental research.
    c. Instruction and training, and
    d. Other hospital activities.
    8. Cost center means an identifiable department or area (including 
research) within the hospital which has been assigned an account number 
in the hospital accounting system for the purpose of accumulating 
expense by department or area.

[[Page 392]]

    9. Cost finding is the process of recasting the data derived from 
the accounts ordinarily kept by a hospital to ascertain costs of the 
various types of services rendered. It is the determination of direct 
costs by specific identification and the proration of indirect costs by 
allocation.
    10. Step down is a cost finding method that recognizes that services 
rendered by certain nonrevenue-producing departments or centers are 
utilized by certain other nonrevenue producing centers as well as by the 
revenue-producing centers. All costs of nonrevenue-producing centers are 
allocated to all centers which they serve, regardless of whether or not 
these centers produce revenue. Following the apportionment of the cost 
of the nonrevenue-producing center, that center will be considered 
closed and no further costs are apportioned to that center.
    11. Scatter bed is a bed assigned to a research patient based on 
availability. Research patients occupying these beds are not physically 
segregated from nonresearch patients occupying beds. Scatter beds are 
geographically dispersed among all the beds available for use in the 
hospital. There are no special features attendant to a scatter bed that 
distinguishes it from others that could just as well have been occupied.
    12. Discrete bed is a bed or beds that have been set aside for 
occupancy by research patients and are physically segregated from other 
hospital beds in an environment that permits an easily ascertainable 
allocation of costs associated with the space they occupy and the 
services they generate.

                         C. Basic Considerations

                      1. Composition of Total Costs

    The cost of a research agreement is comprised of the allowable 
direct costs incident to its performance plus the allocable portion of 
the allowable indirect costs of the hospital less applicable credits. 
(See paragraph C.5.)

               2. Factors Affecting Allowability of Costs

    The tests of allowability of costs under these principles are:
    a. They must be reasonable.
    b. They must be assigned to research agreements under the standards 
and methods provided herein.
    c. They must be accorded consistent treatment through application of 
those generally accepted accounting principles appropriate to the 
circumstances (See paragraph A.2.e.) and
    d. They must conform to any limitations or exclusions set forth in 
these principles or in the research agreement as to types or amounts of 
cost items.

                           3. Reasonable Costs

    A cost may be considered reasonable if the nature of the goods or 
services acquired or applied, and the amount involved therefor reflect 
the action that a prudent person would have taken under the 
circumstances prevailing at the time the decision to incur the cost was 
made. Major considerations involved in the determination of the 
reasonableness of a cost are:
    a. Whether or not the cost is of a type generally recognized as 
necessary for the operation of the hospital or the performance of the 
research agreement,
    b. The restraints or requirements imposed by such factors as arm's 
length bargaining, federal and state laws and regulations, and research 
agreement terms and conditions,
    c. Whether or not the individuals concerned acted with due prudence 
in the circumstances, considering their responsibilities to the 
hospital, its patients, its employees, its students, the Government, and 
the public at large, and
    d. The extent to which the actions taken with respect to the 
incurrence of the cost are consistent with established hospital policies 
and practices applicable to the work of the hospital generally, 
including Government research.

                           4. Allocable Costs

    a. A cost is allocable to a particular cost center (i.e., a specific 
function, project, research agreement, department, or the like) if the 
goods or services involved are chargeable or assignable to such cost 
center in accordance with relative benefits received or other equitable 
relationship. Subject to the foregoing, a cost is allocable to a 
research agreement if it is incurred solely to advance the work under 
the research agreement; or it benefits both the research agreement and 
other work of the hospital in proportions that can be approximated 
through use of reasonable methods; or it is necessary to the overall 
operation of the hospital and, in light of the standards provided in 
this chapter, is deemed to be assignable in part to organized research. 
Where the purchase of equipment or other capital items are specifically 
authorized under a research agreement, the amounts thus authorized for 
such purchases are allocable to the research agreement regardless of the 
use that may subsequently be made of the equipment or other capital 
items involved.
    b. Any costs allocable to a particular research agreement under the 
standards provided in these principles may not be shifted to other 
research agreements in order to meet deficiencies caused by overruns or 
other fund considerations, to avoid restrictions imposed by law or by 
terms of the research agreement, or for other reasons of convenience.

[[Page 393]]

                          5. Applicable Credits

    a. The term applicable credits refers to those receipts or negative 
expenditure types of transactions which operate to offset or reduce 
expense items that are allocable to research agreements as direct or 
indirect costs as outlined in paragraph E.1. Typical examples of such 
transactions are: Purchase discounts, rebates, or allowances; recoveries 
or indemnities on losses; sales of scrap or incidental services; 
tuition; adjustments of overpayments or erroneous charges; and services 
rendered to patients admitted to federally funded clinical research 
centers, primarily for care though also participating in research 
protocols.
    b. In some instances, the amounts received from the Federal 
Government to finance hospital activities or service operations should 
be treated as applicable credits. Specifically, the concept of netting 
such credit items against related expenditures should be applied by the 
hospital in determining the rates or amounts to be charged to government 
research for services rendered whenever the facilities or other 
resources used in providing such services have been financed directly, 
in whole or in part, by federal funds. Thus, where such items are 
provided for or benefit a particular hospital activity, i.e., patient 
care, research, instruction and training, or other, they should be 
treated as an offset to the indirect costs apportioned to that activity. 
Where the benefits are common to all hospital activities they should be 
treated as a credit to the total indirect cost pool before allocation to 
the various cost objectives.

                             D. Direct Costs

                               1. General

    Direct costs are those that can be identified specifically with a 
particular cost center. For this purpose, the term cost center refers 
not only to the ultimate centers against which costs are finally lodged 
such as research agreements, but also to other established cost centers 
such as the individual accounts for recording particular objects or 
items of expense, and the separate account groupings designed to record 
the expenses incurred by individual organizational units, functions, 
projects and the like. In general, the administrative functions and 
service activities described in paragraph VI are identifiable as 
separate cost centers, and the expenses associated with such centers 
become eligible in due course for distribution as indirect costs of 
research agreements and other ultimate cost centers.

                  2. Application to Research Agreements

    Identifiable benefit to the research work rather than the nature of 
the goods and services involved is the determining factor in 
distinguishing direct from indirect costs of research agreements. 
Typical of transactions chargeable to a research agreement as direct 
costs are the compensation of employees for the time or effort devoted 
to the performance of work under the research agreement, including 
related staff benefit and pension plan costs to the extent that such 
items are consistently accorded to all employees and treated by the 
hospital as direct rather than indirect costs (see paragraph E.2.d(2)); 
the costs of materials consumed or expended in the performance of such 
work; and other items of expense incurred for the research agreement, 
such as extraordinary utility consumption. The cost of materials 
supplied from stock or services rendered by specialized facilities or 
other institutional service operations may be included as direct costs 
of research agreements provided such items are consistently treated by 
the institution as direct rather than indirect costs and are charged 
under a recognized method of costing or pricing designed to recover only 
the actual direct and indirect costs of such material or service and 
conforming to generally accepted cost accounting practices consistently 
followed by the institution.

                            E. Indirect Costs

                               1. General

    Indirect costs are those that have been incurred for common or joint 
objectives, and thus are not readily subject to treatment as direct 
costs of research agreements or other ultimate or revenue producing cost 
centers. In hospitals such costs normally are classified but not 
necessarily restricted to the following functional categories: 
Depreciation; Administrative and General (including fringe benefits if 
not charged directly); Operation of Plant; Maintenance of Plant; Laundry 
and Linen Service; Housekeeping; Dietary; Maintenance of Personnel; and 
Medical Records and Library.

                      2. Criteria for Distribution

    a. Base period.
    A base period for distribution of indirect costs is the period 
during which such costs are incurred and accumulated for distribution to 
work performed within that period. The base period normally should 
coincide with the fiscal year established by the hospital, but in any 
event the base period should be so selected as to avoid inequities in 
the distribution of costs.
    b. Need for cost groupings.
    The overall objective of the allocation process is to distribute the 
indirect costs described in paragraph F. to organized research, patient 
care, instruction and training, and other hospital activities in 
reasonable proportions consistent with the nature and extent of the use 
of the hospital's resources by research personnel, medical staff,

[[Page 394]]

patients, students, and other personnel or organizations. In order to 
achieve this objective with reasonable precision, it may be necessary to 
provide for selective distribution by establishing separate groupings of 
cost within one or more of the functional categories of indirect costs 
referred to in paragraph E.1. In general, the cost groupings established 
within a functional category should constitute, in each case, a pool of 
those items of expense that are considered to be of like character in 
terms of their relative contribution to (or degree of remoteness from) 
the particular cost centers to which distribution is appropriate. Each 
such pool or cost grouping should then be distributed individually to 
the related cost centers, using the distribution base or method most 
appropriate in the light of the guides set out in 2.c. below. While this 
paragraph places primary emphasis on a step-down method of indirect cost 
computation, paragraph H. provides an alternate method which may be used 
under certain conditions.
    c. Selection of distribution method.
    Actual conditions must be taken into account in selecting the method 
or base to be used in distributing to related cost centers the expenses 
assembled under each of the individual cost groups established as 
indicated under 2.b. above. Where a distribution can be made by 
assignment of a cost grouping directly to the area benefited, the 
distribution should be made in that manner. Care should be given, 
however, to eliminate similar or duplicative costs from any other 
distribution made to this area. Where the expenses under a cost grouping 
are more general in nature, the distribution to related cost centers 
should be made through use of a selected base which will produce results 
which are equitable to both the Government and the hospital. In general, 
any cost element or cost-related factor associated with the hospital's 
work is potentially adaptable for use as a distribution base provided:
    (1) It can readily be expressed in terms of dollars or other 
quantitative measure (total direct expenditures, direct salaries, man-
hours applied, square feet utilized, hours of usage, number of documents 
processed, population served, and the like); and
    (2) It is common to the related cost centers during the base period. 
The essential consideration in selection of the distribution base in 
each instance is that it be the one best suited for assigning the pool 
of costs to related cost centers in accord with the relative benefits 
derived; the traceable cause and effect relationship; or logic and 
reason, where neither benefit nor cause and effect relationship is 
determinable.
    d. General consideration on cost groupings.
    The extent to which separate cost groupings and selective 
distribution would be appropriate at a hospital is a matter of judgment 
to be determined on a case-by-case basis. Typical situations which may 
warrant the establishment of two or more separate cost groups (based on 
account classification or analysis) within a functional category include 
but are not limited to the following:
    (1) Where certain items or categories of expense relate solely to 
one of the major divisions of the hospital (patient care, sponsored 
research, instruction and training, or other hospital activities) or to 
any two but not all, such expenses should be set aside as a separate 
cost grouping for direct assignment or selective distribution in 
accordance with the guides provided in 2.b. and 2.c.above.
    (2) Where any types of expense ordinary treated as indirect cost as 
outlined in paragraph are charged to research agreements as direct 
costs, the similar type expenses applicable to other activities of the 
institution must through separate cost grouping be excluded from the 
indirect costs allocable to research agreements.
    (3) Where it is determined that certain expenses are for the support 
of a service unit or facility whose output is susceptible of measurement 
on a workload or other quantitative basis, such expenses should be set 
aside as a separate cost grouping for distribution on such basis to 
organized research and other hospital activities.
    (4) Where organized activities (including identifiable segments of 
organized research as well as the activities cited inB.5.) provide their 
own purchasing, personnel administration, building maintenance, or 
housekeeping or similar service, the distribution of such elements of 
indirect cost to such activities should be accomplished through cost 
grouping which includes only that portion of central indirect costs 
(such as for overall management) which are properly allocable to such 
activities.
    (5) Where the hospital elects to treat as indirect charges the costs 
of pension plans and other staff benefits, such costs should be set 
aside as a separate cost grouping for selective distribution to related 
cost centers, including organized research.
    (6) Where the hospital is affiliated with a medical school or some 
other institution which performs organized research on the hospital's 
premises, every effort should be made to establish separate cost 
groupings in the Administrative and General or other applicable category 
which will reasonably reflect the use of services and facilities by such 
research. (See also paragraph.)
    e. Materiality.
    Where it is determined that the use of separate cost groupings and 
selective distribution are necessary to produce equitable results, the 
number of such separate cost groupings within a functional category 
should be held within practical limits, after taking into consideration 
the materiality of

[[Page 395]]

the amounts involved and the degree of precision attainable through less 
selective methods of distribution.

    3. Administration of Limitations on Allowances for Indirect Costs

    a. Research grants may be subject to laws and/or administrative 
regulations that limit the allowance for indirect costs under each such 
grant to a stated percentage of the direct costs allowed. Agencies that 
sponsor such grants will establish procedures which will assure that:
    (1) The terms and amount authorized in each case conform with the 
provisions of paragraphs C, E, and I of these principles as they apply 
to matters involving the consistent treatment and allowability of 
individual items of cost; and
    (2) The amount actually allowed for indirect costs under each such 
research grant does not exceed the maximum allowable under the 
limitation or the amount otherwise allowable under these principles, 
whichever is the smaller.
    b. Where the actual allowance for indirect costs on any research 
grant must be restricted to the smaller of the two alternative amounts 
referred to in 3.a. above, such alternative amounts should be determined 
in accordance with the following guides:
    (1) The maximum allowable under the limitation should be established 
by applying the stated percentage to a direct cost base which shall 
include all items of expenditure authorized by the sponsoring agency for 
inclusion as part of the total cost for the direct benefit of the work 
under the grant; and
    (2) The amount otherwise allowable under these principles should be 
established by applying the current institutional indirect cost rate to 
those elements of direct cost which were included in the base on which 
the rate was computed.
    c. When the maximum amount allowable under a statutory limitation or 
the terms of a research agreement is less than the amount otherwise 
allocable as indirect costs under these principles, the amount not 
recoverable as indirect costs under the research agreement involved may 
not be shifted to other research agreements.

           F. Identification and Assignment of Indirect Costs

                      1. Depreciation or Use Charge

    a. The expenses under this heading should include depreciation (as 
defined in paragraph I.2.i(1)) on buildings, fixed equipment, and 
movable equipment, except to the extent purchased through federal funds. 
Where adequate records for the recording of depreciation are not 
available, a use charge may be substituted for depreciation (See 
paragraph I.2.)
    b. The expenses included in this category should be allocated to 
applicable cost centers in a manner consistent with the guides set forth 
in paragraph E.2., on a basis that gives primary emphasis to (a) space 
utilization with respect to depreciation on buildings and fixed 
equipment; and (b) specific identification of assets and their use with 
respect to movable equipment as it relates to patient care, organized 
research, instruction and training, and other hospital activities. Where 
such records are not sufficient for the purpose of the foregoing, 
reasonable estimates will suffice as a means for effecting distribution 
of the amounts involved.

                 2. Administration and General Expenses

    a. The expenses under this heading are those that have been incurred 
for the administrative offices of the hospital including accounting, 
personnel, purchasing, information centers, telephone expense, and the 
like which do not relate solely to any major division of the 
institution, i.e., solely to patient care, organized research, 
instruction and training, or other hospital activities.
    b. The expenses included in this category may be allocated on the 
basis of total expenditures exclusive of capital expenditures, or 
salaries and wages in situations where the results of the distribution 
made on this basis are deemed to be equitable both to the Government and 
the hospital; otherwise the distribution of Administration and General 
expenses should be made through use of selected bases, applied to 
separate cost groupings established within this category of expenses in 
accordance with the guides set out in paragraph E.2.

                          3. Operation of Plant

    a. The expenses under this heading are those that have been incurred 
by a central service organization or at the departmental level for the 
administration, supervision, and provision of utilities (exclusive of 
telephone expense) and protective services to the physical plant. They 
include expenses incurred for such items as power plant operations, 
general utility costs, elevator operations, protection services, and 
general parking lots.
    b. The expenses included in this category should be allocated to 
applicable cost centers in a manner consistent with the guides provided 
in paragraph E.2., on a basis that gives primary emphasis to space 
utilization. The allocations should be developed as follows:
    (1) Where actual space and related cost records are available or can 
readily be developed and maintained without significant change in the 
accounting practices, the amount distributed should be based on such 
records;
    (2) Where the space and related cost records maintained are not 
sufficient for

[[Page 396]]

purposes of the foregoing, a reasonable estimate of the proportion of 
total space assigned to the various costs centers normally will suffice 
as a means for effecting distribution of the amounts involved; or
    (3) Where it can be demonstrated that an area or volume or space 
basis of allocation is impractical or inequitable, other bases may be 
used provided consideration is given to the use of facilities by 
research personnel and others, including patients.

                         4. Maintenance of Plant

    a. The expenses under this heading should include:
    (1) All salaries and wages pertaining to ordinary repair and 
maintenance work performed by employees on the payroll of the hospital;
    (2) All supplies and parts used in the ordinary repairing and 
maintaining of buildings and general equipment; and
    (3) Amounts paid to outside concerns for the ordinary repairing and 
maintaining of buildings and general equipment.
    b. The expenses included in this category should be allocated to 
applicable cost centers in a manner consistent with the guides provided 
in paragraph E.2. on a basis that gives primary emphasis to space 
utilization. The allocations and apportionments should be developed as 
follows:
    (1) Where actual space and related cost records are available and 
can readily be developed and maintained without significant change in 
the accounting practices, the amount distributed should be based on such 
records;
    (2) Where the space and related cost records maintained are not 
sufficient for purposes of the foregoing, a reasonable estimate of the 
proportion of total space assigned to the various cost centers normally 
will suffice as a means for effecting distribution of the amounts 
involved; or
    (3) Where it can be demonstrated that an area or volume of space 
basis of allocation is impractical or inequitable, other basis may be 
used provided consideration is given to the use of facilities by 
research personnel and others, including patients.

                          5. Laundry and Linen

    a. The expenses under this heading should include:
    (1) Salaries and wages of laundry department employees, 
seamstresses, clean linen handlers, linen delivery men, etc.;
    (2) Supplies used in connection with the laundry operation and all 
linens purchased; and
    (3) Amounts paid to outside concerns for purchased laundry and/or 
linen service.
    b. The expense included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph E.2. on a basis that gives primary emphasis to actual pounds 
of linen used. The allocations should be developed as follows:
    (1) Where actual poundage and related cost records are available or 
can readily be developed and maintained without significant change in 
the accounting practices, the amount distributed should be based on such 
records;
    (2) Where it can be demonstrated that a poundage basis of allocation 
is impractical or inequitable other bases may be used provided 
consideration is given to the use of linen by research personnel and 
others, including patients.

                             6. Housekeeping

    a. The expenses under this heading should include:
    (1) All salaries and wages of the department head, foreman, maids, 
porters, janitors, wall washers, and other housekeeping employees;
    (2) All supplies used in carrying out the housekeeping functions; 
and
    (3) Amounts paid to outside concerns for purchased services such as 
window washing, insect extermination, etc.
    b. The expenses included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph E.2. on a basis that gives primary emphasis to space actually 
serviced by the housekeeping department. The allocations and 
apportionments should be developed as follows:
    (1) Where actual space serviced and related cost records are 
available or can readily be developed and maintained without significant 
change in the accounting practices, the amount distributed should be 
based on such records;
    (2) Where the space serviced and related cost records maintained are 
not sufficient for purposes of the foregoing, a reasonable estimate of 
the proportion of total space assigned to the various cost centers 
normally will suffice as a means for effecting distribution of the 
amounts of housekeeping expenses involved; or
    (3) Where it can be demonstrated that the space serviced basis of 
allocation is impractical or inequitable, other bases may be used 
provided consideration is given to the use of housekeeping services by 
research personnel and others, including patients.

                               7. Dietary

    a. These expenses, as used herein, shall mean only the subsidy 
provided by the hospital to its employees including research personnel 
through its cafeteria operation. The hospital must be able to 
demonstrate through the use of proper cost accounting

[[Page 397]]

techniques that the cafeteria operates at a loss to the benefit of 
employees.
    b. The reasonable operating loss of a subsidized cafeteria operation 
should be allocated to related cost centers in a manner consistent with 
the guides provided in paragraph E.2. on a basis that gives primary 
emphasis to number of employees.

                  8. Maintenance (Housing) of Personnel

    a. The expenses under this heading should include:
    (1) The salaries and wages of matrons, clerks, and other employees 
engaged in work in nurses' residences and other employees' quarters;
    (2) All supplies used in connection with the operation of such 
dormitories; and
    (3) Payments to outside agencies for the rental of houses, 
apartments, or rooms used by hospital personnel.
    b. The expenses included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph E.2. on a basis that gives primary emphasis to employee 
utilization of housing facilities. The allocation should be developed as 
follows:
    (1) Appropriate credit should be given for all payments received 
from employees or otherwise to reduce the expense to be allocated;
    (2) A net cost per housed employee may then be computed; and
    (3) Allocation should be made on a departmental basis based on the 
number of housed employees in each respective department.

                     9. Medical Records and Library

    a. The expenses under this heading should include:
    (1) The salaries and wages of the records librarian, medical 
librarian, clerks, stenographers, etc.; and
    (2) All supplies such as medical record forms, chart covers, filing 
supplies, stationery, medical library books, periodicals, etc.
    b. The expenses included in this category should be allocated to 
related cost centers in a manner consistent with the guides provided in 
paragraph E.2. on a basis that gives primary emphasis to a special time 
survey of medical records personnel. If this appears to be impractical 
or inequitable, other bases may be used provided consideration is given 
to the use of these facilities by research personnel and others, 
including patients.

     G. Determination and Application of Indirect Cost Rate or Rates

                         1. Indirect Cost Pools

    a. Subject to b. below, indirect costs allocated to organized 
research should be treated as a common pool, and the costs in such 
common pool should be distributed to individual research agreements 
benefiting therefrom on a single rate basis.
    b. In some instances a single rate basis for use on all government 
research at a hospital may not be appropriate since it would not take 
into account those different environmental factors which may affect 
substantially the indirect costs applicable to a particular segment of 
government research at the institution. For this purpose, a particular 
segment of government research may be that performed under a single 
research agreement or it may consist of research under a group of 
research agreements performed in a common environment. The environmental 
factors are not limited to the physical location of the work. Other 
important factors are the level of the administrative support required, 
the nature of the facilities or other resources employed, the scientific 
disciplines or technical skills involved, the organizational 
arrangements used, or any combination thereof. Where a particular 
segment of government research is performed within an environment which 
appears to generate a significantly different level of indirect costs, 
provision should be made for a separate indirect cost pool applicable to 
such work. An example of this differential may be in the development of 
a separate indirect cost pool for a clinical research center grant. The 
separate indirect cost pool should be developed during the course of the 
regular distribution process, and the separate indirect cost rate 
resulting therefrom should be utilized provided it is determined that:
    (1) Such indirect cost rate differs significantly from that which 
would have obtained under a. above; and
    (2) The volume of research work to which such rate would apply is 
material in relation to other government research at the institution.
    c. It is a common practice for grants or contracts awarded to other 
institutions, typically University Schools of Medicine, to be performed 
on hospital premises. In these cases the hospital should develop a 
separate indirect cost pool applicable to the work under such grants or 
contracts. This pool should be developed by a selective distribution of 
only those indirect cost categories which benefit the work performed by 
the other institution, within the practical limits dictated by available 
data and the materiality of the amounts involved. Hospital costs 
determined to be allocable to grants or contracts awarded to another 
institution may not be recovered as a cost of grants or contracts 
awarded directly to the hospital.

                        2. The Distribution Base

    Preferably, indirect costs allocated to organized research should be 
distributed to applicable research agreements on the basis of

[[Page 398]]

direct salaries and wages. However, where the use of salaries and wages 
results in an inequitable allocation of costs to the research 
agreements, total direct costs or a variation thereof, may be used in 
lieu of salaries and wages. Regardless of the base used, an indirect 
cost rate should be determined for each of the separate indirect cost 
pools developed pursuant to paragraph G.1. The rate in each case should 
be stated as the percentage which the amount of the particular indirect 
cost pool is of the total direct salaries and wages (or other base 
selected) for all research agreements identified with such a pool.

                   3. Negotiated Lump Sum for Overhead

    A negotiated fixed amount in lieu of indirect costs may be 
appropriate for self-contained or off-campus research activities where 
the benefits derived from a hospital's indirect services cannot be 
readily determined. Such amount negotiated in lieu of indirect costs 
will be treated as an offset to the appropriate indirect cost pool after 
allocation to patient care, organized research, instruction and 
training, and other hospital activities. The base on which such 
remaining expenses are allocated should be appropriately adjusted.

                     4. Predetermined Overhead Rates

    The utilization of predetermined fixed overhead rates may offer 
potential advantages in the administration of research agreements by 
facilitating the preparation of research budgets and permitting more 
expeditious close out of the agreements when the work is completed. 
Therefore, to the extent allowed by law, consideration may be given to 
the negotiation of predetermined fixed rates in those situations where 
the cost experience and other pertinent factors available are deemed 
sufficient to enable the Government and the hospital to reach a 
reasonable conclusion as to the probable level of the indirect cost rate 
for the ensuing accounting period.

               H. Simplified Method for Small Institutions

                               1. General

    a. Where the total direct cost of all government-sponsored research 
and development work at a hospital in a year is minimal, the use of the 
abbreviated procedure described in paragraph H.2. below may be 
acceptable in the determination of allowable indirect costs. This method 
may also be used to initially determine a provisional indirect cost rate 
for hospitals that have not previously established a rate. Under this 
abbreviated procedure, data taken directly from the institution's most 
recent annual financial report and immediately available supporting 
information will be utilized as a basis for determining the indirect 
cost rate applicable to research agreements at the institution.
    b. The rigid formula approach provided under the abbreviated 
procedure has limitations which may preclude its use at some hospitals 
either because the minimum data required for this purpose are not 
readily available or because the application of the abbreviated 
procedure to the available data produces results which appear 
inequitable to the Government or the hospital. In any such case, 
indirect costs should be determined through use of the regular procedure 
rather than the abbreviated procedure.
    c. In certain instances where the total direct cost of all 
government-sponsored research and development work at the hospital is 
more than minimal, the abbreviated procedure may be used if prior 
permission is obtained. This alternative will be granted only in those 
cases where it can be demonstrated that the step-down technique cannot 
be followed.

                        2. Abbreviated Procedure

    a. Total expenditures as taken from the most recent annual financial 
report will be adjusted by eliminating from further consideration 
expenditures for capital items as defined in paragraph I.2.d. and 
unallowable costs as defined under various headings in paragraph I. and 
paragraph C.5.
    b. Total expenditures as adjusted under the foregoing will then be 
distributed among (1) expenditures applicable to administrative and 
general overhead functions, (2) expenditures applicable to all other 
overhead functions, and (3) expenditures for all other purposes. The 
first group shall include amounts associated with the functional 
categories, Administration and General, and Dietary, as defined in 
paragraphs F.2. and 7. The second group shall include Depreciation, 
Operation of Plant, Maintenance of Plant, and Housekeeping. The third 
group--expenditures for all other purposes--shall include the amounts 
applicable to all other activities, namely, patient care, organized 
research, instruction and training, and other hospital activities as 
defined under paragraph B.5. For the purposes of this section, the 
functional categories of Laundry and Linen, Maintenance of Personnel, 
and Medical Records and Library as defined in paragraph E. shall be 
considered as expenditures for all other purposes.
    c. The expenditures distributed to the first two groups in paragraph 
H.2.b. should then be adjusted by those receipts or negative expenditure 
types of transactions which tend to reduce expense items allocable to 
research agreements as indirect costs. Examples of such receipts or 
negative expenditures are itemized in paragraph C.5.a.
    d. In applying the procedures in paragraphs H.2.a and 2.b, the cost 
of unallowable activities such as Gift Shop, Investment Property

[[Page 399]]

Management, Fund Raising, and Public Relations, when they benefit from 
the hospital's indirect cost services, should be treated as expenditures 
for all other purposes. Such activities are presumed to benefit from the 
hospital's indirect cost services when they include salaries of 
personnel working in the hospital. When they do not include such 
salaries, they should be eliminated from the indirect cost rate 
computation.
    e. The indirect cost rate will then be computed in two stages. The 
first stage requires the computation of an Administrative and General 
rate component. This is done by applying a ratio of research direct 
costs over total direct costs to the Administrative and General pool 
developed under paragraphs H.2.b and 2.c. above. The resultant amount--
that which is allocable to research--is divided by the direct research 
cost base. The second stage requires the computation of an All Other 
Indirect Cost rate component. This is done by applying a ratio of 
research direct space over total direct space to All Other Indirect Cost 
pool developed under paragraphs H.2.b. and 2.c. above. The resultant 
amount--that which is allocable to research--is divided by the direct 
research cost base.
    The total of the two rate components will be the institution's 
indirect cost rate. For the purposes of this section, the research 
direct cost or space and total direct cost or space will be that cost or 
space identified with the functional categories classified under 
Expenditures for all other purposes under paragraph H.2.b.

             I. General Standards for Selected Items of Cost

                               1. General

    This section provides standards to be applied in establishing the 
allowability of certain items involved in determining cost. These 
standards should apply irrespective of whether a particular item of cost 
is properly treated as direct cost or indirect cost. Failure to mention 
a particular item of cost in the standards is not intended to imply that 
it is either allowable or unallowable; rather, determination as to 
allowability in each case should be based on the treatment or standards 
provided for similar or related items of cost. In case of discrepancy 
between the provisions of a specific research agreement and the 
applicable standards provided, the provisions of the research agreement 
should govern. However, in some cases advance understandings should be 
reached on particular cost items in order that the full costs of 
research be supported. The extent of allowability of the selected items 
of cost covered in this section has been stated to apply broadly to many 
accounting systems in varying environmental situations. Thus, as to any 
given research agreement, the reasonableness and allocability of certain 
items of costs may be difficult to determine, particularly in connection 
with hospitals which have medical school or other affiliations. In order 
to avoid possible subsequent disallowance or dispute based on 
unreasonableness or nonallocability, it is important that prospective 
recipients of federal funds, particularly those whose work is 
predominantly or substantially with the Government, seek agreement with 
the Government in advance of the incurrence of special or unusual costs 
in categories where reasonableness or allocability are difficult to 
determine. Such agreement may also be initiated by the Government. Any 
such agreement should be incorporated in the research agreement itself. 
However, the absence of such an advance agreement on any element of cost 
will not in itself serve to make that element either allowable or 
unallowable. Examples of costs on which advance agreements may be 
particularly important are:
    a. Facilities costs, such as;
    (1) Depreciation
    (2) Rental
    (3) Use charges for fully depreciated assets
    (4) Idle facilities and idle capacity
    (5) Plant reconversion
    (6) Extraordinary or deferred maintenance and repair
    (7) Acquisition of automatic data processing equipment.
    b. Pre-award costs
    c. Non-hospital professional activities
    d. Self-insurance
    e. Support services charged directly (computer services, printing 
and duplicating services, etc.)
    f. Employee compensation, travel, and other personnel costs, 
including:
    (1) Compensation for personal service, including wages and salaries, 
bonuses and incentives, premium payments, pay for time not worked, and 
supplementary compensation and benefits, such as pension and retirement, 
group insurance, severance pay plans, and other forms of compensation;
    (2) Morale, health, welfare, and food service and dormitory costs.
    (3) Training and education costs.
    (4) Relocation costs, including special or mass personnel movement.

                            2. Selected Items

    a. Advertising costs. The term advertising costs means the costs of 
advertising media and corollary administrative costs. Advertising media 
include magazines, newspapers, radio and television programs, direct 
mail, exhibits, and the like. The only advertising costs allowable are 
those which are solely for:
    (1) The recruitment of persons required for the performance by the 
institution of obligations arising under the research agreement, when 
considered in conjunction with all

[[Page 400]]

other recruitment costs as set forth in paragraph I.2.hh;
    (2) The procurement of scarce items for the performance of the 
research agreement; or
    (3) The disposal of scrap or surplus materials acquired in the 
performance of the research agreement.
    Costs of this nature, if incurred for more than one research 
agreement or for both research agreement work and other work of the 
institution, are allowable to the extent that the principles in 
paragraphs D. and E. are observed.
    b. Bad debts. Losses arising from uncollectible accounts and other 
claims and related collection and legal costs are unallowable except 
that a bad debt may be included as a direct cost of the research 
agreement to the extent that it is caused by a research patient and 
approved by the awarding agency. This inclusion is only intended to 
cover the situation of the patient admitted for research purposes who 
subsequently or in conjunction with the research receives clinical care 
for which a charge is made to the patient. If, after exhausting all 
means of collecting these charges, a bad debt results, it may be 
considered an appropriate charge to the research agreement.
    c. Bonding costs.
    (1) Bonding costs arise when the Government requires assurance 
against financial loss to itself or others by reason of the act or 
default of the hospital. They arise also in instances where the hospital 
requires similar assurance.
    Included are such types as bid, performance, payment, advance 
payment, infringement, and fidelity bonds.
    (2) Costs of bonding required pursuant to the terms of the research 
agreement are allowable.
    (3) Costs of bonding required by the hospital in the general conduct 
of its business are allowable to the extent that such bonding is in 
accordance with sound business practice and the rates and premiums are 
reasonable under the circumstances.
    d. Capital expenditures. The costs of equipment, buildings, and 
repairs which materially increase the value or useful life of buildings 
or equipment should be capitalized and are unallowable except as 
provided for in the research agreement.
    e. Civil defense costs. Civil defense costs are those incurred in 
planning for, and the protection of life and property against the 
possible effects of enemy attack. Reasonable costs of civil defense 
measures (including costs in excess of normal plant protection costs, 
first-aid training and supplies, fire-fighting training, posting of 
additional exit notices and directions, and other approved civil defense 
measures) undertaken on the institution's premises pursuant to 
suggestions or requirements of civil defense authorities are allowable 
when distributed to all activities of the institution. Capital 
expenditures for civil defense purposes will not be allowed, but a use 
allowance or depreciation may be permitted in accordance with provisions 
set forth elsewhere. Costs of local civil defense projects not on the 
institution's premises are unallowable.
    f. Communication costs. Costs incurred for telephone services, local 
and long distance telephone calls, telegrams, radiograms, postage, and 
the like are allowable.
    g. Compensation for personal services.

                               (1) General

    Compensation for personal services covers all remuneration paid 
currently or accrued to employees of the hospital for services rendered 
during the period of performance under government research agreements. 
Such remuneration includes salaries, wages, staff benefits (see 
paragraph I.2.j.), and pension plan costs (see paragraph I.2.y.). The 
costs of such remuneration are allowable to the extent that the total 
compensation to individual employees is reasonable for the services 
rendered and conforms to the established policy of the institution 
consistently applied, and provided that the charges for work performed 
directly on government research agreements and for other work allocable 
as indirect costs to sponsored research are determined and supported as 
hereinafter provided. For non-profit, non-proprietary institutions, 
where federally supported programs constitute less than a preponderance 
of the activity at the institution the primary test of reasonableness 
will be to require that the institution's compensation policies be 
applied consistently both to federally-sponsored and non-sponsored 
activities alike. However, where special circumstances so dictate a 
contractual clause may be utilized which calls for application of the 
test of comparability in determining the reasonableness of compensation.

                        (2) Payroll Distribution

    Amounts charged to organized research for personal services, 
regardless of whether treated as direct costs or allocated as indirect 
costs, will be based on hospital payrolls which have been approved and 
documented in accordance with generally accepted hospital practices. In 
order to develop necessary direct and indirect allocations of cost, 
supplementary data on time or effort as provided in paragraph (3) below, 
normally need be required only for individuals whose compensation is 
properly chargeable to two or more research agreements or to two or more 
of the following broad functional categories: (i) Patient care; (ii) 
organized research; (iii) instruction and training; (iv) indirect 
activities as defined in paragraph E.1.; or (v) other hospital 
activities as defined in paragraph B.5.

[[Page 401]]

                      (3) Reporting Time or Effort

    Charges for salaries and wages of individuals other than members of 
the professional staff will be supported by daily time and attendance 
and payroll distribution records. For members of the professional staff, 
current and reasonable estimates of the percentage distribution of their 
total effort may be used as support in the absence of actual time 
records. The term professional staff for purposes of this section 
includes physicians, research associates, and other personnel performing 
work at responsible levels of activities. These personnel normally 
fulfill duties, the competent performance of which usually requires 
persons possessing degrees from accredited institutions of higher 
learning and/or state licensure. In order to qualify as current and 
reasonable, estimates must be made no later than one month (though not 
necessarily a calendar month) after the month in which the services were 
performed.

                 (4) Preparation of Estimates of Effort

    Where required under paragraph (3) above, estimates of effort spent 
by a member of the professional staff on each research agreement should 
be prepared by the individual who performed the services or by a 
responsible individual such as a department head or supervisor having 
first-hand knowledge of the services performed on each research 
agreement. Estimates must show the allocation of effort between 
organized research and all other hospital activities in terms of the 
percentage of total effort devoted to each of the broad functional 
categories referred to in (2) above. The estimate of effort spent on a 
research agreement may include a reasonable amount of time spent in 
activities contributing and intimately related to work under the 
agreement, such as preparing and delivering special lectures about 
specific aspects of the ongoing research, writing research reports and 
articles, participating in appropriate research seminars, consulting 
with colleagues with respect to related research, and attending 
appropriate scientific meetings and conferences. The term ``all other 
hospital activities'' would include departmental research, 
administration, committee work, and public services undertaken on behalf 
of the hospital.

                   (5) Application of Budget Estimates

    Estimates determined before the performance of services, such as 
budget estimates on a monthly, quarterly, or yearly basis do not qualify 
as estimates of effort spent.

                (6) Non-Hospital Professional Activities

    A hospital must not alter or waive hospital-wide policies and 
practices dealing with the permissible extent of professional services 
over and above those traditionally performed without extra hospital 
compensation, unless such arrangements are specifically authorized by 
the sponsoring agency. Where hospital-wide policies do not adequately 
define the permissible extent of consultantships or other non-hospital 
activities undertaken for extra pay, the Government may require that the 
effort of professional staff working under research agreements be 
allocated as between (i) hospital activities, and (ii) non-hospital 
professional activities. If the sponsoring agency should consider the 
extent of non-hospital professional effort excessive, appropriate 
arrangements governing compensation will be negotiated on a case by case 
basis.

               (7) Salary Rates for Part-Time Appointments

    Charges for work performed on government research by staff members 
having only part-time appointments will be determined at a rate not in 
excess of that for which he is regularly paid for his part-time staff 
assignment.
    h. Contingency provisions.
    Contributions to a contingency reserve or any similar provisions 
made for events the occurrence of which cannot be foretold with 
certainty as to time, intensity, or with an assurance of their 
happening, are unallowable.
    i. Depreciation and use allowances.
    (1) Hospitals may be compensated for the use of buildings, capital 
improvements and usable equipment on hand through depreciation or use 
allowances. Depreciation is a charge to current operations which 
distributes the cost of a tangible capital asset, less estimated 
residual value, over the estimated useful life of the asset in a 
systematic and logical manner. It does not involve a process of 
valuation. Useful life has reference to the prospective period of 
economic usefulness in the particular hospital's operations as 
distinguished from physical life. Use allowances are the means of 
allowing compensation when depreciation or other equivalent costs are 
not considered.
    (2) Due consideration will be given to government-furnished research 
facilities utilized by the institution when computing use allowances 
and/or depreciation if the government-furnished research facilities are 
material in amount. Computation of the use allowance and/or depreciation 
will exclude both the cost or any portion of the cost of grounds, 
buildings and equipment borne by or donated by the Federal Government, 
irrespective of where title was originally vested or where it presently 
resides, and secondly, the cost of grounds. Capital expenditures for 
land improvements (paved areas, fences, streets, sidewalks, utility 
conduits, and similar improvements not already included in the cost of 
buildings) are allowable provided the systematic amortization of such 
capital expenditures has been provided in the

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institution's books of accounts, based on reasonable determinations of 
the probable useful lives of the individual items involved, and the 
share allocated to organized research is developed from the amount thus 
amortized for the base period involved.
    (3) Normal depreciation on a hospital's plant, equipment, and other 
capital facilities, except as excluded by (4) below, is an allowable 
element of research cost provided that the amount thereof is computed:
    i. Upon the property cost basis used by the hospital for Federal 
Income Tax purposes (See section 167 of the Internal Revenue Code of 
1954); or
    ii. In the case of non-profit or tax exempt organizations, upon a 
property cost basis which could have been used by the hospital for 
Federal Income Tax purposes, had such hospital been subject to the 
payment of income tax; and in either case
    iii. By the consistent application to the assets concerned of any 
generally accepted accounting method, and subject to the limitations of 
the Internal Revenue Code of 1954 as amended, including--
    (a) The straight line method;
    (b) The declining balance method, using a rate not exceeding twice 
the rate which would have been used had the annual allowance been 
computed under the method described in (a) above;
    (c) The sum of the years-digits method; and
    (d) Any other consistent method productive of an annual allowance 
which, when added to all allowances for the period commencing with the 
use of the property and including the current year, does not during the 
first two-thirds of the useful life of the property exceed the total of 
such allowances which would have been used had such allowances been 
computed under the method described in (b) above.
    (4) Where the depreciation method is followed, adequate property 
records must be maintained. The period of useful service (service life) 
established in each case for usable capital assets must be determined on 
a realistic basis which takes into consideration such factors as type of 
construction, nature of the equipment used, technological developments 
in the particular research area, and the renewal and replacement 
policies followed for the individual items or classes of assets 
involved. Where the depreciation method is introduced for application to 
assets acquired in prior years, the annual charges therefrom must not 
exceed the amounts that would have resulted had the depreciation method 
been in effect from the date of acquisition of such assets.
    (5) Depreciation on idle or excess facilities shall not be allowed 
except on such facilities as are reasonably necessary for standby 
purposes.
    (6) Where an institution elects to go on a depreciation basis for a 
particular class of assets, no depreciation, rental or use charge may be 
allowed on any such assets that would be viewed as fully depreciated; 
provided, however, that reasonable use charges may be negotiated for any 
such assets if warranted after taking into consideration the cost of the 
facility or item involved, the estimated useful life remaining at time 
of negotiation, the actual replacement policy followed in the light of 
service lives used for calculating depreciation, the effect of any 
increased maintenance charges or decreased efficiency due to age, and 
any other factors pertinent to the utilization of the facility or item 
for the purpose contemplated.
    (7) Hospitals which choose a depreciation allowance for assets 
purchased prior to 1966 based on a percentage of operating costs in lieu 
of normal depreciation for purposes of reimbursement under Pub. L. 89-97 
(Medicare) shall utilize that method for determining depreciation 
applicable to organized research.
    The operating costs to be used are the lower of the hospital's 1965 
operating costs or the hospital's current year's allowable costs. The 
percent to be applied is 5 percent starting with the year 1966-67, with 
such percentage being uniformity reduced by one-half percent each 
succeeding year. The allowance based on operating costs is in addition 
to regular depreciation on assets acquired after 1965. However, the 
combined amount of such allowance on pre-1966 assets and the allowance 
for actual depreciation on assets acquired after 1965 may not exceed 6 
percent of the hospital's allowable cost for the current year. After 
total depreciation has been computed, allocation methods are used to 
determine the share attributable to organized research.
    For purposes of this section, Operating Costs means the total costs 
incurred by the hospital in operating the institution, and includes 
patient care, research, and other activities. Allowable Costs means 
operating costs less unallowable costs as defined in these principles; 
by the application of allocation methods to the total amount of such 
allowable costs, the share attributable to Federally-sponsored research 
is determined.
    A hospital which elects to use this procedure under Pub. L. 89-97 
and subsequently changes to an actual depreciation basis on pre-1966 
assets in accordance with the option afforded under the Medicare program 
shall simultaneously change to an actual depreciation basis for 
organized research.
    Where the hospital desires to change to actual depreciation but 
either has no historical cost records or has incomplete records, the 
determination of historical cost could be made through appropriate means 
involving expert consultation with the determination

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being subject to review and approval by the Department of Health and 
Human Services.
    (8) Where the use allowance method is followed, the use allowance 
for buildings and improvements will be computed at an annual rate not 
exceeding two percent of acquisition cost. The use allowance for 
equipment will be computed at an annual rate not exceeding six and two-
thirds percent of acquisition cost of usable equipment in those cases 
where the institution maintains current records with respect to such 
equipment on hand. Where the institution's records reflect only the cost 
(actual or estimated) of the original complement of equipment, the use 
allowance will be computed at an annual rate not exceeding ten percent 
of such cost. Original complement for this purpose means the complement 
of equipment initially placed in buildings to perform the functions 
currently being performed in such buildings; however, where a permanent 
change in the function of a building takes place, a redetermination of 
the original complement of equipment may be made at that time to 
establish a new original complement. In those cases where no equipment 
records are maintained, the institution will justify a reasonable 
estimate of the acquisition cost of usable equipment which may be used 
to compute the use allowance at an annual rate not exceeding six and 
two-thirds percent of such estimate.
    (9) Depreciation and/or use charges should usually be allocated to 
research and other activities as an indirect cost.
    j. Employee morale, health, and welfare costs and credits.
    The costs of house publications, health or first-aid benefits, 
recreational activities, employees' counseling services, and other 
expenses incurred in accordance with the hospital's established practice 
or custom for the improvement of working conditions, employer-employee 
relations, employee morale, and employee performance, are allowable. 
Such costs will be equitably apportioned to all activities of the 
hospital. Income generated from any of these activities will be credited 
to the cost thereof unless such income has been irrevocably set over to 
employee welfare organizations.
    k. Entertainment costs.
    Except as pertains to j. above, costs incurred for amusement, social 
activities, entertainment, and any items relating thereto, such as 
meals, lodging, rentals, transportation, and gratuities are unallowable.
    l. Equipment and other facilities.
    The cost of equipment or other facilities are allowable on a direct 
charge basis where such purchases are approved by the sponsoring agency 
concerned or provided for by the terms of the research agreement.
    m. Fines and penalties.
    Costs resulting from violations of, or failure of the institution to 
comply with federal, state and local laws and regulations are 
unallowable except when incurred as a result of compliance with specific 
provisions of the research agreement, or instructions in writing from 
the awarding agency.
    n. Insurance and indemnification.
    (1) Costs of insurance required or approved and maintained pursuant 
to the research agreement are allowable.
    (2) Costs of other insurance maintained by the hospital in 
connection with the general conduct of its activities are allowable 
subject to the following limitations: (i) Types and extent and cost of 
coverage must be in accordance with sound institutional practice; (ii) 
costs of insurance or of any contributions to any reserve covering the 
risk of loss of or damage to government owned property are unallowable 
except to the extent that the Government has specifically required or 
approved such costs; and (iii) costs of insurance on the lives of 
officers or trustees are unallowable except where such insurance is part 
of an employee plan which is not unduly restricted.
    (3) Contributions to a reserve for an approved self-insurance 
program are allowable to the extent that the types of coverage, extent 
of coverage, and the rates and premiums would have been allowed had 
insurance been purchased to cover the risks. Such contributions are 
subject to prior approval of the Government.
    (4) Actual losses which could have been covered by permissible 
insurance (through an approved self-insurance program or otherwise) are 
unallowable unless expressly provided for in the research agreement, 
except that costs incurred because of losses not covered under nominal 
deductible insurance coverage provided in keeping with sound management 
practice as well as minor losses not covered by insurance such as 
spoilage, breakage and disappearance of small hand tools which occur in 
the ordinary course of operations are allowable.
    o. Interest, fund raising and investment management costs.
    (1) Costs incurred for interest on borrowed capital or temporary use 
of endowment funds, however represented, are unallowable.
    (2) Costs of organized fund raising, including financial campaigns, 
endowment drives, solicitation of gifts and bequests, and similar 
expenses incurred solely to raise capital or obtain contributions are 
not allowable.
    (3) Costs of investment counsel and staff and similar expenses 
incurred solely to enhance income from investments are not allowable.
    (4) Costs related to the physical custody and control of monies and 
securities are allowable.
    p. Labor relations costs.

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    Costs incurred in maintaining satisfactory relations between the 
hospital and its employees, including costs of labor management 
committees, employees' publications, and other related activities are 
allowable.
    q. Losses on research agreements or contracts.
    Any excess of costs over income under any agreement or contract of 
any nature is unallowable. This includes, but is not limited to, the 
hospital's contributed portion by reason of cost-sharing agreements, 
under-recoveries through negotiation of flat amounts for overhead, or 
legal or administrative limitations.
    r. Maintenance and repair costs.
    (1) Costs necessary for the upkeep of property (including government 
property unless otherwise provided for), which neither add to the 
permanent value of the property nor appreciably prolong its intended 
life, but keep it in an efficient operating condition, are to be treated 
as follows:
    i. Normal maintenance and repair costs are allowable;
    ii. Extraordinary maintenance and repair costs are allowable, 
provided they are allocated to the periods to which applicable for 
purposes of determining research costs.
    (2) Expenditures for plant and equipment, including rehabilitation 
thereof, which according to generally accepted accounting principles as 
applied under the hospital's established policy, should be capitalized 
and subjected to depreciation, are allowable only on a depreciation 
basis.
    s. Material costs.
    Costs incurred for purchased materials, supplies and fabricated 
parts directly or indirectly related to the research agreement, are 
allowable. Purchases made specifically for the research agreement should 
be charged thereto at their actual prices after deducting all cash 
discounts, trade discounts, rebates, and allowances received by the 
institution. Withdrawals from general stores or stockrooms should be 
charged at their cost under any recognized method of pricing stores 
withdrawals conforming to sound accounting practices consistently 
followed by the hospital. Incoming transportation charges are a proper 
part of material cost. Direct material cost should include only the 
materials and supplies actually used for the performance of the research 
agreement, and due credit should be given for any excess materials 
retained or returned to vendors. Due credit should be given for all 
proceeds or value received for any scrap resulting from work under the 
research agreement. Where government donated or furnished material is 
used in performing the research agreement, such material will be used 
without charge.
    t. Memberships, subscriptions and professional activity costs.
    (1) Costs of the hospital's membership in civic, business, technical 
and professional organizations are allowable.
    (2) Costs of the hospital's subscriptions to civic, business, 
professional and technical periodicals are allowable.
    (3) Costs of meetings and conferences, when the primary purpose is 
the dissemination of technical information, are allowable. This includes 
costs of meals, transportation, rental of facilities, and other items 
incidental to such meetings or conferences.
    u. Organization costs.
    Expenditures such as incorporation fees, attorneys' fees, 
accountants' fees, brokers' fees, fees to promoters and organizers in 
connection with (1) organization or reorganization of a hospital, or (2) 
raising capital, are unallowable.
    v. Other business expenses.
    Included in this item are such recurring expenses as registry and 
transfer charges resulting from changes in ownership of securities 
issued by the hospital, cost of shareholders meetings preparation and 
publication of reports to shareholders, preparation and submission of 
required reports and forms to taxing and other regulatory bodies, and 
incidental costs of directors and committee meetings. The above and 
similar costs are allowable when allocated on an equitable basis.
    w. Patient care.
    The cost of routine and ancillary or special services to research 
patients is an allowable direct cost of research agreements.
    (1) Routine services shall include the costs of the regular room, 
dietary and nursing services, minor medical and surgical supplies and 
the use of equipment and facilities for which a separate charge is not 
customarily made.
    (2) Ancillary or special services are the services for which charges 
are customarily made in addition to routine services, such as operating 
rooms, anesthesia, laboratory, BMR-EKG, etc.
    (3) Patient care, whether expressed as a rate or an amount, shall be 
computed in a manner consistent with the procedures used to determine 
reimbursable costs under Pub. L. 89-97 (Medicare Program) as defined 
under the ``Principles of Reimbursement For Provider Costs'' published 
by the Social Security Administration of the Department of Health and 
Human Services. The allowability of specific categories of cost shall be 
in accordance with those principles rather than the principles for 
research contained herein. In the absence of participation in the 
Medicare program by a hospital, all references to the Medicare program 
in these principles shall be construed as meaning the Medicaid program.
    i. Once costs have been recognized as allowable, the indirect costs 
or general service center's cost shall be allocated (stepped-

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down) to special service centers, and all patient and nonpatient costs 
centers based upon actual services received or benefiting these centers.
    ii. After allocation, routine and ancillary costs shall be 
apportioned to scatter-bed research patients on the same basis as is 
used to apportion costs to Medicare patients, i.e. using either the 
departmental method or the combination method, as those methods are 
defined by the Social Security Administration; except that final 
settlement shall be on a grant-by-grant basis. However, to the extent 
that the Social Security Administration has recognized any other method 
of cost apportionment, that method generally shall also be recognized as 
applicable to the determination of research patient care costs.
    iii. A cost center must be established on Medicare reimbursement 
forms for each discrete-bed unit grant award received by a hospital. 
Routine costs should be stepped-down to this line item(s) in the normal 
course of stepping-down costs under Medicare/Medicaid requirements. 
However, in stepping-down routine costs, consideration must be given to 
preventing a step-down of those costs to discrete-bed unit line items 
that have already been paid for directly by the grant, such as bedside 
nursing costs. Ancillary costs allocable to research discrete-bed units 
shall be determined and proposed in accordance with paragraph w.(3).ii.
    (4) Where federally sponsored research programs provide specifically 
for the direct reimbursement of nursing, dietary, and other services, 
appropriate adjustment must be made to patient care costs to preclude 
duplication and/or misallocation of costs.
    x. Patent costs.
    Costs of preparing disclosures, reports and other documents required 
by the research agreement and of searching the art to the extent 
necessary to make such invention disclosures are allowable. In 
accordance with the clauses of the research agreement relating to 
patents, costs of preparing documents and any other patent costs, in 
connection with the filing of a patent application where title is 
conveyed to the Government, are allowable. (See also paragraph I.2.jj.)
    y. Pension plan costs.
    Costs of the hospital's pension plan which are incurred in 
accordance with the established policies of the institution are 
allowable, provided such policies meet the test of reasonableness and 
the methods of cost allocation are not discriminatory, and provided 
appropriate adjustments are made for credits or gains arising out of 
normal and abnormal employee turnover or any other contingencies that 
can result in forfeitures by employees which inure to the benefit of the 
hospital.
    z. Plan security costs.
    Necessary expenses incurred to comply with government security 
requirements including wages, uniforms and equipment of personnel 
engaged in plant protection are allowable.
    aa. Pre-research agreement costs.
    Costs incurred prior to the effective date of the research 
agreement, whether or not they would have been allowable thereunder if 
incurred after such date, are unallowable unless specifically set forth 
and identified in the research agreement.
    bb. Professional services costs.
    (1) Costs of professional services rendered by the members of a 
particular profession who are not employees of the hospital are 
allowable subject to (2) and (3) below when reasonable in relation to 
the services rendered and when not contingent upon recovery of the costs 
from the Government. Retainer fees to be allowable must be reasonably 
supported by evidence of services rendered.
    (2) Factors to be considered in determining the allowability of 
costs in a particular case include (i) the past pattern of such costs, 
particularly in the years prior to the award of government research 
agreements on the institution's total activity; (ii) the nature and 
scope of managerial services expected of the institution's own 
organizations; and (iii) whether the proportion of government work to 
the hospital's total activity is such as to influence the institution in 
favor of incurring the cost, particularly where the services rendered 
are not of a continuing nature and have little relationship to work 
under government research agreements.
    (3) Costs of legal, accounting and consulting services, and related 
costs incurred in connection with organization and reorganization or the 
prosecution of claims against the Government are unallowable. Costs of 
legal, accounting and consulting services, and related costs incurred in 
connection with patent infringement litigation are unallowable unless 
otherwise provided for in the research agreement.
    cc. Profits and losses on disposition of plant equipment, or other 
assets.
    Profits or losses of any nature arising from the sale or exchange of 
plant, equipment, or other capital assets, including sales or exchange 
of either short- or long-term investments, shall be excluded in 
computing research agreement costs.
    dd. Proposal costs.
    Proposal costs are the costs of preparing bids or proposals on 
potential government and non-government research agreements or projects, 
including the development of technical data and cost data necessary to 
support the institution's bids or proposals. Proposal costs of the 
current accounting period of both successful and unsuccessful bids and 
proposals normally should be treated as indirect costs and allocated 
currently to all activities of the institution, and no proposal

[[Page 406]]

costs of past accounting periods will be allocable in the current period 
to the government research agreement. However, the institution's 
established practices may be to treat proposal costs by some other 
recognized method. Regardless of the methods used, the results obtained 
may be accepted only if found to be reasonable and equitable.
    ee. Public information services costs.
    Costs of news releases pertaining to specific research or scientific 
accomplishment are unallowable unless specifically authorized by the 
sponsoring agency.
    ff. Rearrangement and alteration costs.
    Costs incurred for ordinary or normal rearrangement and alteration 
of facilities are allowable. Special rearrangement and alteration costs 
incurred specifically for a project are allowable only as a direct 
charge when such work has been approved in advance by the sponsoring 
agency concerned.
    gg. Reconversion costs.
    Costs incurred in the restoration or rehabilitation of the 
institution's facilities to approximately the same condition existing 
immediately prior to commencement of government research agreement work, 
fair wear and tear excepted, are allowable.
    hh. Recruiting costs.
    (1) Subject to (2), (3), and (4) below, and provided that the size 
of the staff recruited and maintained is in keeping with workload 
requirements, costs of ``help wanted'' advertising, operating costs of 
an employment office necessary to secure and maintain an adequate staff, 
costs of operating an aptitude and educational testing program, travel 
costs of employees while engaged in recruiting personnel, travel costs 
of applicants for interviews for prospective employment, and relocation 
costs incurred incident to recruitment of new employees are allowable to 
the extent that such costs are incurred pursuant to a well-managed 
recruitment program. Where an institution uses employment agencies, 
costs not in excess of standard commercial rates for such services are 
allowable.
    (2) In publications, costs of help wanted advertising that includes 
color, includes advertising material for other than recruitment 
purposes, or is excessive in size (taking into consideration recruitment 
purposes for which intended and normal institutional practices in this 
respect) are unallowable.
    (3) Costs of help wanted advertising, special emoluments; fringe 
benefits, and salary allowances incurred to attract professional 
personnel from other institutions that do not meet the test of 
reasonableness or do not conform with the established practices of the 
institution are unallowable.
    (4) Where relocation costs incurred incident to recruitment of a new 
employee have been allowed either as an allocable direct or indirect 
cost, and the newly hired employee resigns for reasons within his 
control within twelve months after hire, the institution will be 
required to refund or credit such relocations costs as were charged to 
the Government.
    ii. Rental costs (including sale and lease-back of facilities).
    (1) Rental costs of land, building, and equipment and other personal 
property are allowable if the rates are reasonable in light of such 
factors as rental costs of comparable facilities and market conditions 
in the area, the type, life expectancy, condition, and value of the 
facilities leased, options available, and other provisions of the rental 
agreement. Application of these factors, in situations where rentals are 
extensively used, may involve among other considerations comparison of 
rental costs with the amount which the hospital would have received had 
it owned the facilities.
    (2) Charges in the nature of rent between organizations having a 
legal or other affiliation or arrangement such as hospitals, medical 
schools, foundations, etc., are allowable to the extent such charges do 
not exceed the normal costs of ownership such as depreciation, taxes, 
insurance, and maintenance, provided that no part of such costs shall 
duplicate any other allowed costs.
    (3) Unless otherwise specifically provided in the agreement, rental 
costs specified in sale and lease-back agreements incurred by hospitals 
through selling plant facilities to investment organizations such as 
insurance companies or to private investors, and concurrently leasing 
back the same facilities are allowable only to the extent that such 
rentals do not exceed the amount which the hospital would have received 
had it retained legal title to the facilities.
    jj. Royalties and other costs for use of patents.
    Royalties on a patent or amortization of the cost of acquiring a 
patent or invention or rights thereto necessary for the proper 
performance of the research agreement and applicable to tasks or 
processes thereunder are allowable unless the Government has a license 
or the right to free use of the patent, the patent has been adjudicated 
to be invalid, or has been administratively determined to be invalid, 
the patent is considered to be unenforceable, or the patent has expired.
    kk. Severance pay.
    (1) Severance pay is compensation in addition to regular salaries 
and wages which is paid by a hospital to employees whose services are 
being terminated. Costs of severance pay are allowable only to the 
extent that such payments are required by law, by employer-employee 
agreement, by established policy that constitutes in effect an implied 
agreement on the institution's part, or by circumstances of the 
particular employment.
    (2) Severance payments that are due to normal, recurring turnover, 
and which otherwise meet the conditions of (a) above may be

[[Page 407]]

allowed provided the actual costs of such severance payments are 
regarded as expenses applicable to the current fiscal year and are 
equitably distributed among the institution's activities during that 
period.
    (3) Severance payments that are due to abnormal or mass terminations 
are of such conjectural nature that allowability must be determined on a 
case-by-case basis. However, the Government recognizes its obligation to 
participate to the extent of its fair share in any specific payment.
    ll. Specialized service facilities operated by a hospital.
    (1) The costs of institutional services involving the use of highly 
complex and specialized facilities such as electronic computers and 
reactors are allowable provided the charges therefor meet the conditions 
of (2) or (3) below, and otherwise take into account any items of income 
or federal financing that qualify as applicable credits under paragraph 
C.5.
    (2) The costs of such hospital services normally will be charged 
directly to applicable research agreements based on actual usage or 
occupancy of the facilities at rates that (i) are designed to recover 
only actual costs of providing such services, and (ii) are applied on a 
nondiscriminatory basis as between organized research and other work of 
the hospital including commercial or accommodation sales and usage by 
the hospital for internal purposes. This would include use of such 
facilities as radiology, laboratories, maintenance men used for a 
special purpose, medical art, photography, etc.
    (3) In the absence of an acceptable arrangement for direct costing 
as provided in (2) above, the costs incurred for such institutional 
services may be assigned to research agreements as indirect costs, 
provided the methods used achieve substantially the same results. Such 
arrangements should be worked out in coordination with all government 
users of the facilities in order to assure equitable distribution of the 
indirect costs.
    mm. Special administrative costs.
    Costs incurred for general public relations activities, catalogs, 
alumni activities, and similar services are unallowable.
    nn. Staff and/or employee benefits.
    (1) Staff and/or employee benefits in the form of regular 
compensation paid to employees during periods of authorized absences 
from the job such as for annual leave, sick leave, military leave and 
the like are allowable provided such costs are absorbed by all hospital 
activities including organized research in proportion to the relative 
amount of time or effort actually devoted to each.
    (2) Staff benefits in the form of employer contributions or expenses 
for Social Security taxes, employee insurance, Workmen's Compensation 
insurance, the Pension Plan (see paragraph I.2.y.), hospital costs or 
remission of hospital charges to the extent of costs for individual 
employees or their families, and the like are allowable provided such 
benefits are granted in accordance with established hospital policies, 
and provided such contributions and other expenses whether treated as 
indirect costs or an increment of direct labor costs are distributed to 
particular research agreements and other activities in a manner 
consistent with the pattern of benefits accruing to the individuals or 
groups of employees whose salaries and wages are chargeable to such 
research agreements and other activities.
    oo. Taxes.
    (1) In general, taxes which the hospital is required to pay and 
which are paid or accrued in accordance with generally accepted 
accounting principles, and payments made to local governments in lieu of 
taxes which are commensurate with the local government services received 
are allowable except for (i) taxes from which exemptions are available 
to the hospital directly or which are available to the hospital based on 
an exemption afforded the Government and in the latter case when the 
sponsoring agency makes available the necessary exemption certificates, 
(ii) special assessments on land which represent capital improvements, 
and (iii) Federal Income Taxes.
    (2) Any refund of taxes, interest, or penalties, and any payment to 
the hospital of interest thereon attributable to taxes, interest or 
penalties, which were allowed as research agreement costs will be 
credited or paid to the Government in the manner directed by the 
Government provided any interest actually paid or credited to a hospital 
incident to a refund of tax, interest, and penalty will be paid or 
credited to the Government only to the extent that such interest accrued 
over the period during which the hospital had been reimbursed by the 
Government for the taxes, interest, and penalties.
    pp. Transportation costs.
    Costs incurred for inbound freight, express, cartage, postage and 
other transportation services relating either to goods purchased, in 
process, or delivered are allowable. When such costs can readily be 
identified with the items involved, they may be charged directly as 
transportation costs or added to the cost of such items. Where 
identification with the material received cannot readily be made, 
inbound transportation costs may be charged to the appropriate indirect 
cost accounts if the institution follows a consistent equitable 
procedure in this respect. Outbound freight, if reimbursable under the 
terms of the research agreement, should be treated as a direct cost.
    qq. Travel costs.
    (1) Travel costs are the expenses for transportation, lodging, 
subsistence, and related items incurred by employees who are in travel 
status on official business of the hospital. Such costs may be charged 
on an actual

[[Page 408]]

basis, on a per diem or mileage basis in lieu of actual costs incurred, 
or on a combination of the two provided the method used is applied to an 
entire trip and not to selected days of the trip, and results in charges 
consistent with those normally allowed by the institution in its regular 
operations.
    (2) Travel costs are allowable subject to (3) and (4) below when 
they are directly attributable to specific work under a research 
agreement or when they are incurred in the normal course of 
administration of the hospital or a department or research program 
thereof.
    (3) The difference in cost between first class air accommodations 
and less than first class air accommodations is unallowable except when 
less than first class air accommodations are not reasonably available to 
meet necessary mission requirements such as where less than first class 
accommodations would (i) require circuitous routing, (ii) require travel 
during unreasonable hours, (iii) greatly increase the duration of the 
flight, (iv) result in additional costs which would offset the 
transportation savings, or (v) offer accommodations which are not 
reasonably adequate for the medical needs of the traveler.
    (4) Costs of personnel movements of a special or mass nature are 
allowable only when authorized or approved in writing by the sponsoring 
agency or its authorized representative.
    rr. Termination costs applicable to contracts.
    (1) Contract terminations generally give rise to the incurrence of 
costs or to the need for special treatment of costs which would not have 
arisen had the contract not been terminated. Items peculiar to 
termination are set forth below. They are to be used in conjunction with 
all other provisions of these principles in the case of contract 
termination.
    (2) The cost of common items of material reasonably usable on the 
hospital's other work will not be allowable unless the hospital submits 
evidence that it could not retain such items at cost without sustaining 
a loss. In deciding whether such items are reasonably usable on other 
work of the institution, consideration should be given to the hospital's 
plans for current scheduled work or activities including other research 
agreements. Contemporaneous purchases of common items by the hospital 
will be regarded as evidence that such items are reasonably usable on 
the hospital's other work. Any acceptance of common items as allowable 
to the terminated portion of the contract should be limited to the 
extent that the quantities of such items on hand, in transit, and on 
order are in excess of the reasonable quantitative requirement of other 
work.
    (3) If in a particular case, despite all reasonable efforts by the 
hospital, certain costs cannot be discontinued immediately after the 
effective date of termination, such costs are generally allowable within 
the limitations set forth in these principles, except that any such 
costs continuing after termination due to the negligent or willful 
failure of the hospital to discontinue such costs will be considered 
unacceptable.
    (4) Loss of useful value of special tooling and special machinery 
and equipment is generally allowable, provided (i) such special tooling, 
machinery or equipment is not reasonably capable of use in the other 
work of the hospital; (ii) the interest of the Government is protected 
by transfer of title or by other means deemed appropriate by the 
contracting officer; and (iii) the loss of useful value as to any one 
terminated contract is limited to that portion of the acquisition cost 
which bears the same ratio to the total acquisition cost as the 
terminated portion of the contract bears to the entire terminated 
contract and other government contracts for which the special tooling, 
special machinery or equipment was acquired.
    (5) Rental costs under unexpired leases are generally allowable 
where clearly shown to have been reasonably necessary for the 
performance of the terminated contract, less the residual value of such 
leases, if (i) the amount of such rental claimed does not exceed the 
reasonable use value of the property leased for the period of the 
contract and such further period as may be reasonable; and (ii) the 
hospital makes all reasonable efforts to terminate, assign, settle, or 
otherwise reduce the cost of such lease. There also may be included the 
cost of alterations of such leased property, provided such alterations 
were necessary for the performance of the contract and of reasonable 
restoration required by the provisions of the lease.
    (6) Settlement expenses including the following are generally 
allowable: (i) Accounting, legal, clerical, and similar costs reasonably 
necessary for the preparation and presentation to contracting officers 
of settlement claims and supporting data with respect to the terminated 
portion of the contract and the termination and settlement of 
subcontracts; and (ii) reasonable costs for the storage, transportation, 
protection, and disposition of property provided by the Government or 
acquired or produced by the institution for the contract.
    (7) Subcontractor claims including the allocable portion of claims 
which are common to the contract and to other work of the contractor are 
generally allowable.
    ss. Voluntary services.
    The value of voluntary services provided by sisters or other members 
of religious orders is allowable provided that amounts do not exceed 
that paid other employees for similar work. Such amounts must be 
identifiable in the records of the hospital as a legal

[[Page 409]]

obligation of the hospital. This may be reflected by an agreement 
between the religious order and the hospital supported by evidence of 
payments to the order.



        Sec. Appendix X to Part 75--Data Collection Form (SF-SAC)

    The Data Collection Form SF-SAC is available on the FAC Web site.

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016]



           Sec. Appendix XI to Part 75--Compliance Supplement

    The compliance supplement is available on the OMB Web site: (e.g., 
for 2013 here: http://www.whitehouse.gov/omb /circulars/)

[79 FR 75889, Dec. 19, 2014, as amended at 81 FR 3019, Jan. 20, 2016]



 Sec. Appendix XII to Part 75--Award Term and Conditions for Recipient 
                    Integrity and Performance Matters

 A. Reporting of Matters Related to Recipient Integrity and Performance

                    1. General Reporting Requirement

    If the total value of your currently active grants, cooperative 
agreements, and procurement contracts from all Federal awarding agencies 
exceeds $10,000,000 for any period of time during the period of 
performance of this Federal award, then you as the recipient during that 
period of time must maintain the currency of information reported to the 
System for Award Management (SAM) that is made available in the 
designated integrity and performance system (currently the Federal 
Awardee Performance and Integrity Information System (FAPIIS)) about 
civil, criminal, or administrative proceedings described in paragraph 2 
of this award term and condition. This is a statutory requirement under 
section 872 of Public Law 110-417, as amended (41 U.S.C. 2313). As 
required by section 3010 of Public Law 111-212, all information posted 
in the designated integrity and performance system on or after April 15, 
2011, except past performance reviews required for Federal procurement 
contracts, will be publicly available.

               2. Proceedings About Which You Must Report

    Submit the information required about each proceeding that:
    a. Is in connection with the award or performance of a grant, 
cooperative agreement, or procurement contract from the Federal 
Government;
    b. Reached its final disposition during the most recent five year 
period; and
    c. If one of the following:
    (1) A criminal proceeding that resulted in a conviction, as defined 
in paragraph 5 of this award term and condition;
    (2) A civil proceeding that resulted in a finding of fault and 
liability and payment of a monetary fine, penalty, reimbursement, 
restitution, or damages of $5,000 or more;
    (3) An administrative proceeding, as defined in paragraph 5 of this 
award term and condition, that resulted in a finding of fault and 
liability and your payment of either a monetary fine or penalty of 
$5,000 or more or reimbursement, restitution, or damages in excess of 
$100,000; or
    (4) Any other criminal, civil, or administrative proceeding if:
    (i) It could have led to an outcome described in paragraph 2.c.(1), 
(2), or (3) of this award term and condition;
    (ii) It had a different disposition arrived at by consent or 
compromise with an acknowledgement of fault on your part; and
    (iii) The requirement in this award term and condition to disclose 
information about the proceeding does not conflict with applicable laws 
and regulations.

                         3. Reporting Procedures

    Enter in the SAM Entity Management area the information that SAM 
requires about each proceeding described in paragraph 2 of this award 
term and condition. You do not need to submit the information a second 
time under assistance awards that you received if you already provided 
the information through SAM because you were required to do so under 
Federal procurement contracts that you were awarded.

                         4. Reporting Frequency

    During any period of time when you are subject to this requirement 
in paragraph 1 of this award term and condition, you must report 
proceedings information through SAM for the most recent five year 
period, either to report new information about any proceeding(s) that 
you have not reported previously or affirm that there is no new 
information to report. Recipients that have Federal contract, grant, and 
cooperative agreement awards with a cumulative total value greater than 
$10,000,000 must disclose semiannually any information about the 
criminal, civil, and administrative proceedings.

                             5. Definitions

    For purposes of this award term and condition:
    a. Administrative proceeding means a non-judicial process that is 
adjudicatory in nature in order to make a determination of fault or 
liability (e.g., Securities and Exchange Commission Administrative 
proceedings, Civilian Board of Contract Appeals proceedings, and Armed 
Services Board of

[[Page 410]]

Contract Appeals proceedings). This includes proceedings at the Federal 
and State level but only in connection with performance of a Federal 
contract or grant. It does not include audits, site visits, corrective 
plans, or inspection of deliverables.
    b. Conviction, for purposes of this award term and condition, means 
a judgment or conviction of a criminal offense by any court of competent 
jurisdiction, whether entered upon a verdict or a plea, and includes a 
conviction entered upon a plea of nolo contendere.
    c. Total value of currently active grants, cooperative agreements, 
and procurement contracts includes--
    (1) Only the Federal share of the funding under any Federal award 
with a recipient cost share or match; and
    (2) The value of all expected funding increments under a Federal 
award and options, even if not yet exercised
    B. [Reserved]

[81 FR 3019, Jan. 20, 2016]



PART 77_REMEDIAL ACTIONS APPLICABLE TO LETTER OF CREDIT ADMINISTRATION--
Table of Contents



Sec.
77.1 Purpose.
77.2 Scope.
77.3 Conditions that may give rise to remedial actions.
77.4 Remedial actions.
77.5 Remedial action procedures.
77.6 Emergency procedures.

    Authority: 5 U.S.C. 301.

    Source: 50 FR 781, Jan. 7, 1985, unless otherwise noted.



Sec.  77.1  Purpose.

    Letters of credit with the United States Treasury, issued by the 
Department to States or other grantees and contractors, are a convenient 
means for disbursing Federal funds to recipients of grant awards or 
contracts (recipient organizations) under the programs of this and other 
Executive Departments. The sound and efficient operation of the letter-
of-credit system is dependent in large part upon the honesty, good 
faith, and responsible financial management of recipient organizations 
that receive funds pursuant to letters of credit. This part sets forth 
conditions that may prompt the Department to seek remedial action 
against a recipient organization operating under a letter of credit and 
the procedures that will be used to reach a final decision regarding the 
taking of remedial actions against a recipient organization.



Sec.  77.2  Scope.

    The regulations in this part apply to all recipient organizations 
under any program administered by the Department through which the 
organization receives Federal funds under a letter of credit.



Sec.  77.3  Conditions that may give rise to remedial actions.

    If the Department determines that any of the following conditions is 
present in a recipient organization's administration of a letter of 
credit, it may take remedial actions against the organization:
    (a) A recipient organization draws Federal funds through its letter 
of credit in excess of the aggregate grant award or contract authority 
currently available to it.
    (b) A recipient organization draws Federal funds for a particular 
program in excess of currently available grant award or contract 
authority for that program, even though the organization may not have 
exceeded its aggregate grant award or contract authority.
    (c) A recipient organization fails to file timely all reports and 
other data required by the Department in connection with its grant 
awards, contracts, or letter of credit.
    (d) A recipient organization accumulates, through its letter of 
credit or otherwise, excess amounts of Federal funds relative to its 
actual and immediate disbursement requirements.
    (e) A recipient organization's cash management system fails to 
comply with generally accepted accounting principles or Departmental 
regulations or demonstrates irregularities, misrepresentations, fraud, 
or abuse in its operation.



Sec.  77.4  Remedial actions.

    If, after the conclusion of the procedures set forth in Sec.  77.5 
or Sec.  77.6 the Department finds that one or more of the conditions 
set forth in Sec.  77.3 is or has been present, the Department may take 
the following remedial actions

[[Page 411]]

against a recipient organization's use of its letter of credit:
    (a) The Department may place special limits, restrictions, or 
controls upon the recipient organization's use of its letter of credit.
    (b) The Department may require more frequent or more detailed 
financial reporting from the recipient organization.
    (c) The Department may suspend, reduce, or terminate the recipient 
organization's use of its letter of credit.



Sec.  77.5  Remedial action procedures.

    Except as provided in Sec.  77.6, the Department will use the 
following procedures whenever it seeks the remedial action specified in 
Sec.  77.4.
    (a) Notice. Prior to taking remedial action, the Department will 
provide the recipient organization written notice of its intended action 
setting forth both the legal and factual reasons therefor. Notice may be 
provided by certified or express mail, TWX, telegram, delivery, or 
similar means.
    (b) Opportunity to respond. (1) The recipient organization has 30 
days after receipt of the notice in which to submit to the Department a 
written statement setting forth any legal and factual reasons why it 
believes the proposed remedial action would be inappropriate. If no 
response is received by the Department within the 30-day period, the 
Department may make the proposed remedial action effective immediately. 
If a response opposing the taking of remedial action is received from 
the recipient organization within the 30-day period, no remedial action 
will be taken until a final decision has been reached under paragraph 
(c) of this section. (2) The Department may prepare a written reply to 
the recipient organization's response. Any such reply will be forwarded 
to the deciding official together with the notice sent to the recipient 
organization and the organization's response, and a copy of the reply 
will be served on the recipient organization.
    (c) Departmental decision. The Department's decision to take 
remedial action under this part will be made by an official of the 
Department who had no involvement with the initial determination to seek 
remedial action. The deciding official may affirm, reverse, or modify 
the initial determination. In making the decision, the official will 
consider only the notice provided by the Department, the recipient 
organization's statement, the Department's reply, together with any 
other documents attached to them, and statements at any informal 
conference held pursuant to paragraph (d) of this section. The 
official's decision will be provided to the recipient organization in 
writing and will constitute the Department's final administrative action 
on the matter.
    (d) Informal conference. If, in the judgment of the official 
designated to make a final decision, it would materially enhance his 
ability to resolve the matters in dispute, he may convene an informal 
conference to question or hear an oral presentation by the parties. If 
an informal conference is convened it will be transcribed.
    (e) Effect of decision. The decision in a proceeding under this 
section affects only the recipient organization's obligations related to 
its letter of credit and does not determine the organization's ultimate 
liability with respect to improperly spent funds or other misconduct.



Sec.  77.6  Emergency procedures.

    (a) Should the Department determine that it cannot adequately 
protect assets of the Federal government available to a recipient 
organization under its letter of credit without taking remedial action 
prior to the procedures specified in Sec.  77.5, it may immediately take 
remedial action subject to the subsequent completion of those 
procedures.
    (b) Where the Department has taken remedial action as described in 
paragraph (a) of this section, it will notify the recipient organization 
orally of the remedial action within one business day of its imposition 
and in writing within seven business days of its imposition. The written 
notice will conform to that described in Sec.  77.5(a).
    (c) After receipt of the written notice, the recipient organization 
will have the same opportunity to respond as described in Sec.  
77.5(b)(1).

[[Page 412]]

    (d) The Department will issue a final decision in writing no later 
than twenty days following receipt of any response submitted by the 
recipient organization.



PART 78_CONDITIONS FOR WAIVER OF DENIAL OF FEDERAL BENEFITS--Table of Contents



Sec.
78.1 Applicability.
78.2 Definitions.
78.3 Benefits not denied to rehabilitated offenders.

    Authority: Section 5301 of Pub. L. 100-690, the Anti-Drug Abuse Act 
of 1988, 102 Stat. 4310, 21 U.S.C. 853a.

    Source: 56 FR 29592, June 28, 1991, unless otherwise noted.



Sec.  78.1  Applicability.

    This part is applicable to any decision to deny Federal benefits, 
under authority of 21 U.S.C. 853a, to an individual convicted of a 
Federal or State offense involving distribution or possession of a 
controlled substance as defined by the Controlled Substances Act, 21 
U.S.C. 802.



Sec.  78.2  Definitions.

    For the purposes of denying Federal benefits under 21 U.S.C. 853a:
    (a) Deemed to be rehabilitated means that an individual has 
abstained from the illicit use of a controlled substance for the period 
of at least 180 days immediately prior to and including the date of 
sentencing provided that such abstinence is documented by the results of 
periodic urine drug testing conducted during that period; and provided 
further that such drug testing is conducted using an immunoassay test 
approved by the Food and Drug Administration for commercial distribution 
or, in the case of a State offense, either using an immunoassay test 
approved by the Food and Drug Administration for commercial distribution 
or pursuant to standards approved by the State.
    (b) Long-term treatment program or long-term drug treatment program 
means any drug abuse treatment program of 180 days or more where the 
provider has been accredited by the Joint Commission on Accreditation of 
Health Organizations, the Commission on Accreditation of Rehabilitation 
Facilities, or the Council on Accreditation of Services for Families and 
Children, or licensed or otherwise approved by the State to provide drug 
abuse treatment.



Sec.  78.3  Benefits not denied to rehabilitated offenders.

    (a) No individual convicted of any Federal or State offense 
involving the distribution of controlled substances shall be denied 
Federal benefits relating to long-term drug treatment programs for 
addiction under 21 U.S.C. 853a(a)(2) if:
    (1) The individual declares himself or herself to be an addict and 
submits to a long-term treatment program for addiction as defined by 
Sec.  78.2(b), provided that in the determination of the sentencing 
court there is a reasonable body of evidence to substantiate the 
individual's declaration that such individual is an addict; or
    (2) The individual is, in the determination of the sentencing court, 
deemed to be rehabilitated as defined by Sec.  78.2(a).
    (b) No individual convicted of any Federal or State offense 
involving the possession of controlled substances shall be denied any 
Federal benefit, or otherwise subject to penalties and conditions, under 
21 U.S.C. 853a(b)(2) if:
    (1) The individual declares himself or herself to be an addict and 
submits to a long-term treatment program for addiction as defined by 
Sec.  78.2(b), provided that in the determination of the sentencing 
court there is a reasonable body of evidence to substantiate the 
individual's declaration that such individual is an addict; or
    (2) The individual is, in the determination of the sentencing court, 
deemed to be rehabilitated as defined by Sec.  78.2(a).



PART 79_PROGRAM FRAUD CIVIL REMEDIES--Table of Contents



Sec.
79.1 Basis and purpose.
79.2 Definitions.
79.3 Basis for civil penalties and assessments.
79.4 Investigation.
79.5 Review by the reviewing official.
79.6 Prerequisites for issuing a complaint.

[[Page 413]]

79.7 Complaint.
79.8 Service of complaint.
79.9 Answer.
79.10 Default upon failure to file an answer.
79.11 Referral of complaint and answer to the ALJ.
79.12 Notice of hearing.
79.13 Parties to the hearing.
79.14 Separation of functions.
79.15 Ex parte contacts.
79.16 Disqualification of reviewing official or ALJ.
79.17 Rights of parties.
79.18 Authority of the ALJ.
79.19 Prehearing conferences.
79.20 Disclosure of documents.
79.21 Discovery.
79.22 Exchange of witness lists, statements and exhibits.
79.23 Subpoenas for attendance at hearing.
79.24 Protective order.
79.25 Fees.
79.26 Form, filing and service of papers.
79.27 Computation of time.
79.28 Motions.
79.29 Sanctions.
79.30 The hearing and burden of proof.
79.31 Determining the amount of penalties and assessments.
79.32 Location of hearing.
79.33 Witnesses.
79.34 Evidence.
79.35 The record.
79.36 Post-hearing briefs.
79.37 Initial decision.
79.38 Reconsideration of initial decision.
79.39 Appeal to authority head.
79.40 Stays ordered by the Department of Justice.
79.41 Stay pending appeal.
79.42 Judicial review.
79.43 Collection of civil penalties and assessments.
79.44 Right to administrative offset.
79.45 Deposit in Treasury of United States.
79.46 Compromise or settlement.
79.47 Limitations.

    Authority: 31 U.S.C. 3801-3812.

    Source: 53 FR 11659, Apr. 8, 1988, unless otherwise noted.



Sec.  79.1  Basis and purpose.

    (a) Basis. This part implements the Program Fraud Civil Remedies Act 
of 1986, Pub. L. 99-509, Sec. Sec.  6101-6104, 100 Stat. 1874 (October 
21, 1986), to be codified at 31 U.S.C. 3801-3812, 31 U.S.C. 3809 of the 
statute requires each authority head to promulgate regulations necessary 
to implement the provisions of the statute.
    (b) Purpose. This part (1) establishes administrative procedures for 
imposing civil penalties and assessments against persons who make, 
submit, or present, or cause to be made, submitted, or presented, false, 
fictitious, or fraudulent claims or written statements to authorities or 
to their agents, and (2) specifies the hearing and appeal rights of 
persons subject to allegations of liability for such penalties and 
assessments.



Sec.  79.2  Definitions.

    ALJ means an Administrative Law Judge in the authority appointed 
pursuant to 5 U.S.C. 3105 or detailed to the authority pursuant to 5 
U.S.C. 3344.
    Authority means the Department of Health and Human Services.
    Authority head means the Departmental Grant Appeals Board of the 
Department of Health and Human Services.
    Benefit means, in the context of statement, anything of value, 
including but not limited to any advantage, preference, privilege, 
license, permit, favorable decision, ruling, status, or loan guarantee.
    Claim means any request, demand, or submission--
    (a) Made to the authority for property, services, or money 
(including money representing grants, loans, insurance, or benefits);
    (b) Made to a recipient of property, services, or money from the 
authority or to a party to a contract with the authority--
    (1) For property or services if the United States--
    (i) Provided such property or services;
    (ii) Provided any portion of the funds for the purchase of such 
property or services; or
    (iii) Will reimburse such recipient or party for the purchase of 
such property or services; or
    (2) For the payment of money (including money representing grants, 
loans, insurance, or benefits) if the United States--
    (i) Provided any portion of the money requested or demanded; or
    (ii) Will reimburse such recipient or party for any portion of the 
money paid on such request or demand: or
    (c) Made to the authority which has the effect of decreasing an 
obligation

[[Page 414]]

to pay or account for property, services, or money.
    Complaint means the administrative complaint served by the reviewing 
official on the defendant under Sec.  79.7.
    Defendant means any person alleged in a complaint under Sec.  79.7 
to be liable for a civil penalty or assessment under Sec.  79.3.
    Department means the Department of Health and Human Services.
    Government means the United States Government.
    Individual means a natural person.
    Initial decision means the written decision of the ALJ required by 
Sec.  79.10 or Sec.  79.37, and includes a revised initial decision 
issued following a remand or a motion for reconsideration.
    Investigating official means the Inspector General of the Department 
of Health and Human Services or an officer or employee of the Office of 
the Inspector General designated by the Inspector General and serving in 
a position for which the rate of basic pay is not less than the minimum 
rate of basic pay for grade GS-16 under the General Schedule.
    Knows or has reason to know, means that a person, with respect to a 
claim or statement--
    (a) Has actual knowledge that the claim or statement is false, 
fictitious, or fraudulent;
    (b) Acts in deliberate ignorance of the truth or falsity of the 
claim or statement; or
    (c) Acts in reckless disregard of the truth or falsity of the claim 
or statement.
    Makes, wherever it appears, shall include the terms presents, 
submits, and causes to be made, presented, or submitted. As the context 
requires, making or made, shall likewise include the corresponding forms 
of such terms.
    Person means any individual, partnership, corporation, association 
or private organization, and includes the plural of that term.
    Representative means an attorney who is a member in good standing of 
the bar of any State, Territory, or possession of the United States or 
of the District of Columbia or the Commonwealth of Puerto Rico.
    Reviewing official means the General Counsel of the Department or 
his or her designee who is--
    (a) Not subject to supervision by, or required to report to, the 
investigating official;
    (b) Not employed in the organizational unit of the authority in 
which the investigating official is employed; and
    (c) Serving in a position for which the rate of basic pay is not 
less than the minimum rate of basic pay for grade GS-16 under the 
General Schedule.
    Statement means any representation, certification, affirmation, 
document, record, or accounting or bookkeeping entry made--
    (a) With respect to a claim or to obtain the approval or payment of 
a claim (including relating to eligibility to make a claim); or
    (b) With respect to (including relating to eligibility for)--
    (1) A contract with, or a bid or proposal for a contract with; or
    (2) A grant, loan, or benefit from, the authority, or any State, 
political subdivision of a State, or other party, if the United States 
Government provides any portion of the money or property under such 
contract or for such grant, loan, or benefit, or if the Government will 
reimburse such State, political subdivision, or party for any portion of 
the money or property under such contract or for such grant, loan, or 
benefit,



Sec.  79.3  Basis for civil penalties and assessments.

    (a) Claims. (1) Except as provided in paragraph (c) of this section, 
any person who makes a claim that the person knows or has reason to 
know--
    (i) Is false, fictitious, or fraudulent;
    (ii) Includes, or is supported by, any written statement which 
asserts a material fact which is false, fictitious, or fraudulent;
    (iii) Includes, or is supported by, any written statement that--
    (A) Omits a material fact;
    (B) Is false, fictitious, or fraudulent as a result of such 
omission; and
    (C) Is a statement in which the person making such statement has a 
duty to include such material fact; or

[[Page 415]]

    (iv) Is for payment for the provision of property or services which 
the person has not provided as claimed, shall be subject, in addition to 
any other remedy that may be prescribed by law, to a civil penalty of 
not more than $5,500 \1\ for each such claim.
---------------------------------------------------------------------------

    \1\ The amounts specified in this section are updated annually, as 
adjusted in accordance with the Federal Civil Monetary Penalty Inflation 
Adjustment Act of 1990 (Pub. L. 101-140), as amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(section 701 of Pub. L. 114-74). Annually adjusted amounts are published 
at 45 CFR part 102.
---------------------------------------------------------------------------

    (2) Each voucher, invoice, claim form, or other individual request 
or demand for property, services, or money constitutes a separate claim.
    (3) A claim shall be considered made to the authority, recipient, or 
party when such claim is actually made to an agent, fiscal intermediary, 
or other entity, including any State or political subdivision thereof, 
acting for or on behalf of the authority, recipient, or party.
    (4) Each claim for property, services, or money is subject to a 
civil penalty regardless of whether such property, services, or money is 
actually delivered or paid.
    (5) If the Government has made any payment (including transferred 
property or provided services) on a claim, a person subject to a civil 
penalty under paragraph (a)(1) of this section shall also be subject to 
an assessment of not more than twice the amount of such claim or that 
portion thereof that is determined to be in violation of paragraph 
(a)(1). Such assessment shall be in lieu of damages sustained by the 
Government because of such claim.
    (b) Statements. (1) Except as provided in paragraph (c) of this 
section, any person who makes a written statement that--
    (i) The person knows or has reason to know--
    (A) Asserts a material fact which is false, factitious, or 
fraudulent; or
    (B) Is false, factitious, or fraudulent because it omits a material 
fact that the person making the statement has a duty to include in such 
statement; and
    (ii) Contains, or is accompanied by, an express certification or 
affirmation of the truthfulness and accuracy of the contents of the 
statement, shall be subject, in addition to any other remedy that may be 
prescribed by law, to a civil penalty of not more than $5,500 \2\ for 
each such statement.
---------------------------------------------------------------------------

    \2\ The amounts specified in this section are updated annually, as 
adjusted in accordance with the Federal Civil Monetary Penalty Inflation 
Adjustment Act of 1990 (Pub. L. 101-140), as amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(section 701 of Pub. L. 114-74). Annually adjusted amounts are published 
at 45 CFR part 102.
---------------------------------------------------------------------------

    (2) Each representation, certification, or affirmation constitutes a 
separate statement.
    (3) A statement shall be considered made to the authority when such 
statement is actually made to an agent, fiscal intermediary, or other 
entity, including any State or political subdivision thereof, acting for 
or on behalf of the authority.
    (c) Applications for certain benefits. (1) In the case of any claim 
or statement made by any individual relating to any of the benefits 
listed in paragraph (c)(2) of this section received by such individual, 
such individual may be held liable for penalties and assessments under 
this section only if such claim or statement is made by such individual 
in making application for such benefits with respect to such 
individual's eligibility to receive such benefits.
    (2) For purposes of paragraph (c) of this section, the term benefits 
means--
    (i) Benefits under the supplemental security income program under 
title XVI of the Social Security Act;
    (ii) Old age, survivors, and disability insurance benefits under 
title II of the Social Security Act;
    (iii) Benefits under title XVIII of the Social Security Act;
    (iv) Aid to families with dependent children under a State plan 
approved under section 402(a) of the Social Security Act;
    (v) Medical assistance under a State plan approved under section 
1902(a) of the Social Security Act;
    (vi) Benefits under title XX of the Social Security Act;
    (vii) Benefits under section 336 of the Older Americans Act; or,

[[Page 416]]

    (viii) Benefits under the Low-Income Home Energy Assistance Act of 
1981, which are intended for the personal use of the individual who 
receives the benefits or for a member of the individual's family.
    (d) No proof of specific intent to defraud is required to establish 
liability under this section.
    (e) In any case in which it is determined that more than one person 
is liable for making a claim or statement under this section, each such 
person may be held liable for a civil penalty.
    (f) In any case in which it is determined that more than one person 
is liable for making a claim under this section on which the Government 
has made payment (including transferred property or provided services), 
an assessment may be imposed against any such person or jointly and 
severally against any combination of such persons.

[53 FR 11659, Apr. 8, 1988, as amended at 61 FR 52301, Oct. 7, 1996; 81 
FR 61565, Sept. 6, 2016]



Sec.  79.4  Investigation.

    (a) If an investigating official concludes that a subpoena pursuant 
to the authority conferred by 31 U.S.C. 3804(a) is warranted--
    (1) The subpoena so issued shall notify the person to whom it is 
addressed of the authority under which the subpoena is issued and shall 
identify the records or documents sought;
    (2) The investigating official may designate a person to act on his 
or her behalf to receive the documents sought; and
    (3) The person receiving such subpoena shall be required to tender 
to the investigating official, or the person designated to receive the 
documents, a certification that--
    (i) The documents sought have been produced;
    (ii) Such documents are not available and the reasons therefor; or
    (iii) Such documents suitably identified, have been withheld based 
upon the assertion of an identified privilege.
    (b) If the investigating official concludes that an action under the 
Program Fraud Civil Remedies Act may be warranted, the investigating 
official shall submit a report containing the findings and conclusions 
of such investigation to the reviewing official.
    (c) Nothing in this section shall preclude or limit an investigating 
official's discretion to refer allegations directly to the Department of 
Justice for suit under the False Claims Act or other civil relief, or to 
defer or postpone a report or referral to the reviewing official to 
avoid interference with a criminal investigation or prosecution.
    (d) Nothing in this section modifies any responsibility of an 
investigating official to report violations of criminal law to the 
Attorney General.



Sec.  79.5  Review by the reviewing official.

    (a) If, based on the report of the investigating official under 
Sec.  79.4(b), the reviewing official determines that there is adequate 
evidence to believe that a person is liable under Sec.  79.3, the 
reviewing official shall transmit to the Attorney General a written 
notice of the reviewing official's attention to issue a complaint under 
Sec.  79.7.
    (b) Such notice shall include--
    (1) A statement of the reviewing official's reasons for issuing a 
complaint;
    (2) A statement specifying the evidence that supports the 
allegations of liability;
    (3) A description of the claims or statements upon which the 
allegations of liability are based;
    (4) An estimate of the amount of money, or the value of property, 
services, or other benefits, requested or demanded in violation of Sec.  
79.3 of this part;
    (5) A statement of any exculpatory or mitigating circumstances that 
may relate to the claims or statements known by the reviewing official 
or the investigating official; and
    (6) A statement that there is a reasonable prospect of collecting an 
appropriate amount of penalties and assessments.



Sec.  79.6  Prerequisites for issuing a complaint.

    (a) The reviewing official may issue a complaint under Sec.  79.7 
only if--
    (1) The Department of Justice approves the issuance of a complaint 
in a written statement described in 31 U.S.C. 3803(b)(1), and

[[Page 417]]

    (2) In the case of allegations of liability under Sec.  79.3(a) with 
respect to a claim, the reviewing official determines that, with respect 
to such claim or a group of related claims submitted at the same time 
such claim is submitted (as defined in paragraph (b) of this section), 
the amount of money, or the value of property or services, demanded or 
requested in violation of Sec.  79.3(a) does not exceed $150,000.
    (b) For the purposes of this section, a related group of claims 
submitted at the same time shall include only those claims arising from 
the same transaction (e.g., grant, loan, application, or contract) that 
are submitted simultaneously as part of a single request, demand, or 
submission.
    (c) Nothing in this section shall be construed to limit the 
reviewing official's authority to join in a single complaint against a 
person claims that are unrelated or were not submitted simultaneously, 
regardless of the amount of money, or the value of property or services, 
demanded or requested.



Sec.  79.7  Complaint.

    (a) On or after the date the Department of Justice approves the 
issuance of a complaint in accordance with 31 U.S.C. 3803(b)(1), the 
reviewing official may serve a complaint on the defendant, as provided 
in Sec.  79.8.
    (b) The complaint shall state--
    (1) The allegations of liability against the defendant, including 
the statutory basis for liability, an identification of the claims or 
statements that are the basis for the alleged liability, and the reasons 
why liability allegedly arises from such claims or statements;
    (2) The maximum amount of penalties and assessments for which the 
defendant may be held liable;
    (3) Instructions for filing an answer to request a hearing, 
including a specific statement of the defendant's right to request a 
hearing by filing an answer and to be represented by a representative; 
and
    (4) That failure to file an answer as set forth in Sec.  79.9 will 
result in the imposition of the maximum amount of penalties and 
assessments without right to appeal, as provided in Sec.  79.10.
    (c) At the same time the reviewing official serves the complaint, he 
or she shall serve the defendant with a copy of these regulations.



Sec.  79.8  Service of complaint.

    (a) Service of a complaint must be made by certified or registered 
mail or by delivery in any manner authorized by Rule 4(d) of the Federal 
Rules of Civil Procedure. Service is complete upon receipt.
    (b) Proof of service, stating the name and address of the person on 
whom the complaint was served, and the manner and date of service, may 
be made by--
    (1) Affidavit of the individual serving the complaint by delivery;
    (2) A United States Postal Service return receipt card acknowledging 
receipt; or
    (3) Written acknowledgment of receipt by the defendant or his or her 
representative.



Sec.  79.9  Answer.

    (a) The defendant may request a hearing by filing an answer with the 
reviewing official within 30 days of service of the complaint. An answer 
shall be deemed to be a request for hearing.
    (b) In the answer, the defendant--
    (1) Shall admit or deny each of the allegations of liability made in 
the complaint;
    (2) Shall state any defense on which the defendant intends to rely;
    (3) May state any reasons why the defendant contends that the 
penalties and assessments should be less than the statutory maximum; and
    (4) Shall state the name, address, and telephone number of the 
person authorized by the defendant to act as defendant's representative, 
if any.
    (c) If the defendant is unable to file an answer meeting the 
requirements of paragraph (b) of this section within the time provided, 
the defendant, before that time expires, may file with the reviewing 
official a general answer denying liability and requesting a hearing, 
and a request for an extension of time within which to file an answer 
meeting the requirements of paragraph (b) of this section. As provided 
in Sec.  79.11, the reviewing official shall file promptly

[[Page 418]]

with the ALJ the complaint, the general answer denying liability, and 
the request for an extension of time. For good cause shown, the ALJ may 
grant the defendant up to 30 additional days within which to file an 
answer meeting the requirements of paragraph (b) of this section.



Sec.  79.10  Default upon failure to file an answer.

    (a) If the defendant does not file an answer within the time 
prescribed in Sec.  79.9(a), the reviewing official may refer the 
complaint to the ALJ.
    (b) Upon the referral of the complaint, the ALJ shall promptly serve 
on the defendant in the manner prescribed in Sec.  79.8, a notice that 
an initial decision will be issued under this section.
    (c) The ALJ shall assume the facts alleged in the complaint to be 
true and, if such facts establish liability under Sec.  79.3, the ALJ 
shall issue an initial decision imposing the maximum amount of penalties 
and assessments allowed under the statute.
    (d) Except as otherwise provided in this section, by failing to file 
a timely answer, the defendant waives any right to further review of the 
penalties and assessments imposed under paragraph (c) of this section, 
and the initial decision shall become final and binding upon the parties 
30 days after it is issued.
    (e) If, before such an initial decision becomes final, the defendant 
files a motion with the ALJ seeking to reopen on the grounds that 
extraordinary circumstances prevented the defendant from filing an 
answer, the initial decision shall be stayed pending the ALJ's decision 
on the motion.
    (f) If, on such motion, the defendant can demonstrate extraordinary 
circumstances excusing the failure to file a timely answer, the ALJ 
shall withdraw the initial decision in paragraph (c) of this section, if 
such a decision has been issued, and shall grant the defendant an 
opportunity to answer the complaint.
    (g) A decision of the ALJ denying a defendant's motion under 
paragraph (e) of this section is not subject to reconsideration under 
Sec.  79.38.
    (h) The defendant may appeal to the authority head the decision 
denying a motion to reopen by filing a notice of appeal with the 
authority head within 15 days after the ALJ denies the motion. The 
timely filing of a notice of appeal shall stay the initial decision 
until the authority head decides the issue.
    (i) If the defendant files a timely notice of appeal with the 
authority head, the ALJ shall forward the record of the proceeding to 
the authority head.
    (j) The authority head shall decide expeditiously whether 
extraordinary circumstances excuse the defendant's failure to file a 
timely answer based solely on the record before the ALJ.
    (k) If the authority head decides that extraordinary circumstances 
excuse the defendant's failure to file a timely answer, the authority 
head shall remand the case to the ALJ with instructions to grant the 
defendant an opportunity to answer.
    (l) If the authority head decides that the defendant's failure to 
file a timely answer is not excused, the authority head shall reinstate 
the initial decision of the ALJ, which shall become final and binding 
upon the parties 30 days after the authority head issues such decision.



Sec.  79.11  Referral of complaint and answer to the ALJ.

    Upon receipt of an answer, the reviewing official shall file the 
complaint and answer with the ALJ.



Sec.  79.12  Notice of hearing.

    (a) When the ALJ receives the complaint and answer, the ALJ shall 
promptly serve a notice of hearing upon the defendant in the manner 
prescribed by Sec.  79.8. At the same time, the ALJ shall send a copy of 
such notice to the representative for the Government.
    (b) Such notice shall include--
    (1) The tentative time and place, and the nature of the hearing;
    (2) The legal authority and jurisdiction under which the hearing is 
to be held;
    (3) The matters of fact and law to be asserted;
    (4) A description of the procedures for the conduct of the hearing;

[[Page 419]]

    (5) The name, address, and telephone number of the representative of 
the Government and of the defendant, if any; and
    (6) Such other matters as the ALJ deems appropriate.



Sec.  79.13  Parties to the hearing.

    (a) The parities to the hearing shall be the defendant and the 
authority.
    (b) Pursuant to 31 U.S.C. 3730(c)(5), a private plaintiff under the 
False Claims Act may participate in these proceedings to the extent 
authorized by the provisions of that Act.



Sec.  79.14  Separation of functions.

    (a) The investigating official, the reviewing official, and any 
employee or agent of the authority who takes part in investigating, 
preparing, or presenting a particular case may not, in such case or a 
factually related case--
    (1) Participate in the hearing as the ALJ;
    (2) Participate or advise in the initial decision or the review of 
the initial decision by the authority head, except as a witness or a 
representative in public proceedings; or
    (3) Make the collection of penalties and assessments under 31 U.S.C. 
3806.
    (b) The ALJ shall not be responsible to, or subject to the 
supervision or direction of, the investigating official or the reviewing 
official.
    (c) Except as provided in paragraph (a) of this section, the 
representative for the Government may be employed anywhere in the 
authority, including in the offices of either the investigating official 
or the reviewing official.



Sec.  79.15  Ex parte contacts.

    No party or person (except employees of the ALJ's office) shall 
communciate in any way with the ALJ on any matter at issue in a case, 
unless on notice and opportunity for all parties to participate. This 
provision does not prohibit a person or party from inquiring about the 
status of a case or asking routine questions concerning administrative 
functions or procedures.



Sec.  79.16  Disqualification of reviewing official or ALJ.

    (a) A reviewing official or ALJ in a particular case may disqualify 
himself or herself at any time.
    (b) A party may file with the ALJ a motion for disqualification of a 
reviewing official or an ALJ. Such motion shall be accompanied by an 
affidavit alleging personal bias or other reason for disqualification.
    (c) Such motion and affidavit shall be filed promptly upon the 
party's discovery of reasons requiring disqualification, or such 
objections shall be deemed waived.
    (d) Such affidavit shall state specific facts that support the 
party's belief that personal bias or other reason for disqualification 
exists and the time and circumstances of the party's discovery of such 
facts. It shall be accompanied by a certificate of the representative of 
record that it is made in good faith.
    (e) Upon the filing of such a motion and affidavit, the ALJ shall 
proceed no further in the case until he or she resolves the matter of 
disqualification in accordance with paragraph (f) of this section.
    (f)(1) If the ALJ determines that a reviewing official is 
disqualified, the ALJ shall dismiss the complaint without prejudice.
    (2) If the ALJ disqualifies himself or herself, the case shall be 
reassigned promptly to another ALJ.
    (3) If the ALJ denies a motion to disqualify, the authority head may 
determine the matter only as part of his or her review of the initial 
decision upon appeal, if any.



Sec.  79.17  Rights of parties.

    Except as otherwise limited by this part, all parties may--
    (a) Be accompanied, represented, and advised by a representative;
    (b) Participate in any conference held by the ALJ;
    (c) Conduct discovery;
    (d) Agree to stipulations of fact or law, which shall be made part 
of the record;
    (e) Present evidence relevant to the issues at the hearing;
    (f) Present and cross-examine witnesses;

[[Page 420]]

    (g) Present oral arguments at the hearing as permitted by the ALJ; 
and
    (h) Submit written briefs and proposed findings of fact and 
conclusions of law after the hearing.



Sec.  79.18  Authority of the ALJ.

    (a) The ALJ shall conduct a fair and impartial hearing, avoid delay, 
maintain order, and assure that a record of the proceeding is made.
    (b) The ALJ has the authority to--
    (1) Set and change the date, time, and place of the hearing upon 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable period of time;
    (3) Hold conferences to identify or simplify the issues, or to 
consider other matters that may aid in the expeditious disposition of 
the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance of witnesses and the 
production of documents at depositions or at hearings;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of discovery;
    (8) Regulate the course of the hearing and the conduct of 
representatives and parties;
    (9) Examine witnesses;
    (10) Receive, rule on, exclude, or limit evidence;
    (11) Upon motion of a party, take official notice of facts;
    (12) Upon motion of a party, decide cases, in whole or in part, by 
summary judgment where there is no disputed issue of material fact;
    (13) Conduct any conference, argument, or hearing on motions in 
person or by telephone; and
    (14) Exercise such other authority as is necessary to carry out the 
responsibilities of the ALJ under this part.
    (c) The ALJ does not have the authority to find Federal statutes or 
regulations invalid.



Sec.  79.19  Prehearing conferences.

    (a) The ALJ may schedule prehearing conferences as appropriate.
    (b) Upon the motion of any party, the ALJ shall schedule at least 
one prehearing conference at a reasonable time in advance of the 
hearing.
    (c) The ALJ may use prehearing conferences to discuss the following:
    (1) Simplication of the issues;
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement;
    (3) Stipulations and admissions of fact__, or as to the contents and 
authenticity of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;
    (5) Whether a party chooses to waive appearance at an oral hearing 
and to submit only documentary evidence (subject to the objection of 
other parties) and written argument;
    (6) Limitation of the number of witnesses;
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits;
    (8) Discovery;
    (9) The time and place for the hearing; and
    (10) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.
    (d) The ALJ may issue an order containing all matters agreed upon by 
the parties or ordered by the ALJ at a prehearing conference.



Sec.  79.20  Disclosure of documents.

    (a) Upon written request to the reviewing official, the defendant 
may review any relevant and material documents, transcripts, records, 
and other materials that relate to the allegations set out in the 
complaint and upon which the findings and conclusions of the 
investigating official under Sec.  79.4(b) are based, unless such 
documents are subject to a privilege under Federal law. Upon payment of 
fees for duplication, the defendant may obtain copies of such documents.
    (b) Upon written request to the reviewing official, the defendant 
also may obtain a copy of all exculpatory information in the possession 
of the reviewing official or investigating official relating to the 
allegations in the complaint, even if it is contained in a document that 
would otherwise be

[[Page 421]]

privileged. If the document would otherwise be privileged, only that 
portion containing exculpatory information must be disclosed.
    (c) The notice sent to the Attorney General from the reviewing 
official as described in Sec.  79.5 is not discoverable under any 
circumstances.
    (d) The defendant may file a motion to compel disclosure of the 
documents subject to the provisions of this section. Such a motion may 
only be filed with the ALJ following the filing of an answer pursuant to 
Sec.  79.9.



Sec.  79.21  Discovery.

    (a) The following types of discovery are authorized:
    (1) Requests for production of documents for inspection and copying;
    (2) Requests for admission of the contents or authenticity of any 
relevant document or of the truth of any revelant fact;
    (3) Written interrogatories; and
    (4) Depositions.
    (b) For the purpose of this section and Sec. Sec.  79.22 and 79.23, 
the term documents includes information, documents, reports, answers, 
records, accounts, papers, and other data and documentary evidence. 
Nothing contained herein shall be interpreted to require the creation of 
a document.
    (c) Unless mutually agreed to by the parties, discovery is available 
only as ordered by the ALJ. The ALJ shall regulate the timing of 
discovery.
    (d) Motions for discovery. (1) A party seeking discovery may file a 
motion with the ALJ. Such a motion shall be accompanied by a copy of the 
requested discovery, or in the case of depositions, a summary of the 
scope of the proposed deposition.
    (2) Within ten days of service, a party may file an opposition to 
the motion and/or a motion for protective order as provided in Sec.  
79.24.
    (3) The ALJ may grant a motion for discovery only if he or she finds 
that the discovery sought--
    (i) Is necessary for the expeditious, fair, and reasonable 
consideration of the issues;
    (ii) Is not unduly costly or burdensome;
    (iii) Will not unduly delay the proceeding; and
    (iv) Does not seek privileged information.
    (4) The burden of showing that discovery should be allowed is on the 
party seeking discovery.
    (5) The ALJ may grant discovery subject to a protective order under 
Sec.  79.24.
    (e) Depositions. (1) If a motion for deposition is granted, the ALJ 
shall issue a subpoena for the deponent, which may require the deponent 
to produce documents. The subpoena shall specify the time and place at 
which the deposition will be held.
    (2) The party seeking to depose shall serve the subpoena in the 
manner prescribed in Sec.  79.8.
    (3) The deponent may file with the ALJ a motion to quash the 
subpoena or a motion for a protective order within ten days of service.
    (4) The party seeking to depose shall provide for the taking of a 
verbatim transcript of the deposition, which it shall make available to 
all other parties for inspection and copying.
    (f) Each party shall bear its own costs of discovery.



Sec.  79.22  Exchange of witness lists, statements and exhibits.

    (a) At least 15 days before the hearing or at such other time as may 
be ordered by the ALJ, the parties shall exchange witness lists, copies 
of prior statements of proposed witnesses, and copies of proposed 
hearing exhibits, including copies of any written statements that the 
party intends to offer in lieu of live testimony in accordance with 
Sec.  79.33(b). At the time the above documents are exchanged, any party 
that intends to rely on the transcript of deposition testimony in lieu 
of live testimony at the hearing, if permitted by the ALJ, shall provide 
each party with a copy of the specific pages of the transcript it 
intends to introduce into evidence.
    (b) If a party objects, the ALJ shall not admit into evidence the 
testimony of any witness whose name does not appear on the witness list 
or any exhibit not provided to the opposing party as provided above 
unless the ALJ finds good cause for the failure or that there is no 
prejudice to the objecting party.

[[Page 422]]

    (c) Unless another party objects within the time set by the ALJ, 
documents exchanged in accordance with paragraph (a) of this section 
shall be deemed to be authentic for the purpose of admissibility at the 
hearing.



Sec.  79.23  Subpoenas for attendance at hearing.

    (a) A party wishing to procure the appearance and testimony of any 
individual at the hearing may request that the ALJ issue a subpoena.
    (b) A subpoena requiring the attendance and testimony of an 
individual may also require the individual to produce documents at the 
hearing.
    (c) A party seeking a subpoena shall file a written request therefor 
not less than 15 days before the date fixed for the hearing unless 
otherwise allowed by the ALJ for good cause shown. Such request shall 
specify any documents to be produced and shall designate the witnesses 
and describe the address and location thereof with sufficient 
particularity to permit such witnesses to be found.
    (d) The subpoena shall specify the time and place at which the 
witness is to appear and any documents the witness is to produce.
    (e) The party seeking the subpoena shall serve it in the manner 
prescribed in Sec.  79.8, except that a subpoena on a party or upon an 
individual under the control of a party may be served as prescribed in 
Sec.  79.26(b).
    (f) A party or the individual to whom the subpoena is directed may 
file with the ALJ a motion to quash the subpoena within ten days after 
service or on or before the time specified in the subpoena for 
compliance if it is less than ten days after service.



Sec.  79.24  Protective order.

    (a) A party or a prospective witness or deponent may file a motion 
for a protective order with respect to discovery sought by an opposing 
party or with respect to the hearing, seeking to limit the availability 
or disclosure of evidence.
    (b) In issuing a protective order, the ALJ may make any order which 
justice requires to protect a party or person from annoyance, 
embarrassment, oppression, or undue burden or expense, including one or 
more of the following:
    (1) That the discovery not be had;
    (2) That the discovery may be had only on specified terms and 
conditions, including a designation of the time or place;
    (3) That the discovery may be had only through a method of discovery 
other than that requested:
    (4) That certain matters not be inquired into, or that the scope of 
discovery be limited to certain matters;
    (5) That discovery be conducted with no one present except persons 
designated by the ALJ;
    (6) That the contents of discovery or evidence be sealed;
    (7) That a deposition after being sealed be opened only by order of 
the ALJ;
    (8) That a trade secret or other confidential research, development, 
commercial information, or facts pertaining to any criminal 
investigation, proceeding, or other administrative investigation not be 
disclosed or be disclosed only in a designated way; or
    (9) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as directed by the 
ALJ.



Sec.  79.25  Fees.

    The party requesting a subpoena shall pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in United States District Court. A check 
for witness fees and mileage shall accompany the subpoena when served, 
except that when a subpoena is issued on behalf of the authority, a 
check for witness fees and mileage need not accompany the subpoena.



Sec.  79.26  Form, filing and service of papers.

    (a) Form. (1) Documents filed with the ALJ shall include an original 
and two copies.
    (2) Every pleading and paper filed in the proceeding shall contain a 
caption setting forth the title of the action, the case number assigned 
by the ALJ, and a designation of the paper (e.g., motion to quash 
subpoena).

[[Page 423]]

    (3) Every pleading and paper shall be signed by, and shall contain 
the address and telephone number of, the party or the person on whose 
behalf the paper was filed, or his or her representative.
    (4) Papers are considered filed when they are mailed. Date of 
mailing may be established by a certificate from the party or its 
representative or by proof that the document was sent by certified or 
registered mail.
    (b) Service. A party filing a document with the ALJ shall, at the 
time of filing, serve a copy of such document on every other party. 
Service upon any party of any document other than those required to be 
served as prescribed in Sec.  79.8 shall be made by delivering a copy or 
by placing a copy of the document in the United States mail, postage 
prepaid, and addressed to the party's last known address. When a party 
is represented by a representative, service shall be made upon such 
representative in lieu of the actual party.
    (c) Proof of service. A certificate of the individual serving the 
document by personal delivery or by mail, setting forth the manner of 
service, shall be proof of service.



Sec.  79.27  Computation of time.

    (a) In computing any period of time under this part or in an order 
issued thereunder, the time begins with the day following the act, 
event, or default, and includes the last day of the period, unless it is 
a Saturday, Sunday, or legal holiday observed by the Federal government, 
in which event it includes the next business day.
    (b) Except as provided in paragraph (c) of this section, when the 
period of time allowed is less than seven days, intermediate Saturdays, 
Sundays, and legal holidays observed by the Federal government shall be 
excluded from the computation.
    (c) Where a document has been served or issued by placing it in the 
mail, an additional five calendar days will be added to the time 
permitted for any response.



Sec.  79.28  Motions.

    (a) Any application to the ALJ for an order or ruling shall be by 
motion. Motions shall state the relief sought, the authority relied 
upon, and the facts alleged, and shall be filed with the ALJ and served 
on all other parties.
    (b) Except for motions made during a prehearing conference or at the 
hearing, all motions shall be in writing. The ALJ may require that oral 
motions be reduced to writing.
    (c) Within 15 days after a written motion is served, or such other 
time as may be fixed by the ALJ, any party may file a response to such 
motion.
    (d) The ALJ may not grant a written motion before the time for 
filing responses thereto has expired, except upon consent of the parties 
or following a hearing on the motion, but may overrule or deny such 
motion without awaiting a response.
    (e) The ALJ shall make a reasonable effort to dispose of all 
outstanding motions prior to the beginning of the hearing.



Sec.  79.29  Sanctions.

    (a) The ALJ may sanction a person, including any party or 
representative, for--
    (1) Failing to comply with an order, rule, or procedure governing 
the proceeding;
    (2) Failing to prosecute or defend an action; or
    (3) Engaging in other misconduct that interferes with the speedy, 
orderly, or fair conduct of the hearing.
    (b) Any such sanction, including but not limited to those listed in 
paragraphs (c), (d), and (e) of this section, shall reasonably relate to 
the severity and nature of the failure or misconduct.
    (c) When a party fails to comply with an order, including an order 
for taking a deposition, the production of evidence within the party's 
control, or a request for admission, the ALJ may--
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) In the case of requests for admission, deem each matter of which 
an admission is requested to be admitted;
    (3) Prohibit the party failing to comply with such order from 
introducing evidence concerning, or otherwise relying upon, testimony 
relating to the information sought; and

[[Page 424]]

    (4) Strike any part of the pleadings or other submissions of the 
party failing to comply with such request.
    (d) If a party fails to prosecute or defend an action under this 
part commenced by service of a notice of hearing, the ALJ may dismiss 
the action or may issue an initial decision imposing penalties and 
assessments.
    (e) The ALJ may refuse to consider any motion, request, response, 
brief or other document which is not filed in a timely fashion.



Sec.  79.30  The hearing and burden of proof.

    (a) The ALJ shall conduct a hearing on the record in order to 
determine whether the defendant is liable for a civil penalty or 
assessment under Sec.  79.3 and, if so, the appropriate amount of any 
such civil penalty or assessment considering any aggravating or 
mitigating factors.
    (b) The authority shall prove defendant's liability and any 
aggravating factors by a preponderance of the evidence.
    (c) The defendant shall prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (d) The hearing shall be open to the public unless otherwise ordered 
by the ALJ for good cause shown.



Sec.  79.31  Determining the amount of penalties and assessments.

    (a) In determining an appropriate amount of civil penalties and 
assessments, the ALJ and the authority head, upon appeal, should 
evaluate any circumstances that mitigate or aggravate the violation and 
should articulate in their opinions the reasons that support the 
penalties and assessments they impose. Because of the intangible costs 
of fraud, the expense of investigating such conduct, and the need to 
deter others who might be similarly tempted, ordinarily double damages 
and a significant civil penalty should be imposed.
    (b) Although not exhaustive, the following factors are among those 
that may influence the ALJ and the authority head in determining the 
amount of penalties and assessments to impose with respect to the 
misconduct (i.e., the false, fictitious, or fraudulent claims or 
statements) charged in the complaint:
    (1) The number of false, fictitious, or fraudulent claims or 
statements;
    (2) The time period over which such claims or statements were made;
    (3) The degree of the defendant's culpability with respect to the 
misconduct;
    (4) The amount of money or the value of the property, services, or 
benefit falsely claimed;
    (5) The value of the Government's actual loss as a result of the 
misconduct, including foreseeable consequential damages and the costs of 
investigation;
    (6) The relationship of the amount imposed as civil penalties to the 
amount of the Government's loss;
    (7) The potential or actual impact of the misconduct upon national 
defense, public health or safety, or public confidence in the management 
of Government programs and operations, including particularly the impact 
on the intended beneficiaries of such programs;
    (8) Whether the defendant has engaged in a pattern of the same or 
similar misconduct;
    (9) Whether the defendant attempted to conceal the misconduct;
    (10) The degree to which the defendant has involved others in the 
misconduct or in concealing it;
    (11) Where the misconduct of employees or agents is imputed to the 
defendant, the extent to which the defendant's practices fostered or 
attempted to preclude such misconduct;
    (12) Whether the defendant cooperated in or obstructed an 
investigation of the misconduct;
    (13) Whether the defendant assisted in identifying and prosecuting 
other wrongdoers;
    (14) The complexity of the program or transaction, and the degree of 
the defendant's sophistication with respect to it, including the extent 
of the defendant's prior participation in the program or in similar 
transactions;
    (15) Whether the defendant has been found, in any criminal, civil, 
or administrative proceeding, to have engaged in similar misconduct or 
to have dealt dishonestly with the Government of the United States or of 
a State, directly or indirectly; and

[[Page 425]]

    (16) The need to deter the defendant and others from engaging in the 
same or similar misconduct.
    (c) Nothing in this section shall be construed to limit the ALJ or 
the authority head from considering any other factors that in any given 
case may mitigate or aggravate the offense for which penalties and 
assessments are imposed.



Sec.  79.32  Location of hearing.

    (a) The hearing may be held--
    (1) In any judicial district of the United States in which the 
defendant resides or transacts business;
    (2) In any judicial district of the United States in which the claim 
or statement in issue was made; or
    (3) In such other place as may be agreed upon by the defendant and 
the ALJ.
    (b) Each party shall have the opportunity to present argument with 
respect to the location of the hearing.
    (c) The hearing shall be held at the place and at the time ordered 
by the ALJ.



Sec.  79.33  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing shall be given orally by witnesses under oath or 
affirmation.
    (b) At the discretion of the ALJ, testimony may be admitted in the 
form of a written statement or deposition. Any such written statement 
must be provided to all other parties along with the last known address 
of such witness, in a manner which allows sufficient time for other 
parties to subpoena such witness for cross-examination at the hearing. 
Prior written statements of witnesses proposed to testify at the hearing 
and deposition transcripts shall be exchanged as provided in Sec.  
79.22(a).
    (c) The ALJ shall exercise reasonable control over the mode and 
order of interrogating witnesses and presenting evidence so as to (1) 
make the interrogation and presentation effective for the ascertainment 
of the truth, (2) avoid needless consumption of time, and (3) protect 
witnesses from harassment or undue embarrassment.
    (d) The ALJ shall permit the parties to conduct such cross-
examination as may be required for a full and true disclosure of the 
facts.
    (e) At the discretion of the ALJ, a witness may be cross-examined on 
matters relevant to the proceeding without regard to the scope of his or 
her direct examination. To the extent permitted by the ALJ, cross-
examination on matters outside the scope of direct examination shall be 
conducted in the manner of direct examination and may proceed by leading 
questions only if the witness is a hostile witness, an adverse party, or 
a witness identified with an adverse party.
    (f) Upon motion of any party, the ALJ shall order witnesses excluded 
so that they cannot hear the testimony of other witnesses. This rule 
does not authorize exclusion of--
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of the party appearing for the entity pro se or designated by 
the party's representative; or
    (3) An individual whose presence is shown by a party to be essential 
to the presentation of its case, including an individual employed by the 
Government engaged in assisting the representative for the Government.



Sec.  79.34  Evidence.

    (a) The ALJ shall determine the admissibility of evidence.
    (b) Except as provided in this part, the ALJ shall not be bound by 
the Federal Rules of Evidence. However, the ALJ may apply the Federal 
Rules of Evidence where appropriate, e.g., to exclude unreliable 
evidence.
    (c) The ALJ shall exclude irrelevant and immaterial evidence.
    (d) Although relevant, evidence may be excluded if its probative 
value is substantially outweighed by the danger of unfair prejudice, 
confusion of the issues, or by considerations of undue delay or needless 
presentation of cumulative evidence.
    (e) Although relevant, evidence may be excluded if it is privileged 
under Federal law.
    (f) Evidence concerning offers of compromise or settlement shall be 
inadmissible to the extent provided in Rule 408 of the Federal Rules of 
Evidence.

[[Page 426]]

    (g) The ALJ shall permit the parties to introduce rebuttal witnesses 
and evidence.
    (h) All documents and other evidence offered or taken for the record 
shall be open to examination by all parties, unless otherwise ordered by 
the ALJ pursuant to Sec.  79.24.



Sec.  79.35  The record.

    (a) The hearing will be recorded and transcribed. Transcripts may be 
obtained following the hearing from the ALJ at a cost not to exceed the 
actual cost of duplication.
    (b) The transcript of testimony, exhibits and other evidence 
admitted at the hearing, and all papers and requests filed in the 
proceeding constitute the record for the decision by the ALJ and the 
authority head.
    (c) The record may be inspected and copied (upon payment of a 
reasonable fee) by anyone, unless otherwise ordered by the ALJ pursuant 
to Sec.  79.24.



Sec.  79.36  Post-hearing briefs.

    The ALJ may require the parties to file post-hearing briefs. In any 
event, any party may file a post-hearing brief. The ALJ shall fix the 
time for filing such briefs, not to exceed 60 days from the date the 
party receives the transcript of the hearing or, if applicable, the 
stipulated record. Such briefs may be accompanied by proposed findings 
of fact and conclusions of law. The ALJ may permit the parties to file 
reply briefs.



Sec.  79.37  Initial decision.

    (a) The ALJ shall issue an initial decision based only on the 
record, which shall contain findings of fact, conclusions of law, and 
the amount of any penalties and assessments imposed.
    (b) The findings of fact shall include a finding on each of the 
following issues:
    (1) Whether the claims or statements identified in the complaint, or 
any portions thereof, violate Sec.  79.3;
    (2) If the person is liable for penalties or assessments, the 
appropriate amount of any such penalties or assessments considering any 
mitigating or aggravating factors that he or she finds in the case, such 
as those described in Sec.  79.31.
    (c) The ALJ shall promptly serve the initial decision on all parties 
within 90 days after the time for submission of post-hearing briefs and 
reply briefs (if permitted) has expired. The ALJ shall at the same time 
serve all parties with a statement describing the right of any defendant 
determined to be liable for a civil penalty or assessment to file a 
motion for reconsideration with the ALJ or a notice of appeal with the 
authority head. If the ALJ fails to meet the deadline contained in this 
paragraph, he or she shall notify the parties of the reason for the 
delay and shall set a new deadline.
    (d) Unless the initial decision of the ALJ is timely appealed to the 
authority head, or a motion for reconsideration of the initial decision 
is timely filed, the initial decision shall constitute the final 
decision of the authority head and shall be final and binding on the 
parties 30 days after it is issued by the ALJ.



Sec.  79.38  Reconsideration of initial decision.

    (a) Except as provided in paragraph (d) of this section, any party 
may file a motion for reconsideration of the initial decision within 20 
days of receipt of the initial decision. If service was made by mail, 
receipt will be presumed to be five days from the date of mailing in the 
absence of contrary proof.
    (b) Every such motion must set forth the matters claimed to have 
been erroneously decided and the nature of the alleged errors. Such 
motion shall be accompanied by a supporting brief.
    (c) Responses to such motions shall be allowed only upon request of 
the ALJ.
    (d) No party may file a motion for reconsideration of an initial 
decision that has been revised in response to a previous motion for 
reconsideration.
    (e) The ALJ may dispose of a motion for reconsideration by denying 
it or by issuing a revised initial decision.
    (f) If the ALJ denies a motion for reconsideration, the initial 
decision shall constitute the final decision of the authority head and 
shall be final and binding on the parties 30 days after the ALJ denies 
the motion, unless the initial decision is timely appealed to the

[[Page 427]]

authority head in accordance with Sec.  79.39.
    (g) If the ALJ issues a revised initial decision, that decision 
shall constitute the final decision of the authority head and shall be 
final and binding on the parties 30 days after it is issued, unless it 
is timely appealed to the authority head in accordance with Sec.  79.39.



Sec.  79.39  Appeal to authority head.

    (a) Any defendant who has filed a timely answer and who is 
determined in an initial decision to be liable for a civil penalty or 
assessment may appeal such decision to the authority head by filing a 
notice of appeal with the authority head in accordance with this 
section.
    (b)(1) A notice of appeal may be filed at any time within 30 days 
after the ALJ issues an initial decision. However, if another party 
files a motion for reconsideration under Sec.  79.38, consideration of 
the appeal shall be stayed automatically pending resolution of the 
motion for reconsideration.
    (2) If a motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ denies the motion or 
issues a revised initial decision, whichever applies.
    (3) If no motion for reconsideration is timely filed, a notice of 
appeal must be filed within 30 days after the ALJ issues the initial 
decision.
    (4) The authority head may extend the initial 30-day period for an 
additional 30-days if the defendant files with the authority head a 
request for an extension within the initial 30 day period and shows good 
cause.
    (c) If the defendant files a timely notice of appeal with the 
authority head, and the time for filing motions for reconsideration 
under Sec.  79.38 has expired, the ALJ shall forward the record of the 
proceeding to the authority head.
    (d) A notice of appeal shall be accompanied by a written brief 
specifying exceptions to the initial decision and reasons supporting the 
exceptions.
    (e) The representative for the Government may file a brief in 
opposition to exceptions within 30 days of receiving the notice of 
appeal and accompanying brief.
    (f) There is no right to appear personally before the authority 
head.
    (g) There is no right to appeal any interlocutory ruling by the ALJ.
    (h) In reviewing the initial decision, the authority head shall not 
consider any objection that was not raised before the ALJ unless a 
demonstration is made of extraordinary circumstances causing the failure 
to raise the objection.
    (i) If any party demonstrates to the satisfaction of the authority 
head that additional evidence not presented at such hearing is material 
and that there were reasonable grounds for the failure to present such 
evidence at such hearing, the authority head shall remand the matter to 
the ALJ for consideration of such additional evidence.
    (j) The authority head may affirm, reduce, reverse, compromise, 
remand, or settle any penalty or assessment determined by the ALJ in any 
initial decision.
    (k) The authority head shall promptly serve each party to the appeal 
with a copy of the decision of the authority head and a statement 
describing the right of any person determined to be liable for a penalty 
or assessment to seek judicial review.
    (l) Unless a petition for review is filed as provided in 31 U.S.C. 
3805 after a defendant has exhausted all administrative remedies under 
this part and within 60 days after the date on which the authority head 
serves the defendant with a copy of the authority head's decision, a 
determination that a defendant is liable under Sec.  79.3 is final and 
is not subject to judicial review.



Sec.  79.40  Stays ordered by the Department of Justice.

    If at any time the Attorney General or an Assistant Attorney General 
designated by the Attorney General transmits to the authority head a 
written finding that continuation of the administrative process 
described in this part with respect to a claim or statement may 
adversely affect any pending or potential criminal or civil action 
related to such claim or statement, the authority head shall stay the 
process immediately. The authority head may order the process resumed 
only upon receipt of the written authorization of the Attorney General.

[[Page 428]]



Sec.  79.41  Stay pending appeal.

    (a) An initial decision is stayed automatically pending disposition 
of a motion for reconsideration or of an appeal to the authority head.
    (b) No administrative stay is available following a final decision 
of the authority head.



Sec.  79.42  Judicial review.

    Section 3805 of title 31, United States Code, authorizes judicial 
review by an appropriate United States District Court of a final 
decision of the authority head imposing penalties or assessments under 
this part and specifies the procedures for such review.



Sec.  79.43  Collection of civil penalties and assessments.

    Sections 3806 and 3808(b) of title 31, United States Code, authorize 
actions for collection of civil penalties and assessments imposed under 
this part and specify the procedures for such actions.



Sec.  79.44  Right to administrative offset.

    The amount of any penalty or assessment which has become final, or 
for which a judgment has been entered under Sec.  79.42 or Sec.  79.43, 
or any amount agreed upon in a compromise or settlement under Sec.  
79.46, may be collected by administrative offset under 31 U.S.C. 3716, 
except that an administrative offset may not be made under this 
subsection against a refund of an overpayment of Federal taxes, then or 
later owing by the United States to the defendant.



Sec.  79.45  Deposit in Treasury of United States.

    All amounts collected pursuant to this part shall be deposited as 
miscellaneous receipts in the Treasury of the United States, except as 
provided in 31 U.S.C. 3806(g).



Sec.  79.46  Compromise or settlement.

    (a) Parties may make offers of compromise or settlement at any time.
    (b) The reviewing official has the exclusive authority to compromise 
or settle a case under this part at any time after the date on which the 
reviewing official is permitted to issue a complaint and before the date 
on which the ALJ issues an initial decision.
    (c) The authority head has exclusive authority to compromise or 
settle a case under this part at any time after the date on which the 
ALJ issues an initial decision, except during the pendency of any review 
under Sec.  79.42 or during the pendency of any action to collect 
penalties and assessments under Sec.  79.43.
    (d) The Attorney General has exclusive authority to compromise or 
settle a case under this part during the pendency of any review under 
Sec.  79.42 or of any action to recover penalties and assessments under 
31 U.S.C. 3806.
    (e) The investigating official may recommend settlement terms to the 
reviewing official, the authority head, or the Attorney General, as 
appropriate. The reviewing official may recommend settlement terms to 
the authority head, or the Attorney General, as appropriate.
    (f) Any compromise or settlement must be in writing.



Sec.  79.47  Limitations.

    (a) The notice of hearing with respect to a claim or statement must 
be served in the manner specified in Sec.  79.8 within 6 years after the 
date on which such claim or statement is made.
    (b) If the defendant fails to file a timely answer, service of a 
notice under Sec.  79.10(b) shall be deemed a notice of hearing for 
purposes of this section.
    (c) The statute of limitations may be extended by agreement of the 
parties.



PART 80_NONDISCRIMINATION UNDER PROGRAMS RECEIVING FEDERAL ASSISTANCE 
THROUGH THE DEPARTMENT OF HEALTH AND HUMAN SERVICES EFFECTUATION OF TITLE VI 
OF THE CIVIL RIGHTS ACT OF 1964--Table of Contents



Sec.
80.1 Purpose.
80.2 Application of this regulation.
80.3 Discrimination prohibited.
80.4 Assurances required.
80.5 Illustrative application.
80.6 Compliance information.
80.7 Conduct of investigations.
80.8 Procedure for effecting compliance.
80.9 Hearings.

[[Page 429]]

80.10 Decisions and notices.
80.11 Judicial review.
80.12 Effect on other regulations; forms and instructions.
80.13 Definitions.

Appendix A to Part 80--Federal Financial Assistance to Which These 
          Regulations Apply
Appendix B to Part 80--Guidelines for Eliminating Discrimination and 
          Denial of Services on the Basis of Race, Color, National 
          Origin, Sex, and Handicap in Vocational Education Programs

    Authority: Sec. 602, 78 Stat. 252; 42 U.S.C. 2000d-1.



Sec.  80.1  Purpose.

    The purpose of this part is to effectuate the provisions of title VI 
of the Civil Rights Act of 1964 (hereafter referred to as the ``Act'') 
to the end that no person in the United States shall; on the ground of 
race, color, or national origin, be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program or activity receiving Federal financial assistance 
from the Department of Health and Human Services.

(Sec. 601, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d))

[29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17982, July 5, 1973]



Sec.  80.2  Application of this regulation.

    This regulation applies to any program to which Federal financial 
assistance is authorized to be extended to a recipient under a law 
administered by the Department, including the Federal financial 
assistance listed in appendix A to this part. It applies to money paid, 
property transferred, or other Federal financial assistance extended 
after the effective date of the regulation pursuant to an application 
approved prior to such effective date. This regulation does not apply to 
(a) any Federal financial assistance by way of insurance or guaranty 
contracts, (b) money paid, property transferred, or other assistance 
extended before the effective date of this regulation, (c) the use of 
any assistance by any individual who is the ultimate beneficiary under 
any such program, or (d) any employment practice, under any such 
program, or any employer, employment agency, or labor organization, 
except to the extent described in Sec.  80.3. The fact that a type of 
Federal assistance is not listed in appendix A to this part shall not 
mean, if title VI of the Act is otherwise applicable, that a program is 
not covered. Federal financial assistance under statutes now in force or 
hereinafter enacted may be added to this list by notice published in the 
Federal Register.

(Secs. 602, 604, Civil Rights Act of 1964, 78 Stat. 252, 253 (42 U.S.C. 
2000d-1, 2000d-3))

[38 FR 17979, July 5, 1973, as amended at 70 FR 24318, May 9, 2005]



Sec.  80.3  Discrimination prohibited.

    (a) General. No person in the United States shall, on the ground of 
race, color, or national origin be excluded from participation in, be 
denied the benefits of, or be otherwise subjected to discrimination 
under any program to which this part applies.
    (b) Specific discriminatory actions prohibited. (1) A recipient 
under any program to which this part applies may not, directly or 
through contractual or other arrangements, on ground of race, color, or 
national origin:
    (i) Deny an individual any service, financial aid, or other benefit 
provided under the program;
    (ii) Provide any service, financial aid, or other benefit to an 
individual which is different, or is provided in a different manner, 
from that provided to others under the program;
    (iii) Subject an individual to segregation or separate treatment in 
any matter related to his receipt of any service, financial aid, or 
other benefit under the program;
    (iv) Restrict an individual in any way in the enjoyment of any 
advantage or privilege enjoyed by others receiving any service, 
financial aid, or other benefit under the program;
    (v) Treat an individual differently from others in determining 
whether he satisfies any admission, enrollment, quota, eligibility, 
membership or other requirement or condition which individuals must meet 
in order to be provided any service, financial aid, or other benefit 
provided under the program;
    (vi) Deny an individual an opportunity to participate in the program

[[Page 430]]

through the provision of services or otherwise or afford him an 
opportunity to do so which is different from that afforded others under 
the program (including the opportunity to participate in the program as 
an employee but only to the extent set forth in paragraph (c) of this 
section).
    (vii) Deny a person the opportunity to participate as a member of a 
planning or advisory body which is an integral part of the program.
    (2) A recipient, in determining the types of services, financial 
aid, or other benefits, or facilities which will be provided under any 
such program, or the class of individuals to whom, or the situations in 
which, such services, financial aid, other benefits, or facilities will 
be provided under any such program, or the class of individuals to be 
afforded an opportunity to participate in any such program, may not, 
directly or through contractual or other arrangements, utilize criteria 
or methods of administration which have the effect of subjecting 
individuals to discrimination because of their race, color, or national 
origin, or have the effect of defeating or substantially impairing 
accomplishment of the objectives of the program as respect individuals 
of a particular race, color, or national origin.
    (3) In determining the site or location of a facilities, an 
applicant or recipient may not make selections with the effect of 
excluding individuals from, denying them the benefits of, or subjecting 
them to discrimination under any programs to which this regulation 
applies, on the ground of race, color, or national origin; or with the 
purpose or effect of defeating or substantially impairing the 
accomplishment of the objectives of the Act or this regulation.
    (4) As used in this section, the services, financial aid, or other 
benefits provided under a program receiving Federal financial assistance 
shall be deemed to include any service, financial aid, or other benefits 
provided in or through a facility provided with the aid of Federal 
financial assistance.
    (5) The enumeration of specific forms of prohibited discrimination 
in this paragraph and paragraph (c) of this section does not limit the 
generality of the prohibition in paragraph (a) of this section.
    (6)(i) In administering a program regarding which the recipient has 
previously discriminated against persons on the ground of race, color, 
or national origin, the recipient must take affirmative action to 
overcome the effects of prior discrimination.
    (ii) Even in the absence of such prior discrimination, a recipient 
in administering a program may take affirmative action to overcome the 
effects of conditions which resulted in limiting participation by 
persons of a particular race, color, or national origin.
    (c) Employment practices. (1) Where a primary objective of the 
Federal financial assistance to a program to which this regulation 
applies is to provide employment, a recipient may not (directly or 
through contractual or other arrangements) subject an individual to 
discrimination on the ground of race, color, or national origin in its 
employment practices under such program (including recruitment or 
recruitment advertising, employment, layoff or termination, upgrading, 
demotion, or transfer, rates of pay or other forms of compensation, and 
use of facilities), including programs where a primary objective of the 
Federal financial assistance is (i) to reduce the employment of such 
individuals or to help them through employment to meet subsistence 
needs, (ii) to assist such individuals through employment to meet 
expenses incident to the commencement or continuation of their education 
or training, (iii) to provide work experience which contributes to the 
education or training of such individuals, or (iv) to provide 
remunerative activity to such individuals who because of handicaps 
cannot be readily absorbed in the competive labor market. The following, 
under existing laws, have one of the above objectives as a primary 
objective:
    (a) Projects under the Public Works Acceleration Act, Pub. L. 87-
658, 42 U.S.C. 2641-2643.
    (b) Work-study under the Vocational Education Act of 1963, as 
amended, 20 U.S.C. 1371-1374.

[[Page 431]]

    (c) Programs assisted under laws listed in appendix A to this part 
as respects employment opportunities provided thereunder, or in 
facilities provided thereunder, which are limited, or for which 
preference is given, to students, fellows, or other persons in training 
for the same or related employments.
    (d) Assistance to rehabilitation facilities under the Vocational 
Rehabilitation Act, 29 U.S.C. 32-34, 41a and 41b.
    (2) The requirements applicable to construction employment under any 
such program shall be those specified in or pursuant to Part III of 
Executive Order 11246 or any Executive order which supersedes it.
    (3) Where a primary objective of the Federal financial assistance is 
not to provide employment, but discrimination on the ground of race, 
color, or national origin in the employment practices of the recipient 
or other persons subject to the regulation tends, on the ground of race, 
color, or national origin, to exclude individuals from participation in, 
to deny them the benefits of, or to subject them to discrimination under 
any program to which this regulation applies, the foregoing provisions 
of this paragraph (c) shall apply to the employment practices of the 
recipient or other persons subject to the regulation, to the extent 
necessary to assure equality of opportunity to, and nondiscriminatory 
treatment of, beneficiaries.
    (d) Indian Health and Cuban Refugee Services. An individual shall 
not be deemed subjected to discrimination by reason of his exclusion 
from benefits limited by Federal law to individuals of a particular 
race, color, or national origin different from his.
    (e) Medical emergencies. Notwithstanding the foregoing provisions of 
this section, a recipient of Federal financial assistance shall not be 
deemed to have failed to comply with paragraph (a) of this section if 
immediate provision of a service or other benefit to an individual is 
necessary to prevent his death or serious impairment of his health, and 
such service or other benefit cannot be provided except by or through a 
medical institution which refuses or fails to comply with paragraph (a) 
of this section.

(Secs. 601, 602, 604, Civil Rights Act of 1964, 78 Stat. 252, 253 (42 
U.S.C. 2000d, 2000d-1, 2000d-3))

[29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17979, 17982, July 5, 
1973; 70 FR 24318, May 9, 2005]



Sec.  80.4  Assurances required.

    (a) General. (1) Every application for Federal financial assistance 
to which this part applies, except an application to which paragraph (b) 
of this section applies, and every application for Federal financial 
assistance to provide a facility shall, as a condition to its approval 
and the extension of any Federal financial assistance pursuant to the 
application, contain or be accompanied by an assurance that the program 
will be conducted or the facility operated in compliance with all 
requirements imposed by or pursuant to this part. In the case of an 
application for Federal financial assistance to provide real property or 
structures thereon, the assurance shall obligate the recipient, or, in 
the case of a subsequent transfer, the transferee, for the period during 
which the real property or structures are used for a purpose for which 
the Federal financial assistance is extended or for another purpose 
involving the provision of similar services or benefits. In the case of 
personal property the assurance shall obligate the recipient for the 
period during which he retains ownership or possession of the property. 
In all other cases the assurance shall obligate the recipient for the 
period during which Federal financial assistance is extended pursuant to 
the application. The responsible Department official shall specify the 
form of the foregoing assurances in the program, and the extent to which 
like assurances will be required of subgrantees, contractors and 
subcontractors, transferees, successors in interest, and other 
participants in the program. Any such assurance shall include provisions 
which give the United States a right to seek its judicial enforcement.
    (2) Where Federal financial assistance is provided in the form of a 
transfer of real property or interest therein

[[Page 432]]

from the Federal Government the instrument effecting or recording the 
transfer shall contain a covenant running with the land to assure 
nondiscrimination for the period during which the real property is used 
for a purpose for which the Federal financial assistance is extended or 
for another purpose involving the provision of similar services or 
benefits. Where no transfer of property is involved but property is 
improved with Federal financial assistance, the recipient shall agree to 
include such a covenant to any subsequent transfer of the property. 
Where the property is obtained from the Federal Government, such 
covenant may also include a condition coupled with a right to be 
reserved by the Department to revert title to the property in the event 
of a breach of the covenant where, in the discretion of the responsible 
Department official, such a condition and right of reverter is 
appropriate to the statute under which the real property is obtained and 
to the nature of the grant and the grantee. In the event a transferee of 
real property proposes to mortgage or otherwise encumber the real 
property as security for financing construction of new, or improvement 
of existing, facilities on such property for the purposes for which the 
property was transferred, the responsible Department official may agree, 
upon request of the transferee and if necessary to accomplish such 
financing, and upon such conditions as he deems appropriate, to forbear 
the exercise of such right to revert title for so long as the lien of 
such mortgage or other encumbrance remains effective.
    (b) Continuing Federal financial assistance. Every application by a 
State or a State agency for continuing Federal financial assistance to 
which this regulation applies (including the Federal financial 
assistance listed in part 2 of appendix A to this part) shall as a 
condition to its approval and the extension of any Federal financial 
assistance pursuant to the application (1) contain or be accompanied by 
a statement that the program is (or, in the case of a new program, will 
be) conducted in compliance with all requirements imposed by or pursuant 
to this regulation, and (2) provide or be accompanied by provision for 
such methods of administration for the program as are found by the 
responsible Department official to give reasonable assurance that the 
applicant and all recipients of Federal financial assistance under such 
program will comply with all requirements imposed by or pursuant to this 
regulation.
    (c) Elementary and secondary schools. The requirements of paragraph 
(a) or (b) of this section with respect to any elementary or secondary 
school or school system shall be deemed to be satisfied if such school 
or school system (1) is subject to a final order of a court of the 
United States for the desegregation of such school or school system, and 
provides an assurance that it will comply with such order, including any 
future modification of such order, or (2) submits a plan for the 
desegregation of such school or school system which the responsible 
Department official determines is adequate to accomplish the purposes of 
the Act and this part, at the earliest practicable time, and provides 
reasonable assurance that it will carry out such plan; in any case of 
continuing Federal financial assistance the responsible Department 
official may reserve the right to redetermine, after such period as may 
be specified by him, the adequacy of the plan to accomplish the purposes 
of the Act and the regulations in this part. In any case in which a 
final order of a court of the United States for the desegregation of 
such school or school system is entered after submission of such a plan, 
such plan shall be revised to conform to such final order, including any 
future modification of such order.
    (d) Assurance from institutions. (1) In the case of any application 
for Federal financial assistance to an institution of higher education 
(including assistance for construction, for research, for special 
training project, for student loans or for any other purpose), the 
assurance required by this section shall extend to admission practices 
and to all other practices relating to the treatment of students.
    (2) The assurance required with respect to an institution of higher 
education, hospital, or any other institution, insofar as the assurance 
relates to

[[Page 433]]

the institution's practices with respect to admission or other treatment 
of individuals as students, patients, or clients of the institution or 
to the opportunity to participate in the provision of services or other 
benefits to such individuals, shall be applicable to the entire 
institution.

(Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 
2000d, 2000d-1); sec. 182, 80 Stat. 1209 (42 U.S.C. 2000d-5))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 
FR 17980, 17982, July 5, 1973; 70 FR 24318, May 9, 2005]



Sec.  80.5  Illustrative application.

    The following examples will illustrate the programs aided by Federal 
financial assistance of the Department. (In all cases the discrimination 
prohibited is discrimination on the ground of race, color, or national 
origin prohibited by Title VI of the Act and this regulation, as a 
condition of the receipt of Federal financial assistance).
    (a) In federally assisted programs for the provision of health or 
welfare services, discrimination in the selection or eligibility of 
individuals to receive the services, and segregation or other 
discriminatory practices in the manner of providing them, are 
prohibited. This prohibition extends to all facilities and services 
provided by the grantee or, if the grantee is a State, by a political 
subdivision of the State. It extends also to services purchased or 
otherwise obtained by the grantee (or political subdivision) from 
hospitals, nursing homes, schools, and similar institutions for 
beneficiaries of the program, and to the facilities in which such 
services are provided, subject, however, to the provisions of Sec.  
80.3(e).
    (b) In federally-affected area assistance (Pub. L. 815 and Pub. L. 
874) for construction aid and for general support of the operation of 
elementary or secondary schools, or in more limited support to such 
schools such as for the acquisition of equipment, the provision of 
vocational education, or the provision of guidance and counseling 
services, discrimination by the recipient school district in any of its 
elementary or secondary schools in the admission of students, or in the 
treatment of its students in any aspect of the educational process, is 
prohibited. In this and the following illustrations the prohibition of 
discrimination in the treatment of students or other trainees includes 
the prohibition of discrimination among the students or trainees in the 
availability or use of any academic, dormitory, eating, recreational, or 
other facilities of the grantee or other recipient.
    (c) In a research, training, demonstration, or other grant to a 
university for activities to be conducted in a graduate school, 
discrimination in the admission and treatment of students in the 
graduate school is prohibited, and the prohibition extends to the entire 
university.
    (d) In a training grant to a hospital or other nonacademic 
institution, discrimination is prohibited in the selection of 
individuals to be trained and in their treatment by the grantee during 
their training. In a research or demonstration grant to such an 
institution discrimination is prohibited with respect to any educational 
activity and any provision of medical or other services and any 
financial aid to individuals incident to the program.
    (e) In grants to assist in the construction of facilities for the 
provision of health, educational or welfare services, assurances will be 
required that services will be provided without discrimination, to the 
same extent that discrimination would be prohibited as a condition of 
Federal operating grants for the support of such services. Thus, as a 
condition of grants for the construction of academic, research, or other 
facilities at institutions of higher education, assurances will be 
required that there will be no discrimination in the admission or 
treatment of students. In case of hospital construction grants the 
assurance will apply to patients, to interns, residents, student nurses, 
and other trainees, and to the privilege of physicians, dentists, and 
other professionally qualified persons to practice in the hospital, and 
will apply to the entire facility for which, or for a part of which, the 
grant is made, and to facilities operated in connection therewith.
    (f) Upon transfers of real or personal surplus property for health 
or educational uses, discrimination is prohibited to the same extent as 
in the case

[[Page 434]]

of grants for the construction of facilities or the provision of 
equipment for like purposes.
    (g) Each applicant for a grant for the construction of educational 
television facilities is required to provide an assurance that it will, 
in its broadcast services, give due consideration to the interests of 
all significant racial or ethnic groups within the population to be 
served by the applicant.
    (h) A recipient may not take action that is calculated to bring 
about indirectly what this regulation forbids it to accomplish directly. 
Thus, a State, in selecting or approving projects or sites for the 
construction of public libraries which will receive Federal financial 
assistance, may not base its selections or approvals on criteria which 
have the effect of defeating or of substantially impairing 
accomplishments of the objectives of the Federal assistance as respects 
individuals of a particular race, color or national origin.
    (i) In some situations, even though past discriminatory practices 
attributable to a recipient or applicant have been abandoned, the 
consequences of such practices continue to impede the full availability 
of a benefit. If the efforts required of the applicant or recipient 
under Sec.  80.6(d), to provide information as to the availability of 
the program or activity and the rights of beneficiaries under this 
regulation, have failed to overcome these consequences, it will become 
necessary under the requirement stated in (i) of Sec.  80.3(b) (6) for 
such applicant or recipient to take additional steps to make the 
benefits fully available to racial and nationality groups previously 
subject to discrimination. This action might take the form, for example, 
of special arrangements for obtaining referrals or making selections 
which will insure that groups previously subjected to discrimination are 
adequately served.
    (j) Even though an applicant or recipient has never used 
discriminatory policies, the services and benefits of the program or 
activity it administers may not in fact be equally available to some 
racial or nationality groups. In such circumstances, an applicant or 
recipient may properly give special consideration to race, color, or 
national origin to make the benefits of its program more widely 
available to such groups, not then being adequately served. For example, 
where a university is not adequately serving members of a particular 
racial or nationality group, it may establish special recruitment 
policies to make its program better known and more readily available to 
such group, and take other steps to provide that group with more 
adequate service.

(Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 
2000d, 2000d-1))

[29 FR 16298, Dec. 4, 1964; 29 FR 16988, Dec. 11, 1964, as amended at 38 
FR 17980, 17982, July 5, 1973; 70 FR 24318, May 9, 2005]



Sec.  80.6  Compliance information.

    (a) Cooperation and assistance. The responsible Department official 
shall to the fullest extent practicable seek the cooperation of 
recipients in obtaining compliance with this part and shall provide 
assistance and guidance to recipients to help them comply voluntarily 
with this part.
    (b) Compliance reports. Each recipient shall keep such records and 
submit to the responsible Department official or his designee timely, 
complete and accurate compliance reports at such times, and in such form 
and containing such information, as the responsible Department official 
or his designee may determine to be necessary to enable him to ascertain 
whether the recipient has complied or is complying with this part. For 
example, recipients should have available for the Department racial and 
ethnic data showing the extent to which members of minority groups are 
beneficiaries of and participants in federally-assisted programs. In the 
case in which a primary recipient extends Federal financial assistance 
to any other recipient, such other recipient shall also submit such 
compliance reports to the primary recipient as may be necessary to 
enable the primary recipient to carry out its obligations under this 
part.
    (c) Access to sources of information. Each recipient shall permit 
access by the responsible Department official or his designee during 
normal business

[[Page 435]]

hours to such of its books, records, accounts, and other sources of 
information, and its facilities as may be pertinent to ascertain 
compliance with this part. Where any information required of a recipient 
is in the exclusive possession of any other agency, institution or 
person and this agency, institution or person shall fail or refuse to 
furnish this information the recipient shall so certify in its report 
and shall set forth what efforts it has made to obtain the information. 
Asserted considerations of privacy or confidentiality may not operate to 
bar the Department from evaluating or seeking to enforce compliance with 
this part. Information of a confidential nature obtained in connection 
with compliance evaluation or enforcement shall not be disclosed except 
where necessary in formal enforcement proceedings or where otherwise 
required by law.
    (d) Information to beneficiaries and participants. Each recipient 
shall make available to participants, beneficiaries, and other 
interested persons such information regarding the provisions of this 
regulation and its applicability to the program for which the recipient 
receives Federal financial assistance, and make such information 
available to them in such manner, as the responsible Department official 
finds necessary to apprise such persons of the protections against 
discrimination assured them by the Act and this regulation.

(Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 
2000d, 2000d-1))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 
FR 17981, 17982, July 5, 1973; 70 FR 24318, May 9, 2005]



Sec.  80.7  Conduct of investigations.

    (a) Periodic compliance reviews. The responsible Department official 
or his designee shall from time to time review the practices of 
recipients to determine whether they are complying with this part.
    (b) Complaints. Any person who believes himself or any specific 
class of individuals to be subjected to discrimination prohibited by 
this part may by himself or by a representative file with the 
responsible Department official or his designee a written complaint. A 
complaint must be filed not later than 180 days from the date of the 
alleged discrimination, unless the time for filing is extended by the 
responsible Department official or his designee.
    (c) Investigations. The responsible Department official or his 
designee will make a prompt investigation whenever a compliance review, 
report, complaint, or any other information indicates a possible failure 
to comply with this part. The investigation should include, where 
appropriate, a review of the pertinent practices and policies of the 
recipient, the circumstances under which the possible noncompliance with 
this part occurred, and other factors relevant to a determination as to 
whether the recipient has failed to comply with this part.
    (d) Resolution of matters. (1) If an investigation pursuant to 
paragraph (c) of this section indicates a failure to comply with this 
part, the responsible Department official or his designee will so inform 
the recipient and the matter will be resolved by informal means whenever 
possible. If it has been determined that the matter cannot be resolved 
by informal means, action will be taken as provided for in Sec.  80.8.
    (2) If an investigation does not warrant action pursuant to 
paragraph (d)(1) of this section the responsible Department official or 
his designee will so inform the recipient and the complainant, if any, 
in writing.
    (e) Intimidatory or retaliatory acts prohibited. No recipient or 
other person shall intimidate, threaten, coerce, or discriminate against 
any individual for the purpose of interfering with any right or 
privilege secured by section 601 of the Act or this part, or because he 
has made a complaint, testified, assisted, or participated in any manner 
in an investigation, proceeding or hearing under this part. The identity 
of complainants shall be kept confidential except to the extent 
necessary to carry out the purposes of this part, including the conduct 
of any investigation, hearing, or judicial proceeding arising 
thereunder.

(Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 
2000d, 2000d-1))

[29 FR 16298, Dec. 4, 1964, as amended at 38 FR 17981, 17982, July 5, 
1973]

[[Page 436]]



Sec.  80.8  Procedure for effecting compliance.

    (a) General. If there appears to be a failure or threatened failure 
to comply with this regulation, and if the noncompliance or threatened 
noncompliance cannot be corrected by informal means, compliance with 
this part may be effected by the suspension or termination of or refusal 
to grant or to continue Federal financial assistance or by any other 
means authorized by law. Such other means may include, but are not 
limited to, (1) a reference to the Department of Justice with a 
recommendation that appropriate proceedings be brought to enforce any 
rights of the United States under any law of the United States 
(including other titles of the Act), or any assurance or other 
contractual undertaking, and (2) any applicable proceeding under State 
or local law.
    (b) Noncompliance with Sec.  80.4. If an applicant fails or refuses 
to furnish an assurance required under Sec.  80.4 or otherwise fails or 
refuses to comply with a requirement imposed by or pursuant to that 
section Federal financial assistance may be refused in accordance with 
the procedures of paragraph (c) of this section. The Department shall 
not be required to provide assistance in such a case during the pendency 
of the administrative proceedings under such paragraph except that the 
Department shall continue assistance during the pendency of such 
proceedings where such assistance is due and payable pursuant to an 
application therefor approved prior to the effective date of this part.
    (c) Termination of or refusal to grant or to continue Federal 
financial assistance. No order suspending, terminating or refusing to 
grant or continue Federal financial assistance shall become effective 
until (1) the responsible Department official has advised the applicant 
or recipient of his failure to comply and has determined that compliance 
cannot be secured by voluntary means, (2) there has been an express 
finding on the record, after opportunity for hearing, of a failure by 
the applicant or recipient to comply with a requirement imposed by or 
pursuant to this part, (3) the expiration of 30 days after the Secretary 
has filed with the committee of the House and the committee of the 
Senate having legislative jurisdiction over the program involved, a full 
written report of the circumstances and the grounds for such action. Any 
action to suspend or terminate or to refuse to grant or to continue 
Federal financial assistance shall be limited to the particular 
political entity, or part thereof, or other applicant or recipient as to 
whom such a finding has been made and shall be limited in its effect to 
the particular program, or part thereof, in which such noncompliance has 
been so found.
    (d) Other means authorized by law. No action to effect compliance by 
any other means authorized by law shall be taken until (1) the 
responsible Department official has determined that compliance cannot be 
secured by voluntary means, (2) the recipient or other person has been 
notified of its failure to comply and of the action to be taken to 
effect compliance, and (3) the expiration of at least 10 days from the 
mailing of such notice to the recipient or other person. During this 
period of at least 10 days additional efforts shall be made to persuade 
the recipient or other person to comply with the regulation and to take 
such corrective action as may be appropriate.

(Secs. 601, 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 
2000d, 2000d-1; sec. 182, 80 Stat. 1209; (42 U.S.C. 2000d-5))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14556, Oct. 19, 1967; 38 
FR 17982, July 5, 1973]



Sec.  80.9  Hearings.

    (a) Opportunity for hearing. Whenever an opportunity for a hearing 
is required by Sec.  80.8(c), reasonable notice shall be given by 
registered or certified mail, return receipt requested, to the affected 
applicant or recipient. This notice shall advise the applicant or 
recipient of the action proposed to be taken, the specific provision 
under which the proposed action against it is to be taken, and the 
matters of fact or law asserted as the basis for this action, and either 
(1) fix a date not less than 20 days after the date of such notice 
within which the applicant or recipient may request of the responsible 
Department official that the matter be scheduled for hearing or (2) 
advise the

[[Page 437]]

applicant or recipient that the matter in question has been set down for 
hearing at a stated place and time. The time and place so fixed shall be 
reasonable and shall be subject to change for cause. The complainant, if 
any, shall be advised of the time and place of the hearing. An applicant 
or recipient may waive a hearing and submit written information and 
argument for the record. The failure of an applicant or recipient to 
request a hearing for which a date has been set shall be deemed to be a 
waiver of the right to a hearing under section 602 of the Act and Sec.  
80.8(c) of this regulation and consent to the making of a decision on 
the basis of such information as may be filed as the record.
    (b) Time and place of hearing. Hearings shall be held at the offices 
of the Department in Washington, DC, at a time fixed by the responsible 
Department official unless he determines that the convenience of the 
applicant or recipient or of the Department requires that another place 
be selected. Hearings shall be held before a hearing examiner designated 
in accordance with 5 U.S.C. 3105 and 3344 (section 11 of the 
Administrative Procedure Act).
    (c) Right to counsel. In all proceedings under this section, the 
applicant or recipient and the Department shall have the right to be 
represented by counsel.
    (d) Procedures, evidence, and record. (1) The hearing, decision, and 
any administrative review thereof shall be conducted in conformity with 
sections 5-8 of the Administrative Procedure Act, and in accordance with 
such rules of procedure as are proper (and not inconsistent with this 
section) relating to the conduct of the hearing, giving of notices 
subsequent to those provided for in paragraph (a) of this section, 
taking of testimony, exhibits, arguments and briefs, requests for 
findings, and other related matters. Both the Department and the 
applicant or recipient shall be entitled to introduce all relevant 
evidence on the issues as stated in the notice for hearing or as 
determined by the officer conducting the hearing at the outset of or 
during the hearing. Any person (other than a Government employee 
considered to be on official business) who, having been invited or 
requested to appear and testify as a witness on the Government's behalf, 
attends at a time and place scheduled for a hearing provided for by this 
part, may be reimbursed for his travel and actual expenses of attendance 
in an amount not to exceed the amount payable under the standardized 
travel regulations to a Government employee traveling on official 
business.
    (2) Technical rules of evidence shall not apply to hearings 
conducted pursuant to this part, but rules or principles designed to 
assure production of the most credible evidence available and to subject 
testimony to test by cross-examination shall be applied where reasonably 
necessary by the officer conducting the hearing. The hearing officer may 
exclude irrelevant, immaterial, or unduly repetitious evidence. All 
documents and other evidence offered or taken for the record shall be 
open to examination by the parties and opportunity shall be given to 
refute facts and arguments advanced on either side of the issues. A 
transcript shall be made of the oral evidence except to the extent the 
substance thereof is stipulated for the record. All decisions shall be 
based upon the hearing record and written findings shall be made.
    (e) Consolidated or Joint Hearings. In cases in which the same or 
related facts are asserted to constitute noncompliance with this 
regulation with respect to two or more Federal statutes, authorities, or 
other means by which Federal financial assistance is extended, to which 
this part applies, or noncompliance with this part and the regulations 
of one or more other Federal departments or agencies issued under Title 
VI of the Act, the responsible Department official may, by agreement 
with such other departments or agencies where applicable, provide for 
the conduct of consolidated or joint hearings, and for the application 
to such hearings of rules of procedures not inconsistent with this part. 
Final decisions in such cases, insofar as this regulation is concerned, 
shall be made in accordance with Sec.  80.10.

(Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d-1))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 
FR 17981, 17982, July 5, 1973; 70 FR 24318, May 9, 2005]

[[Page 438]]



Sec.  80.10  Decisions and notices.

    (a) Decisions by hearing examiners. After a hearing is held by a 
hearing examiner such hearing examiner shall either make an initial 
decision, if so authorized, or certify the entire record including his 
recommended findings and proposed decision to the reviewing authority 
for a final decision, and a copy of such initial decision or 
certification shall be mailed to the applicant or recipient and to the 
complainant, if any. Where the initial decision referred to in this 
paragraph or in paragraph (c) of this section is made by the hearing 
examiner, the applicant or recipient or the counsel for the Department 
may, within the period provided for in the rules of procedure issued by 
the responsible Department official, file with the reviewing authority 
exceptions to the initial decision, with his reasons therefor. Upon the 
filing of such exceptions the reviewing authority shall review the 
initial decision and issue its own decision thereof including the 
reasons therefor. In the absence of exceptions the initial decision 
shall constitute the final decision, subject to the provisions of 
paragraph (e) of this section.
    (b) Decisions on record or review by the reviewing authority. 
Whenever a record is certified to the reviewing authority for decision 
or it reviews the decision of a hearing examiner pursuant to paragraph 
(a) or (c) of this section, the applicant or recipient shall be given 
reasonable opportunity to file with it briefs or other written 
statements of its contentions, and a copy of the final decision of the 
reviewing authority shall be given in writing to the applicant or 
recipient and to the complainant, if any.
    (c) Decisions on record where a hearing is waived. Whenever a 
hearing is waived pursuant to Sec.  80.9(a) the reviewing authority 
shall make its final decision on the record or refer the matter to a 
hearing examiner for an initial decision to be made on the record. A 
copy of such decision shall be given in writing to the applicant or 
recipient, and to the complainant, if any.
    (d) Rulings required. Each decision of a hearing examiner or 
reviewing authority shall set forth a ruling on each finding, 
conclusion, or exception presented, and shall identify the requirement 
or requirements imposed by or pursuant to this part with which it is 
found that the applicant or recipient has failed to comply.
    (e) Review in certain cases by the Secretary. If the Secretary has 
not personally made the final decision referred to in paragraph (a), 
(b), or (c) of this section, a recipient or applicant or the counsel for 
the Department may request the Secretary to review a decision of the 
Reviewing Authority in accordance with rules of procedure issued by the 
responsible Department official. Such review is not a matter of right 
and shall be granted only where the Secretary determines there are 
special and important reasons therefor. The Secretary may grant or deny 
such request, in whole or in part. He may also review such a decision 
upon his own motion in accordance with rules of procedure issued by the 
responsible Department official. In the absence of a review under this 
paragraph, a final decision referred to in paragraphs (a), (b), and (c) 
of this section shall become the final decision of the Department when 
the Secretary transmits it as such to Congressional committees with the 
report required under section 602 of the Act. Failure of an applicant or 
recipient to file an exception with the Reviewing Authority or to 
request review under this paragraph shall not be deemed a failure to 
exhaust administrative remedies for the purpose of obtaining judicial 
review.
    (f) Content of orders. The final decision may provide for suspension 
or termination of, or refusal to grant or continue Federal financial 
assistance, in whole or in part, to which this regulation applies, and 
may contain such terms, conditions, and other provisions as are 
consistent with and will effectuate the purposes of the Act and this 
regulation, including provisions designed to assure that no Federal 
financial assistance to which this regulation applies will thereafter be 
extended under such law or laws to the applicant or recipient determined 
by such decision to be in default in its performance of an assurance 
given by it pursuant to this regulation, or to have otherwise failed to 
comply with this regulation

[[Page 439]]

unless and until it corrects its noncompliance and satisfies the 
responsible Department official that it will fully comply with this 
regulation.
    (g) Post-termination proceedings. (1) An applicant or recipient 
adversely affected by an order issued under paragraph (f) of this 
section shall be restored to full eligibility to receive Federal 
financial assistance if it satisfies the terms and conditions of that 
order for such eligibility or if it brings itself into compliance with 
this part and provides reasonable assurance that it will fully comply 
with this part. An elementary or secondary school or school system which 
is unable to file an assurance of compliance with Sec.  80.3 shall be 
restored to full eligibility to receive Federal financial assistance, if 
it files a court order or a plan for desegregation which meets the 
requirements of Sec.  80.4(c), and provides reasonable assurance that it 
will comply with the court order or plan.
    (2) Any applicant or recipient adversely affected by an order 
entered pursuant to paragraph (f) of this section may at any time 
request the responsible Department official to restore fully its 
eligibility to receive Federal financial assistance. Any such request 
shall be supported by information showing that the applicant or 
recipient has met the requirements of paragraph (g)(1) of this section. 
If the responsible Department official determines that those 
requirements have been satisfied, he shall restore such eligibility.
    (3) If the responsible Department official denies any such request, 
the applicant or recipient may submit a request for a hearing in 
writing, specifying why it believes such official to have been in error. 
It shall thereupon be given an expeditious hearing, with a decision on 
the record, in accordance with rules of procedure issued by the 
responsible Department official. The applicant or recipient will be 
restored to such eligibility if it proves at such hearing that it 
satisfied the requirements of paragraph (g)(1) of this section. While 
proceedings under this paragraph are pending, the sanctions imposed by 
the order issued under paragraph (f) of this section shall remain in 
effect.

(Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d-1))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 
FR 17981, 17982, July 5, 1973]



Sec.  80.11  Judicial review.

    Action taken pursuant to section 602 of the Act is subject to 
judicial review as provided in section 603 of the Act.

(Sec. 603, 78 Stat. 253, (42 U.S.C. 2000d-2))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14556, Oct. 19, 1967]



Sec.  80.12  Effect on other regulations; forms and instructions.

    (a) Effect on other regulations. All regulations, orders, or like 
directions heretofore issued by any officer of the Department which 
impose requirements designed to prohibit any discrimination against 
individuals on the ground of race, color, or national origin under any 
program to which this regulation applies, and which authorize the 
suspension or termination of or refusal to grant or to continue Federal 
financial assistance to any applicant for or recipient of assistance for 
failure to comply with such requirements, are hereby superseded to the 
extent that such discrimination is prohibited by this regulation, except 
that nothing in this regulation shall be deemed to relieve any person of 
any obligation assumed or imposed under any such superseded regulation, 
order, instruction, or like direction prior to the effective date of 
this regulation. Nothing in this regulation, however, shall be deemed to 
supersede any of the following (including future amendments thereof): 
(1) The ``Standards for a Merit System of Personnel Administration,'' 
issued jointly by the Secretaries of Defense, of Health and Human 
Services, and of Labor, 45 CFR part 70; (2) Executive Order 11063 and 
regulations issued thereunder, or any other regulations or instructions, 
insofar as such Order, regulations, or instructions prohibit 
discrimination on the ground of race, color, or national origin in any 
program or situation to which this regulation is inapplicable, or 
prohibit discrimination on any other ground; or (3)

[[Page 440]]

requirements for Emergency School Assistance as published in 35 FR 13442 
and codified as 45 CFR part 181.
    (b) Forms and instructions. The responsible Department official 
shall issue and promptly make available to interested persons forms and 
detailed instructions and procedures for effectuating this part.
    (c) Supervision and coordination. The responsible Department 
official may from time to time assign to officials of the Department, or 
to officials of other departments or agencies of the Government with the 
consent of such departments or agencies, responsibilities in connection 
with the effectuation of the purposes of Title VI of the Act and this 
regulation (other than responsibility for review as provided in Sec.  
80.10(e)), including the achievements of effective coordination and 
maximum uniformity within the Department and within the Executive Branch 
of the Government in the application of Title VI and this regulation to 
similar programs and in similar situations. Any action taken, 
determination made, or requirement imposed by an official of another 
Department or Agency acting pursuant to an assignment of responsibility 
under this subsection shall have the same effect as though such action 
had been taken by the responsible official of this Department.

(Sec. 602, Civil Rights Act of 1964, 78 Stat. 252 (42 U.S.C. 2000d-10))

[29 FR 16298, Dec. 4, 1964, as amended at 32 FR 14555, Oct. 19, 1967; 38 
FR 17981, 17982, July 5, 1973]



Sec.  80.13  Definitions.

    As used in this part--
    (a) The term Department means the Department of Health and Human 
Services, and includes each of its operating agencies and other 
organizational units.
    (b) The term Secretary means the Secretary of Health and Human 
Services.
    (c) The term responsible Department official means the Secretary or, 
to the extent of any delegation by the Secretary of authority to act in 
his stead under any one or more provisions of this part, any person or 
persons to whom the Secretary has heretofore delegated, or to whom the 
Secretary may hereafter delegate such authority.
    (d) The term reviewing authority means the Secretary, or any person 
or persons (including a board or other body specially created for that 
purpose and also including the responsible Department official) acting 
pursuant to authority delegated by the Secretary to carry out 
responsibilities under Sec.  80.10 (a) through (d).
    (e) The term United States means the States of the United States, 
the District of Columbia, Puerto Rico, the Virgin Islands, American 
Samoa, Guam, Wake Island, the Canal Zone, and the territories and 
possessions of the United States, and the term State means any one of 
the foregoing.
    (f) The term Federal financial assistance includes (1) grants and 
loans of Federal funds, (2) the grant or donation of Federal property 
and interests in property, (3) the detail of Federal personnel, (4) the 
sale and lease of, and the permission to use (on other than a casual or 
transient basis), Federal property or any interest in such property 
without consideration or at a nominal consideration, or at a 
consideration which is reduced for the purpose of assisting the 
recipient, or in recognition of the public interest to be served by such 
sale or lease to the recipient, and (5) any Federal agreement, 
arrangement, or other contract which has as one of its purposes the 
provision of assistance.
    (g) The term program or activity and the term program mean all of 
the operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (ii) The entity of such State or local government that distributes 
Federal financial assistance and each such department or agency (and 
each other State or local government entity) to which the assistance is 
extended, in the case of assistance to a State or local government;
    (2)(i) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (ii) A local educational agency (as defined in 20 U.S.C. 7801), 
system of vocational education, or other school system;

[[Page 441]]

    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (4) Any other entity which is established by two or more of the 
entities described in paragraph (g)(1), (g)(2), or (g)(3) of this 
section; any part of which is extended Federal financial assistance.
    (h) The term facility includes all or any portion of structures, 
equipment, or other real or personal property or interests therein, and 
the provision of facilities includes the construction, expansion, 
renovation, remodeling, alteration or acquisition of facilities.
    (i) The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, or organization, or other entity, 
or any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, including any 
successor, assign, or transferee thereof, but such term does not include 
any ultimate beneficiary.
    (j) The term primary recipient means any recipient which is 
authorized or required to extend Federal financial assistance to another 
recipient.
    (k) The term applicant means one who submits an application, 
request, or plan required to be approved by a Department official, or by 
a primary recipient, as a condition to eligibility for Federal financial 
assistance, and the term application means such an application, request, 
or plan.

(Secs. 602, 606, Civil Rights Act of 1964, (42 U.S.C. 2000d-1, 2000d-
4a))

[29 FR 16298, Dec. 4, 1964; 29 FR 16988, Dec. 11, 1964, as amended at 32 
FR 14555, Oct. 19, 1967; 38 FR 17982, July 5, 1973; 70 FR 24318, May 9, 
2005]



Sec. Appendix A to Part 80--Federal Financial Assistance to Which These 
                            Regulations Apply

      Part 1. Assistance other than Continuing Assistance to States

    1. Loans for acquisition of equipment for academic subjects, and for 
minor remodeling (20 U.S.C. 445).
    2. Construction of facilities for institutions of higher education 
(20 U.S.C. 701-758).
    3. School Construction in federally-affected and in major disaster 
areas (20 U.S.C. 631-647).
    4. Construction of educational broadcast facilities (47 U.S.C. 390-
399).
    5. Loan service of captioned films and educational media; research 
on, and production and distribution of, educational media for the 
handicapped, and training of persons in the use of such media for the 
handicapped (20 U.S.C. 1452).
    6. Demonstration residential vocational education schools (20 U.S.C. 
1321).
    7. Research and related activities in education of handicapped 
children (20 U.S.C. 1441).
    8. Educational research, dissemination and demonstration projects; 
research training; and construction under the Cooperation Research Act 
(20 U.S.C. 331-332(b)).
    9. Research in teaching modern foreign languages (20 U.S.C. 512).
    10. Training projects for manpower development and training (42 
U.S.C. 2601, 2602, 2610a-2610c).
    11. Research and training projects in Vocational Education (20 
U.S.C. 1281(a), 1282-1284).
    12. Allowances to institutions training NDEA graduate fellows (20 
U.S.C. 461-465).
    13. Grants for training in librarianship (20 U.S.C. 1031-1033).
    14. Grants for training personnel for the education of handicapped 
children (20 U.S.C. 1431).
    15. Allowances for institutions training teachers and related 
educational personnel in elementary and secondary education, or post-
secondary vocational education (20 U.S.C. 1111-1118).
    16. Recruitment, enrollment, training and assignment of Teacher 
Corps personnel (20 U.S.C. 1101-1107a).
    17. Operation and maintenance of schools in Federally-affected and 
in major disaster areas (20 U.S.C. 236-241; 241-1; 242-244).

[[Page 442]]

    18. Grants or contracts for the operation of training institutes for 
elementary or secondary school personnel to deal with special 
educational problems occasioned by desegregation (42 U.S.C. 2000c-3).
    19. Grants for in-service training of teachers and other schools 
personnel and employment of specialists in desegregation problems (42 
U.S.C. 2000c-4).
    20. Higher education students loan program (Title II, National 
Defense Education Act, 20 U.S.C. 421-429).
    21. Educational Opportunity grants and assistance for State and 
private programs of low-interest insured loans and State loans to 
students in institutions of higher education (Title IV, Higher Education 
Act of 1965, 20 U.S.C. 1061-1087).
    22. Grants and contracts for the conduct of Talent Search, Upward 
Bound, and Special Services Programs (20 U.S.C. 1068).
    23. Land-grant college aid (7 U.S.C. 301-308; 321-326; 328-331).
    24. Language and area centers (Title VI, National Defense Education 
Act, 20 U.S.C. 511).
    25. American Printing House for the Blind (20 U.S.C. 101-105).
    26. Future Farmers of America (36 U.S.C. 271-391) and similar 
programs.
    27. Science clubs (Pub. L. 85-875, 20 U.S.C. 2, note).
    28. Howard University (20 U.S.C. 121-129).
    29. Gallaudet College (31 D.C. Code, Ch. 10).
    30. Establishment and operation of a model secondary school for the 
deaf by Gallaudet College (31 D.C. Code 1051-1053; 80 Stat. 1027-1028).
    31. Faculty development programs, workshops and institutes (20 
U.S.C. 1131-1132).
    32. National Technical Institute for the Deaf (20 U.S.C. 681-685).
    33. Institutes and other programs for training educational personnel 
(Parts D, E, and F, Title V, Higher Education Act of 1965) (20 U.S.C. 
1119-1119c-4).
    34. Grants and contracts for research and demonstration projects in 
librarianship (20 U.S.C. 1034).
    35. Acquisition of college library resources (20 U.S.C. 1021-1028).
    36. Grants for strengthening developing institutions of higher 
education (20 U.S.C. 1051-1054); National Fellowships for teaching at 
developing institutions (20 U.S.C. 1055), and grants to retired 
professors to teach at developing institutions (20 U.S.C. 1056).
    37. College Work-Study Program (42 U.S.C. 2751-2757).
    38. Financial assistance for acquisition of higher education 
equipment, and minor remodeling (20 U.S.C. 1121-1129).
    39. Grants for special experimental demonstration projects and 
teacher training in adult education (20 U.S.C. 1208).
    40. Grant programs for advanced and undergraduate international 
studies (20 U.S.C. 1171-1176; 22 U.S.C. 2452(b)).
    41. Experimental projects for developing State leadership or 
establishment of special services (20 U.S.C. 865).
    42. Grants to and arrangements with State educational and other 
agencies to meet special educational needs of migratory children of 
migratory agricultural workers (20 U.S.C. 241e(c)).
    43. Grants by the Commissioner of Education to local educational 
agencies for supplementary educational centers and services; guidance, 
counseling, and testing (20 U.S.C. 841-844; 844b).
    44. Resource centers for improvement of education of handicapped 
children (20 U.S.C. 1421) and centers and services for deaf-blind 
children (20 U.S.C. 1422).
    45. Recruitment of personnel and dissemination of information on 
education of handicapped (20 U.S.C. 1433).
    46. Grants for research and demonstrations relating to physical 
education or recreation for handicapped children (20 U.S.C. 1442) and 
training of physical educators and recreation personnel (20 U.S.C. 
1434).
    47. Dropout prevention projects (20 U.S.C. 887).
    48. Bilingual education programs (20 U.S.C. 880b-880b-6).
    49. Grants to agencies and organizations for Cuban refugees (22) 
U.S.C. 2601(b)(4).
    50. Grants and contracts for special programs for children with 
specific learning disabilities including research and related 
activities, training and operating model centers (20 U.S.C. 1461).
    51. Curriculum development in vocational and technical education (20 
U.S.C. 1391).
    52. Establishment, including construction, and operation of a 
National Center on Educational Media and Materials for the Handicapped 
(20 U.S.C. 1453).
    53. Grants and contracts for the development and operation of 
experimental preschool and early education programs for handicapped (20 
U.S.C. 1423).
    54. Grants to public or private non-profit agencies to carry on the 
Follow Through Program in kindergarten and elementary schools (42 U.S.C. 
2809 (a)(2)).
    55. Grants for programs of cooperative education and grants and 
contracts for training and research in cooperative education (20 U.S.C. 
1087a-1087c).
    56. Grants and contracts to encourage the sharing of college 
facilities and resources (network for knowledge) (20 U.S.C. 1133-1133b).
    57. Grants, contracts, and fellowships to improve programs preparing 
persons for public service and to attract students to public service (20 
U.S.C. 1134-1134b).
    58. Grants for the improvement of graduate programs (20 U.S.C. 1135-
1135c).

[[Page 443]]

    59. Contracts for expanding and improving law school clinical 
experience programs (20 U.S.C. 1136-1136b).
    60. Exemplary programs and projects in vocational education (20 
U.S.C. 1301-1305).
    61. Grants to reduce borrowing cost for construction of residential 
schools and dormitories (20 U.S.C. 1323).
    62. Project grants and contracts for research and demonstration 
relating to new or improved health facilities and services (section 304, 
PHS Act, 42 U.S.C. 242b).
    63. Grants for construction or modernization of emergency rooms of 
general hospitals (Title VI, Part C, PHS Act, 42 U.S.C. 291j).
    64. Institutional and special projects grants to schools of nursing 
(sections 805-808, PHS Act, 42 U.S.C. 296d-296g).
    65. Grants for construction and initial staffing of facilities for 
prevention and treatment of alcoholism (section 241-2, Community Mental 
Health Centers Act (42 U.S.C. 2688 f and g).
    66. Grants for construction and initial staffing of specialized 
facilities for the treatment of alcoholics requiring care in such 
facilities (section 243, Community Mental Health Centers Act, 42 U.S.C. 
2688h).
    67. Special project grants for training programs, evaluation of 
existing treatment programs, and conduct of significant programs 
relating to treatment of alcoholics (section 246, Community Mental 
Health Centers Act, 42 U.S.C. 2688j-1).
    68. Grants for construction and initial staff of treatment 
facilities for narcotic addicts (section 251, Community Mental Health 
Centers Act, 42 U.S.C. 2688m).
    69. Special project grants for training programs, evaluation of 
existing treatment programs, and conduct of significant programs 
relating to treatment of narcotics addicts (section 252, Community 
Mental Health Centers Act, 42 U.S.C. 2688n-1).
    70. Grants for consultation services for Community Mental Health 
Centers, alcoholism prevention and treatment facilities for narcotic 
addicts, and facilities for mental health of children (section 264, 
Community Mental Health Centers Act, 42 U.S.C. 2688r).
    71. Grants for construction and initial staff of facilities for 
mental health of children (section 271, Community Mental Health Centers 
Act, 42 U.S.C. 2688u).
    72. Special project grants for training programs and evaluation of 
existing treatment program relating to mental health of children 
(section 272, Community Mental Health Centers Act, 42 U.S.C. 2688x).
    73. Grants and loans for construction and modernization of medical 
facilities in the District of Columbia (Pub. L. 90-457; 82 Stat. 631-3).
    74. Teaching facilities for nurse training (sections. 801-804, 
Public Health Service Act, 42 U.S.C. 296-296c).
    75. Teaching facilities for allied health professions personnel 
(section 791, Public Health Service Act, 42 U.S.C. 295h).
    76. Mental retardation research facilities (Title VI, Part D, Public 
Health Service Act, 42 U.S.C. 295-395e).
    77. George Washington University Hospital construction (76 Stat. 83, 
Pub. L. 87-460, May 31, 1962).
    78. Research projects, including conferences, communication 
activities and primate or other center grants (sections 301, 303, 304, 
and 308, Public Health Service Act, 42 U.S.C. 241, 242a, 242b, and 
242f).
    79. General research support (section 301(d), Public Health Service 
Act, 42 U.S.C. 241).
    80. Mental Health demonstrations and administrative studies (section 
303(a)(2), Public Health Service Act, 42 U.S.C. 242a).
    81. Migratory workers health services (section 310, Public Health 
Service Act, 42 U.S.C. 242h).
    82. Immunization programs (section 317, Public Health Service Act, 
42 U.S.C. 247b).
    83. Health research training projects and fellowship grants 
(sections 301, 433, Public Health Service Act, 42 U.S.C. 242, 289c).
    84. Categorical (heart, cancer, etc.) grants for training, 
traineeships or fellowships (sections 303, 433, etc., Public Health 
Service Act, 42 U.S.C. 242a, 289c, etc.).
    85. Advanced professional nurse traineeships (section 821, Public 
Health Service Act, 42 U.S.C. 297).
    86. Department projects under Appalachian Regional Development Act 
(40 U.S.C. App. A).
    87. Grants to institutions for traineeships for professional public 
health personnel section 306, Public Health Service Act, 42 U.S.C. 
242d).
    88. Grants for graduate or specialized training in public health 
(section 309, Public Health Service Act, 42 U.S.C. 242g).
    89. Health professions school student loan program (Title VII, Part 
C, Public Health Service Act, 42 U.S.C. 294-294(k)).
    90. Grants for provision in schools of public health of training, 
consultation and technical assistance in the field of public health and 
in the administration of state or local public health programs (section 
309(c)), Public Health Service Act, 42 U.S.C. 242(g)(c)).
    91. Project grants for training, studies, or demonstrations looking 
metropolitan area, or other local area plans for health services 
(section 314(c), Public Health Service Act, 42 U.S.C. 246(c)).
    92. Project grants for training, studies, or demonstrations looking 
toward the development of improved comprehensive health planning 
(section 314(c), Public Health Service Act, 42 U.S.C. 246(c)).
    93. Project grants for health services development (section 314(e), 
Public Health Service Act, 42 U.S.C. 246(e)).

[[Page 444]]

    94. Institutional and special grants to health professions schools 
(Title VII, Part E, Public Health Service Act, 42 U.S.C. 295f-295f-4).
    95. Improvement grants to centers for allied health professions 
(section 792, Public Health Service Act, 42 U.S.C. 295h-1).
    96. Scholarship grants to health professions schools (Title VII, 
Part F, Public Health Service Act, 42 U.S.C. 295h-1).
    97. Scholarship grants to schools of nursing (Title VIII, Part D, 
Public Health Service Act, 42 U.S.C. 198c-298c-6).
    98. Traineeships for advanced training of allied health professions 
personnel (section 793, Public Health Service Act, 42 U.S.C. 295h-2).
    99. Contracts to encourage full utilization of nursing educational 
talent (section 868, Public Health Service Act, 42 U.S.C. 298c-7).
    100. Grants to community mental health centers for the compensation 
of professional and technical personnel for the initial operation of new 
centers or of new services in centers (Community Mental Health Centers 
Act, Part B, 42 U.S.C. 2688-2688d).
    101. Grants for the planning, construction, equipment and operation 
of multicounty demonstration health projects in the Appalachian region 
(section 202 of Appalachian Regional Development Act, Pub. L. 89-4, as 
amended, Pub. L. 90-103 40 U.S.C. App. 202).
    102. Education, research, training, and demonstrations in the fields 
of heart disease, cancer, stroke and related diseases (sections 900-110, 
Public Health Service Act, 42 U.S.C. 299a-j).
    103. Assistance to medical libraries (sections 390-399, Public 
Health Service Act, 42 U.S.C. 280b-280b-9).
    104. Nursing student loans (sections 822-828. Public Health Service 
Act, 42 U.S.C. 297a-g).
    105. Hawaii leprosy payments (section 331, Public Health Service 
Act, 42 U.S.C. 255).
    106. Heart disease laboratories and related facilities for patient 
care (section 412(d), Public Health Service Act, 42 U.S.C. 287a(d)).
    107. Grants for construction of hospitals serving Indians (Pub. L. 
85-151, 42 U.S.C. 2005).
    108. Indian Sanitation Facilities (Pub. L. 86-121, 42 U.S.C. 2004a).
    109. Research projects relating to maternal and child health 
services and crippled children's services (42 U.S.C. 712).
    110. Maternal and child health special project grants to State 
agencies and institutions of higher learning (42 U.S.C. 703(s)).
    111. Maternity and infant care and family planning services; special 
project grants to local health agencies and other organizations (42 
U.S.C. 708).
    112. Special project grants to State agencies and institutions of 
higher learning for crippled children's services (42 U.S.C. 704(2)).
    113. Special project grants for health of school and preschool 
children (42 U.S.C. 709) and for dental health of children (42 U.S.C. 
710).
    114. Grants to institutions of higher learning for training 
personnel for health care and related services for mothers and children 
(42 U.S.C. 711).
    115. Grants and contracts for the conduct of research, experiments, 
or demonstrations relating to the developments, utilization, quality, 
organization, and financing of services, facilities, and resources of 
hospitals, long-term care facilities, for other medical facilities 
(section 304, Public Health Service Act, as amended by Pub. L. 90-174, 
42 U.S.C. 242b).
    116. Health research facilities (Title VII Part A, Public Health 
Service Act, 42 U.S.C. 292-292j).
    117. Teaching facilities for health professions personnel (Title 
VII, Part B, Public Health Service Act, 42 U.S.C. 293-293h).
    118. Project grants and contracts for research, development, 
training, and studies in the field of electronic product radiation 
(section 356, Public Health Service Act, 42 U.S.C. 263d).
    119. Project grants and contracts for research, studies, 
demonstrations, training, and education relating to coal mine health 
(section 501, Federal Coal Mine Health and Safety Act of 1969, Public 
Law 91-173).
    120. Surplus real and related personal property disposal (40 U.S.C. 
484(k)).
    121. Supplementary medical insurance benefits for the aged (Title 
XVIII, Part A, Social Security Act, 42 U.S.C. 1395c-1395i-2).
    122. Issuance of rent-free permits for vending stands, credit 
unions, employee associations, etc. (20 U.S.C. 107-107f; 45 CFR Part 20; 
section 25, 12 U.S.C. 1170).
    123. Grants for special vocational rehabilitation projects (29 
U.S.C. 34(a)(1)).
    124. Experimental, pilot or demonstration projects to promote the 
objectives of Title I, X, XIV, XVI, or XIX or Part A of Title IV of the 
Social Security Act (42 U.S.C. 1315).
    125. Social Security and welfare cooperative research or 
demonstration projects (42 U.S.C. 1310).
    126. Child welfare research, training, or demonstration projects (42 
U.S.C. 626).
    127. Training projects (Title VI, Older Americans Act, 42 U.S.C. 
3041-3042).
    128. Grants for expansion of vocational rehabilitation services (29 
U.S.C. 34(a)(2) (A)).
    129. Grants for construction of rehabilitation facilities (29 U.S.C. 
41a(a)-(e)) and for initial staffing of rehabilitation facilities (29 
U.S.C. 41a(f)).
    130. Project development grants for rehabilitation facilities (29 
U.S.C. 41a(g)(2)).
    131. Rehabilitation Facility improvement grants (29 U.S.C. 41b(b)).
    132. Agreement for the establishment and operation of a national 
center for deaf-blind youths and adults (29 U.S.C. 42a).

[[Page 445]]

    133. Project grants for services for migratory agricultural workers 
(29 U.S.C. 42b).
    134. Grants for initial staffing of community mental retardation 
facilities (42 U.S.C. 2678-2678d).
    135. Grants for training welfare personnel and for expansion and 
development of undergraduate and graduate social work programs (42 
U.S.C. 906, 908).
    136. Research and development projects concerning older Americans 
(42 U.S.C. 3031-3032).
    137. Grants to States for training of nursing home administrators 
(42 U.S.C. 1396g (e)).
    138. Contracts or jointly financed cooperative arrangements with 
industry (29 U.S.C. 34(a)(2)(B)).
    139. Project grants for new careers in rehabilitation (29 U.S.C. 
34(a)(2)(C)).
    140. Children of low-income families (20 U.S.C. 241a-241m).
    141. Grants for training (29 U.S.C. 37(a) (2)).
    142. Grants for projects for training services (29 U.S.C. 41b(a)).
    143. Grants for comprehensive juvenile delinquency planning (42 
U.S.C. 3811).
    144. Grants for project planning in juvenile delinquency (42 U.S.C. 
3812).
    145. Grants for juvenile delinquency rehabilitative services 
projects (42 U.S.C. 3822, 3842).
    146. Grants for juvenile delinquency preventive service projects (42 
U.S.C. 3861).
    147. Grants for training projects in juvenile delinquency fields (42 
U.S.C. 3861).
    148. Grants for development of improved techniques and practices in 
juvenile delinquency services (42 U.S.C. 3871).
    149. Grants for technical assistance in juvenile delinquency 
services (42 U.S.C. 3872).
    150. Grants for State technical assistance to local units in 
juvenile delinquency services (42 U.S.C. 3873).
    151. Grants for public service centers projects (42 U.S.C. 2744).
    152. Grants to public or private non-profit agencies to carry on the 
Project Headstart Program (42 U.S.C. 2809(a)(1)).
    153. Project grants for new careers for the handicapped (29 U.S.C. 
34(a)(2)(D)).
    154. Construction, demonstration, and training grants for 
university-affiliated facilities for persons with developmental 
disabilities (42 U.S.C. 2661-2666).

                 Part 2. Continuing Assistance to State

    1. Grants to States for public library services and construction, 
interlibrary cooperation and specialized State library services for 
certain State institutions and the physically handicapped (20 U.S.C. 
351-355).
    2. Grants to States for strengthening instruction in academic 
subjects (20 U.S.C. 441-444).
    3. Grants to States for vocational education (20 U.S.C. 1241-1264).
    4. Arrangements with State education agencies for training under the 
Manpower Development and Training Act (42 U.S.C. 2601-2602, 2610a).
    5. Grants to States to assist in the elementary and secondary 
education of children of low-income families (20 U.S.C. 241a-241m).
    6. Grants to States to provide for school library resources, 
textbooks and other instructional materials for pupils and teachers in 
elementary and secondary schools (20 U.S.C. 821-827).
    7. Grants to States to strengthen State departments of education (20 
U.S.C. 861-870).
    8. Grants to States for community service programs (20 U.S.C. 1001-
1011).
    9. Grants to States for adult basic education and related research, 
teacher training and special projects (20 U.S.C. 1201-1211).
    10. Grants to State educational agencies for supplementary 
educational centers and services, and guidance, counseling and testing 
(20 U.S.C. 841-847).
    11. Grants to States for research and training in vocational 
education (20 U.S.C. 1281(b)).
    12. Grants to States for exemplary programs and projects in 
vocational education (20 U.S.C. 1301-1305).
    13. Grants to States for residential vocational education schools 
(20 U.S.C. 1321).
    14. Grants to States for consumer and homemaking education (20 
U.S.C. 1341).
    15. Grants to States for cooperative vocational educational program 
(20 U.S.C. 1351-1355).
    16. Grants to States for vocational workstudy programs (20 U.S.C. 
1371-1374).
    17. Grants to States to attract and qualify teachers to meet 
critical teaching shortages (20 U.S.C. 1108-1110c).
    18. Grants to States for education of handicapped children (20 
U.S.C. 1411-1414).
    19. Grants for administration of State plans and for comprehensive 
planning to determine construction needs of institutions of higher 
education (20 U.S.C. 715(b)).
    20. Grants to States for comprehensive health planning (section 
314(a), Public Health Service Act, 42 U.S.C. 246(a)).
    21. Grants to States for establishing and maintaining adequate 
public health services (section 314(d), Public Health Service Act, 42 
U.S.C. 246(d)).
    22. Grants, loans, and loan guarantees with interest subsidies for 
hospital and medical facilities (Title VI, Public Health Service Act, 42 
U.S.C. 291 et seq.).
    23. Grants to States for community mental health centers 
construction (Community Mental Health Centers Act, Part A, 42 U.S.C. 
2681-2687).
    24. Cost of rehabilitation services (Title II, Social Security Act 
section 222(d); 42 U.S.C. 422(d)).

[[Page 446]]

    25. Surplus personal property disposal donations for health and 
educational purposes through State agencies (40 U.S.C. 484(j)).
    26. Grants for State and community programs on aging (Title III, 
Older Americans Act, 42 U.S.C. 3021-3025).
    27. Grants to States for planning, provision of services, and 
construction and operation of facilities for persons with developmental 
disabilities (42 U.S.C. 2670-2677c).
    28. Grants to States for vocational rehabilitation services (29 
U.S.C. 32); for innovation of vocational rehabilitation services (29 
U.S.C. 33); and for rehabilitation facilities planning (29 U.S.C. 
41a(g)(1)).
    29. Designation of State licensing agency for blind operators of 
vending stands (20 U.S.C. 107-107f).
    30. Grants to States for old-age assistance (42 U.S.C. 301 et seq.); 
aid to families with dependent children (42 U.S.C. 601 et seq.); child-
welfare services (42 U.S.C. 620 et seq.); aid to the blind (42 U.S.C. 
1201 et seq.); aid to the permanently and totally disabled (42 U.S.C. 
1351 et seq.); aid to the aged, blind, or disabled (42 U.S.C. 1381 et 
seq.); medical assistance (42 U.S.C. 1396 et seq.).
    31. Grants to States for maternal and child health and crippled 
children's services (42 U.S.C. 701-707); for special projects for 
maternal and infant care (42 U.S.C. 708).
    32. Grants to States for juvenile delinquency preventive and 
rehabilitative services (42 U.S.C. 3841).

[38 FR 17982, July 5, 1973; 40 FR 18173, Apr. 25, 1975, as amended at 70 
FR 24319, May 9, 2005]



 Sec. Appendix B to Part 80--Guidelines for Eliminating Discrimination 
  and Denial of Services on the Basis of Race, Color, National Origin, 
           Sex, and Handicap in Vocational Education Programs

                          I. Scope and Coverage

                      a. application of guidelines

    These Guidelines apply to recipients of any Federal financial 
assistance from the Department of Health and Human Services that offer 
or administer programs of vocational education or training. This 
includes State agency recipients.

                       b. definition of recipient

    The definition of recipient of Federal financial assistance is 
established by Department regulations implementing title VI, title IX, 
and section 504 (45 CFR 80.13(i), 86.2(h), 84.3(f).
    For the purposes of title VI:
    The term recipient means any State, political subdivision of any 
State, or instrumentality of any State or political subdivision, any 
public or private agency, institution, or organization, or other entity, 
or any individual, in any State, to whom Federal financial assistance is 
extended, directly or through another recipient, for any program, 
including any successor, assignee, or transferee thereof, but such term 
does not include any ultimate beneficiary [e.g., students] under any 
such program. (45 CFR 80.13(i)).
    For the purpose of title IX:
    Recipient means any State or political subdivision thereof, or any 
instrumentality of a State or political subdivision thereof, any public 
or private agency, institution, or organization, or other entity, or any 
person to whom Federal financial assistance is extended directly or 
through another recipient and which operates an education program or 
activity which receives or benefits from such assistance, including any 
subunit, successor, assignee, or transferee thereof. (45 CFR 86.2(h)).
    For the purposes of section 504:
    Recipient means any State or its political subdivision, any 
instrumentality of a State or its political subdivision, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended directly or 
through another recipient, including any successor, assignee, or 
transferee of a recipient, but excluding the ultimate beneficiary of the 
assistance. (45 CFR 84.3(f)).

          c. examples of recipients covered by these guidelines

    The following education agencies, when they provide vocational 
education, are examples of recipients covered by these Guidelines:
    1. The board of education of a public school district and its 
administrative agency.
    2. The administrative board of a specialized vocational high school 
serving students from more than one school district.
    3. The administrative board of a technical or vocation school that 
is used exclusively or principally for the provision of vocational 
education to persons who have completed or left high school (including 
persons seeking a certificate or an associate degree through a 
vocational program offered by the school) and who are available for 
study in preparation for entering the labor market.
    4. The administrative board of a postsecondary institution, such as 
a technical institute, skill center, junior college, community college, 
or four year college that has a department or division that provides 
vocational education to students seeking immediate employment, a 
certificate or an associate degree.
    5. The administrative board of a proprietary (private) vocational 
education school.
    6. A State agency recipient itself operating a vocational education 
facility.

[[Page 447]]

         d. examples of schools to which these guidelines apply

    The following are examples of the types of schools to which these 
Guidelines apply.
    1. A junior high school, middle school, or those grades of a 
comprehensive high school that offers instruction to inform, orient, or 
prepare students for vocational education at the secondary level.
    2. A vocational education facility operated by a State agency.
    3. A comprehensive high school that has a department exclusively or 
principally used for providing vocational education; or that offers at 
least one vocational program to secondary level students who are 
available for study in preparation for entering the labor market; or 
that offers adult vocational education to persons who have completed or 
left high school and who are available for study in preparation for 
entering the labor market.
    4. A comprehensive high school, offering the activities described 
above, that receives students on a contract basis from other school 
districts for the purpose of providing vocational education.
    5. A specialized high school used exclusively or principally for the 
provision of vocational education, that enrolls students from one or 
more school districts for the purpose of providing vocational education.
    6. A technical or vocational school that primarily provides 
vocational education to persons who have completed or left high school 
and who are available for study in preparation for entering the labor 
market, including students seeking an associate degree or certificate 
through a course of vocational instruction offered by the school.
    7. A junior college, a community college, or four-year college that 
has a department or division that provides vocational education to 
students seeking immediate employment, an associate degree or a 
certificate through a course of vocational instruction offered by the 
school.
    8. A proprietary school, licensed by the State, that offers 
vocational education.

    Note: Subsequent sections of these Guidelines may use the term 
secondary vocational education center in referring to the institutions 
described in paragraphs 3, 4 and 5 above or the term postsecondary 
vocational education center in referring to institutions described in 
paragraphs 6 and 7 above or the term vocational education center in 
referring to any or all institutions described above.

      II. Responsibilities Assigned Only to State Agency Recipients

           a. responsibilities of all state agency recipients

    State agency recipients, in addition to complying with all other 
provisions of the Guidelines relevant to them, may not require, approve 
of, or engage in any discrimination or denial of services on the basis 
of race, color, national origin, sex, or handicap in performing any of 
the following activities:
    1. Establishment of criteria or formulas for distribution of Federal 
or State funds to vocational education programs in the State;
    2. Establishment of requirements for admission to or requirements 
for the administration of vocational education programs;
    3. Approval of action by local entities providing vocational 
education. (For example, a State agency must ensure compliance with 
section IV of these Guidelines if and when it reviews a vocational 
education agency decision to create or change a geographic service 
area.);
    4. Conducting its own programs. (For example, in employing its staff 
it may not discriminate on the basis of sex or handicap.)

         b. state agencies performing oversight responsibilities

    The State agency responsible for the administration of vocational 
education programs must adopt a compliance program to prevent, identify 
and remedy discrimination on the basis of race, color, national origin, 
sex or handicap by its subrecipients. (A subrecipient, in this context, 
is a local agency or vocational education center that receives financial 
assistance through a State agency.) This compliance program must 
include:
    1. Collecting and analyzing civil rights related data and 
information that subrecipients compile for their own purposes or that 
are submitted to State and Federal officials under existing authorities;
    2. Conducting periodic compliance reviews of selected subrecipients 
(i.e., an investigation of a subrecipient to determine whether it 
engages in unlawful discrimination in any aspect of its program); upon 
finding unlawful discrimination, notifying the subrecipient of steps it 
must take to attain compliance and attempting to obtain voluntary 
compliance;
    3. Providing technical assistance upon request to subrecipients. 
This will include assisting subrecipients identify unlawful 
discrimination and instructing them in remedies for and prevention of 
such discrimination;
    4. Periodically reporting its activities and findings under the 
foregoing paragraphs, including findings of unlawful discrimination 
under paragraph 2, immediately above, to the Office for Civil Rights.
    State agencies are not required to terminate or defer assistance to 
any subrecipient. Nor are they required to conduct hearings. The 
responsibilities of the Office for Civil Rights to collect and analyze 
data, to conduct compliance reviews, to investigate complaints and to 
provide technical assistance are not diminished or attenuated by the 
requirements of Section II of the Guidelines.

[[Page 448]]

                c. statement of procedures and practices

    Within one year from the publication of these Guidelines in final 
form, each State agency recipient performing oversight responsibilities 
must submit to the Office for Civil Rights the methods of administration 
and related procedures it will follow to comply with the requirements 
described in paragraphs A and B immediately above. The Department will 
review each submission and will promptly either approve it, or return it 
to State officials for revision.

 III. Distribution of Federal Financial Assistance and Other Funds for 
                          Vocational Education

                       a. agency responsibilities

    Recipients that administer grants for vocational education must 
distribute Federal, State, or local vocational education funds so that 
no student or group of students is unlawfully denied an equal 
opportunity to benefit from vocational education on the basis of race, 
color, national origin, sex, or handicap.

                        b. distribution of funds

    Recipients may not adopt a formula or other method for the 
allocation of Federal, State, or local vocational education funds that 
has the effect of discriminating on the basis of race, color, national 
origin, sex, or handicap. However, a recipient may adopt a formula or 
other method of allocation that uses as a factor race, color, national 
origin, sex, or handicap [or an index or proxy for race, color, national 
origin, sex, or handicap e.g., number of persons receiving Aid to 
Families with Dependent Children or with limited English speaking 
ability] if the factor is included to compensate for past discrimination 
or to comply with those provisions of the Vocational Education 
Amendments of 1976 designed to assist specified protected groups.

       c. example of a pattern suggesting unlawful discrimination

    In each State it is likely that some local recipients will enroll 
greater proportions of minority students in vocational education than 
the State-wide proportion of minority students in vocational education. 
A funding formula or other method of allocation that results in such 
local recipients receiving per-pupil allocations of Federal or State 
vocational education funds lower than the State-wide average per-pupil 
allocation will be presumed unlawfully discriminatory.

         d. distribution through competitive grants or contracts

    Each State agency that establishes criteria for awarding competitive 
vocational education grants or contracts must establish and apply the 
criteria without regard to the race, color, national origin, sex, or 
handicap of any or all of a recipient's students, except to compensate 
for past discrimination.

    e. application processes for competitive or discretionary grants

    State agencies must disseminate information needed to satisfy the 
requirements of any application process for competitive or discretionary 
grants so that all recipients, including those having a high percentage 
of minority or handicapped students, are informed of and able to seek 
funds. State agencies that provide technical assistance for the 
completion of the application process must provide such assistance 
without discrimination against any one recipient or class of recipients.

     f. alteration of fund distribution to provide equal opportunity

    If the Office for Civil Rights finds that a recipient's system for 
distributing vocational education funds unlawfully discriminates on the 
basis of race, color, national origin, sex, or handicap, it will require 
the recipient to adopt an alternative nondiscriminatory method of 
distribution. The Office for Civil Rights may also require the recipient 
to compensate for the effects of its past unlawful discrimination in the 
distribution of funds.

  IV. Access and Admission of Students to Vocational Education Programs

                      a. recipient responsibilities

    Criteria controlling student eligibility for admission to vocational 
education schools, facilities and programs may not unlawfully 
discriminate on the basis of race, color, national origin, sex, or 
handicap. A recipient may not develop, impose, maintain, approve, or 
implement such discriminatory admissions criteria.

                b. site selection for vocational schools

    State and local recipients may not select or approve a site for a 
vocational education facility for the purpose or with the effect of 
excluding, segregating, or otherwise discriminating against students on 
the basis of race, color, or national origin. Recipients must locate 
vocational education facilities at sites that are readily accessible to 
both nonminority and minority communities, and that do not tend to 
identify the facility or program as intended for nonminority or minority 
students.

[[Page 449]]

 c. eligibility for admission to vocational education centers based on 
                                residence

    Recipients may not establish, approve or maintain geographic 
boundaries for a vocational education center service area or attendance 
zone, (hereinafter service area), that unlawfully exclude students on 
the basis of race, color, or national origin. The Office for Civil 
Rights will presume, subject to rebuttal, that any one or combination of 
the following circumstances indicates that the boundaries of a given 
service area are unlawfully constituted:
    1. A school system or service area contiguous to the given service 
area, contains minority or nonminority students in substantially greater 
proportion than the given service area;
    2. A substantial number of minority students who reside outside the 
given vocational education center service area, and who are not eligible 
for the center reside, nonetheless, as close to the center as a 
substantial number of non-minority students who are eligible for the 
center;
    3. The over-all vocational education program of the given service 
area in comparison to the over-all vocational education program of a 
contiguous school system or service area enrolling a substantially 
greater proportion of minority students: (a) Provides its students with 
a broader range of curricular offerings, facilities and equipment; or 
(b) provides its graduates greater opportunity for employment in jobs: 
(i) For which there is a demonstrated need in the community or region; 
(ii) that pay higher entry level salaries or wages; or (iii) that are 
generally acknowledged to offer greater prestige or status.

d. additions and renovations to existing vocational education facilities

    A recipient may not add to, modify, or renovate the physical plant 
of a vocational education facility in a manner that creates, maintains, 
or increases student segregation on the basis of race, color, national 
origin, sex, or handicap.

e. remedies for violations of site selection and geographic service area 
                              requirements

    If the conditions specified in paragraphs IV, A, B, C, or D, 
immediately above, are found and not rebutted by proof of 
nondiscrimination, the Office for Civil rights will require the 
recipient(s) to submit a plan to remedy the discrimination. The 
following are examples of steps that may be included in the plan, where 
necessary to overcome the discrimination: (1) Redrawing of the 
boundaries of the vocational education center's service area to include 
areas unlawfully excluded and/or to exclude areas unlawfully included; 
(2) provision of transportation to students residing in areas unlawfully 
excluded; (3) provision of additional programs and services to students 
who would have been eligible for attendance at the vocational education 
center but for the discriminatory service area or site selection; (4) 
reassignment of students; and (5) construction of new facilities or 
expansion of existing facilities.

 f. eligibility for admission to secondary vocational education centers 
          based on numerical limits imposed on sending schools

    A recipient may not adopt or maintain a system for admission to a 
secondary vocational education center or program that limits admission 
to a fixed number of students from each sending school included in the 
center's service area if such a system disproportionately excludes 
students from the center on the basis of race, sex, national origin or 
handicap. (Example: Assume 25 percent of a school district's high school 
students are black and that most of those black students are enrolled in 
one high school; the white students, 75 percent of the district's total 
enrollment, are generally enrolled in the five remaining high schools. 
This paragraph prohibits a system of admission to the secondary 
vocational education center that limits eligibility to a fixed and equal 
number of students from each of the district's six high schools.)

   g. remedies for violation of eligibility based on numerical limits 
                              requirements

    If the Office for Civil Rights finds a violation of paragraph F, 
above, the recipient must implement an alternative system of admissions 
that does not disproportionately exclude students on the basis of race, 
color, national origin, sex, or handicap.

 h. eligibility for admission to vocational education centers, branches 
                  or annexes based upon student option

    A vocational education center, branch or annex, open to all students 
in a service area and predominantly enrolling minority students or 
students of one race, national origin or sex, will be presumed 
unlawfully segregated if: (1) It was established by a recipient for 
members of one race, national origin or sex; or (2) it has since its 
construction been attended primarily by members of one race, national 
origin or sex; or (3) most of its program offerings have traditionally 
been selected predominantely by members of one race, national origin or 
sex.

     i. remedies for facility segregation under student option plans

    If the conditions specified in paragraph IV-H are found and not 
rebutted by proof of nondiscrimination, the Office for Civil Rights will 
require the recipient(s) to submit a plan to remedy the segregation. The 
following are

[[Page 450]]

examples of steps that may be included in the plan, where necessary to 
overcome the discrimination:
    (1) elimination of program duplication in the segregated facility 
and other proximate vocational facilities; (2) relocation or 
``clustering'' of programs or courses; (3) adding programs and courses 
that traditionally have been identified as intended for members of a 
particular race, national origin or sex to schools that have 
traditionally served members of the other sex or traditionally served 
persons of a different race or national origin; (4) merger of programs 
into one facility through school closings or new construction; (5) 
intensive outreach recruitment and counseling; (6) providing free 
transportation to students whose enrollment would promote desegregation.
    [Paragraph J omitted]

 k. eligibility based on evaluation of each applicant under admissions 
                                criteria

    Recipients may not judge candidates for admission to vocational 
education programs on the basis of criteria that have the effect of 
disproportionately excluding persons of a particular race, color, 
national origin, sex, or handicap. However, if a recipient can 
demonstrate that such criteria have been validated as essential to 
participation in a given program and that alternative equally valid 
criteria that do not have such a disproportionate adverse effect are 
unavailable, the criteria will be judged nondiscriminatory. Examples of 
admissions criteria that must meet this test are past academic 
performance, record of disciplinary infractions, counselors' approval, 
teachers' recommendations, interest inventories, high school diplomas 
and standardized tests, such as the Test of Adult Basic Education 
(TABE).
    An introductory, preliminary, or exploratory course may not be 
established as a prerequisite for admission to a program unless the 
course has been and is available without regard to race, color, national 
origin, sex, and handicap. However, a course that was formerly only 
available on a discriminatory basis may be made a prerequisite for 
admission to a program if the recipient can demonstrate that: (a) the 
course is essential to participation in the program; and (b) the course 
is presently available to those seeking enrollment for the first time 
and to those formerly excluded.

l. eligibility of national origin minority persons with limited english 
                             language skills

    Recipients may not restrict an applicant's admission to vocational 
education programs because the applicant, as a member of a national 
origin minority with limited English language skills, cannot participate 
in and benefit from vocational instruction to the same extent as a 
student whose primary language is English. It is the responsibility of 
the recipient to identify such applicants and assess their ability to 
participate in vocational instruction.
    Acceptable methods of identification include: (1) Identification by 
administrative staff, teachers, or parents of secondary level students; 
(2) identification by the student in postsecondary or adult programs; 
and (3) appropriate diagnostic procedures, if necessary.
    Recipients must take steps to open all vocational programs to these 
national origin minority students. A recipient must demonstrate that a 
concentration of students with limited English language skills in one or 
a few programs is not the result of discriminatory limitations upon the 
opportunities available to such students.

 m. remedial action in behalf of persons with limited english language 
                                 skills

    If the Office for Civil Rights finds that a recipient has denied 
national origin minority persons admission to a vocational school or 
program because of their limited English language skills or has assigned 
students to vocational programs solely on the basis of their limited 
English language skills, the recipient will be required to submit a 
remedial plan that insures national origin minority students equal 
access to vocational education programs.

                n. equal access for handicapped students

    Recipients may not deny handicapped students access to vocational 
education programs or courses because of architectural or equipment 
barriers, or because of the need for related aids and services or 
auxiliary aids. If necessary, recipients must: (1) Modify instructional 
equipment; (2) modify or adapt the manner in which the courses are 
offered; (3) house the program in facilities that are readily accessible 
to mobility impaired students or alter facilities to make them readily 
accessible to mobility impaired students; and (4) provide auxiliary aids 
that effectively make lectures and necessary materials available to 
postsecondary handicapped students; (5) provide related aids or services 
that assure secondary students an appropriate education.
    Academic requirements that the recipient can demonstrate are 
essential to a program of instruction or to any directly related 
licensing requirement will not be regarded as discriminatory. However, 
where possible, a recipient must adjust those requirements to the needs 
of individual handicapped students.
    Access to vocational programs or courses may not be denied 
handicapped students on the ground that employment opportunities in any 
occupation or profession may be more

[[Page 451]]

limited for handicapped persons than for non-handicapped persons.

                         o. public notification

    Prior to the beginning of each school year, recipients must advise 
students, parents, employees and the general public that all vocational 
opportunities will be offered without regard to race, color, national 
origin, sex, or handicap. Announcement of this policy of non-
discrimination may be made, for example, in local newspapers, recipient 
publications and/or other media that reach the general public, program 
beneficiaries, minorities (including national origin minorities with 
limited English language skills), women, and handicapped persons. A 
brief summary of program offerings and admission criteria should be 
included in the announcement; also the name, address and telephone 
number of the person designated to coordinate Title IX and Section 504 
compliance activity.
    If a recipient's service area contains a community of national 
origin minority persons with limited English language skills, public 
notification materials must be disseminated to that community in its 
language and must state that recipients will take steps to assure that 
the lack of English language skills will not be a barrier to admission 
and participation in vocational education programs.

                V. Counseling and Prevocational Programs

                      a. recipient responsibilities

    Recipients must insure that their counseling materials and 
activities (including student program selection and career/employment 
selection), promotional, and recruitment efforts do not discriminate on 
the basis of race, color, national origin, sex, or handicap.

                 b. counseling and prospects for success

    Recipients that operate vocational education programs must insure 
that counselors do not direct or urge any student to enroll in a 
particular career or program, or measure or predict a student's 
prospects for success in any career or program based upon the student's 
race, color, national origin, sex, or handicap. Recipients may not 
counsel handicapped students toward more restrictive career objectives 
than nonhandicapped students with similar abilities and interests. If a 
vocational program disproportionately enrolls male or female students, 
minority or nonminority students, or handicapped students, recipients 
must take steps to insure that the disproportion does not result from 
unlawful discrimination in counseling activities.

                    c. student recruitment activities

    Recipients must conduct their student recruitment activities so as 
not to exclude or limit opportunities on the basis of race, color, 
national origin, sex, or handicap. Where recruitment activities involve 
the presentation or portrayal of vocational and career opportunities, 
the curricula and programs described should cover a broad range of 
occupational opportunities and not be limited on the basis of the race, 
color, national origin, sex, or handicap of the students or potential 
students to whom the presentation is made. Also, to the extent possible, 
recruiting teams should include persons of different races, national 
origins, sexes, and handicaps.

   d. counseling of students with limited english-speaking ability or 
                           hearing impairments

    Recipients must insure that counselors can effectively communicate 
with national origin minority students with limited English language 
skills and with students who have hearing impairments. This requirement 
may be satisfied by having interpreters available.

                        e. promotional activities

    Recipients may not undertake promotional efforts (including 
activities of school officials, counselors, and vocational staff) in a 
manner that creates or perpetuates stereotypes or limitations based on 
race, color, national origin, sex or handicap. Examples of promotional 
efforts are career days, parents' night, shop demonstrations, 
visitations by groups of prospective students and by representatives 
from business and industry. Materials that are part of promotional 
efforts may not create or perpetuate stereotypes through text or 
illustration. To the extent possible they should portray males or 
females, minorities or handicapped persons in programs and occupations 
in which these groups traditionally have not been represented. If a 
recipient's service area contains a community of national origin 
minority persons with limited English language skills, promotional 
literature must be distributed to that community in its language.

 VI. Equal Opportunity in the Vocational Education Instructional Setting

               a. accommodations for handicapped students

    Recipients must place secondary level handicapped students in the 
regular educational environment of any vocational education program to 
the maximum extent appropriate to the needs of the student unless it can 
be demonstrated that the education of the handicapped person in the 
regular environment with the use of supplementary aids

[[Page 452]]

and services cannot be achieved satisfactorily. Handicapped students may 
be placed in a program only after the recipient satisfies the provisions 
of the Department's Regulation, 45 CFR part 84, relating to evaluation, 
placement, and procedural safeguards. If a separate class or facility is 
identifiable as being for handicapped persons, the facility, the 
programs, and the services must be comparable to the facilities, 
programs, and services offered to nonhandicapped students.

                     b. student financial assistance

    Recipients may not award financial assistance in the form of loans, 
grants, scholarships, special funds, subsidies, compensation for work, 
or prizes to vocational education students on the basis of race, color, 
national origin, sex, or handicap, except to overcome the effects of 
past discrimination. Recipients may administer sex restricted financial 
assistance where the assistance and restriction are established by will, 
trust, bequest, or any similar legal instrument, if the overall effect 
of all financial assistance awarded does not discriminate on the basis 
of sex. Materials and information used to notify students of 
opportunities for financial assistance may not contain language or 
examples that would lead applicants to believe the assistance is 
provided on a discriminatory basis. If a recipient's service area 
contains a community of national origin minority persons with limited 
English language skills, such information must be disseminated to that 
community in its language.

  c. housing in residential postsecondary vocational education centers

    Recipients must extend housing opportunities without discrimination 
based on race, color, national origin, sex, or handicap. This obligation 
extends to recipients that provide on-campus housing and/or that have 
agreements with providers of off-campus housing. In particular, a 
recipient postsecondary vocational education program that provides on-
campus or off-campus housing to its nonhandicapped students must 
provide, at the same cost and under the same conditions, comparable 
convenient and accessible housing to handicapped students.

                        d. comparable facilities

    Recipients must provide changing rooms, showers, and other 
facilities for students of one sex that are comparable to those provided 
to students of the other sex. This may be accomplished by alternating 
use of the same facilities or by providing separate, comparable 
facilities.
    Such facilities must be adapted or modified to the extent necessary 
to make the vocational education program readily accessible to 
handicapped persons.

 VII. Work Study, Cooperative Vocational Education, Job Placement, and 
                           Apprentice Training

 a. responsibilities in cooperative vocational education programs, work-
               study programs, and job placement programs

    A recipient must insure that: (a) It does not discriminate against 
its students on the basis of race, color, national origin, sex, or 
handicap in making available opportunities in cooperative education, 
work study and job placement programs; and (b) students participating in 
cooperative education, work study and job placement programs are not 
discriminated against by employers or prospective employers on the basis 
of race, color, national origin, sex, or handicap in recruitment, 
hiring, placement, assignment to work tasks, hours of employment, levels 
of responsibility, and in pay.
    If a recipient enters into a written agreement for the referral or 
assignment of students to an employer, the agreement must contain an 
assurance from the employer that students will be accepted and assigned 
to jobs and otherwise treated without regard to race, color, national 
origin, sex, or handicap.
    Recipients may not honor any employer's request for students who are 
free of handicaps or for students of a particular race, color, national 
origin, or sex. In the event an employer or prospective employer is or 
has been subject to court action involving discrimination in employment, 
school officials should rely on the court's findings if the decision 
resolves the issue of whether the employer has engaged in unlawful 
discrimination.

                     b. apprentice training programs

    A recipient may not enter into any agreement for the provision or 
support of apprentice training for students or union members with any 
labor union or other sponsor that discriminates against its members or 
applicants for membership on the basis of race, color, national origin, 
sex, or handicap. If a recipient enters into a written agreement with a 
labor union or other sponsor providing for apprentice training, the 
agreement must contain an assurance from the union or other sponsor: (1) 
That it does not engage in such discrimination against its membership or 
applicants for membership; and (2) that apprentice training will be 
offered and conducted for its membership free of such discrimination.

                  VIII. Employment of Faculty and Staff

                         a. employment generally

    Recipients may not engage in any employment practice that 
discriminates against any employee or applicant for employment on the 
basis of sex or handicap. Recipients

[[Page 453]]

may not engage in any employment practice that discriminates on the 
basis of race, color, or national origin if such discrimination tends to 
result in segregation, exclusion or other discrimination against 
students.

                             b. recruitment

    Recipients may not limit their recruitment for employees to schools, 
communities, or companies disproportionately composed of persons of a 
particular race, color, national origin, sex, or handicap except for the 
purpose of overcoming the effects of past discrimination. Every source 
of faculty must be notified that the recipient does not discriminate in 
employment on the basis of race, color, national origin, sex, or 
handicap.

                      c. patterns of discrimination

    Whenever the Office for Civil Rights finds that in light of the 
representation of protected groups in the relevant labor market there is 
a significant underrepresentation or overrepresentation of protected 
group persons on the staff of a vocational education school or program, 
it will presume that the disproportion results from unlawful 
discrimination. This presumption can be overcome by proof that qualified 
persons of the particular race, color, national origin, or sex, or that 
qualified handicapped persons are not in fact available in the relevant 
labor market.

                           d. salary policies

    Recipients must establish and maintain faculty salary scales and 
policy based upon the conditions and responsibilities of employment, 
without regard to race, color, national origin, sex or handicap.

         e. employment opportunities for handicapped applicants

    Recipients must provide equal employment opportunities for teaching 
and administrative positions to handicapped applicants who can perform 
the essential functions of the position in question. Recipients must 
make reasonable accommodation for the physical or mental limitations of 
handicapped applicants who are otherwise qualified unless recipients can 
demonstrate that the accommodation would impose an undue hardship.

                  f. the effects of past discrimination

    Recipients must take steps to overcome the effects of past 
discrimination in the recruitment, hiring, and assignment of faculty. 
Such steps may include the recruitment or reassignment of qualified 
persons of a particular race, national origin, or sex, or who are 
handicapped.

       g. staff of state advisory councils of vocational education

    State Advisory Councils of Vocational Education are recipients of 
Federal financial assistance and therefore must comply with Section VIII 
of the Guidelines.

  h. employment at state operated vocational education centers through 
                     state civil-service authorities

    Where recruitment and hiring of staff for State operated vocational 
education centers is conducted by a State civil service employment 
authority, the State education agency operating the program must insure 
that recruitment and hiring of staff for the vocational education center 
is conducted in accordance with the requirements of these Guidelines.

              IX. Proprietary Vocational Education Schools

                      a. recipient responsibilities

    Proprietary vocational education schools that are recipients of 
Federal financial assistance through Federal student assistance programs 
or otherwise are subject to all of the requirements of the Department's 
regulations and these Guidelines.

                        b. enforcement authority

    Enforcement of the provisions of Title IX of the Education 
Amendments of 1972 and section 504 of the Rehabilitation Act of 1973 is 
the responsibility of the Department of Health and Human Services. 
However, authority to enforce Title VI of the Civil Rights Act of 1964 
for proprietary vocational education schools has been delegated to the 
Veterans Administration.
    When the Office for Civil Rights receives a Title VI complaint 
alleging discrimination by a proprietary vocational education school it 
will forward the complaint to the Veterans Administration and cite the 
applicable requirements of the Department's regulations and these 
Guidelines. The complainant will be notified of such action.

[44 FR 17164, Mar. 21, 1979]



PART 81_PRACTICE AND PROCEDURE FOR HEARINGS UNDER PART 80 OF THIS TITLE--
Table of Contents



                      Subpart A_General Information

Sec.
81.1 Scope of rules.
81.2 Records to be public.
81.3 Use of gender and number.
81.4 Suspension of rules.

[[Page 454]]

                    Subpart B_Appearance and Practice

81.11 Appearance.
81.12 Authority for representation.
81.13 Exclusion from hearing for misconduct.

                            Subpart C_Parties

81.21 Parties; General Counsel deemed a party.
81.22 Amici curiae.
81.23 Complainants not parties.

       Subpart D_Form, Execution, Service and Filing of Documents

81.31 Form of documents to be filed.
81.32 Signature of documents.
81.33 Filing and service.
81.34 Service--how made.
81.35 Date of service.
81.36 Certificate of service.

                             Subpart E_Time

81.41 Computation.
81.42 Extension of time or postponement.
81.43 Reduction of time to file documents.

                 Subpart F_Proceedings Prior to Hearing

81.51 Notice of hearing or opportunity for hearing.
81.52 Answer to notice.
81.53 Amendment of notice or answer.
81.54 Request for hearing.
81.55 Consolidation.
81.56 Motions.
81.57 Responses to motions and petitions.
81.58 Disposition of motions and petitions.

       Subpart G_Responsibilities and Duties of Presiding Officer

81.61 Who presides.
81.62 Designation of hearing examiner.
81.63 Authority of presiding officer.

                      Subpart H_Hearing Procedures

81.71 Statement of position and trial briefs.
81.72 Evidentiary purpose.
81.73 Testimony.
81.74 Exhibits.
81.75 Affidavits.
81.76 Depositions.
81.77 Admissions as to facts and documents.
81.78 Evidence.
81.79 Cross-examination.
81.80 Unsponsored written material.
81.81 Objections.
81.82 Exceptions to rulings of presiding officer unnecessary.
81.83 Official notice.
81.84 Public document items.
81.85 Offer of proof.
81.86 Appeals from ruling of presiding officer.

                          Subpart I_The Record

81.91 Official transcript.
81.92 Record for decision.

               Subpart J_Posthearing Procedures, Decisions

81.101 Posthearing briefs: Proposed findings and conclusions.
81.102 Decisions following hearing.
81.103 Exceptions to initial or recommended decisions.
81.104 Final decisions.
81.105 Oral argument to the reviewing authority.
81.106 Review by the Secretary.
81.107 Service on amici curiae.

                Subpart K_Judicial Standards of Practice

81.111 Conduct.
81.112 Improper conduct.
81.113 Ex parte communications.
81.114 Expeditious treatment.
81.115 Matters not prohibited.
81.116 Filing of ex parte communications.

                  Subpart L_Posttermination Proceedings

81.121 Posttermination proceedings.

                          Subpart M_Definitions

81.131 Definitions.

    Authority: 5 U.S.C. 301 and 45 CFR 80.9(d).

    Source: 32 FR 15156, Nov. 2, 1967, unless otherwise noted.



                      Subpart A_General Information



Sec.  81.1  Scope of rules.

    The rules of procedure in this part supplement Sec. Sec.  80.9 and 
80.10 of this subtitle and govern the practice for hearings, decisions, 
and administrative review conducted by the Department of Health and 
Human Services, pursuant to Title VI of the Civil Rights Act of 1964 
(section 602, 78 Stat. 252) and part 80 of this subtitle.



Sec.  81.2  Records to be public.

    All pleadings, correspondence, exhibits, transcripts, of testimony, 
exceptions, briefs, decisions, and other documents filed in the docket 
in any proceeding may be inspected and copied in the office of the Civil 
Rights hearing clerk. Inquiries may be made at the Central Information 
Center, Department of Health and Human Services,

[[Page 455]]

330 Independence Avenue SW., Washington, DC 20201.



Sec.  81.3  Use of gender and number.

    As used in this part, words importing the singular number may extend 
and be applied to several persons or things, and vice versa. Words 
importing the masculine gender may be applied to females or 
organizations.



Sec.  81.4  Suspension of rules.

    Upon notice to all parties, the reviewing authority or the presiding 
officer, with respect to matters pending before them, may modify or 
waive any rule in this part upon determination that no party will be 
unduly prejudiced and the ends of justice will thereby be served.



                    Subpart B_Appearance and Practice



Sec.  81.11  Appearance.

    A party may appear in person or by counsel and participate fully in 
any proceeding. A State agency or a corporation may appear by any of its 
officers or by any employee it authorizes to appear on its behalf. 
Counsel must be members in good standing of the bar of a State, 
Territory, or possession of the United States or of the District of 
Columbia or the Commonwealth of Puerto Rico.



Sec.  81.12  Authority for representation.

    Any individual acting in a representative capacity in any proceeding 
may be required to show his authority to act in such capacity.



Sec.  81.13  Exclusion from hearing for misconduct.

    Disrespectful, disorderly, or contumacious language or contemptuous 
conduct, refusal to comply with directions, or continued use of dilatory 
tactics by any person at any hearing before a presiding officer shall 
constitute grounds for immediate exclusion of such person from the 
hearing by the presiding officer.



                            Subpart C_Parties



Sec.  81.21  Parties; General Counsel deemed a party.

    (a) The term party shall include an applicant or recipient or other 
person to whom a notice of hearing or opportunity for hearing has been 
mailed naming him a respondent.
    (b) The General Counsel of the Department of Health and Human 
Services shall be deemed a party to all proceedings.



Sec.  81.22  Amici curiae.

    (a) Any interested person or organization may file a petition to 
participate in a proceeding as an amicus curiae. Such petition shall be 
filed prior to the prehearing conference, or if none is held, before the 
commencement of the hearing, unless the petitioner shows good cause for 
filing the petition later. The presiding officer may grant the petition 
if he finds that the petitioner has a legitimate interest in the 
proceedings, that such participation will not unduly delay the outcome, 
and may contribute materially to the proper disposition thereof. An 
amicus curiae is not a party and may not introduce evidence at a 
hearing.
    (b) An amicus curiae may submit a statement of position to the 
presiding officer prior to the beginning of a hearing, and shall serve a 
copy on each party. The amicus curiae may submit a brief on each 
occasion a decision is to be made or a prior decision is subject to 
review. His brief shall be filed and served on each party within the 
time limits applicable to the party whose position he deems himself to 
support; or if he does not deem himself to support the position of any 
party, within the longest time limit applicable to any party at that 
particular stage of the proceedings.
    (c) When all parties have completed their initial examination of a 
witness, any amicus curiae may request the presiding officer to propound 
specific questions to the witness. The presiding officer, in his 
discretion, may grant any such request if he believes the proposed 
additional testimony may assist materially in elucidating factual 
matters at issue between the parties and will not expand the issues.

[[Page 456]]



Sec.  81.23  Complainants not parties.

    A person submitting a complaint pursuant to Sec.  80.7(b) of this 
title is not a party to the proceedings governed by this part, but may 
petition, after proceedings are initiated, to become an amicus curiae.



       Subpart D_Form, Execution, Service and Filing of Documents



Sec.  81.31  Form of documents to be filed.

    Documents to be filed under the rules in this part shall be dated, 
the original signed in ink, shall show the docket description and title 
of the proceeding, and shall show the title, if any, and address of the 
signatory. Copies need not be signed but the name of the person signing 
the original shall be reproduced. Documents shall be legible and shall 
not be more than 8\1/2\ inches wide and 12 inches long.



Sec.  81.32  Signature of documents.

    The signature of a party, authorized officer, employee or attorney 
constitutes a certificate that he has read the document, that to the 
best of his knowledge, information, and belief there is good ground to 
support it, and that it is not interposed for delay. If a document is 
not signed or is signed with intent to defeat the purpose of this 
section, it may be stricken as sham and false and the proceeding may 
proceed as though the document had not been filed. Similar action may be 
taken if scandalous or indecent matter is inserted.



Sec.  81.33  Filing and service.

    All notices by a Department official, and all written motions, 
requests, petitions, memoranda, pleadings, exceptions, briefs, 
decisions, and correspondence to a Department official from a party, or 
vice versa, relating to a proceeding after its commencement shall be 
filed and served on all parties. Parties shall supply the original and 
two copies of documents submitted for filing. Filings shall be made with 
the Civil Rights hearing clerk at the address stated in the notice of 
hearing or notice of opportunity for hearing, during regular business 
hours. Regular business hours are every Monday through Friday (legal 
holidays in the District of Columbia excepted) from 9 a.m. to 5:30 p.m., 
eastern standard or daylight saving time, whichever is effective in the 
District of Columbia at the time. Originals only on exhibits and 
transcripts of testimony need be filed. For requirements of service on 
amici curiae, see Sec.  81.107.



Sec.  81.34  Service--how made.

    Service shall be made by personal delivery of one copy to each 
person to be served or by mailing by first-class mail, properly 
addressed with postage prepaid. When a party or amicus has appeared by 
attorney or other representative, service upon such attorney or 
representative will be deemed service upon the party or amicus. 
Documents served by mail preferably should be mailed in sufficient time 
to reach the addressee by the date on which the original is due to be 
filed, and should be air mailed if the addressee is more than 300 miles 
distant.



Sec.  81.35  Date of service.

    The date of service shall be the day when the matter is deposited in 
the U.S. mail or is delivered in person, except that the date of service 
of the initial notice of hearing or opportunity for hearing shall be the 
date of its delivery, or of its attempted delivery if refused.



Sec.  81.36  Certificate of service.

    The original of every document filed and required to be served upon 
parties to a proceeding shall be endorsed with a certificate of service 
signed by the party making service or by his attorney or representative, 
stating that such service has been made, the date of service, and the 
manner of service, whether by mail or personal delivery.



                             Subpart E_Time



Sec.  81.41  Computation.

    In computing any period of time under the rules in this part or in 
an order issued hereunder, the time begins with the day following the 
act, event, or default, and includes the last day of the period, unless 
it is a Saturday, Sunday, or legal holiday observed in the District of 
Columbia, in which

[[Page 457]]

event it includes the next following business day. When the period of 
time prescribed or allowed is less than 7 days, intermediate Saturdays, 
Sundays, and legal holidays shall be excluded from the computation.



Sec.  81.42  Extension of time or postponement.

    Requests for extension of time should be served on all parties and 
should set forth the reasons for the application. Applications may be 
granted upon a showing of good cause by the applicant. From the 
designation of a presiding officer until the issuance of his decision 
such requests should be addressed to him. Answers to such requests are 
permitted, if made promptly.



Sec.  81.43  Reduction of time to file documents.

    For good cause, the reviewing authority or the presiding officer, 
with respect to matters pending before them, may reduce any time limit 
prescribed by the rules in this part, except as provided by law or in 
part 80 of this title.



                 Subpart F_Proceedings Prior to Hearing



Sec.  81.51  Notice of hearing or opportunity for hearing.

    Proceedings are commenced by mailing a notice of hearing or 
opportunity for hearing to an affected applicant or recipient, pursuant 
to Sec.  80.9 of this title.



Sec.  81.52  Answer to notice.

    The respondent, applicant or recipient may file an answer to the 
notice within 20 days after service thereof. Answers shall admit or deny 
specifically and in detail each allegation of the notice, unless the 
respondent party is without knowledge, in which case his answer should 
so state, and the statement will be deemed a denial. Allegations of fact 
in the notice not denied or controverted by answer shall be deemed 
admitted. Matters alleged as affirmative defenses shall be separately 
stated and numbered. Failure of the respondent to file an answer within 
the 20-day period following service of the notice may be deemed an 
admission of all matters of fact recited in the notice.



Sec.  81.53  Amendment of notice or answer.

    The General Counsel may amend the notice of hearing or opportunity 
for hearing once as a matter of course before an answer thereto is 
served, and each respondent may amend his answer once as a matter of 
course not later than 10 days before the date fixed for hearing but in 
no event later than 20 days from the date of service of his original 
answer. Otherwise a notice or answer may be amended only by leave of the 
presiding officer. A respondent shall file his answer to an amended 
notice within the time remaining for filing the answer to the original 
notice or within 10 days after service of the amended notice, whichever 
period may be the longer, unless the presiding officer otherwise orders.



Sec.  81.54  Request for hearing.

    Within 20 days after service of a notice of opportunity for hearing 
which does not fix a date for hearing the respondent, either in his 
answer or in a separate document, may request a hearing. Failure of the 
respondent to request a hearing shall be deemed a waiver of the right to 
a hearing and to constitute his consent to the making of a decision on 
the basis of such information as is available.



Sec.  81.55  Consolidation.

    The responsible Department official may provide for proceedings in 
the Department to be joined or consolidated for hearing with proceedings 
in other Federal departments or agencies, by agreement with such other 
departments or agencies. All parties to any proceeding consolidated 
subsequently to service of the notice of hearing or opportunity for 
hearing shall be promptly served with notice of such consolidation.



Sec.  81.56  Motions.

    Motions and petitions shall state the relief sought, the authority 
relied upon, and the facts alleged. If made before or after the hearing, 
these matters shall be in writing. If made at the hearing, they may be 
stated orally; but the

[[Page 458]]

presiding officer may require that they be reduced to writing and filed 
and served on all parties in the same manner as a formal motion. 
Motions, answers, and replies shall be addressed to the presiding 
officer, if the case is pending before him. A repetitious motion will 
not be entertained.



Sec.  81.57  Responses to motions and petitions.

    Within 8 days after a written motion or petition is served, or such 
other period as the reviewing authority or the presiding officer may 
fix, any party may file a response thereto. An immediate oral response 
may be made to an oral motion.



Sec.  81.58  Disposition of motions and petitions.

    The reviewing authority or the presiding officer may not sustain or 
grant a written motion or petition prior to expiration of the time for 
filing responses thereto, but may overrule or deny such motion or 
petition without awaiting response: Provided, however, That prehearing 
conferences, hearings and decisions need not be delayed pending 
disposition of motions or petitions. Oral motions and petitions may be 
ruled on immediately. Motions and petitions submitted to the reviewing 
authority or the presiding officer, respectively, and not disposed of in 
separate rulings or in their respective decisions will be deemed denied. 
Oral arguments shall not be held or written motions or petitions unless 
the presiding officer in his discretion expressly so orders.



       Subpart G_Responsibilities and Duties of Presiding Officer



Sec.  81.61  Who presides.

    A hearing examiner assigned under 5 U.S.C. 3105 or 3344 (formerly 
section 11 of the Administrative Procedure Act) shall preside over the 
taking of evidence in any hearing to which these rules of procedure 
apply.



Sec.  81.62  Designation of hearing examiner.

    The designation of the hearing examiner as presiding officer shall 
be in writing, and shall specify whether the examiner is to make an 
initial decision or to certify the entire record including his 
recommended findings and proposed decision to the reviewing authority, 
and may also fix the time and place of hearing. A copy of such order 
shall be served on all parties. After service of an order designating a 
hearing examiner to preside, and until such examiner makes his decision, 
motions and petitions shall be submitted to him. In the case of the 
death, illness, disqualification or unavailability of the designated 
hearing examiner, another hearing examiner may be designated to take his 
place.



Sec.  81.63  Authority of presiding officer.

    The presiding officer shall have the duty to conduct a fair hearing, 
to take all necessary action to avoid delay, and to maintain order. He 
shall have all powers necessary to these ends, including (but not 
limited to) the power to:
    (a) Arrange and issue notice of the date, time, and place of 
hearings, or, upon due notice to the parties, to change the date, time, 
and place of hearings previously set.
    (b) Hold conferences to settle, simplify, or fix the issues in a 
proceeding, or to consider other matters that may aid in the expeditious 
disposition of the proceeding.
    (c) Require parties and amici curiae to state their position with 
respect to the various issues in the proceeding.
    (d) Administer oaths and affirmations.
    (e) Rule on motions, and other procedural items on matters pending 
before him.
    (f) Regulate the course of the hearing and conduct of counsel 
therein.
    (g) Examine witnesses and direct witnesses to testify.
    (h) Receive, rule on, exclude or limit evidence.
    (i) Fix the time for filing motions, petitions, briefs, or other 
items in matters pending before him.
    (j) Issue initial or recommended decisions.
    (k) Take any action authorized by the rules in this part or in 
conformance with the provisions of 5 U.S.C. 551-559 (the Administrative 
Procedure Act).

[[Page 459]]



                      Subpart H_Hearing Procedures



Sec.  81.71  Statement of position and trial briefs.

    The presiding officer may require parties and amici curiae to file 
written statements of position prior to the beginning of a hearing. The 
presiding officer may also require the parties to submit trial briefs.



Sec.  81.72  Evidentiary purpose.

    (a) The hearing is directed to receiving factual evidence and expert 
opinion testimony related to the issues in the proceeding. Argument will 
not be received in evidence; rather it should be presented in 
statements, memoranda, or briefs, as determined by the presiding 
officer. Brief opening statements, which shall be limited to statement 
of the party's position and what he intends to prove, may be made at 
hearings.
    (b) Hearings for the reception of evidence will be held only in 
cases where issues of fact must be resolved in order to determine 
whether the respondent has failed to comply with one or more applicable 
requirements of part 80 of this title. In any case where it appears from 
the respondent's answer to the notice of hearing or opportunity for 
hearing, from his failure timely to answer, or from his admissions or 
stipulations in the record, that there are no matters of material fact 
in dispute, the reviewing authority or presiding officer may enter an 
order so finding, vacating the hearing date if one has been set, and 
fixing the time for filing briefs under Sec.  81.101. Thereafter the 
proceedings shall go to conclusion in accordance with subpart J of this 
part. The presiding officer may allow an appeal from such order in 
accordance with Sec.  81.86.



Sec.  81.73  Testimony.

    Testimony shall be given orally under oath or affirmation by 
witnesses at the hearing; but the presiding officer, in his discretion, 
may require or permit that the direct testimony of any witness be 
prepared in writing and served on all parties in advance of the hearing. 
Such testimony may be adopted by the witness at the hearing, and filed 
as part of the record thereof. Unless authorized by the presiding 
officer, witnesses will not be permitted to read prepared testimony into 
the record. Except as provided in Sec. Sec.  81.75 and 81.76, witnesses 
shall be available at the hearing for cross-examination.



Sec.  81.74  Exhibits.

    Proposed exhibits shall be exchanged at the prehearing conference, 
or otherwise prior to the hearing if the presiding officer so requires. 
Proposed exhibits not so exchanged may be denied admission as evidence. 
The authenticity of all proposed exhibits exchanged prior to hearing 
will be deemed admitted unless written objection thereto is filed prior 
to the hearing or unless good cause is shown at the hearing for failure 
to file such written objection.



Sec.  81.75  Affidavits.

    An affidavit is; not inadmissible as such. Unless the presiding 
officer fixes other time periods affidavits shall be filed and served on 
the parties not later than 15 days prior to the hearing; and not less 
than 7 days prior to hearing a party may file and serve written 
objection to any affidavit on the ground that he believes it necessary 
to test the truth of assertions therein at hearing. In such event the 
assertions objected to will not be received in evidence unless the 
affiant is made available for cross-examination, or the presiding 
officer determines that cross-examination is not necessary for the full 
and true disclosure of facts referred to in such assertions. 
Notwithstanding any objection, however, affidavits may be considered in 
the case of any respondent who waives a hearing.



Sec.  81.76  Depositions.

    Upon such terms as may be just, for the convenience of the parties 
or of the Department, the presiding officer may authorize or direct the 
testimony of any witness to be taken by deposition.



Sec.  81.77  Admissions as to facts and documents.

    Not later than 15 days prior to the scheduled date of the hearing 
except for good cause shown, or prior to such earlier date as the 
presiding officer may order, any party may serve upon

[[Page 460]]

an opposing party a written request for the admission of the genuineness 
and authenticity of any relevant documents described in and exhibited 
with the request, or for the admission of the truth of any relevant 
matters of fact stated in the request. Each of the matters of which an 
admission is requested shall be deemed admitted, unless within a period 
designated in the request (not less than 10 days after service thereof, 
or within such further time as the presiding officer or the reviewing 
authority if no presiding officer has yet been designated may allow upon 
motion and notice) the party to whom the request is directed serves upon 
the requesting party a sworn statement either denying specifically the 
matters of which an admission is requested or setting forth in detail 
the reasons why he cannot truthfully either admit or deny such matters. 
Copies of requests for admission and answers thereto shall be served on 
all parties. Any admission made by a party to such request is only for 
the purposes of the pending proceeding, or any proceeding or action 
instituted for the enforcement of any order entered therein, and shall 
not constitute and admission by him for any other purpose or be used 
against him in any other proceeding or action.



Sec.  81.78  Evidence.

    Irrelevant, immaterial, unreliable, and unduly repetitious evidence 
will be excluded.



Sec.  81.79  Cross-examination.

    A witness may be cross-examined on any matter material to the 
proceeding without regard to the scope of his direct examination.



Sec.  81.80  Unsponsored written material.

    Letters expressing views or urging action and other unsponsored 
written material regarding matters in issue in a hearing will be placed 
in the correspondence section of the docket of the proceeding. These 
data are not deemed part of the evidence or record in the hearing.



Sec.  81.81  Objections.

    Objections to evidence shall be timely and briefly state the ground 
relied upon.



Sec.  81.82  Exceptions to rulings of presiding officer unnecessary.

    Exceptions to rulings of the presiding officer are unnecessary. It 
is sufficient that a party, at the time the ruling of the presiding 
officer is sought, makes known the action which he desires the presiding 
officer to take, or his objection to an action taken, and his grounds 
therefor.



Sec.  81.83  Official notice.

    Where official notice is taken or is to be taken of a material fact 
not appearing in the evidence of record, any party, on timely request, 
shall be afforded an opportunity to show the contrary.



Sec.  81.84  Public document items.

    Whenever there is offered (in whole or in part) a public document, 
such as an official report, decision, opinion, or published scientific 
or economic statistical data issued by any of the executive departments 
(or their subdivisions), legislative agencies or committees, or 
administrative agencies of the Federal Government (including Government-
owned corporations), or a similar document issued by a State or its 
agencies, and such document (or part thereof) has been shown by the 
offeror to be reasonably available to the public, such document need not 
be produced or marked for identification, but may be offered for 
official notice, as a public document item by specifying the document or 
relevant part thereof.



Sec.  81.85  Offer of proof.

    An offer of proof made in connection with an objection taken to any 
ruling of the presiding officer rejecting or excluding proffered oral 
testimony shall consist of a statement of the substance of the evidence 
which counsel contends would be adduced by such testimony; and, if the 
excluded evidence consists of evidence in documentary or written form or 
of reference to documents or records, a copy of such evidence shall be 
marked for identification and shall

[[Page 461]]

accompany the record as the offer of proof.



Sec.  81.86  Appeals from ruling of presiding officer.

    Rulings of the presiding officer may not be appealed to the 
reviewing authority prior to his consideration of the entire proceeding 
except with the consent of the presiding officer and where he certifies 
on the record or in writing that the allowance of an interlocutory 
appeal is clearly necessary to prevent exceptional delay, expense, or 
prejudice to any party, or substantial detriment to the public interest. 
If an appeal is allowed, any party may file a brief with the reviewing 
authority within such period as the presiding officer directs. No oral 
argument will be heard unless the reviewing authority directs otherwise. 
At any time prior to submission of the proceeding to it for decisions, 
the reviewing authority may direct the presiding officer to certify any 
question or the entire record to it for decision. Where the entire 
record is so certified, the presiding officer shall recommend a 
decision.



                          Subpart I_The Record



Sec.  81.91  Official transcript.

    The Department will designate the official reporter for all 
hearings. The official transcripts of testimony taken, together with any 
exhibits, briefs, or memoranda of law filed therewith shall be filed 
with the Department. Transcripts of testimony in hearings may be 
obtained from the official reporter by the parties and the public at 
rates not to exceed the maximum rates fixed by the contract between the 
Department and the reporter. Upon notice to all parties, the presiding 
officer may authorize corrections to the transcript which involve 
matters of substance.



Sec.  81.92  Record for decision.

    The transcript of testimony, exhibits, and all papers and requests 
filed in the proceedings, except the correspondence section of the 
docket, including rulings and any recommended or initial decision shall 
constitute the exclusive record for decision.



               Subpart J_Posthearing Procedures, Decisions



Sec.  81.101  Posthearing briefs: Proposed findings and conclusions.

    (a) The presiding officer shall fix the time for filing posthearing 
briefs, which may contain proposed findings of fact and conclusions of 
law, and, if permitted, reply briefs.
    (b) Briefs should include a summary of the evidence relied upon 
together with references to exhibit numbers and pages of the transcript, 
with citations of the authorities relied upon.



Sec.  81.102  Decisions following hearing.

    When the time for submission of posthearing briefs has expired, the 
presiding officer shall certify the entire record, including his 
recommended findings and proposed decision, to the responsible 
Department official; or if so authorized he shall make an initial 
decision. A copy of the recommended findings and proposed decision, or 
of the initial decision, shall be served upon all parties, and amici, if 
any.



Sec.  81.103  Exceptions to initial or recommended decisions.

    Within 20 days after the mailing of an initial or recommended 
decision, any party may file exceptions to the decision, stating reasons 
therefor, with the reviewing authority. Any other party may file a 
response thereto within 30 days after the mailing of the decision. Upon 
the filing of such exceptions, the reviewing authority shall review the 
decision and issue its own decision thereon.



Sec.  81.104  Final decisions.

    (a) Where the hearing is conducted by a hearing examiner who makes 
an initial decision, if no exceptions thereto are filed within the 20-
day period specified in Sec.  81.103, such decision shall become the 
final decision of the Department, and shall constitute ``final agency 
action'' within the meaning of 5 U.S.C. 704 (formerly section 10(c) of 
the Administrative Procedure Act), subject to the provisions of Sec.  
81.106.
    (b) Where the hearing is conducted by a hearing examiner who makes a 
recommended decision, or upon the filing of exceptions to a hearing 
examiner's

[[Page 462]]

initial decision, the reviewing authority shall review the recommended 
or initial decision and shall issue its own decision thereon, which 
shall become the final decision of the Department, and shall constitute 
``final agency action'' within the meaning of 5 U.S.C. 704 (formerly 
section 10(c) of the Administrative Procedure Act), subject to the 
provisions of Sec.  81.106.
    (c) All final decisions shall be promptly served on all parties, and 
amici, if any.



Sec.  81.105  Oral argument to the reviewing authority.

    (a) If any party desires to argue a case orally on exceptions or 
replies to exceptions to an initial or recommended decision, he shall 
make such request in writing. The reviewing authority may grant or deny 
such requests in its discretion. If granted, it will serve notice of 
oral argument on all parties. The notice will set forth the order of 
presentation, the amount of time allotted, and the time and place for 
argument. The names of persons who will argue should be filed with the 
Department hearing clerk not later than 7 days before the date set for 
oral argument.
    (b) The purpose of oral argument is to emphasize and clarify the 
written argument in the briefs. Reading at length from the brief or 
other texts is not favored. Participants should confine their arguments 
to points of controlling importance and to points upon which exceptions 
have been filed. Consolidations of appearances at oral argument by 
parties taking the same side will permit the parties' interests to be 
presented more effectively in the time allotted.
    (c) Pamphlets, charts, and other written material may be presented 
at oral argument only if such material is limited to facts already in 
the record and is served on all parties and filed with the Department 
hearing clerk at least 7 days before the argument.



Sec.  81.106  Review by the Secretary.

    Within 20 days after an initial decision becomes a final decision 
pursuant to Sec.  81.104(a) or within 20 days of the mailing of a final 
decision referred to in Sec.  81.104(b), as the case may be, a party may 
request the Secretary to review the final decision. The Secretary may 
grant or deny such request, in whole or in part, or serve notice of his 
intent to review the decision in whole or in part upon his own motion. 
If the Secretary grants the requested review, or if he serves notice of 
intent to review upon his own motion, each party to the decision shall 
have 20 days following notice of the Secretary's proposed action within 
which to file exceptions to the decision and supporting briefs and 
memoranda, or briefs and memoranda in support of the decision. Failure 
of a party to request review under this paragraph shall not be deemed a 
failure to exhaust administrative remedies for the purpose of obtaining 
judicial review.



Sec.  81.107  Service on amici curiae.

    All briefs, exceptions, memoranda, requests, and decisions referred 
to in this Subpart J shall be served upon amici curiae at the same times 
and in the same manner required for service on parties. Any written 
statements of position and trial briefs required of parties under Sec.  
81.71 shall be served on amici.



                Subpart K_Judicial Standards of Practice



Sec.  81.111  Conduct.

    Parties and their representatives are expected to conduct themselves 
with honor and dignity and observe judicial standards of practice and 
ethics in all proceedings. They should not indulge in offensive 
personalities, unseemly wrangling, or intemperate accusations or 
characterizations. A representative of any party whether or not a lawyer 
shall observe the traditional responsibilities of lawyers as officers of 
the court and use his best efforts to restrain his client from 
improprieties in connection with a proceeding.



Sec.  81.112  Improper conduct.

    With respect to any proceeding it is improper for any interested 
person to attempt to sway the judgment of the reviewing authority by 
undertaking to bring pressure or influence to bear upon any officer 
having a responsibility for a decision in the proceeding,

[[Page 463]]

or his decisional staff. It is improper that such interested persons or 
any members of the Department's staff or the presiding officer give 
statements to communications media, by paid advertisement or otherwise, 
designed to influence the judgment of any officer having a 
responsibility for a decision in the proceeding, or his decisional 
staff. It is improper for any person to solicit communications to any 
such officer, or his decisional staff, other than proper communications 
by parties or amici curiae.



Sec.  81.113  Ex parte communications.

    Only persons employed by or assigned to work with the reviewing 
authority who perform no investigative or prosecuting function in 
connection with a proceeding shall communicate ex parte with the 
reviewing authority, or the presiding officer, or any employee or person 
involved in the decisional process in such proceedings with respect to 
the merits of that or a factually related proceeding. The reviewing 
authority, the presiding officer, or any employee or person involved in 
the decisional process of a proceeding shall communicate ex parte with 
respect to the merits of that or a factually related proceeding only 
with persons employed by or assigned to work with them and who perform 
no investigative or prosecuting function in connection with the 
proceeding.



Sec.  81.114  Expeditious treatment.

    Requests for expeditious treatment of matters pending before the 
responsible Department official or the presiding officer are deemed 
communications on the merits, and are improper except when forwarded 
from parties to a proceeding and served upon all other parties thereto. 
Such communications should be in the form of a motion.



Sec.  81.115  Matters not prohibited.

    A request for information which merely inquires about the status of 
a proceeding without discussing issues or expressing points of view is 
not deemed an ex parte communication. Such requests should be directed 
to the Civil Rights hearing clerk. Communications with respect to minor 
procedural matters or inquiries or emergency requests for extensions of 
time are not deemed ex parte communications prohibited by Sec.  81.113. 
Where feasible, however, such communications should be by letter with 
copies to all parties. Ex parte communications between a respondent and 
the responsible Department official or the Secretary with respect to 
securing such respondent's voluntary compliance with any requirement of 
part 80 of this title are not prohibited.



Sec.  81.116  Filing of ex parte communications.

    A prohibited communication in writing received by the Secretary, the 
reviewing authority, or by the presiding officer, shall be made public 
by placing it in the correspondence file of the docket in the case and 
will not be considered as part of the record for decision. If the 
prohibited communication is received orally a memorandum setting forth 
its substance shall be made and filed in the correspondence section of 
the docket in the case. A person referred to in such memorandum may file 
a comment for inclusion in the docket if he considers the memorandum to 
be incorrect.



                  Subpart L_Posttermination Proceedings



Sec.  81.121  Posttermination proceedings.

    (a) An applicant or recipient adversely affected by the order 
terminating, discontinuing, or refusing Federal financial assistance in 
consequence of proceedings pursuant to this title may request the 
responsible Department official for an order authorizing payment, or 
permitting resumption, of Federal financial assistance. Such request 
shall be in writing and shall affirmatively show that since entry of the 
order, it has brought its program or activity into compliance with the 
requirements of the Act, and with the Regulation thereunder, and shall 
set forth specifically, and in detail, the steps which it has taken to 
achieve such compliance. If the responsible Department official denies 
such request the applicant or recipient shall be given an expeditious 
hearing if it so requests in writing and specifies why it

[[Page 464]]

believes the responsible Department official to have been in error. The 
request for such a hearing shall be addressed to the responsible 
Department official and shall be made within 30 days after the applicant 
or recipient is informed that the responsible Department official has 
refused to authorize payment or permit resumption of Federal financial 
assistance.
    (b) In the event that a hearing shall be requested pursuant to 
paragraph (a) of this section, the hearing procedures established by 
this part shall be applicable to the proceedings, except as otherwise 
provided in this section.



                          Subpart M_Definitions



Sec.  81.131  Definitions.

    The definitions contained in Sec.  80.13 of this subtitle apply to 
this part, unless the context otherwise requires, and the term reviewing 
authority as used herein includes the Secretary of Health and Human 
Services, with respect to action by that official under Sec.  81.106.
    Transition provisions: (a) The amendments herein shall become 
effective upon publication in the Federal Register.
    (b) These rules shall apply to any proceeding or part thereof to 
which part 80 of this title as amended effective October 19, 1967 
(published in the Federal Register for October 19, 1967), and as the 
same may be hereafter amended, applies. In the case of any proceeding or 
part thereof governed by the provisions of part 80 as that part existed 
prior to such amendment, and rules in this part 81 shall apply as if 
these amendments were not in effect.



PART 83_REGULATION FOR THE ADMINISTRATION AND ENFORCEMENT OF SECTIONS 799A 
AND 845 OF THE PUBLIC HEALTH SERVICE ACT--Table of Contents



                Subpart A_Purposes; Definitions; Coverage

Sec.
83.1 Purposes.
83.2 Definitions.
83.3 Remedial and affirmative actions.
83.4 Coverage.
83.5 Effect of title IX of the Education Amendments of 1972.
83.6-83.9 [Reserved]

            Subpart B_Discrimination in Admissions Prohibited

83.10 General obligations.
83.11 Discriminatory acts prohibited.
83.12 Recruitment.
83.13 State law and licensure requirements.
83.14 Development and dissemination of nondiscrimination policy.
83.15 Designation by entity of responsible employee and adoption of 
          grievance procedures.
83.16-83.19 [Reserved]

                     Subpart C_Procedures [Interim]

83.20 Interim procedures.

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

    Source: 40 FR 28573, July 7, 1975, unless otherwise noted.



                Subpart A_Purposes; Definitions; Coverage



Sec.  83.1  Purposes.

    (a) The purposes of this part are (1) to effectuate the provisions 
of sections 799A and 845 of the Public Health Service Act, which forbid 
the extension of Federal support under title VII or VIII of that Act to 
any entity of the types described in those sections unless that entity 
submits to the Secretary of Health and Human Services an assurance 
satisfactory to the Secretary that it will not discriminate on the basis 
of sex in the admission of individuals to its training programs, and (2) 
to implement the policy of the Secretary that no Federal support will be 
extended under those titles to any other entity unless that entity 
submits to the Secretary an assurance satisfactory to the Secretary that 
it will not discriminate on the basis of sex in the admission of 
individuals to its training programs.
    (b) The objective of this part is to abolish use of sex as a 
criterion in the admission of individuals to all training programs 
operated by an entity which receives support under title VII or VIII of 
the Act, and thereby to foster maximum use of all available human 
resources in meeting the Nation's needs for qualified health personnel.

[[Page 465]]



Sec.  83.2  Definitions.

    As used in this part the term--
    (a) Act means the Public Health Service Act.
    (b) Administrative law judge means a person appointed by the 
Reviewing Authority to preside over a hearing held under this part.
    (c) Assurance commitment clause means a clause in an invitation for 
a contract offer extended by the Federal Government under title VII or 
VIII of the Act which, when executed by an entity as part of such offer, 
becomes, upon acceptance of such offer by the Federal Government, a 
contractual obligation of such entity to comply with its assurance 
submitted to the Director under this part.
    (d) Department means the Department of Health and Human Services.
    (e) Director means the Director of the Office for Civil Rights of 
the Department.
    (f) Entity means (1) a school of medicine, school of dentistry, 
school of osteopathy, school of pharmacy, school of optometry, school of 
podiatry, school of veterinary medicine, or school of public health, as 
defined by section 724 of the Act;
    (2) A school of nursing, as defined by section 843 of the Act;
    (3) A school or college of a training center for an allied health 
profession, as defined by section 795 of the Act, or of another 
institution of undergraduate education which school or college can 
provide a training program;
    (4) An affiliated hospital, as defined by section 724 or 795 of the 
Act; and
    (5) Any other institution, organization, consortium, or agency which 
is eligible to receive Federal support.
    (g) Federal support means assistance extended after November 18, 
1971, under title VII or VIII of the Act to an entity by means of a 
grant to, a contract with, or a loan guarantee or interest subsidy 
payment made on behalf of, such entity.
    (h) Federally supported entity means an entity which receives 
Federal support.
    (i) Reviewing authority means that component of the Department to 
which the Secretary delegates authority to review the decision of an 
administrative law judge in a proceeding arising under this part.
    (j) Secretary means the Secretary of Health and Human Services.
    (k) Training program means a program of training described by 
section 724(4) of the Act, a program of education described by, or 
specified by regulations pursuant to, section 795(1) of the Act, a 
program of education described by section 843(c), 843(d), or 843(e) of 
the Act, and a program leading to any license or certification requisite 
to the practice of a health profession for which a degree specified in 
any such section is granted.



Sec.  83.3  Remedial and affirmative actions.

    (a) Remedial action. If the Director finds that an entity has 
discriminated against persons on the basis of sex in any of its training 
programs, such entity shall take such remedial action as the Director 
deems necessary to overcome the effects of such discrimination.
    (b) Affirmative action. In the absence of a finding of 
discrimination on the basis of sex in a training program, an entity may 
take affirmative action to overcome the effects of conditions which 
resulted in limited participation therein by persons of a particular 
sex.



Sec.  83.4  Coverage.

    (a) If an entity receives Federal support for any of its training 
programs, all of its training programs thereby become subject to this 
part.
    (b) The obligation imposed by this part on a federally supported 
entity not to discriminate on the basis of sex in the admission of 
individuals to a training program includes not only the obligation not 
to discriminate on such basis in the selection of individuals for such 
program, but also the obligation not to discriminate on such basis 
against individuals after their selection for such program.
    (c) The obligation imposed by this part on a federally supported 
entity not to discriminate on the basis of sex against an individual who 
is an applicant for, or is enrolled in, a training program is applicable 
to the same extent to the actions of such entity with

[[Page 466]]

respect to an applicant for, or a student enrolled in, an undergraduate 
program of education of such entity if individuals enrolled in such 
program must complete all or a part of such programs to be eligible for 
admission to an undergraduate training program of such entity.
    (d) An entity shall not discriminate on the basis of sex in 
violation of this part for as long as such entity receives or benefits 
from Federal support. For purposes of the preceding sentence, an entity 
shall be deemed to continue to receive or benefit from Federal support 
for as long as it retains ownership, possession, or use of either real 
or personal property and which was acquired in whole or in part with 
Federal support. If an entity receives value for property which was 
acquired in whole or in part with Federal support and such value is 
applied toward the acquisition of other property, such entity shall be 
deemed to continue to receive or benefit from such support for as long 
as such entity retains ownership, use, or possession of such other 
property.
    (e) An entity shall not transfer property which was acquired, 
constructed, altered, repaired, expanded, or renovated in whole or in 
part with Federal support unless the agency, organization, or individual 
to whom such property is to be transferred has submitted to the 
Director, and he or she has found satisfactory, an assurance of 
compliance with this part. The preceding sentence shall not apply with 
respect to any real or personal property for which payments have been 
recaptured by the United States under title VII or VIII of the Act, with 
respect to any other property for which the transferring entity has 
refunded to the Federal Government the Federal share of the fair market 
value of such property, or with respect to any personal property which 
has only scrap value to both the entity and the agency, organization or 
individual to which the property is to be transferred.



Sec.  83.5  Effect of title IX of the Education Amendments of 1972.

    The obligations imposed by this part are independent of obligations 
imposed by or pursuant to title IX of the Education Amendments of 1972.



Sec. Sec.  83.6-83.9  [Reserved]



            Subpart B_Discrimination in Admissions Prohibited



Sec.  83.10  General obligations.

    (a) Eligibility for support. No entity will be provided Federal 
support unless such entity has furnished the Director assurances 
satisfactory to him or her that it will not discriminate on the basis of 
sex, in violation of this part, in the admission of individuals to each 
of its training programs.
    (b) Eliminating the effects of discrimination. An assurance of 
compliance with this part will not be satisfactory to the Director if 
the entity submitting such assurance fails to take whatever remedial 
action in accordance with Sec.  83.3(a) that is necessary for such 
entity to eliminate the effects of any discrimination on the basis of 
sex in the admission of individuals to its training programs that such 
entity practiced prior to the submission to the Director of such 
assurance, or practices at the time of or subsequent to such submission. 
The Director may require such entity, as a condition to determining that 
its assurance is, or remains, satisfactory, to take specific actions, or 
to submit to him or her specific information, bearing upon compliance 
with this part.



Sec.  83.11  Discriminatory acts prohibited.

    (a) General. No person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, or be subjected to 
discrimination under any academic, extracurricular, research, 
occupational training, or other training program or activity operated by 
an entity.
    (b) Discrimination in selection. In determining whether an 
individual satisfies any enrollment, eligibility, or other condition for 
selection for a training program, a federally supported entity shall 
not:
    (1) On the basis of sex, given preference to one individual over 
another by ranking applicants on such basis, or otherwise give such 
preference; or
    (2) Apply numerical limitations upon the number or proportion of 
persons of either sex who may be admitted; or

[[Page 467]]

    (3) Otherwise treat one individual differently from another on the 
basis of sex.
    (c) Testing. A federally supported entity shall not administer or 
operate any test or use any criterion for admission which has a 
disproportionately adverse effect on persons on the basis of sex unless 
the use of such test or criterion is shown validly to predict success in 
the training program or activity in question and alternative tests or 
criteria which do not have such a disproportionately adverse effect are 
shown to be unavailable.
    (d) Prohibitions relating to marital or parental status. In 
determining whether a person satisfies any policy or criterion for 
admission, or in making any offer of admission, in providing financial 
aid or any other benefit, an entity to which this subpart applies:
    (1) Shall not apply any rule concerning the actual or potential 
parental, family, or marital status of a student or applicant which 
treats persons differently on the basis of sex;
    (2) Shall not discriminate against or exclude any person on the 
basis of pregnancy, childbirth, termination of pregnancy or recovery 
therefrom, or establish or follow any rule or practice which so 
discriminates or excludes;
    (3) Shall treat pregnancy, childbirth, termination of pregnancy and 
any temporary disabilities related to or resulting from pregnancy, 
childbirth, termination of pregnancy or recovery therefrom in the same 
manner and under the same policies as any other temporary disability or 
physical condition; and
    (4) Shall not make pre-admission inquiry as to the marital status of 
an applicant for admission, including whether such applicant is 
``Miss,'' or ``Mrs.'' A recipient may make pre-admission inquiry as to 
the sex of an applicant for admission, but only if such inquiry is made 
equally of such applicants of both sexes and if the results of such 
inquiry are not used in connection with discrimination prohibited by 
this part.
    (e) Preference to students from other institutions in admission. An 
entity shall not give preference to applicants for admission, on the 
basis of attendance at any educational institution or other school or 
entity which admits as students only or predominantly members of one 
sex, if the giving of such preference has the effect of discriminating 
on the basis of sex in violation of this part.
    (f) Discrimination in the provision of benefits and services--(1) 
General. Except as otherwise provided in this part in providing 
financial aid or any other benefit, or in providing any service, to an 
applicant for a training program or to a student enrolled in such 
program, no federally supported entity shall on the basis of sex:
    (i) Treat one individual differently from another in determining 
whether such individual satisfies any requirement or condition for the 
provision of such benefit of service;
    (ii) Provide a different benefit or service or provide a benefit or 
a service in a different manner;
    (iii) Deny an individual any such benefit or service;
    (iv) Subject an individual to separate treatment or rules of 
behavior;
    (v) Discriminate against any individual by assisting an agency, 
organization, or individual in providing, in a manner which 
discriminates on the basis of sex, a benefit or service to applicants 
for or students enrolled in a training program; or
    (vi) Otherwise limit any individual in the enjoyment of any right, 
privilege, advantage, or opportunity.
    (2) Financial aid established by certain legal instruments. (i) A 
recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established pursuant to domestic or foreign wills, trusts, bequests, or 
similar legal instruments or by acts of a foreign government which 
requires that awards be made to members of a particular sex specified 
therein: Provided, That the overall effect of the award of such sex-
restricted scholarships, fellowships, and other forms of financial 
assistance does not discriminate on the basis of sex.
    (ii) To ensure nondiscriminatory awards of assistance as required in 
paragraph (f)(2)(i) of this section, recipients shall develop and use 
procedures under which:
    (A) Students are selected for award of financial assistance on the 
basis of non-discriminatory criteria and not on

[[Page 468]]

the basis of availability of funds restricted to members of a particular 
sex;
    (B) An appropriate sex-restricted scholarship, fellowship, or other 
form of financial assistance is allocated to each student selected under 
paragraph (f)(2)(ii) (A) of this section; and
    (C) No student is denied the award for which he or she was selected 
under paragraph (f)(2)(ii)(A) of this section because of the absence of 
a scholarship, fellowship, or other form of financial assistance 
designated for a member of that student's sex.
    (g) Housing. (1) An entity shall not, on the basis of sex, apply 
different rules or regulations, impose different fees or requirements, 
or offer different services or benefits related to housing, except as 
provided in this subsection (including housing provided only to married 
students).
    (2) An entity may provide separate housing on the basis of sex.
    (3) Housing provided by an entity to students of one sex, when 
compared to that provided to students of the other sex, shall be as a 
whole: (i) Proportionate in quantity to the number of students of that 
sex applying for such housing; and (ii) comparable in quality and cost 
to the student.
    (4) An entity shall not on the basis of sex, administer different 
policies or practices concerning occupancy by its students of housing 
other than that provided by such recipient.
    (5) An entity which, through solicitation, listing, approval of 
housing, or otherwise, assists any agency, organization, or person in 
making housing available to any of its students, shall take reasonable 
action to ensure that such housing is provided to students of one sex, 
when compared to that provided to students of the other sex, is as a 
whole: (i) Proportionate in quantity and (ii) comparable in quality and 
cost to the student. An entity may render such assistance to any agency, 
organization, or person which provides all or part of such housing to 
students only of one sex.
    (h) Inter-institutional programs. If a federally supported entity 
aids participation, by any applicant for or student enrolled in any of 
its training programs, in any program or activity of another 
organization or agency, such entity shall:
    (1) Develop and implement a procedure to assure itself that such 
organization or agency takes no action with respect to such applicants 
or students which this part would prohibit such entity from taking; and
    (2) Not aid such participation if such organization or agency takes 
such action.
    (i) Discrimination in employment prohibited. A federally supported 
entity shall not discriminate on the basis of sex in employment 
practices relating to its professional and other staff who work directly 
with applicants for or students enrolled in any of its training 
programs. The provisions of this subpart apply to:
    (1) Recruitment, advertising, and the process of application for 
employment;
    (2) Hiring, upgrading, promotion, consideration for and award of 
tenure, demotion, transfer, layoff, termination, right of return from 
layoff, and rehiring;
    (3) Rates of pay or any other form of compensation, and changes in 
compensation;
    (4) Job assignments, classifications and structure, including 
position descriptions, lines of progression, and seniority lists;
    (5) The terms of any collective bargaining agreement;
    (6) Granting and return from leaves of absence, pregnancy leave, 
leave for persons of either sex to care for children or dependents, or 
any other leave;
    (7) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (8) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, selection for tuition assistance, selection for sabbaticals 
and leaves of absence to pursue training;
    (9) Employer-sponsored activities, including social or recreational 
programs; and
    (10) Any other term, condition, or privilege of employment.

[[Page 469]]



Sec.  83.12  Recruitment.

    (a) Comparable recruitment. A federally supported entity shall, with 
respect to each of its training programs, make comparable efforts to 
recruit members of each sex in the geographic area from which such 
entity attracts its students. A federally supported entity shall not 
recruit for any of its training programs exclusively or primarily at 
organizations or agencies which admit as members or students, or which 
provide a service for, only members of one sex unless such entity can 
demonstrate that such action is part of a recruitment program which does 
not have the effect of discriminating on the basis of sex in selection 
for a training program.
    (b) Recruitment practices. A federally supported entity shall:
    (1) Prominently include a statement of its policy of 
nondiscrimination on the basis of sex in each announcement, bulletin, 
catalogue, or application form which describes the training program of 
such entity or is used in connection with the recruitment of employees 
who will work directly with applicants for or students enrolled in a 
training program;
    (2) Distribute without discrimination on the basis of sex any 
announcements, bulletins, catalogues, or other materials used in 
connection with the recruitment of students for a training program or 
employees who will work directly with applicants for such program or 
such students; and
    (3) Apprise each of its recruitment representatives of its policy of 
nondiscrimination on the basis of sex, and require such representatives 
to adhere to such policy.



Sec.  83.13  State law and licensure requirements.

    The obligation of an entity to comply with this part is not obviated 
or alleviated by any State or local law which would render an applicant 
for or student enrolled in a training program ineligible on the basis of 
sex for any license or certificate requisite to the practice of the 
health profession for which such applicant seeks, or student pursues, 
training.



Sec.  83.14  Development and dissemination of nondiscrimination policy.

    (a) A federally supported entity shall develop a written policy 
statement of nondiscrimination on the basis of sex, in accordance with 
this part, and shall implement specific and continuing steps to 
publicize such statement to applicants for admission or employment, 
students, employees, and sources of referral of applicants for admission 
or employment.
    (b) Each federally supported entity shall prominently include a 
statement of the policy described in paragraph (a) of this section in 
each announcement, bulletin, catalogue, and application form which it 
makes available to any person of a type described in paragraph (a) of 
this section, or which is otherwise used in connection with the 
recruitment of students or employees who work directly with students and 
applicants for admission.
    (c) A federally supported entity shall not use or distribute a 
publication of the type described in this section which suggests, by 
text or illustration, that such recipient treats applicants, students, 
or employees differently on the basis of sex except as such treatment is 
permitted by this part.



Sec.  83.15  Designation by entity of responsible employee and adoption 
of grievance procedures.

    (a) Designation of responsible employee. A federally supported 
entity shall designate at least one employee to coordinate its efforts 
to comply with and carry out its responsibilities under this part, 
including any investigation of any complaint communicated to such entity 
alleging its noncompliance with this part or alleging any action which 
would be prohibited by this part. The entity shall notify all of its 
students and employees who work directly with students and applicants 
for admission of the name, office address and telephone number of the 
employee or employees appointed pursuant to this paragraph.
    (b) Complaint procedure of entity. A federally supported entity 
shall adopt and publish grievance procedures providing for prompt and 
equitable resolution of student and employee complaints alleging any 
action which

[[Page 470]]

would be prohibited by this part. Such procedures shall be in writing 
and available to all present and prospective students and employees.



Sec. Sec.  83.16-83.19  [Reserved]



                     Subpart C_Procedures [Interim]



Sec.  83.20  Interim procedures.

    For the purposes of implementing this part during the period between 
its effective date and the final issuance by the Department of a 
consolidated procedural regulation applicable to sections 704 and 845 of 
the Act and other civil rights authorities administered by the 
Department, the procedural provisions applicable to title VI of the 
Civil Rights Act of 1964 are hereby adopted and incorporated herein by 
reference. These procedures may be found at 45 CFR 80.6 through 80.11 
and 45 CFR part 81.



PART 84_NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS 
OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents



                      Subpart A_General Provisions

Sec.
84.1 Purpose.
84.2 Application.
84.3 Definitions.
84.4 Discrimination prohibited.
84.5 Assurances required.
84.6 Remedial action, voluntary action, and self-evaluation.
84.7 Designation of responsible employee and adoption of grievance 
          procedures.
84.8 Notice.
84.9 Administrative requirements for small recipients.
84.10 Effect of State or local law or other requirements and effect of 
          employment opportunities.

                     Subpart B_Employment Practices

84.11 Discrimination prohibited.
84.12 Reasonable accommodation.
84.13 Employment criteria.
84.14 Preemployment inquiries.
84.15-84.20 [Reserved]

                         Subpart C_Accessibility

84.21 Discrimination prohibited.
84.22 Existing facilities.
84.23 New construction.
84.24-84.30 [Reserved]

        Subpart D_Preschool, Elementary, and Secondary Education

84.31 Application of this subpart.
84.32 Location and notification.
84.33 Free appropriate public education.
84.34 Educational setting.
84.35 Evaluation and placement.
84.36 Procedural safeguards.
84.37 Nonacademic services.
84.38 Preschool and adult education.
84.39 Private education.
84.40 [Reserved]

                    Subpart E_Postsecondary Education

84.41 Application of this subpart.
84.42 Admissions and recruitment.
84.43 Treatment of students; general.
84.44 Academic adjustments.
84.45 Housing.
84.46 Financial and employment assistance to students.
84.47 Nonacademic services.
84.48-84.50 [Reserved]

             Subpart F_Health, Welfare, and Social Services

84.51 Application of this subpart.
84.52 Health, welfare, and other social services.
84.53 Drug and alcohol addicts.
84.54 Education of institutionalized persons.
84.55 Procedures relating to health care for handicapped infants.
84.56-84.60 [Reserved]

                          Subpart G_Procedures

84.61 Procedures.

Appendix A to Part 84--Analysis of Final Regulation
Appendix B to Part 84--Guidelines for Eliminating Discrimination and 
          Denial of Services on the Basis of Race, Color, National 
          Origin, Sex, and Handicap in Vocational Education Programs 
          [Note]
Appendix C to Part 84--Guidelines Relating to Health Care for 
          Handicapped Infants

    Authority: 20 U.S.C. 1405; 29 U.S.C. 794; 42 U.S.C. 290dd-2; 21 
U.S.C. 1174.

    Source: 42 FR 22677, May 4, 1977, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  84.1  Purpose.

    The purpose of this part is to effectuate section 504 of the 
Rehabilitation

[[Page 471]]

Act of 1973, which is designed to eliminate discrimination on the basis 
of handicap in any program or activity receiving Federal financial 
assistance.



Sec.  84.2  Application.

    This part applies to each recipient of Federal financial assistance 
from the Department of Health and Human Services and to the program or 
activity that receives such assistance.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.3  Definitions.

    As used in this part, the term:
    (a) The Act means the Rehabilitation Act of 1973, Pub. L. 93-112, as 
amended by the Rehabilitation Act Amendments of 1974, Pub. L. 93-516, 29 
U.S.C. 794.
    (b) Section 504 means section 504 of the Act.
    (c) Education of the Handicapped Act means that statute as amended 
by the Education for all Handicapped Children Act of 1975, Pub. L. 94-
142, 20 U.S.C. 1401 et seq.
    (d) Department means the Department of Health and Human Services.
    (e) Director means the Director of the Office for Civil Rights of 
the Department.
    (f) Recipient means any state or its political subdivision, any 
instrumentality of a state or its political subdivision, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended directly or 
through another recipient, including any successor, assignee, or 
transferee of a recipient, but excluding the ultimate beneficiary of the 
assistance.
    (g) Applicant for assistance means one who submits an application, 
request, or plan required to be approved by a Department official or by 
a recipient as a condition to becoming a recipient.
    (h) Federal financial assistance means any grant, loan, contract 
(other than a procurement contract or a contract of insurance or 
guaranty), or any other arrangement by which the Department provides or 
otherwise makes available assistance in the form of:
    (1) Funds;
    (2) Services of Federal personnel; or
    (3) Real and personal property or any interest in or use of such 
property, including:
    (i) Transfers or leases of such property for less than fair market 
value or for reduced consideration; and
    (ii) Proceeds from a subsequent transfer or lease of such property 
if the Federal share of its fair market value is not returned to the 
Federal Government.
    (i) Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, or other real or personal 
property or interest in such property.
    (j) Handicapped person--(1) Handicapped persons means any person who 
(i) has a physical or mental impairment which substantially limits one 
or more major life activities, (ii) has a record of such an impairment, 
or (iii) is regarded as having such an impairment.
    (2) As used in paragraph (j)(1) of this section, the phrase:
    (i) Physical or mental impairment means (A) any physiological 
disorder or condition, cosmetic disfigurement, or anatomical loss 
affecting one or more of the following body systems: neurological; 
musculoskeletal; special sense organs; respiratory, including speech 
organs; cardiovascular; reproductive, digestive, genito-urinary; hemic 
and lymphatic; skin; and endocrine; or (B) any mental or psychological 
disorder, such as mental retardation, organic brain syndrome, emotional 
or mental illness, and specific learning disabilities.
    (ii) Major life activities means functions such as caring for one's 
self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (iii) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (iv) Is regarded as having an impairment means (A) has a physical or 
mental impairment that does not substantially limit major life 
activities but that is treated by a recipient as constituting such a 
limitation; (B) has a physical or mental impairment that

[[Page 472]]

substantially limits major life activities only as a result of the 
attitudes of others toward such impairment; or (C) has none of the 
impairments defined in paragraph (j)(2)(i) of this section but is 
treated by a recipient as having such an impairment.
    (k) Program or activity means all of the operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (ii) The entity of such State or local government that distributes 
Federal financial assistance and each such department or agency (and 
each other State or local government entity) to which the assistance is 
extended, in the case of assistance to a State or local government;
    (2)(i) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (ii) A local educational agency (as defined in 20 U.S.C. 7801), 
system of vocational education, or other school system;
    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (4) Any other entity which is established by two or more of the 
entities described in paragraph (k)(1), (2), or (3) of this section; any 
part of which is extended Federal financial assistance.
    (l) Qualified handicapped person means:
    (1) With respect to employment, a handicapped person who, with 
reasonable accommodation, can perform the essential functions of the job 
in question;
    (2) With respect to public preschool elementary, secondary, or adult 
educational services, a handicapped person (i) of an age during which 
nonhandicapped persons are provided such services, (ii) of any age 
during which it is mandatory under state law to provide such services to 
handicapped persons, or (iii) to whom a state is required to provide a 
free appropriate public education under section 612 of the Education of 
the Handicapped Act; and
    (3) With respect to postsecondary and vocational education services, 
a handicapped person who meets the academic and technical standards 
requisite to admission or participation in the recipient's education 
program or activity;
    (4) With respect to other services, a handicapped person who meets 
the essential eligibility requirements for the receipt of such services.
    (m) Handicap means any condition or characteristic that renders a 
person a handicapped person as defined in paragraph (j) of this section.

(29 U.S.C. 794(b))

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.4  Discrimination prohibited.

    (a) General. No qualified handicapped person shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity which receives Federal financial assistance.
    (b) Discriminatory actions prohibited. (1) A recipient, in providing 
any aid, benefit, or service, may not, directly or through contractual, 
licensing, or other arrangements, on the basis of handicap:
    (i) Deny a qualified handicapped person the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified handicapped person an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified handicapped person with an aid, benefit, 
or service that is not as effective as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
handicapped

[[Page 473]]

persons or to any class of handicapped persons unless such action is 
necessary to provide qualified handicapped persons with aid, benefits, 
or services that are as effective as those provided to others;
    (v) Aid or perpetuate discrimination against a qualified handicapped 
person by providing significant assistance to an agency, organization, 
or person that discriminates on the basis of handicap in providing any 
aid, benefit, or service to beneficiaries of the recipients program or 
activity;
    (vi) Deny a qualified handicapped person the opportunity to 
participate as a member of planning or advisory boards; or
    (vii) Otherwise limit a qualified handicapped person in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving an aid, benefit, or service.
    (2) For purposes of this part, aids, benefits, and services, to be 
equally effective, are not required to produce the identical result or 
level of achievement for handicapped and nonhandicapped persons, but 
must afford handicapped persons equal opportunity to obtain the same 
result, to gain the same benefit, or to reach the same level of 
achievement, in the most integrated setting appropriate to the person's 
needs.
    (3) Despite the existence of separate or different aids, benefits, 
or services provided in accordance with this part, a recipient may not 
deny a qualified handicapped person the opportunity to participate in 
such aids, benefits, or services that are not separate or different.
    (4) A recipient may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration (i) that 
have the effect of subjecting qualified handicapped persons to 
discrimination on the basis of handicap, (ii) that have the purpose or 
effect of defeating or substantially impairing accomplishment of the 
objectives of the recipient's program or activity with respect to 
handicapped persons, or (iii) that perpetuate the discrimination of 
another recipient if both recipients are subject to common 
administrative control or are agencies of the same State.
    (5) In determining the site or location of a facility, an applicant 
for assistance or a recipient may not make selections (i) that have the 
effect of excluding handicapped persons from, denying them the benefits 
of, or otherwise subjecting them to discrimination under any program or 
activity that receives Federal financial assistance or (ii) that have 
the purpose or effect of defeating or substantially impairing the 
accomplishment of the objectives of the program or activity with respect 
to handicapped persons.
    (6) As used in this section, the aid, benefit, or service provided 
under a program or activity receiving Federal financial assistance 
includes any aid, benefit, or service provided in or through a facility 
that has been constructed, expanded, altered, leased or rented, or 
otherwise acquired, in whole or in part, with Federal financial 
assistance.
    (c) Aids, benefits, or services limited by Federal law. The 
exclusion of nonhandicapped persons from aids, benefits, or services 
limited by Federal statute or executive order to handicapped persons or 
the exclusion of a specific class of handicapped persons from aids, 
benefits, or services limited by Federal statute or executive order to a 
different class of handicapped persons is not prohibited by this part.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.5  Assurances required.

    (a) Assurances. An applicant for Federal financial assistance to 
which this part applies shall submit an assurance, on a form specified 
by the Director, that the program or activity will be operated in 
compliance with this part. An applicant may incorporate these assurances 
by reference in subsequent applications to the Department.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended in the form of real property or to provide real 
property or structures on the property, the assurance will obligate the 
recipient or, in the case of a subsequent transfer, the transferee, for 
the period during which the real property or structures are used for the 
purpose for which Federal financial assistance is extended or for 
another purpose

[[Page 474]]

involving the provision of similar services or benefits.
    (2) In the case of Federal financial assistance extended to provide 
personal property, the assurance will obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases the assurance will obligate the recipient for 
the period during which Federal financial assistance is extended.
    (c) Covenants. (1) Where Federal financial assistance is provided in 
the form of real property or interest in the property from the 
Department, the instrument effecting or recording this transfer shall 
contain a covenant running with the land to assure nondiscrimination for 
the period during which the real property is used for a purpose for 
which the Federal financial assistance is extended or for another 
purpose involving the provision of similar services or benefits.
    (2) Where no transfer of property is involved but property is 
purchased or improved with Federal financial assistance, the recipient 
shall agree to include the covenant described in paragraph (b)(2) of 
this section in the instrument effecting or recording any subsequent 
transfer of the property.
    (3) Where Federal financial assistance is provided in the form of 
real property or interest in the property from the Department, the 
covenant shall also include a condition coupled with a right to be 
reserved by the Department to revert title to the property in the event 
of a breach of the covenant. If a transferee of real property proposes 
to mortgage or otherwise encumber the real property as security for 
financing construction of new, or improvement of existing, facilities on 
the property for the purposes for which the property was transferred, 
the Director may, upon request of the transferee and if necessary to 
accomplish such financing and upon such conditions as he or she deems 
appropriate, agree to forbear the exercise of such right to revert title 
for so long as the lien of such mortgage or other encumbrance remains 
effective.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.6  Remedial action, voluntary action, and self-evaluation.

    (a) Remedial action. (1) If the Director finds that a recipient has 
discriminated against persons on the basis of handicap in violation of 
section 504 or this part, the recipient shall take such remedial action 
as the Director deems necessary to overcome the effects of the 
discrimination.
    (2) Where a recipient is found to have discriminated against persons 
on the basis of handicap in violation of section 504 or this part and 
where another recipient exercises control over the recipient that has 
discriminated, the Director, where appropriate, may require either or 
both recipients to take remedial action.
    (3) The Director may, where necessary to overcome the effects of 
discrimination in violation of section 504 or this part, require a 
recipient to take remedial action (i) with respect to handicapped 
persons who are no longer participants in the recipient's program or 
activity but who were participants in the program or activity when such 
discrimination occurred or (ii) with respect to handicapped persons who 
would have been participants in the program or activity had the 
discrimination not occurred.
    (b) Voluntary action. A recipient may take steps, in addition to any 
action that is required by this part, to overcome the effects of 
conditions that resulted in limited participation in the recipient's 
program or activity by qualified handicapped persons.
    (c) Self-evaluation. (1) A recipient shall, within one year of the 
effective date of this part:
    (i) Evaluate, with the assistance of interested persons, including 
handicapped persons or organizations representing handicapped persons, 
its current policies and practices and the effects thereof that do not 
or may not meet the requirements of this part;
    (ii) Modify, after consultation with interested persons, including 
handicapped persons or organizations representing handicapped persons, 
any policies and practices that do not meet the requirements of this 
part; and

[[Page 475]]

    (iii) Take, after consultation with interested persons, including 
handicapped persons or organizations representing handicapped persons, 
appropriate remedial steps to eliminate the effects of any 
discrimination that resulted from adherence to these policies and 
practices.
    (2) A recipient that employs fifteen or more persons shall, for at 
least three years following completion of the evaluation required under 
paragraph (c)(1) of this section, maintain on file, make available for 
public inspection, and provide to the Director upon request: (i) A list 
of the interested persons consulted (ii) a description of areas examined 
and any problems identified, and (iii) a description of any 
modifications made and of any remedial steps taken.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.7  Designation of responsible employee and adoption 
of grievance procedures.

    (a) Designation of responsible employee. A recipient that employs 
fifteen or more persons shall designate at least one person to 
coordinate its efforts to comply with this part.
    (b) Adoption of grievance procedures. A recipient that employs 
fifteen or more persons shall adopt grievance procedures that 
incorporate appropriate due process standards and that provide for the 
prompt and equitable resolution of complaints alleging any action 
prohibited by this part. Such procedures need not be established with 
respect to complaints from applicants for employment or from applicants 
for admission to postsecondary educational institutions.



Sec.  84.8  Notice.

    (a) A recipient that employs fifteen or more persons shall take 
appropriate initial and continuing steps to notify participants, 
beneficiaries, applications, and employees, including those with 
impaired vision or hearing, and unions or professional organizations 
holding collective bargaining or professional agreements with the 
recipient that it does not discriminate on the basis of handicap in 
violation of section 504 and this part. The notification shall state, 
where appropriate, that the recipient does not discriminate in admission 
or access to, or treatment or employment in, its programs or activities. 
The notification shall also include an identification of the responsible 
employee designated pursuant to Sec.  84.7(a). A recipient shall make 
the initial notification required by this paragraph within 90 days of 
the effective date of this part. Methods of initial and continuing 
notification may include the posting of notices, publication in 
newspapers and magazines, placement of notices in recipients' 
publication, and distribution of memoranda or other written 
communications.
    (b) If a recipient publishes or uses recruitment materials or 
publications containing general information that it makes available to 
participants, beneficiaries, applicants, or employees, it shall include 
in those materials or publications a statement of the policy described 
in paragraph (a) of this section. A recipient may meet the requirement 
of this paragraph either by including appropriate inserts in existing 
materials and publications or by revising and reprinting the materials 
and publications.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.9  Administrative requirements for small recipients.

    The Director may require any recipient with fewer than fifteen 
employees, or any class of such recipients, to comply with Sec. Sec.  
84.7 and 84.8, in whole or in part, when the Director finds a violation 
of this part or finds that such compliance will not significantly impair 
the ability of the recipient or class of recipients to provide benefits 
or services.



Sec.  84.10  Effect of State or local law or other requirements 
and effect of employment opportunities.

    (a) The obligation to comply with this part is not obviated or 
alleviated by the existence of any state or local law or other 
requirement that, on the basis of handicap, imposes prohibitions or 
limits upon the eligibility of qualified handicapped persons to receive 
services or to practice any occupation or profession.

[[Page 476]]

    (b) The obligation to comply with this part is not obviated or 
alleviated because employment opportunities in any occupation or 
profession are or may be more limited for handicapped persons than for 
nonhandicapped persons.



                     Subpart B_Employment Practices



Sec.  84.11  Discrimination prohibited.

    (a) General. (1) No qualified handicapped person shall, on the basis 
of handicap, be subjected to discrimination in employment under any 
program or activity to which this part applies.
    (2) A recipient that receives assistance under the Education of the 
Handicapped Act shall take positive steps to employ and advance in 
employment qualified handicapped persons in programs or activities 
assisted under that Act.
    (3) A recipient shall make all decisions concerning employment under 
any program or activity to which this part applies in a manner which 
ensures that discrimination on the basis of handicap does not occur and 
may not limit, segregate, or classify applicants or employees in any way 
that adversely affects their opportunities or status because of 
handicap.
    (4) A recipient may not participate in a contractual or other 
relationship that has the effect of subjecting qualified handicapped 
applicants or employees to discrimination prohibited by this subpart. 
The relationships referred to in this paragraph include relationships 
with employment and referral agencies, with labor unions, with 
organizations providing or administering fringe benefits to employees of 
the recipient, and with organizations providing training and 
apprenticeships.
    (b) Specific activities. The provisions of this subpart apply to:
    (1) Recruitment, advertising, and the processing of applications for 
employment;
    (2) Hiring, upgrading, promotion, award of tenure, demotion, 
transfer, layoff, termination, right of return from layoff and rehiring;
    (3) Rates of pay or any other form of compensation and changes in 
compensation;
    (4) Job assignments, job classifications, organizational structures, 
position descriptions, lines of progression, and seniority lists;
    (5) Leaves of absense, sick leave, or any other leave;
    (6) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (7) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, and selection for leaves of absence to pursue training;
    (8) Employer sponsored activities, including those that are social 
or recreational; and
    (9) Any other term, condition, or privilege of employment.
    (c) A recipient's obligation to comply with this subpart is not 
affected by any inconsistent term of any collective bargaining agreement 
to which it is a party.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.12  Reasonable accommodation.

    (a) A recipient shall make reasonable accommodation to the known 
physical or mental limitations of an otherwise qualified handicapped 
applicant or employee unless the recipient can demonstrate that the 
accommodation would impose an undue hardship on the operation of its 
program or activity.
    (b) Reasonable accommodation may include: (1) Making facilities used 
by employees readily accessible to and usable by handicapped persons, 
and (2) job restructuring, part-time or modified work schedules, 
acquisition or modification of equipment or devices, the provision of 
readers or interpreters, and other similar actions.
    (c) In determining pursuant to paragraph (a) of this section whether 
an accommodation would impose an undue hardship on the operation of a 
recipient's program or activity, factors to be considered include:
    (1) The overall size of the recipient's program or activity with 
respect to number of employees, number and type of facilities, and size 
of budget;
    (2) The type of the recipient's operation, including the composition 
and

[[Page 477]]

structure of the recipient's workforce; and
    (3) The nature and cost of the accommodation needed.
    (d) A recipient may not deny any employment opportunity to a 
qualified handicapped employee or applicant if the basis for the denial 
is the need to make reasonable accommodation to the physical or mental 
limitations of the employee or applicant.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.13  Employment criteria.

    (a) A recipient may not make use of any employment test or other 
selection criterion that screens out or tends to screen out handicapped 
persons or any class of handicapped persons unless: (1) The test score 
or other selection criterion, as used by the recipient, is shown to be 
job-related for the position in question, and (2) alternative job-
related tests or criteria that do not screen out or tend to screen out 
as many handicapped persons are not shown by the Director to be 
available.
    (b) A recipient shall select and administer tests concerning 
employment so as best to ensure that, when administered to an applicant 
or employee who has a handicap that impairs sensory, manual, or speaking 
skills, the test results accurately reflect the applicant's or 
employee's job skills, aptitude, or whatever other factor the test 
purports to measure, rather than reflecting the applicant's or 
employee's impaired sensory, manual, or speaking skills (except where 
those skills are the factors that the test purports to measure).



Sec.  84.14  Preemployment inquiries.

    (a) Except as provided in paragraphs (b) and (c) of this section, a 
recipient may not conduct a preemployment medical examination or may not 
make preemployment inquiry of an applicant as to whether the applicant 
is a handicapped person or as to the nature or severity of a handicap. A 
recipient may, however, make preemployment inquiry into an applicant's 
ability to perform job-related functions.
    (b) When a recipient is taking remedial action to correct the 
effects of past discrimination pursuant to Sec.  84.6 (a), when a 
recipient is taking voluntary action to overcome the effects of 
conditions that resulted in limited participation in its federally 
assisted program or activity pursuant to Sec.  84.6(b), or when a 
recipient is taking affirmative action pursuant to section 503 of the 
Act, the recipient may invite applicants for employment to indicate 
whether and to what extent they are handicapped, Provided, That:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose or makes clear orally if no written questionnaire is 
used that the information requested is intended for use solely in 
connection with its remedial action obligations or its voluntary or 
affirmative action efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential as 
provided in paragraph (d) of this section, that refusal to provide it 
will not subject the applicant or employee to any adverse treatment, and 
that it will be used only in accordance with this part.
    (c) Nothing in this section shall prohibit a recipient from 
conditioning an offer of employment on the results of a medical 
examination conducted prior to the employee's entrance on duty, 
Provided, That: (1) All entering employees are subjected to such an 
examination regardless of handicap, and (2) the results of such an 
examination are used only in accordance with the requirements of this 
part.
    (d) Information obtained in accordance with this section as to the 
medical condition or history of the applicant shall be collected and 
maintained on separate forms that shall be accorded confidentiality as 
medical records, except that:
    (1) Supervisors and managers may be informed regarding restrictions 
on the work or duties of handicapped persons and regarding necessary 
accommodations;
    (2) First aid and safety personnel may be informed, where 
appropriate, if the condition might require emergency treatment; and
    (3) Government officials investigating compliance with the Act shall 
be provided relevant information upon request.

[[Page 478]]



Sec. Sec.  84.15-84.20  [Reserved]



                         Subpart C_Accessibility



Sec.  84.21  Discrimination prohibited.

    No qualified handicapped person shall, because a recipient's 
facilities are inaccessible to or unusable by handicapped persons, be 
denied the benefits of, be excluded from participation in, or otherwise 
be subjected to discrimination under any program or activity to which 
this part applies.



Sec.  84.22  Existing facilities.

    (a) Accessibility. A recipient shall operate its program or activity 
so that when each part is viewed in its entirety, it is readily 
accessible to handicapped persons. This paragraph does not require a 
recipient to make each of its existing facilities or every part of a 
facility accessible to and usable by handicapped persons.
    (b) Methods. A recipient may comply with the requirements of 
paragraph (a) of this section through such means as redesign of 
equipment, reassignment of classes or other services to accessible 
buildings, assignment of aides to beneficiaries, home visits, delivery 
of health, welfare, or other social services at alternate accessible 
sites, alteration of existing facilities and construction of new 
facilities in conformance with the requirements of Sec.  84.23, or any 
other methods that result in making its program or activity accessible 
to handicapped persons. A recipient is not required to make structural 
changes in existing facilities where other methods are effective in 
achieving compliance with paragraph (a) of this section. In choosing 
among available methods for meeting the requirement of paragraph (a) of 
this section, a recipient shall give priority to those methods that 
serve handicapped persons in the most integrated setting appropriate.
    (c) Small health, welfare, or other social service providers. If a 
recipient with fewer than fifteen employees that provides health, 
welfare, or other social services finds, after consultation with a 
handicapped person seeking its services, that there is no method of 
complying with paragraph (a) of this section other than making a 
significant alteration in its existing facilities, the recipient may, as 
an alternative, refer the handicapped person to other providers of those 
services that are accessible.
    (d) Time period. A recipient shall comply with the requirement of 
paragraph (a) of this section within sixty days of the effective date of 
this part except that where structural changes in facilities are 
necessary, such changes shall be made within three years of the 
effective date of this part, but in any event as expeditiously as 
possible.
    (e) Transition plan. In the event that structural changes to 
facilities are necessary to meet the requirement of paragraph (a) of 
this section, a recipient shall develop, within six months of the 
effective date of this part, a transition plan setting forth the steps 
necessary to complete such changes. The plan shall be developed with the 
assistance of interested persons, including handicapped persons or 
organizations representing handicapped persons. A copy of the transition 
plan shall be made available for public inspection. The plan shall, at a 
minimum:
    (1) Identify physical obstacles in the recipient's facilities that 
limit the accessibility of its program or activity to handicapped 
persons;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
full accessibility under paragraph (a) and, if the time period of the 
transition plan is longer than one year, identify the steps that will be 
taken during each year of the transition period; and
    (4) Indicate the person responsible for implementation of the plan.
    (f) Notice. The recipient shall adopt and implement procedures to 
ensure that interested persons, including persons with impaired vision 
or hearing, can obtain information as to the existence and location of 
services, activities, and facilities that are accessible to and usable 
by handicapped persons.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.23  New construction.

    (a) Design and construction. Each facility or part of a facility 
constructed

[[Page 479]]

by, on behalf of, or for the use of a recipient shall be designed and 
constructed in such manner that the facility or part of the facility is 
readily accessible to and usable by handicapped persons, if the 
construction was commenced after the effective date of this part.
    (b) Alteration. Each facility or part of a facility which is altered 
by, on behalf of, or for the use of a recipient after the effective date 
of this part in a manner that affects or could affect the usability of 
the facility or part of the facility shall, to the maximum extent 
feasible, be altered in such manner that the altered portion of the 
facility is readily accessible to and usable by handicapped persons.
    (c) Conformance with Uniform Federal Accessibility Standards. (1) 
Effective as of January 18, 1991, design, construction, or alteration of 
buildings in conformance with sections 3-8 of the Uniform Federal 
Accessibility Standards (UFSA) (appendix A to 41 CFR subpart 101-19.6) 
shall be deemed to comply with the requirements of this section with 
respect to those buildings. Departures from particular technical and 
scoping requirements of UFAS by the use of other methods are permitted 
where substantial equivalent or greater access to and usability of the 
building is provided.
    (2) For purposes of this section, section 4.1.6(1)(g) of UFAS shall 
be interpreted to exempt from the requirements of UFAS only mechanical 
rooms and other spaces that, because of their intended use, will not 
require accessibility to the public or beneficiaries or result in the 
employment or residence therein of persons with physical handicaps.
    (3) This section does not require recipients to make building 
alterations that have little likelihood of being accomplished without 
removing or altering a load-bearing structural member.

[42 FR 22677, May 4, 1977, as amended at 55 FR 52138, 52142, Dec. 19, 
1990]



Sec. Sec.  84.24-84.30  [Reserved]



        Subpart D_Preschool, Elementary, and Secondary Education



Sec.  84.31  Application of this subpart.

    Subpart D applies to preschool, elementary, secondary, and adult 
education programs or activities that receive Federal financial 
assistance and to recipients that operate, or that receive Federal 
financial assistance for the operation of, such programs or activities.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.32  Location and notification.

    A recipient that operates a public elementary or secondary education 
program or activity shall annually:
    (a) Undertake to identify and locate every qualified handicapped 
person residing in the recipient's jurisdiction who is not receiving a 
public education; and
    (b) Take appropriate steps to notify handicapped persons and their 
parents or guardians of the recipient's duty under this subpart.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.33  Free appropriate public education.

    (a) General. A recipient that operates a public elementary or 
secondary education program or activity shall provide a free appropriate 
public education to each qualified handicapped person who is in the 
recipient's jurisdiction, regardless of the nature or severity of the 
person's handicap.
    (b) Appropriate education. (1) For the purpose of this subpart, the 
provision of an appropriate education is the provision of regular or 
special education and related aids and services that (i) are designed to 
meet individual educational needs of handicapped persons as adequately 
as the needs of nonhandicapped persons are met and (ii) are based upon 
adherence to procedures that satisfy the requirements of Sec. Sec.  
84.34, 84.35, and 84.36.
    (2) Implementation of an Individualized Education Program developed 
in accordance with the Education of the

[[Page 480]]

Handicapped Act is one means of meeting the standard established in 
paragraph (b)(1)(i) of this section.
    (3) A recipient may place a handicapped person or refer such a 
person for aids, benefits, or services other than those that it operates 
or provides as its means of carrying out the requirements of this 
subpart. If so, the recipient remains responsible for ensuring that the 
requirements of this subpart are met with respect to any handicapped 
person so placed or referred.
    (c) Free education--(1) General. For the purpose of this section, 
the provision of a free education is the provision of educational and 
related services without cost to the handicapped person or to his or her 
parents or guardian, except for those fees that are imposed on non-
handicapped persons or their parents or guardian. It may consist either 
of the provision of free services or, if a recipient places a 
handicapped person or refers such person for aids, benefits, or services 
not operated or provided by the recipient as its means of carrying out 
the requirements of this subpart, of payment for the costs of the aids, 
benefits, or services. Funds available from any public or private agency 
may be used to meet the requirements of this subpart. Nothing in this 
section shall be construed to relieve an insurer or similar third party 
from an otherwise valid obligation to provide or pay for services 
provided to a handicapped person.
    (2) Transportation. If a recipient places a handicapped person or 
refers such person for aids, benefits, or services not operated or 
provided by the recipient as its means of carrying out the requirements 
of this subpart, the recipient shall ensure that adequate transportation 
to and from the aids, benefits, or services is provided at no greater 
cost than would be incurred by the person or his or her parents or 
guardian if the person were placed in the aids, benefits, or services 
operated by the recipient.
    (3) Residential placement. If a public or private residential 
placement is necessary to provide a free appropriate public education to 
a handicapped person because of his or her handicap, the placement, 
including non-medical care and room and board, shall be provided at no 
cost to the person or his or her parents or guardian.
    (4) Placement of handicapped persons by parents. If a recipient has 
made available, in conformance with the requirements of this section and 
Sec.  84.34, a free appropriate public education to a handicapped person 
and the person's parents or guardian choose to place the person in a 
private school, the recipient is not required to pay for the person's 
education in the private school. Disagreements between a parent or 
guardian and a recipient regarding whether the recipient has made a free 
appropriate public education available or otherwise regarding the 
question of financial responsibility are subject to the due process 
procedures of Sec.  84.36.
    (d) Compliance. A recipient may not exclude any qualified 
handicapped person from a public elementary or secondary education after 
the effective date of this part. A recipient that is not, on the 
effective date of this regulation, in full compliance with the other 
requirements of the preceding paragraphs of this section shall meet such 
requirements at the earliest practicable time and in no event later than 
September 1, 1978.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, 24320, May 9, 
2005]



Sec.  84.34  Educational setting.

    (a) Academic setting. A recipient to which this subpart applies 
shall educate, or shall provide for the education of, each qualified 
handicapped person in its jurisdiction with persons who are not 
handicapped to the maximum extent appropriate to the needs of the 
handicapped person. A recipient shall place a handicapped person in the 
regular educational environment operated by the recipient unless it is 
demonstrated by the recipient that the education of the person in the 
regular environment with the use of supplementary aids and services 
cannot be achieved satisfactorily. Whenever a recipient places a person 
in a setting other than the regular educational environment pursuant to 
this paragraph, it shall take into account the proximity of the 
alternate setting to the person's home.

[[Page 481]]

    (b) Nonacademic settings. In providing or arranging for the 
provision of nonacademic and extracurricular services and activities, 
including meals, recess periods, and the services and activities set 
forth in Sec.  84.37(a)(2), a recipient shall ensure that handicapped 
persons participate with nonhandicapped persons in such activities and 
services to the maximum extent appropriate to the needs of the 
handicapped person in question.
    (c) Comparable facilities. If a recipient, in compliance with 
paragraph (a) of this section, operates a facility that is identifiable 
as being for handicapped persons, the recipient shall ensure that the 
facility and the services and activities provided therein are comparable 
to the other facilities, services, and activities of the recipient.



Sec.  84.35  Evaluation and placement.

    (a) Preplacement evaluation. A recipient that operates a public 
elementary or secondary education program or activity shall conduct an 
evaluation in accordance with the requirements of paragraph (b) of this 
section of any person who, because of handicap, needs or is believed to 
need special education or related services before taking any action with 
respect to the initial placement of the person in regular or special 
education and any subsequent significant change in placement.
    (b) Evaluation procedures. A recipient to which this subpart applies 
shall establish standards and procedures for the evaluation and 
placement of persons who, because of handicap, need or are believed to 
need special education or related services which ensure that:
    (1) Tests and other evaluation materials have been validated for the 
specific purpose for which they are used and are administered by trained 
personnel in conformance with the instructions provided by their 
producer;
    (2) Tests and other evaluation materials include those tailored to 
assess specific areas of educational need and not merely those which are 
designed to provide a single general intelligence quotient; and
    (3) Tests are selected and administered so as best to ensure that, 
when a test is administered to a student with impaired sensory, manual, 
or speaking skills, the test results accurately reflect the student's 
aptitude or achievement level or whatever other factor the test purports 
to measure, rather than reflecting the student's impaired sensory, 
manual, or speaking skills (except where those skills are the factors 
that the test purports to measure).
    (c) Placement procedures. In interpreting evaluation data and in 
making placement decisions, a recipient shall (1) draw upon information 
from a variety of sources, including aptitude and achievement tests, 
teacher recommendations, physical condition, social or cultural 
background, and adaptive behavior, (2) establish procedures to ensure 
that information obtained from all such sources is documented and 
carefully considered, (3) ensure that the placement decision is made by 
a group of persons, including persons knowledgeable about the child, the 
meaning of the evaluation data, and the placement options, and (4) 
ensure that the placement decision is made in conformity with Sec.  
84.34.
    (d) Reevaluation. A recipient to which this section applies shall 
establish procedures, in accordance with paragraph (b) of this section, 
for periodic reevaluation of students who have been provided special 
education and related services. A reevaluation procedure consistent with 
the Education for the Handicapped Act is one means of meeting this 
requirement.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.36  Procedural safeguards.

    A recipient that operates a public elementary or secondary education 
program or activity shall establish and implement, with respect to 
actions regarding the identification, evaluation, or educational 
placement of persons who, because of handicap, need or are believed to 
need special instruction or related services, a system of procedural 
safeguards that includes notice, an opportunity for the parents or 
guardian of the person to examine relevant records, an impartial hearing 
with opportunity for participation by the person's parents or guardian 
and representation by counsel, and a review procedure. Compliance with 
the procedural

[[Page 482]]

safeguards of section 615 of the Education of the Handicapped Act is one 
means of meeting this requirement.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24319, May 9, 2005]



Sec.  84.37  Nonacademic services.

    (a) General. (1) A recipient to which this subpart applies shall 
provide non-academic and extracurricular services and activities in such 
manner as is necessary to afford handicapped students an equal 
opportunity for participation in such services and activities.
    (2) Nonacademic and extracurricular services and activities may 
include counseling services, physical recreational athletics, 
transportation, health services, recreational activities, special 
interest groups or clubs sponsored by the recipients, referrals to 
agencies which provide assistance to handicapped persons, and employment 
of students, including both employment by the recipient and assistance 
in making available outside employment.
    (b) Counseling services. A recipient to which this subpart applies 
that provides personal, academic, or vocational counseling, guidance, or 
placement services to its students shall provide these services without 
discrimination on the basis of handicap. The recipient shall ensure that 
qualified handicapped students are not counseled toward more restrictive 
career objectives than are nonhandicapped students with similar 
interests and abilities.
    (c) Physical education and athletics. (1) In providing physical 
education courses and athletics and similar aids, benefits, or services 
to any of its students, a recipient to which this subpart applies may 
not discriminate on the basis of handicap. A recipient that offers 
physical education courses or that operates or sponsors interscholastic, 
club, or intramural athletics shall provide to qualified handicapped 
students an equal opportunity for participation.
    (2) A recipient may offer to handicapped students physical education 
and athletic activities that are separate or different from those 
offered to nonhandicapped students only if separation or differentiation 
is consistent with the requirements of Sec.  84.34 and only if no 
qualified handicapped student is denied the opportunity to compete for 
teams or to participate in courses that are not separate or different.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.38  Preschool and adult education.

    A recipient to which this subpart applies that provides preschool 
education or day care or adult education may not, on the basis of 
handicap, exclude qualified handicapped persons and shall take into 
account the needs of such persons in determining the aids, benefits, or 
services to be provided.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.39  Private education.

    (a) A recipient that provides private elementary or secondary 
education may not, on the basis of handicap, exclude a qualified 
handicapped person if the person can, with minor adjustments, be 
provided an appropriate education, as defined in Sec.  84.33(b)(1), 
within that recipient's program or activity.
    (b) A recipient to which this section applies may not charge more 
for the provision of an appropriate education to handicapped persons 
than to nonhandicapped persons except to the extent that any additional 
charge is justified by a substantial increase in cost to the recipient.
    (c) A recipient to which this section applies that provides special 
education shall do so in accordance with the provisions of Sec. Sec.  
84.35 and 84.36. Each recipient to which this section applies is subject 
to the provisions of Sec. Sec.  84.34, 84.37, and 84.38.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.40  [Reserved]



                    Subpart E_Postsecondary Education



Sec.  84.41  Application of this subpart.

    Subpart E applies to postsecondary education programs or activities, 
including postsecondary vocational education programs or activities, 
that receive Federal financial assistance and to recipients that 
operate, or that receive Federal financial assistance for

[[Page 483]]

the operation of, such programs or activities.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.42  Admissions and recruitment.

    (a) General. Qualified handicapped persons may not, on the basis of 
handicap, be denied admission or be subjected to discrimination in 
admission or recruitment by a recipient to which this subpart applies.
    (b) Admissions. In administering its admission policies, a recipient 
to which this subpart applies:
    (1) May not apply limitations upon the number or proportion of 
handicapped persons who may be admitted;
    (2) May not make use of any test or criterion for admission that has 
a disproportionate, adverse effect on handicapped persons or any class 
of handicapped persons unless (i) the test or criterion, as used by the 
recipient, has been validated as a predictor of success in the education 
program or activity in question and (ii) alternate tests or criteria 
that have a less disproportionate, adverse effect are not shown by the 
Director to be available.
    (3) Shall assure itself that (i) admissions tests are selected and 
administered so as best to ensure that, when a test is administered to 
an applicant who has a handicap that impairs sensory, manual, or 
speaking skills, the test results accurately reflect the applicant's 
aptitude or achievement level or whatever other factor the test purports 
to measure, rather than reflecting the applicant's impaired sensory, 
manual, or speaking skills (except where those skills are the factors 
that the test purports to measure); (ii) admissions tests that are 
designed for persons with impaired sensory, manual, or speaking skills 
are offered as often and in as timely a manner as are other admissions 
tests; and (iii) admissions tests are administered in facilities that, 
on the whole, are accessible to handicapped persons; and
    (4) Except as provided in paragraph (c) of this section, may not 
make preadmission inquiry as to whether an applicant for admission is a 
handicapped person but, after admission, may make inquiries on a 
confidential basis as to handicaps that may require accommodation.
    (c) Preadmission inquiry exception. When a recipient is taking 
remedial action to correct the effects of past discrimination pursuant 
to Sec.  84.6(a) or when a recipient is taking voluntary action to 
overcome the effects of conditons that resulted in limited participation 
in its federally assisted program or activity pursuant to Sec.  84.6(b), 
the recipient may invite applicants for admission to indicate whether 
and to what extent they are handicapped, Provided, That:
    (1) The recipient states clearly on any written questionnaire used 
for this purpose or makes clear orally if no written questionnaire is 
used that the information requested is intended for use solely in 
connection with its remedial action obligations or its voluntary action 
efforts; and
    (2) The recipient states clearly that the information is being 
requested on a voluntary basis, that it will be kept confidential, that 
refusal to provide it will not subject the applicant to any adverse 
treatment, and that it will be used only in accordance with this part.
    (d) Validity studies. For the purpose of paragraph (b)(2) of this 
section, a recipient may base prediction equations on first year grades, 
but shall conduct periodic validity studies against the criterion of 
overall success in the education program or activity in question in 
order to monitor the general validity of the test scores.



Sec.  84.43  Treatment of students; general.

    (a) No qualified handicapped student shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any academic, 
research, occupational training, housing, health insurance, counseling, 
financial aid, physical education, athletics, recreation, 
transportation, other extracurricular, or other postsecondary education 
aids, benefits, or services to which this subpart applies.
    (b) A recipient to which this subpart applies that considers 
participation by students in education programs or activities not 
operated wholly by the recipient as part of, or equivalent to, and 
education program or activity operated

[[Page 484]]

by the recipient shall assure itself that the other education program or 
activity, as a whole, provides an equal opportunity for the 
participation of qualified handicapped persons.
    (c) A recipient to which this subpart applies may not, on the basis 
of handicap, exclude any qualified handicapped student from any course, 
course of study, or other part of its education program or activity.
    (d) A recipient to which this subpart applies shall operate its 
program or activity in the most integrated setting appropriate.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.44  Academic adjustments.

    (a) Academic requirements. A recipient to which this subpart applies 
shall make such modifications to its academic requirements as are 
necessary to ensure that such requirements do not discriminate or have 
the effect of discriminating, on the basis of handicap, against a 
qualified handicapped applicant or student. Academic requirements that 
the recipient can demonstrate are essential to the instruction being 
pursued by such student or to any directly related licensing requirement 
will not be regarded as discriminatory within the meaning of this 
section. Modifications may include changes in the length of time 
permitted for the completion of degree requirements, substitution of 
specific courses required for the completion of degree requirements, and 
adaptation of the manner in which specific courses are conducted.
    (b) Other rules. A recipient to which this subpart applies may not 
impose upon handicapped students other rules, such as the prohibition of 
tape recorders in classrooms or of dog guides in campus buildings, that 
have the effect of limiting the participation of handicapped students in 
the recipient's education program or activity.
    (c) Course examinations. In its course examinations or other 
procedures for evaluating students' academic achievement, a recipient to 
which this subpart applies shall provide such methods for evaluating the 
achievement of students who have a handicap that impairs sensory, 
manual, or speaking skills as will best ensure that the results of the 
evaluation represents the student's achievement in the course, rather 
than reflecting the student's impaired sensory, manual, or speaking 
skills (except where such skills are the factors that the test purports 
to measure).
    (d) Auxiliary aids. (1) A recipient to which this subpart applies 
shall take such steps as are necessary to ensure that no handicapped 
student is denied the benefits of, excluded from participation in, or 
otherwise subjected to discrimination because of the absence of 
educational auxiliary aids for students with impaired sensory, manual, 
or speaking skills.
    (2) Auxiliary aids may include taped texts, interpreters or other 
effective methods of making orally delivered materials available to 
students with hearing impairments, readers in libraries for students 
with visual impairments, classroom equipment adapted for use by students 
with manual impairments, and other similar services and actions. 
Recipients need not provide attendants, individually prescribed devices, 
readers for personal use or study, or other devices or services of a 
personal nature.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.45  Housing.

    (a) Housing provided by the recipient. A recipient that provides 
housing to its nonhandicapped students shall provide comparable, 
convenient, and accessible housing to handicapped students at the same 
cost as to others. At the end of the transition period provided for in 
subpart C, such housing shall be available in sufficient quantity and 
variety so that the scope of handicapped students' choice of living 
accommodations is, as a whole, comparable to that of nonhandicapped 
students.
    (b) Other housing. A recipient that assists any agency, 
organization, or person in making housing available to any of its 
students shall take such action as may be necessary to assure itself 
that such housing is, as a whole, made available in a manner that does 
not result in discrimination on the basis of handicap.

[[Page 485]]



Sec.  84.46  Financial and employment assistance to students.

    (a) Provision of financial assistance. (1) In providing financial 
assistance to qualified handicapped persons, a recipient to which this 
subpart applies may not (i), on the basis of handicap, provide less 
assistance than is provided to nonhandicapped persons, limit eligibility 
for assistance, or otherwise discriminate or (ii) assist any entity or 
person that provides assistance to any of the recipient's students in a 
manner that discriminates against qualified handicapped persons on the 
basis of handicap.
    (2) A recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established under wills, trusts, bequests, or similar legal instruments 
that require awards to be made on the basis of factors that discriminate 
or have the effect of discriminating on the basis of handicap only if 
the overall effect of the award of scholarships, fellowships, and other 
forms of financial assistance is not discriminatory on the basis of 
handicap.
    (b) Assistance in making available outside employment. A recipient 
that assists any agency, organization, or person in providing employment 
opportunities to any of its students shall assure itself that such 
employment opportunities, as a whole, are made available in a manner 
that would not violate subpart B if they were provided by the recipient.
    (c) Employment of students by recipients. A recipient that employs 
any of its students may not do so in a manner that violates subpart B.



Sec.  84.47  Nonacademic services.

    (a) Physical education and athletics. (1) In providing physical 
education courses and athletics and similar aids, benefits, or services 
to any of its students, a recipient to which this subpart applies may 
not discriminate on the basis of handicap. A recipient that offers 
physical education courses or that operates or sponsors intercollegiate, 
club, or intramural athletics shall provide to qualified handicapped 
students an equal opportunity for participation in these activities.
    (2) A recipient may offer to handicapped students physical education 
and athletic activities that are separate or different only if 
separation or differentiation is consistent with the requirements of 
Sec.  84.43(d) and only if no qualified handicapped student is denied 
the opportunity to compete for teams or to participate in courses that 
are not separate or different.
    (b) Counseling and placement services. A recipient to which this 
subpart applies that provides personal, academic, or vocational 
counseling, guidance, or placement services to its students shall 
provide these services without discrimination on the basis of handicap. 
The recipient shall ensure that qualified handicapped students are not 
counseled toward more restrictive career objectives than are 
nonhandicapped students with similar interests and abilities. This 
requirement does not preclude a recipient from providing factual 
information about licensing and certification requirements that may 
present obstacles to handicapped persons in their pursuit of particular 
careers.
    (c) Social organizations. A recipient that provides significant 
assistance to fraternities, sororities, or similar organizations shall 
assure itself that the membership practices of such organizations do not 
permit discrimination otherwise prohibited by this subpart.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec. Sec.  84.48-84.50  [Reserved]



             Subpart F_Health, Welfare, and Social Services



Sec.  84.51  Application of this subpart.

    Subpart F applies to health, welfare, and other social service 
programs or activities that receive Federal financial assistance and to 
recipients that operate, or that receive Federal financial assistance 
for the operation of, such programs or activities.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]

[[Page 486]]



Sec.  84.52  Health, welfare, and other social services.

    (a) General. In providing health, welfare, or other social services 
or benefits, a recipient may not, on the basis of handicap:
    (1) Deny a qualified handicapped person these benefits or services;
    (2) Afford a qualified handicapped person an opportunity to receive 
benefits or services that is not equal to that offered nonhandicapped 
persons;
    (3) Provide a qualified handicapped person with benefits or services 
that are not as effective (as defined in Sec.  84.4(b)) as the benefits 
or services provided to others;
    (4) Provide benefits or services in a manner that limits or has the 
effect of limiting the participation of qualified handicapped persons; 
or
    (5) Provide different or separate benefits or services to 
handicapped persons except where necessary to provide qualified 
handicapped persons with benefits and services that are as effective as 
those provided to others.
    (b) Notice. A recipient that provides notice concerning benefits or 
services or written material concerning waivers of rights or consent to 
treatment shall take such steps as are necessary to ensure that 
qualified handicapped persons, including those with impaired sensory or 
speaking skills, are not denied effective notice because of their 
handicap.
    (c) Emergency treatment for the hearing impaired. A recipient 
hospital that provides health services or benefits shall establish a 
procedure for effective communication with persons with impaired hearing 
for the purpose of providing emergency health care.
    (d) Auxiliary aids. (1) A recipient to which this subpart applies 
that employs fifteen or more persons shall provide appropriate auxiliary 
aids to persons with impaired sensory, manual, or speaking skills, where 
necessary to afford such persons an equal opportunity to benefit from 
the service in question.
    (2) The Director may require recipients with fewer than fifteen 
employees to provide auxiliary aids where the provision of aids would 
not significantly impair the ability of the recipient to provide its 
benefits or services.
    (3) For the purpose of this paragraph, auxiliary aids may include 
brailled and taped material, interpreters, and other aids for persons 
with impaired hearing or vision.



Sec.  84.53  Drug and alcohol addicts.

    A recipient to which this subpart applies that operates a general 
hospital or outpatient facility may not discriminate in admission or 
treatment against a drug or alcohol abuser or alcoholic who is suffering 
from a medical condition, because of the person's drug or alcohol abuse 
or alcoholism.



Sec.  84.54  Education of institutionalized persons.

    A recipient to which this subpart applies and that provides aids, 
benefits, or services for persons who are institutionalized because of 
handicap shall ensure that each qualified handicapped person, as defined 
in Sec.  84.3(l)(2), in its program or activity is provided an 
appropriate education, as defined in Sec.  84.33(b). Nothing in this 
section shall be interpreted as altering in any way the obligations of 
recipients under subpart D.

[42 FR 22677, May 4, 1977, as amended at 70 FR 24320, May 9, 2005]



Sec.  84.55  Procedures relating to health care for handicapped infants.

    (a) Infant Care Review Committees. The Department encourages each 
recipient health care provider that provides health care services to 
infants in programs or activities receiving Federal financial assistance 
to establish an Infant Care Review Committee (ICRC) to assist the 
provider in delivering health care and related services to infants and 
in complying with this part. The purpose of the committee is to assist 
the health care provider in the development of standards, policies and 
procedures for providing treatment to handicapped infants and in making 
decisions concerning medically beneficial treatment in specific cases. 
While the Department recognizes the value of ICRC's in assuring 
appropriate medical care to infants, such committees are not required by 
this section. An ICRC should be composed of individuals representing a 
broad range of perspectives,

[[Page 487]]

and should include a practicing physician, a representative of a 
disability organization, a practicing nurse, and other individuals. A 
suggested model ICRC is set forth in paragraph (f) of this section.
    (b) Posting of informational notice. (1) Each recipient health care 
provider that provides health care services to infants in programs or 
activities receiving Federal financial assistance shall post and keep 
posted in appropriate places an informational notice.
    (2) The notice must be posted at location(s) where nurses and other 
medical professionals who are engaged in providing health care and 
related services to infants will see it. To the extent it does not 
impair accomplishment of the requirement that copies of the notice be 
posted where such personnel will see it, the notice need not be posted 
in area(s) where parents of infant patients will see it.
    (3) Each health care provider for which the content of the following 
notice (identified as Notice A) is truthful may use Notice A. For the 
content of the notice to be truthful: (i) The provider must have a 
policy consistent with that stated in the notice; (ii) the provider must 
have a procedure for review of treatment deliberations and decisions to 
which the notice applies, such as (but not limited to) an Infant Care 
Review Committee; and (iii) the statements concerning the identity of 
callers and retaliation are truthful.

                                Notice A:

               PRINCIPLES OF TREATMENT OF DISABLED INFANTS

    It is the policy of this hospital, consistent with Federal law, 
that, nourishment and medically beneficial treatment (as determined with 
respect for reasonable medical judgments) should not be withheld from 
handicapped infants solely on the basis of their present or anticipated 
mental or physical impairments.
    This Federal law, section 504 of the Rehabilitation Act of 1973, 
prohibits discrimination on the basis of handicap in programs or 
activities receiving Federal financial assistance. For further 
information, or to report suspected noncompliance, call:
    [Identify designated hospital contact point and telephone number] or
    [Identify appropriate child protective services agency and telephone 
number] or
    U.S. Department of Health and Human Services (HHS): 800-368-1019 
(Toll-free; available 24 hours a day; TDD capability).

The identity of callers will be held confidential. Retaliation by this 
hospital against any person for providing information about possible 
noncompliance is prohibited by this hospital and Federal regulations.

    (4) Health care providers other than those described in paragraph 
(b)(3) of this section must post the following notice (identified as 
Notice B):

                                Notice B:

               PRINCIPLES OF TREATMENT OF DISABLED INFANTS

    Federal law prohibits discrimination on the basis of handicap. Under 
this law, nourishment and medically beneficial treatment (as determined 
with respect for reasonable medical judgments) should not be withheld 
from handicapped infants solely on the basis of their present or 
anticipated mental or physical impairments.
    This Federal law, section 504 of the Rehabilitation Act of 1973, 
applies to programs or activities receiving Federal financial 
assistance. For further information, or to report suspected 
noncompliance, call:
    [Identify appropriate child protective services agency and telephone 
number] or
    U.S. Department of Health and Human Services (HHS): 800-368-1019 
(Toll-free; available 24 hours a day: TDD capability)

The identity of callers will be held confidential. Federal regulations 
prohibit retaliation by this hospital against any person who provides 
information about possible violations.

    (5) The notice may be no smaller than 5 by 7 inches, and the type 
size no smaller than that generally used for similar internal 
communications to staff. The recipient must insert the specified 
information on the notice it selects. Recipient hospitals in Washington, 
DC, must list 863-0100 as the telephone number for HHS. No other 
alterations may be made to the notice. Copies of the notices may be 
obtained from the Department of Health and Human Services upon request, 
or the recipient may produce its own notices in conformance with the 
specified wording.
    (c) Responsibilities of recipient state child protective services 
agencies. (1) Within 60 days of the effective date of this section, each 
recipient state child protective services agency shall establish and 
maintain in written form

[[Page 488]]

methods of administration and procedures to assure that the agency 
utilizes its full authority pursuant to state law to prevent instances 
of unlawful medical neglect of handicapped infants. These methods of 
administration and procedures shall include:
    (i) A requirement that health care providers report on a timely 
basis to the state agency circumstances which they determine to 
constitute known or suspected instances of unlawful medical neglect of 
handicapped infants;
    (ii) A method by which the state agency can receive reports of 
suspected unlawful medical neglect of handicapped infants from health 
care providers, other individuals, and the Department on a timely basis;
    (iii) Immediate review of reports of suspected unlawful medical 
neglect of handicapped infants and, where appropriate, on-site 
investigation of such reports;
    (iv) Provision of child protective services to such medically 
neglected handicapped infants, including, where appropriate, seeking a 
timely court order to compel the provision of necessary nourishment and 
medical treatment; and
    (v) Timely notification to the responsible Department official of 
each report of suspected unlawful medical neglect involving the 
withholding, solely on the basis of present or anticipated physical or 
mental impairments, of treatment or nourishment from a handicapped 
infant who, in spite of such impairments, will medically benefit from 
the treatment or nourishment, the steps taken by the state agency to 
investigate such report, and the state agency's final disposition of 
such report.
    (2) Whenever a hospital at which an infant who is the subject of a 
report of suspected unlawful medical neglect is being treated has an 
Infant Care Review Committee (ICRC) the Department encourages the state 
child protective services agency to consult with the ICRC in carrying 
out the state agency's authorities under its state law and methods of 
administration. In developing its methods of administration and 
procedures, the Department encourages child protective services agencies 
to adopt guidelines for investigations similar to those of the 
Department regarding the involvement of ICRC's.
    (d) Expedited access to records. Access to pertinent records and 
facilities of a recipient pursuant to 45 CFR 80.6(c) (made applicable to 
this part by 45 CFR 84.61) shall not be limited to normal business hours 
when, in the judgment of the responsible Department official, immediate 
access is necessary to protect the life or health of a handicapped 
individual.
    (e) Expedited action to effect compliance. The requirement of 45 CFR 
80.8(d)(3) pertaining to notice to recipients prior to the initiation of 
action to effect compliance (made applicable to this part by 45 CFR 
84.61) shall not apply when, in the judgment of the responsible 
Department official, immediate action to effect compliance is necessary 
to protect the life or health of a handicapped individual. In such cases 
the recipient will, as soon as practicable, be given oral or written 
notice of its failure to comply, of the action to be taken to effect 
compliance, and its continuing opportunity to comply voluntarily.
    (f) Model Infant Care Review Committee. Recipient health care 
providers wishing to establish Infant Care Review Committees should 
consider adoption of the following model. This model is advisory. 
Recipient health care providers are not required to establish a review 
committee or, if one is established, to adhere to this model. In seeking 
to determine compliance with this part, as it relates to health care for 
handicapped infants, by health care providers that have an ICRC 
established and operated substantially in accordance with this model, 
the Department will, to the extent possible, consult with the ICRC.
    (1) Establishment and purpose. (i) The hospital establishes an 
Infant Care Review Committee (ICRC) or joins with one or more other 
hospitals to create a joint ICRC. The establishing document will state 
that the ICRC is for the purpose of facilitating the development and 
implementation of standards, policies and procedures designed to assure 
that, while respecting reasonable medical judgments, treatment and 
nourishment not be withheld, solely on the

[[Page 489]]

basis of present or anticipated physical or mental impairments, from 
handicapped infants who, in spite of such impairments, will benefit 
medically from the treatment or nourishment.
    (ii) The activities of the ICRC will be guided by the following 
principles:
    (A) The interpretative guidelines of the Department relating to the 
applicability of this part to health care for handicapped infants.
    (B) As stated in the ``Principles of Treatment of Disabled Infants'' 
of the coalition of major medical and disability organizations, 
including the American Academy of Pediatrics, National Association of 
Children's Hospitals and Related Institutions, Association for Retarded 
Citizens, Down's Syndrome Congress, Spina Bifida Association, and 
others:

    When medical care is clearly beneficial, it should always be 
provided. When appropriate medical care is not available, arrangements 
should be made to transfer the infant to an appropriate medical 
facility. Consideration such as anticipated or actual limited potential 
of an individual and present or future lack of available community 
resources are irrelevant and must not determine the decisions concerning 
medical care. The individual's medical condition should be the sole 
focus of the decision. These are very strict standards.
    It is ethically and legally justified to withhold medical or 
surgical procedures which are clearly futile and will only prolong the 
act of dying. However, supportive care should be provided, including 
sustenance as medically indicated and relief of pain and suffering. The 
needs of the dying person should be respected. The family also should be 
supported in its grieving.
    In cases where it is uncertain whether medical treatment will be 
beneficial, a person's disability must not be the basis for a decision 
to withhold treatment. At all times during the process when decisions 
are being made about the benefit or futility of medical treatment, the 
person should be cared for in the medically most appropriate ways. When 
doubt exists at any time about whether to treat, a presumption always 
should be in favor of treatment.

    (C) As stated by the President's Commission for the Study of Ethical 
Problems in Medicine and Biomedical and Behavioral Research:

    This [standard for providing medically beneficial treatment] is a 
very strict standard in that it excludes consideration of the negative 
effects of an impaired child's life on other persons, including parents, 
siblings, and society. Although abiding by this standard may be 
difficult in specific cases, it is all too easy to undervalue the lives 
of handicapped infants; the Commission finds it imperative to counteract 
this by treating them no less vigorously than their healthy peers or 
than older children with similar handicaps would be treated.

    (iii) The ICRC will carry out its purposes by:
    (A) Recommending institutional policies concerning the withholding 
or withdrawal of medical or surgical treatments to infants, including 
guidelines for ICRC action for specific categories of life-threatening 
conditions affecting infants;
    (B) Providing advice in specific cases when decisions are being 
considered to withhold or withdraw from infant life-sustaining medical 
or surgical treatment; and
    (C) Reviewing retrospectively on a regular basis infant medical 
records in situations in which life-sustaining medical or surgical 
treatment has been withheld or withdrawn.
    (2) Organization and staffing. The ICRC will consist of at least 7 
members and include the following:
    (i) A practicing physician (e.g., a pediatrician, a neonatologist, 
or a pediatric surgeon),
    (ii) A practicing nurse,
    (iii) A hospital administrator,
    (iv) A representative of the legal profession,
    (v) A representative of a disability group, or a developmental 
disability expert,
    (vi) A lay community member, and
    (vii) A member of a facility's organized medical staff, who shall 
serve as chairperson.

In connection with review of specific cases, one member of the ICRC 
shall be designated to act as ``special advocate'' for the infant, as 
provided in paragraph (f)(3)(ii)(E) of the section. The hospital will 
provide staff support for the ICRC, including legal counsel. The ICRC 
will meet on a regular basis, or as required below in connection with 
review of specific cases. It shall adopt or recommend to the appropriate 
hospital official or body such administrative policies as terms of 
office and quorum requirements. The ICRC will recommend procedures to 
ensure that both hospital

[[Page 490]]

personnel and patient families are fully informed of the existence and 
functions of the ICRC and its availability on a 24-hour basis.
    (3) Operation of ICRC--(i) Prospective policy development. (A) The 
ICRC will develop and recommend for adoption by the hospital 
institutional policies concerning the withholding or withdrawal of 
medical treatment for infants with life-threatening conditions. These 
will include guidelines for management of specific types of cases or 
diagnoses, for example, Down's syndrome and spina bifida, and procedures 
to be followed in such recurring circumstances as, for example, brain 
death and parental refusal to consent to life-saving treatment. The 
hospital, upon recommendation of the ICRC, may require attending 
physicians to notify the ICRC of the presence in the facility of an 
infant with a diagnosis specified by the ICRC, e.g., Down's syndrome and 
spina bifida.
    (B) In recommending these policies and guidelines, the ICRC will 
consult with medical and other authorities on issues involving disabled 
individuals, e.g., neonatologists, pediatric surgeons, county and city 
agencies which provide services for the disabled, and disability 
advocacy organizations. It will also consult with appropriate committees 
of the medical staff, to ensure that the ICRC policies and guidelines 
build on existing staff by-laws, rules and regulations concerning 
consultations and staff membership requirements. The ICRC will also 
inform and educate hospital staff on the policies and guidelines it 
develops.
    (ii) Review of specific cases. In addition to regularly scheduled 
meetings, interim ICRC meetings will take place under specified 
circumstances to permit review of individual cases. The hospital will, 
to the extent possible, require in each case that life-sustaining 
treatment be continued, until the ICRC can review the case and provide 
advice.
    (A) Interim ICRC meetings will be convened within 24 hours (or less 
if indicated) when there is disagreement between the family of an infant 
and the infant's physician as to the withholding or withdrawal of 
treatment, when a preliminary decision to withhold or withdraw life-
sustaining treatment has been made in certain categories of cases 
identified by the ICRC, when there is disagreement between members of 
the hospital's medical and/or nursing staffs, or when otherwise 
appropriate.
    (B) Such interim ICRC meetings will take place upon the request of 
any member of the ICRC or hospital staff or parent or guardian of the 
infant. The ICRC will have procedures to preserve the confidentiality of 
the identity of persons making such requests, and such persons shall be 
protected from reprisal. When appropriate, the ICRC or a designated 
member will inform the requesting individual of the ICRC's 
recommendation.
    (C) The ICRC may provide for telephone and other forms of review 
when the timing and nature of the case, as identified in policies 
developed by the ICRC, make the convening of an interim meeting 
impracticable.
    (D) Interim meetings will be open to the affected parties. The ICRC 
will ensure that the interests of the parents, the physician, and the 
child are fully considered; that family members have been fully informed 
of the patient's condition and prognosis; that they have been provided 
with a listing which describes the services furnished by parent support 
groups and public and private agencies in the geographic vicinity to 
infants with conditions such as that before the ICRC; and that the ICRC 
will facilitate their access to such services and groups.
    (E) To ensure a comprehensive evaluation of all options and factors 
pertinent to the committee's deliberations, the chairperson will 
designate one member of the ICRC to act, in connection with that 
specific case, as special advocate for the infant. The special advocate 
will seek to ensure that all considerations in favor of the provision of 
life-sustaining treatment are fully evaluated and considered by the 
ICRC.
    (F) In cases in which there is disagreement on treatment between a 
physician and an infant's family, and the family wishes to continue 
life-sustaining treatment, the family's wishes will be carried out, for 
as long as the family wishes, unless such treatment is medically 
contraindicated. When there is physician/family disagreement and

[[Page 491]]

the family refuses consent to life-sustaining treatment, and the ICRC, 
after due deliberation, agrees with the family, the ICRC will recommend 
that the treatment be withheld. When there is physician/family 
disagreement and the family refuses consent, but the ICRC disagrees with 
the family, the ICRC will recommend to the hospital board or appropriate 
official that the case be referred immediately to an appropriate court 
or child protective agency, and every effort shall be made to continue 
treatment, preserve the status quo, and prevent worsening of the 
infant's condition until such time as the court or agency renders a 
decision or takes other appropriate action. The ICRC will also follow 
this procedure in cases in which the family and physician agree that 
life-sustaining treatment should be withheld or withdrawn, but the ICRC 
disagrees.
    (iii) Retrospective record review. The ICRC, at its regularly-
scheduled meeting, will review all records involving withholding or 
termination of medical or surgical treatment to infants consistent with 
hospital policies developed by the ICRC, unless the case was previously 
before the ICRC pursuant to paragraph (f)(3)(ii) of this section. If the 
ICRC finds that a deviation was made from the institutional policies in 
a given case, it shall conduct a review and report the findings to 
appropriate hospital personnel for appropriate action.
    (4) Records. The ICRC will maintain records of all of its 
deliberations and summary descriptions of specific cases considered and 
the disposition of those cases. Such records will be kept in accordance 
with institutional policies on confidentiality of medical information. 
They will be made available to appropriate government agencies, or upon 
court order, or as otherwise required by law.
    Note: The mandatory provisions set forth in paragraphs (b)-(e) 
inclusive of this section are subject to an injunction prohibiting their 
enforcement. In Bowen v. American Hospital Association, ___ U.S. ___, 
106 S. Ct. 2101 (1986), the Supreme Court upheld the action of a United 
States District Court, 585 F. Supp. 541 (S.D.N.Y. 1984), declaring 
invalid and enjoining enforcement of provisions under this section, 
promulgated January 12, 1984.

(Information collection requirements contained in paragraph (c) have 
been approved by the Office of Management and Budget under control 
number 0990-0114)

[49 FR 1651, Jan. 12, 1984, as amended at 52 FR 3012, Jan. 30, 1987; 70 
FR 24320, May 9, 2005]



Sec. Sec.  84.56-84.60  [Reserved]



                          Subpart G_Procedures



Sec.  84.61  Procedures.

    The procedural provisions applicable to title VI of the Civil Rights 
Act of 1964 apply to this part. These procedures are found in Sec. Sec.  
80.6 through 80.10 and part 81 of this title.

[42 FR 22677, May 4, 1977; 42 FR 22888, May 5, 1977]





        Sec. Appendix A to Part 84--Analysis of Final Regulation

                      subpart a--general provisions

    Definitions--1. ``Recipient''. Section 84.23 contains definitions 
used throughout the regulation. Most of the comments concerning Sec.  
84.3(f), which contains the definition of ``recipient,'' commended the 
inclusion of recipient whose sole source of Federal financial assistance 
is Medicaid. The Secretary believes that such Medicaid providers should 
be regarded as recipients under the statute and the regulation and 
should be held individually responsible for administering services in a 
nondiscriminatory fashion. Accordingly, Sec.  84.3(f) has not been 
changed. Small Medicaid providers, however, are exempt from some of the 
regulation's administrative provisions (those that apply to recipients 
with fifteen or more employees). And such recipients will be permitted 
to refer patients to accessible facilities in certain limited 
circumstances under revised Sec.  84.22(b). The Secretary recognizes the 
difficulties involved in Federal enforcement of this regulation with 
respect to thousands of individual Medicaid providers. As in the case of 
title VI of the Civil Rights Act of 1964, the Office for Civil Rights 
will concentrate its compliance efforts on the state Medicaid agencies 
and will look primarily to them to ensure compliance by individual 
providers.
    One other comment requested that the regulation specify that 
nonpublic elementary and secondary schools that are not otherwise 
recipients do not become recipients by virtue

[[Page 492]]

of the fact their students participate in certain federally funded 
programs. The Secretary believes it unnecessary to amend the regulation 
in this regard, because almost identical language in the Department's 
regulations implementing title VI and Title IX of the Education 
Amendments of 1972 has consistently been interpreted so as not to render 
such schools recipients. These schools, however, are indirectly subject 
to the substantive requirements of this regulation through the 
application of Sec.  84.4(b)(iv), which prohibits recipients from 
assisting agencies that discriminate on the basis of handicap in 
providing services to beneficiairies of the recipients' programs.
    2. ``Federal financial assistance''. In Sec.  84.3(h), defining 
Federal financial assistance, a clarifying change has been made: 
procurement contracts are specifically excluded. They are covered, 
however, by the Department of Labor's regulation under section 503. The 
Department has never considered such contracts to be contracts of 
assistance; the explicit exemption has been added only to avoid possible 
confusion.
    The proposed regulation's exemption of contracts of insurance or 
guaranty has been retained. A number of comments argued for its deletion 
on the ground that section 504, unlike title VI and title IX, contains 
no statutory exemption for such contracts. There is no indication, 
however, in the legislative history of the Rehabilitation Act of 1973 or 
of the amendments to that Act in 1974, that Congress intended section 
504 to have a broader application, in terms of Federal financial 
assistance, than other civil rights statutes. Indeed, Congress directed 
that section 504 be implemented in the same manner as titles VI and IX. 
In view of the long established exemption of contracts of insurance or 
guaranty under title VI, we think it unlikely that Congress intended 
section 504 to apply to such contracts.
    In its May 1976 Notice of Intent, the Department suggested that the 
arrangement under which individual practitioners, hospitals, and other 
facilities receive reimbursement for providing services to beneficiaries 
under Part B of title XVIII of the Social Security Act (Medicare) 
constitutes a contract of insurance or guaranty and thus falls within 
the exemption from the regulation. This explanation oversimplified the 
Department's view of whether Medicare Part B constitutes Federal 
financial assistance. The Department's position has consistently been 
that, whether or not Medicare Part B arrangements involve a contract of 
insurance or guaranty, no Federal financial assistance flows from the 
Department to the doctor or other practitioner under the program, since 
Medicare Part B--like other social security programs--is basically a 
program of payments to direct beneficiaries.
    3. ``Handicapped person''. Section 84.3(j), which defines the class 
of persons protected under the regulation, has not been substantially 
changed. The definition of handicapped person in paragraph (j)(1) 
conforms to the statutory definition of handicapped person that is 
applicable to section 504, as set forth in section 111(a) of the 
Rehabilitation Act Amendments of 1974, Pub. L. 93-516.
    The first of the three parts of the statutory and regulatory 
definition includes any person who has a physical or mental impairment 
that substantially limits one or more major life activities. Paragraph 
(j)(2)(i) further defines physical or mental impairments. The definition 
does not set forth a list of specific diseases and conditions that 
constitute physical or mental impairments because of the difficulty of 
ensuring the comprehensiveness of any such list. The term includes, 
however, such diseases and conditions as orthopedic, visual, speech, and 
hearing impairments, cerebral palsy, epilepsy, muscular dystrophy, 
multiple sclerosis, cancer, heart disease, diabetes, mental retardation, 
emotional illness, and, as discussed below, drug addiction and 
alcoholism.
    It should be emphasized that a physical or mental impairment does 
not constitute a handicap for purposes of section 504 unless its 
severity is such that it results in a substantial limitation of one or 
more major life activities. Several comments observed the lack of any 
definition in the proposed regulation of the phrase ``substantially 
limits.'' The Department does not believe that a definition of this term 
is possible at this time.
    A related issue raised by several comments is whether the definition 
of handicapped person is unreasonably broad. Comments suggested 
narrowing the definition in various ways. the most common recommendation 
was that only ``traditional'' handicaps be covered. The Department 
continues to believe, however, that it has no flexibility within the 
statutory definition to limit the term to persons who have those severe, 
permanent, or progressive conditions that are most commonly regarded as 
handicaps. The Department intends, however, to give particular attention 
in its enforcement of section 504 to eliminating discrimination against 
persons with the severe handicaps that were the focus of concern in the 
Rehabilitation Act of 1973.
    The definition of handicapped person also includes specific 
limitations on what persons are classified as handicapped under the 
regulation. The first of the three parts of the definition specifies 
that only physical and mental handicaps are included. Thus, 
environmental, cultural, and economic disadvantage are not in themselves 
covered; nor are prison records, age, or homosexuality. Of course, if a 
person who has any of these characteristics also has a physical or 
mental handicap, the

[[Page 493]]

person is included within the definition of handicapped person.
    In paragraph (j)(2)(i), physical or mental impairment is defined to 
include, among other impairments, specific learning disabilities. The 
Department will interpret the term as it is used in section 602 of the 
Education of the Handicapped Act, as amended. Paragraph (15) of section 
602 uses the term ``specific learning disabilities'' to describe such 
conditions as perceptual handicaps, brain injury, minimal brain 
dysfunction, dyslexia, and developmental aphasia.
    Paragraph (j)(2)(i) has been shortened, but not substantively 
changed, by the deletion of clause (C), which made explicit the 
inclusion of any condition which is mental or physical but whose precise 
nature is not at present known. Clauses (A) and (B) clearly comprehend 
such conditions.
    The second part of the statutory and regulatory definition of 
handicapped person includes any person who has a record of a physical or 
mental impairment that substantially limits a major life activity. Under 
the definition of ``record'' in paragraph (j)(2)(iii), persons who have 
a history of a handicapping condition but no longer have the condition, 
as well as persons who have been incorrectly classified as having such a 
condition, are protected from discrimination under section 504. 
Frequently occurring examples of the first group are persons with 
histories of mental or emotional illness, heart disease, or cancer; of 
the second group, persons who have been misclassified as mentally 
retarded.
    The third part of the statutory and regulatory definition of 
handicapped person includes any person who is regarded as having a 
physical or mental impairment that substantially limits one or more 
major life activities. It includes many persons who are ordinarily 
considered to be handicapped but who do not technically fall within the 
first two parts of the statutory definition, such as persons with a 
limp. This part of the definition also includes some persons who might 
not ordinarily be considered handicapped, such as persons with 
disfiguring scars, as well as persons who have no physical or mental 
impairment but are treated by a recipient as if they were handicapped.
    4. Drug addicts and alcoholics. As was the case during the first 
comment period, the issue of whether to include drug addicts and 
alcoholics within the definition of handicapped person was of major 
concern to many commenters. The arguments presented on each side of the 
issue were similar during the two comment periods, as was the preference 
of commenters for exclusion of this group of persons. While some 
comments reflected misconceptions about the implications of including 
alcoholics and drug addicts within the scope of the regulation, the 
Secretary understands the concerns that underlie the comments on this 
question and recognizes that application of section 504 to active 
alcoholics and drug addicts presents sensitive and difficult questions 
that must be taken into account in interpretation and enforcement.
    The Secretary has carefully examined the issue and has obtained a 
legal opinion from the Attorney General. That opinion concludes that 
drug addiction and alcoholism are ``physical or mental impairments'' 
within the meaning of section 7(6) of the Rehabilitation Act of 1973, as 
amended, and that drug addicts and alcoholics are therefore handicapped 
for purposes of section 504 if their impairment substantially limits one 
of their major life activities. The Secretary therefore believes that he 
is without authority to exclude these conditions from the definition. 
There is a medical and legal consensus that alcoholism and drug 
addiction are diseases, although there is disagreement as to whether 
they are primarily mental or physical. In addition, while Congress did 
not focus specifically on the problems of drug addiction and alcoholism 
in enacting section 504, the committees that considered the 
Rehabilitation Act of 1973 were made aware of the Department's long-
standing practice of treating addicts and alcoholics as handicapped 
individuals eligible for rehabilitation services under the Vocational 
Rehabilitation Act.
    The Secretary wishes to reassure recipients that inclusion of 
addicts and alcoholics within the scope of the regulation will not lead 
to the consequences feared by many commenters. It cannot be emphasized 
too strongly that the statute and the regulation apply only to 
discrimination against qualified handicapped persons solely by reason of 
their handicap. The fact that drug addiction and alcoholism may be 
handicaps does not mean that these conditions must be ignored in 
determining whether an individual is qualified for services or 
employment opportunities. On the contrary, a recipient may hold a drug 
addict or alcoholic to the same standard of performance and behavior to 
which it holds others, even if any unsatisfactory performance or 
behavior is related to the person's drug addiction or alcoholism. In 
other words, while an alcoholic or drug addict may not be denied 
services or disqualified from employment solely because of his or her 
condition, the behavioral manifestations of the condition may be taken 
into account in determining whether he or she is qualified.
    With respect to the employment of a drug addict or alcoholic, if it 
can be shown that the addiction or alcoholism prevents successful 
performance of the job, the person need not be provided the employment 
opportunity in question. For example, in making employment decisions, a 
recipient may judge addicts and alcoholics on the same basis it

[[Page 494]]

judges all other applicants and employees. Thus, a recipient may 
consider--for all applicants including drug addicts and alcoholics--past 
personnel records, absenteeism, disruptive, abusive, or dangerous 
behavior, violations of rules and unsatisfactory work performance. 
Moreover, employers may enforce rules prohibiting the possession or use 
of alcohol or drugs in the work-place, provided that such rules are 
enforced against all employees.
    With respect to services, there is evidence that drug addicts and 
alcoholics are often denied treatment at hospitals for conditions 
unrelated to their addiction or alcoholism. In addition, some addicts 
and alcoholics have been denied emergency treatment. These practices 
have been specifically prohibited by section 407 of the Drug Abuse 
Office and Treatment Act of 1972 (21 U.S.C. 1174) and section 321 of the 
Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment and 
Rehabilitation Act of 1970 (42 U.S.C. 4581), as amended. These statutory 
provisions are also administered by the Department's Office for Civil 
Rights and are implemented in Sec.  84.53 of this regulation.
    With respect to other services, the implications of coverage, of 
alcoholics and drug addicts are two-fold: first, no person may be 
excluded from services solely by reason of the presence or history of 
these conditions; second, to the extent that the manifestations of the 
condition prevent the person from meeting the basic eligibility 
requirements of the program or cause substantial interference with the 
operation of the program, the condition may be taken into consideration. 
Thus, a college may not exclude an addict or alcoholic as a student, on 
the basis of addiction or alcoholism, if the person can successfully 
participate in the education program and complies with the rules of the 
college and if his or her behavior does not impede the performance of 
other students.
    Of great concern to many commenters was the question of what effect 
the inclusion of drug addicts and alcoholics as handicapped persons 
would have on school disciplinary rules prohibiting the use or 
possession of drugs or alcohol by students. Neither such rules nor their 
application to drug addicts or alcoholics is prohibited by this 
regulation, provided that the rules are enforced evenly with respect to 
all students.
    5. ``Qualified handicapped person.'' Paragraph (k) of Sec.  84.3 
defines the term ``qualified handicapped person.'' Throughout the 
regulation, this term is used instead of the statutory term ``otherwise 
qualified handicapped person.'' The Department believes that the 
omission of the word ``otherwise'' is necessary in order to comport with 
the intent of the statute because, read literally, ``otherwise'' 
qualified handicapped persons include persons who are qualified except 
for their handicap, rather than in spite of their handicap. Under such a 
literal reading, a blind person possessing all the qualifications for 
driving a bus except sight could be said to be ``otherwise qualified'' 
for the job of driving. Clearly, such a result was not intended by 
Congress. In all other respects, the terms ``qualified'' and ``otherwise 
qualified'' are intended to be interchangeable.
    Section 84.3(k)(1) defines a qualified handicapped person with 
respect to employment as a handicapped person who can, with reasonable 
accommodation, perform the essential functions of the job in question. 
The term ``essential functions'' does not appear in the corresponding 
provision of the Department of Labor's section 503 regulation, and a few 
commenters objected to its inclusion on the ground that a handicapped 
person should be able to perform all job tasks. However, the Department 
believes that inclusion of the phrase is useful in emphasizing that 
handicapped persons should not be disqualified simply because they may 
have difficulty in performing tasks that bear only a marginal 
relationship to a particular job. Further, we are convinced that 
inclusion of the phrase is not inconsistent with the Department of 
Labor's application of its definition.
    Certain commenters urged that the definition of qualified 
handicapped person be amended so as explicitly to place upon the 
employer the burden of showing that a particular mental or physical 
characteristic is essential. Because the same result is achieved by the 
requirement contained in paragraph (a) of Sec.  84.13, which requires an 
employer to establish that any selection criterion that tends to screen 
out handicapped persons is job-related, that recommendation has not been 
followed.
    Section 84.3(k)(2) (formerly Sec.  84.3(k)(3)) defines qualified 
handicapped person, with respect to preschool, elementary, and secondary 
programs, in terms of age. Several commenters recommended that 
eligibility for the services be based upon the standard of substantial 
benefit, rather than age, because of the need of many handicapped 
children for early or extended services if they are to have an equal 
opportunity to benefit from education programs. No change has been made 
in this provision, again because of the extreme difficulties in 
administration that would result from the choice of the former standard. 
Under the remedial action provisions of Sec.  84.6(a)(3), however, 
persons beyond the age limits prescribed in Sec.  84.3(k)(2) may in 
appropriate cases be required to be provided services that they were 
formerly denied because of a recipient's violation of section 504.
    Section 84.3(k)(2) states that a handicapped person is qualified for 
preschool, elementary, or secondary services if the person is of an age 
at which nonhandicapped persons are eligible for such services or at 
which state law

[[Page 495]]

mandates the provision of educational services to handicapped persons. 
In addition, the extended age ranges for which recipients must provide 
full educational opportunity to all handicapped persons in order to be 
eligible for assistance under the Education of the Handicapped Act--
generally, 3-18 as of September 1978, and 3-21 as of September 1980 are 
incorporated by reference in this paragraph.
    Section 84.3(k)(3) formerly Sec.  84.3(k)(2)) defines qualified 
handicapped person with respect to postsecondary educational programs. 
As revised, the paragraph means that both academic and technical 
standards must be met by applicants to these programs. The term 
``technical standards'' refers to all nonacademic admissions criteria 
that are essential to participation in the program in question.
    6. General prohibitions against discrimination. Section 84.4 
contains general prohibitions against discrimination applicable to all 
recipients of assistance from this Department.
    Paragraph (b)(1(i) prohibits the exclusion of qualified handicapped 
persons from aids, benefits, or services, and paragraph (ii) requires 
that equal opportunity to participate or benefit be provided. Paragraph 
(iii) requires that services provided to handicapped persons be as 
effective as those provided to the nonhandicapped. In paragraph (iv), 
different or separate services are prohibited except when necessary to 
provide equally effective benefits.
    In this context, the term ``equally effective,'' defined in 
paragraph (b)(2), is intended to encompass the concept of equivalent, as 
opposed to identical, services and to acknowledge the fact that in order 
to meet the individual needs of handicapped persons to the same extent 
that the corresponding needs of nonhandicapped persons are met, 
adjustments to regular programs or the provision of different programs 
may sometimes be necessary. For example, a welfare office that uses the 
telephone for communicating with its clients must provide alternative 
modes of communicating with its deaf clients. This standard parallels 
the one established under title VI of Civil Rights Act of 1964 with 
respect to the provision of educational services to students whose 
primary language is not English. See Lau v. Nichols, 414 U.S. 563 
(1974). To be equally effective, however, an aid, benefit, or service 
need not produce equal results; it merely must afford an equal 
opportunity to achieve equal results.
    It must be emphasized that, although separate services must be 
required in some instances, the provision of unnecessarily separate or 
different services is discriminatory. The addition to paragraph (b)(2) 
of the phrase ``in the most integrated setting appropriated to the 
person's needs'' is intended to reinforce this general concept. A new 
paragraph (b)(3) has also been added to Sec.  84.4, requiring recipients 
to give qualified handicapped persons the option of participating in 
regular programs despite the existence of permissibly separate or 
different programs. The requirement has been reiterated in Sec. Sec.  
84.38 and 84.47 in connection with physical education and athletics 
programs.
    Section 84.4(b)(1)(v) prohibits a recipient from supporting another 
entity or person that subjects participants or employees in the 
recipient's program to discrimination on the basis of handicap. This 
section would, for example, prohibit financial support by a recipient to 
a community recreational group or to a professional or social 
organization that discriminates against handicapped persons. Among the 
criteria to be considered in each case are the substantiality of the 
relationship between the recipient and the other entity, including 
financial support by the recipient, and whether the other entity's 
activities relate so closely to the recipient's program or activity that 
they fairly should be considered activities of the recipient itself. 
Paragraph (b)(1)(vi) was added in response to comment in order to make 
explicit the prohibition against denying qualified handicapped persons 
the opportunity to serve on planning and advisory boards responsible for 
guiding federally assisted programs or activities.
    Several comments appeared to interpret Sec.  84.4(b)(5), which 
proscribes discriminatory site selection, to prohibit a recipient that 
is located on hilly terrain from erecting any new buildings at its 
present site. That, of course, is not the case. This paragraph is not 
intended to apply to construction of additional buildings at an existing 
site. Of course, any such facilities must be made accessible in 
accordance with the requirements of Sec.  84.23.
    7. Assurances of compliance. Section 84.5(a) requires a recipient to 
submit to the Director an assurance that each of its programs and 
activities receiving or benefiting from Federal financial assistance 
from this Department will be conducted in compliance with this 
regulation. To facilitate the submission of assurances by thousands of 
Medicaid providers, the Department will follow the title VI procedures 
of accepting, in lieu of assurances, certification on Medicaid vouchers. 
Many commenters also sought relief from the paperwork requirements 
imposed by the Department's enforcement of its various civil rights 
responsibilities by requesting the Department to issue one form 
incorporating title VI, title IX, and section 504 assurances. The 
Secretary is sympathetic to this request. While it is not feasible to 
adopt a single civil rights assurance form at this time, the Office for 
Civil Rights will work toward that goal.
    8. Private rights of action. Several comments urged that the 
regulation incorporate

[[Page 496]]

provision granting beneficiaries a private right of action against 
recipients under section 504. To confer such a right is beyond the 
authority of the executive branch of Government. There is, however, case 
law holding that such a right exists. Lloyd v. Regional Transportation 
Authority, 548 F. 2d 1277 (7th Cir. 1977); see Hairston v. Drosick, 
Civil No. 75-0691 (S.D. W. Va., Jan. 14, 1976); Gurmankin v. Castanzo, 
411 F. Supp. 982 (E.D. Pa. 1976); cf. Lau v. Nichols, supra.
    9. Remedial action. Where there has been a finding of 
discrimination, Sec.  84.6 requires a recipient to take remedial action 
to overcome the effects of the discrimination. Actions that might be 
required under paragraph (a)(1) include provision of services to persons 
previously discriminated against, reinstatement of employees and 
development of a remedial action plan. Should a recipient fail to take 
required remedial action, the ultimate sanctions of court action or 
termination of Federal financial assistance may be imposed.
    Paragraph (a)(2) extends the responsibility for taking remedial 
action to a recipient that exercises control over a noncomplying 
recipient. Paragraph (a)(3) also makes clear that handicapped persons 
who are not in the program at the time that remedial action is required 
to be taken may also be the subject of such remedial action. This 
paragraph has been revised in response to comments in order to include 
persons who would have been in the program if discriminatory practices 
had not existed. Paragraphs (a) (1), (2), and (3) have also been amended 
in response to comments to make plain that, in appropriate cases, 
remedial action might be required to redress clear violations of the 
statute itself that occurred before the effective date of this 
regulation.
    10. Voluntary action. In Sec.  84.6(b), the term ``voluntary 
action'' has been substituted for the term ``affirmative action'' 
because the use of the latter term led to some confusion. We believe the 
term ``voluntary action'' more accurately reflects the purpose of the 
paragraph. This provision allows action, beyond that required by the 
regulation, to overcome conditions that led to limited participation by 
handicapped persons, whether or not the limited participation was caused 
by any discriminatory actions on the part of the recipient. Several 
commenters urged that paragraphs (a) and (b) be revised to require 
remedial action to overcome effects of prior discriminatory practices 
regardless of whether there has been an express finding of 
discrimination. The self-evaluation requirement in paragraph (c) 
accomplishes much the same purpose.
    11. Self-evaluation. Paragraph (c) requires recipients to conduct a 
self-evaluation in order to determine whether their policies or 
practices may discriminate against handicapped persons and to take steps 
to modify any discriminatory policies and practices and their effects. 
The Department received many comments approving of the addition to 
paragraph (c) of a requirement that recipients seek the assistance of 
handicapped persons in the self-evaluation process. This paragraph has 
been further amended to require consultation with handicapped persons or 
organizations representing them before recipients undertake the policy 
modifications and remedial steps prescribed in paragraphs (c)(1)(ii) and 
(iii).
    Paragraph (c)(2), which sets forth the recordkeeping requirements 
concerning self-evaluation, now applies only to recipients with fifteen 
or more employees. This change was made as part of an effort to reduce 
unnecessary or counterproductive administrative obligations on small 
recipients. For those recipients required to keep records, the 
requirements have been made more specific; records must include a list 
of persons consulted and a description of areas examined, problems 
identified, and corrective steps taken. Moreover, the records must be 
made available for public inspection.
    12. Grievance procedure. Section 84.7 (formerly Sec.  84.8) requires 
recipients with fifteen or more employees to designate an individual 
responsible for coordinating its compliance efforts and to adopt a 
grievance procedure. Two changes were made in the section in response to 
comment. A general requirement that appropriate due process procedures 
be followed has been added. It was decided that the details of such 
procedures could not at this time be specified because of the varied 
nature of the persons and entities who must establish the procedures and 
of the programs to which they apply. A sentence was also added to make 
clear that grievance procedures are not required to be made available to 
unsuccessful applicants for employment or to applicants for admission to 
colleges and universities.
    The regulation does not require that grievance procedures be 
exhausted before recourse is sought from the Department. However, the 
Secretary believes that it is desirable and efficient in many cases for 
complainants to seek resolution of their complaints and disputes at the 
local level and therefore encourages them to use available grievance 
procedures.
    A number of comments asked whether compliance with this section or 
the notice requirements of Sec.  84.8 could be coordinated with 
comparable action required by the title IX regulation. The Department 
encourages such efforts.
    13. Notice. Section 84.8 (formerly Sec.  84.9) sets forth 
requirements for dissemination of statements of nondicrimination policy 
by recipients.
    It is important that both handicapped persons and the public at 
large be aware of the obligations of recipients under section 504.

[[Page 497]]

Both the Department and recipients have responsibilities in this regard. 
Indeed the Department intends to undertake a major public information 
effort to inform persons of their rights under section 504 and this 
regulation. In Sec.  84.8 the Department has sought to impose a clear 
obligation on major recipients to notify beneficiaries and employees of 
the requirements of section 504, without dictating the precise way in 
which this notice must be given. At the same time, we have avoided 
imposing requirements on small recipients (those with fewer than fifteen 
employees) that would create unnecessary and counterproductive paper 
work burdens on them and unduly stretch the enforcement resources of the 
Department.
    Section 84.8(a), as simplified, requires recipients with fifteen or 
more employees to take appropriate steps to notify beneficiaries and 
employees of the recipient's obligations under section 504. The last 
sentence of Sec.  84.8(a) has been revised to list possible, rather than 
required, means of notification. Section 84.8(b) requires recipients to 
include a notification of their policy of nondiscrimination in 
recruitment and other general information materials.
    In response to a number of comments, Sec.  84.8 has been revised to 
delete the requirements of publication in local newspapers, which has 
proved to be both troublesome and ineffective. Several commenters 
suggested that notification on separate forms be allowed until present 
stocks of publications and forms are depleted. The final regulation 
explicitly allows this method of compliance. The separate form should, 
however, be included with each significant publication or form that is 
distributed.
    Former Sec.  84.9(b)(2), which prohibited the use of materials that 
might give the impression that a recipient excludes qualified 
handicapped persons from its program, has been deleted. The Department 
is convinced by the comments that this provision is unnecessary and 
difficult to apply. The Department encourages recipients, however, to 
include in their recruitment and other general information materials 
photographs of handicapped persons and ramps and other features of 
accessible buildings.
    Under new Sec.  84.9 the Director may, under certain circumstances, 
require recipients with fewer than fifteen employees to comply with one 
or more of these requirements. Thus, if experience shows a need for 
imposing notice or other requirements on particular recipients or 
classes of small recipients, the Department is prepared to expand the 
coverage of these sections.
    14. Inconsistent State laws. Section 84.10(a) states that compliance 
with the regulation is not excused by state or local laws limiting the 
eligibility of qualified handicapped persons to receive services or to 
practice an occupation. The provision thus applies only with respect to 
state or local laws that unjustifiably differentiate on the basis of 
handicap.
    Paragraph (b) further points out that the presence of limited 
employment opportunities in a particular profession, does not excuse a 
recipient from complying with the regulation. Thus, a law school could 
not deny admission to a blind applicant because blind laywers may find 
it more difficult to find jobs that do nonhandicapped lawyers.

                     subpart b--employment practices

    Subpart B prescribes requirements for nondiscrimination in the 
employment practices of recipients of Federal financial assistance 
administered by the Department. This subpart is consistent with the 
employment provisions of the Department's regulation implementing title 
IX of the Education Amendments of 1972 (45 CFR part 86) and the 
regulation of the Department of Labor under section 503 of the 
Rehabilitation Act, which requries certain Federal contractors to take 
affirmative action in the employment and advancement of qualified 
handicapped persons. All recipients subject to title IX are also subject 
to this regulation. In addition, many recipients subject to this 
regulation receive Federal procurement contracts in excess of $2,500 and 
are therefore also subject to section 503.
    15. Discriminatory practices. Section 84.11 sets forth general 
provisions with respect to discrimination in employment. A new paragraph 
(a)(2) has been added to clarify the employment obligations of 
recipients that receive Federal funds under Part B of the Education of 
the Handicapped Act, as amended (EHA). Section 606 of the EHA obligates 
elementary or secondary school systems that receive EHA funds to take 
positive steps to employ and advance in employment qualified handicapped 
persons. This obligation is similar to the nondiscrimination requirement 
of section 504 but requires recipients to take additional steps to hire 
and promote handicapped persons. In enacting section 606 Congress chose 
the words ``positive steps'' instead of ``affirmative action'' advisedly 
and did not intend section 606 to incorporate the types of activities 
required under Executive Order 11246 (affirmative action on the basis of 
race, color, sex, or national origin) or under sections 501 and 503 of 
the Rehabilitation Act of 1973.
    Paragraph (b) of Sec.  84.11 sets forth the specific aspects of 
employment covered by the regulation. Paragraph (c) provides that 
inconsistent provisions of collective bargaining agreements do not 
excuse noncompliance.
    16. Reasonable accommodation. The reasonable accommodation 
requirement of Sec.  84.12 generated a substantial number of comments. 
The Department remains convinced that its approach is both fair and 
effective.

[[Page 498]]

Moreover, the Department of Labor reports that it has experienced little 
difficulty in administering the requirements of reasonable 
accommodation. The provision therefore remains basically unchanged from 
the proposed regulation.
    Section 84.12 requires a recipient to make reasonable accommodation 
to the known physical or mental limitations of a handicapped applicant 
or employee unless the recipient can demonstrate that the accommodation 
would impose an undue hardship on the operation of its program. Where a 
handicapped person is not qualified to perform a particular job, where 
reasonable accommodation does not overcome the effects of a person's 
handicap, or where reasonable accommodation causes undue hardship to the 
employer, failure to hire or promote the handicapped person will not be 
considered discrimination.
    Section 84.12(b) lists some of the actions that constitute 
reasonable accommodation. The list is neither all-inclusive nor meant to 
suggest that employers must follow all of the actions listed.
    Reasonable accommodation includes modification of work schedules, 
including part-time employment, and job restructuring. Job restructuring 
may entail shifting nonessential duties to other employees. In other 
cases, reasonable accommodation may include physical modifications or 
relocation of particular offices or jobs so that they are in facilities 
or parts of facilities that are accessible to and usable by handicapped 
persons. If such accommodations would cause undue hardship to the 
employer, they need not be made.
    Paragraph (c) of this section sets forth the factors that the Office 
for Civil Rights will consider in determining whether an accommodation 
necessary to enable an applicant or employee to perform the duties of a 
job would impose an undue hardship. The weight given to each of these 
factors in making the determination as to whether an accommodation 
constitutes undue hardship will vary depending on the facts of a 
particular situation. Thus, a small day-care center might not be 
required to expend more than a nominal sum, such as that necessary to 
equip a telephone for use by a secretary with impaired hearing, but a 
large school district might be required to make available a teacher's 
aide to a blind applicant for a teaching job. Further, it might be 
considered reasonable to require a state welfare agency to accommodate a 
deaf employee by providing an interpreter, while it would constitute an 
undue hardship to impose that requirement on a provider of foster home 
care services. The reasonable accommodation standard in Sec.  84.12 is 
similar to the obligation imposed upon Federal contractors in the 
regulation implementing section 503 of the Rehabilitation Act of 1973, 
administered by the Department of Labor. Although the wording of the 
reasonable accommodation provisions of the two regulations is not 
identical, the obligation that the two regulations impose is the same, 
and the Federal Government's policy in implementing the two sections 
will be uniform. The Department adopted the factors listed in paragraph 
(c) instead of the ``business necessity'' standard of the Labor 
regulation because that term seemed inappropriate to the nature of the 
programs operated by the majority of institutions subject to this 
regulation, e.g., public school systems, hospitals, colleges and 
universities, nursing homes, day-care centers, and welfare offices. The 
factors listed in paragraph (c) are intended to make the rationale 
underlying the business necessity standard applicable to an 
understandable by recipients of HHS funds.
    17. Tests and selection criteria. Revised Sec.  84.13(a) prohibits 
employers from using test or other selection criteria that screen out or 
tend to screen out handicapped persons unless the test or criterion is 
shown to be job-related and alternative tests or criteria that do not 
screen out or tend to screen out as many handicapped persons are not 
shown by the Director to be available. This paragraph is an application 
of the principle established under title VII of the Civil Rights Act of 
1964 in Griggs v. Duke Power Company, 401 U.S. 424 (1971).
    Under the proposed section, a statistical showing of adverse impact 
on handicapped persons was required to trigger an employer's obligation 
to show that employment criteria and qualifications relating to handicap 
were necessary. This requirement was changed because the small number of 
handicapped persons taking tests would make statistical showings of 
``disproportionate, adverse effect'' difficult and burdensome. Under the 
altered, more workable provision, once it is shown that an employment 
test substantially limits the opportunities of handicapped persons, the 
employer must show the test to be job-related. A recipient is no longer 
limited to using predictive validity studies as the method for 
demonstrating that a test or other selection criterion is in fact job-
related. Nor, in all cases, are predictive validity studies sufficient 
to demonstrate that a test or criterion is job-related. In addition, 
Sec.  84.13(a) has been revised to place the burden on the Director, 
rather than the recipient, to identify alternate tests.
    Section 84.13(b) requires that a recipient take into account that 
some tests and criteria depend upon sensory, manual, or speaking skills 
that may not themselves be necessary to the job in question but that may 
make the handicapped person unable to pass the test. The recipient must 
select and administer tests so as best to ensure that the test will 
measure the handicapped person's

[[Page 499]]

ability to perform on the job rather than the person's ability to see, 
hear, speak, or perform manual tasks, except, of course, where such 
skills are the factors that the test purports to measure. For example, a 
person with a speech impediment may be perfectly qualified for jobs that 
do not or need not, with reasonable accommodation, require ability to 
speak clearly. Yet, if given an oral test, the person will be unable to 
perform in a satisfactory manner. The test results will not, therefore, 
predict job performance but instead will reflect impaired speech.
    18. Preemployment inquiries. Section 84.14, concerning preemployment 
inquiries, generated a large number of comments. Commenters representing 
handicapped persons strongly favored a ban on preemployment inquiries on 
the ground that such inquiries are often used to discriminate against 
handicapped persons and are not necessary to serve any legitimate 
interests of employers. Some recipients, on the other hand, argued that 
preemployment inquiries are necessary to determine qualifications of the 
applicant, safety hazards caused by a particular handicapping condition, 
and accommodations that might required.
    The Secretary has concluded that a general prohibition of 
preemployment inquiries is appropriate. However, a sentence has been 
added to paragraph (a) to make clear that an employer may inquire into 
an applicant's ability to perform job-related tasks but may not ask if 
the person has a handicap. For example, an employer may not ask on an 
employment form if an applicant is visually impaired but may ask if the 
person has a current driver's license (if that is a necessary 
qualification for the position in question). Similarly, employers may 
make inquiries about an applicant's ability to perform a job safely. 
Thus, an employer may not ask if an applicant is an epileptic but may 
ask whether the person can perform a particular job without endangering 
other employees.
    Section 84.14(B) allows preemployment inquiries only if they are 
made in conjunction with required remedial action to correct past 
discrimination, with voluntary action to overcome past conditions that 
have limited the participation of handicapped persons, or with 
obligations under section 503 of the Rehabilitation Act of 1973. In 
these instances, paragraph (b) specifies certain safeguards that must be 
followed by the employer.
    Finally, the revised provision allows an employer to condition 
offers of employment to handicapped persons on the results of medical 
examinations, so long as the examinations are administered to all 
employees in a nondiscriminatory manner and the results are treated on a 
confidential basis.
    19. Specific acts of Discrimination. Sections 84.15 (recruitment), 
84.16 (compensation), 84.17 (job classification and structure) and 84.18 
(fringe benefits) have been deleted from the regulation as unnecessarily 
duplicative of Sec.  84.11 (discrimination prohibited). The deletion of 
these sections in no way changes the substantive obligations of 
employers subject to this regulation from those set forth in the July 16 
proposed regulation. These deletions bring the regulation closer in form 
to the Department of Labor's section 503 regulation.
    Proposed Sec.  84.18, concerning fringe benefits, had allowed for 
differences in benefits or contributions between handicapped and 
nonhandicapped persons in situations only where such differences could 
be justified on an actuarial basis. Section 84.11 simply bars 
discrimination in providing fringe benefits and does not address the 
issue of actuarial differences. The Department believes that currently 
available data and experience do not demonstrate a basis for 
promulgating a regulation specifically allowing for differences in 
benefits or contributions.

                    subpart c--program accessibility

    In general, subpart C prohibits the exclusion of qualified 
handicapped persons from federally assisted programs or activities 
because a recipient's facilities are inaccessible or unusable.
    20. Existing facilities. Section 84.22 maintains the same standard 
for nondiscrimination in regard to existing facilities as was included 
in the proposed regulation. The section states that a recipient's 
program or activity, when viewed in its entirety, must be readily 
accessible to and usable by handicapped persons. Paragraphs (a) and (b) 
make clear that a recipient is not required to make each of its existing 
facilities accessible to handicapped persons if its program as a whole 
is accessible. Accessibility to the recipient's program or activity may 
be achieved by a number of means, including redesign of equipment, 
reassignment of classes or other services to accessible buildings, and 
making aides available to beneficiaries. In choosing among methods of 
compliance, recipients are required to give priority consideration to 
methods that will be consistent with provision of services in the most 
appropriate integrated setting. Structural changes in existing 
facilities are required only where there is no other feasible way to 
make the recipient's program accessible.
    Under Sec.  84.22, a university does not have to make all of its 
existing classroom buildings accessible to handicapped students if some 
of its buildings are already accessible and if it is possible to 
reschedule or relocate enough classes so as to offer all required 
courses and a reasonable selection of elective courses in accessible 
facilities. If sufficient relocation of classes is not possible using 
existing facilities, enough alterations to ensure program accessibility 
are required. A university may not exclude a handicapped student from

[[Page 500]]

a specifically requested course offering because it is not offered in an 
accessible location, but it need not make every section of that course 
accessible.
    Commenters representing several institutions of higher education 
have suggested that it would be appropriate for one postsecondary 
institution in a geographical area to be made accessible to handicapped 
persons and for other colleges and universities in that area to 
participate in that school's program, thereby developing an educational 
consortium for the postsecondary education of handicapped students. The 
Department believes that such a consortium, when developed and applied 
only to handicapped persons, would not constitute compliance with Sec.  
84.22, but would discriminate against qualified handicapped persons by 
restricting their choice in selecting institutions of higher education 
and would, therefore, be inconsistent with the basic objectives of the 
statute.
    Nothing in this regulation, however, should be read as prohibiting 
institutions from forming consortia for the benefit of all students. 
Thus, if three colleges decide that it would be cost-efficient for one 
college to offer biology, the second physics, and the third chemistry to 
all students at the three colleges, the arrangement would not violate 
section 504. On the other hand, it would violate the regulation if the 
same institutions set up a consortium under which one college undertook 
to make its biology lab accessible, another its physics lab, and a third 
its chemistry lab, and under which mobility-impaired handicapped 
students (but not other students) were required to attend the particular 
college that is accessible for the desired courses.
    Similarly, while a public school district need not make each of its 
buildings completely accessible, it may not make only one facility or 
part of a facility accessible if the result is to segregate handicapped 
students in a single setting.
    All recipients that proivde health, welfare, or other social 
services may also comply with Sec.  84.22 by delivering services at 
alternate accessible sites or making home visits. Thus, for example, a 
pharmacist might arrange to make home deliveries of drugs. Under revised 
Sec.  84.22(c), small providers of health, welfare, and social services 
(those with fewer than fifteen employees) may refer a beneficiary to an 
accessible provider of the desired service, but only if no means of 
meeting the program accessibility requirement other than a significant 
alteration in existing facilties is available. The referring recipient 
has the responsibility of determining that the other provider is in fact 
accessible and willing to provide the service. The Secretary believes 
this ``last resort'' referral provision is appropriate to avoid 
imposition of additional costs in the health care area, to encourage 
providers to remain in the Medicaid program, and to avoid imposing 
significant costs on small, low-budget providers such as day-care 
centers or foster homes.
    A recent change in the tax law may assist some recipients in meeting 
their obligations under this section. Under section 2122 of the Tax 
Reform Act of 1976, recipients that pay federal income tax are eligible 
to claim a tax deduction of up to $25,000 for architectural and 
transportation modifications made to improve accessibility for 
handicapped persons. Many physicians and dentists, among others, may be 
eligible for this tax deduction. See 42 FR 17870 (April 4, 1977), 
adopting 26 CFR 7.190.
    Several commenters expressed concern about the feasibility of 
compliance with the program accessibility standard. The Secretary 
believes that the standard is flexible enough to permit recipients to 
devise ways to make their programs accessible short of extremely 
expensive or impractical physical changes in facilities. Accordingly, 
the section does not allow for waivers. The Department is ready at all 
times to provide technical assistance to recipients in meeting their 
program accessibility responsibilities. For this purpose, the Department 
is establishing a special technical assistance unit. Recipients are 
encouraged to call upon the unit staff for advice and guidance both on 
structural modifications and on other ways of meeting the program 
accessibility requirement.
    Paragraph (d) has been amended to require recipients to make all 
nonstructural adjustments necessary for meeting the program 
accessibility standard within sixty days. Only where structural changes 
in facilities are necessary will a recipient be permitted up to three 
years to accomplish program accessibility. It should be emphasized that 
the three-year time period is not a waiting period and that all changes 
must be accomplished as expeditiously as possible. Further, it is the 
Department's belief, after consultation with experts in the field, that 
outside ramps to buildings can be constructed quickly and at relatively 
low cost. Therefore, it will be expected that such structural additions 
will be made promptly to comply with Sec.  84.22(d).
    The regulation continues to provide, as did the proposed version, 
that a recipient planning to achieve program accessibility by making 
structural changes must develop a transition plan for such changes 
within six months of the effective date of the regulation. A number of 
commenters suggested extending that period to one year. The secretary 
believes that such an extension is unnecessary and unwise. Planning for 
any necessary structural changes should be undertaken promptly to ensure 
that they can be completed within the three-year period. The elements of 
the transition plan as required

[[Page 501]]

by the regulation remain virtually unchanged from the proposal but Sec.  
84.22(d) now includes a requirement that the recipient make the plan 
available for public inspection.
    Several commenters expressed concern that the program accessibility 
standard would result in the segregation of handicapped persons in 
educational institutions. The regulation will not be applied to permit 
such a result. See Sec.  84.4(c)(2)(iv), prohibiting unnecessarily 
separate treatment; Sec.  84.35, requiring that students in elementary 
and secondary schools be educated in the most integrated setting 
appropriate to their needs; and new Sec.  84.43(d), applying the same 
standard to postsecondary education.
    We have received some comments from organizations of handicapped 
persons on the subject of requiring, over an extended period of time, a 
barrier-free environment--that is, requiring the removal of all 
architectural barriers in existing facilities. The Department has 
considered these comments but has decided to take no further action at 
this time concerning these suggestions, believing that such action 
should only be considered in light of experience in implementing the 
program accessibility standard.
    21. New construction. Section 84.23 requires that all new 
facilities, as well as alterations that could affect access to and use 
of existing facilities, be designed and constructed in a manner so as to 
make the facility accessible to and usable by handicapped persons. 
Section 84.23(a) has been amended so that it applies to each newly 
constructed facility if the construction was commenced after the 
effective date of the regulation. The words ``if construction has 
commenced'' will be considered to mean ``if groundbreaking has 
takenplace.'' Thus, a recipient will not be required to alter the design 
of a facility that has progressed beyond groundbreaking prior to the 
effective date of the regulation.
    Paragraph (b) requires certain alterations to conform to the 
requirement of physical accessibility in paragraph (a). If an alteration 
is undertaken to a portion of a building the accessibility of which 
could be improved by the manner in which the alteration is carried out, 
the alteration must be made in that manner. Thus, if a doorway or wall 
is being altered, the door or other wall opening must be made wide 
enough to accommodate wheelchairs. On the other hand, if the alteration 
consists of altering ceilings, the provisions of this section are not 
applicable because this alteration cannot be done in a way that affects 
the accessibility of that portion of the building. The phrase ``to the 
maximum extent feasible'' has been added to allow for the occasional 
case in which the nature of an existing facility is such as to make it 
impractical or prohibitively expensive to renovate the building in a 
manner that results in its being entirely barrier-free. In all such 
cases, however, the alteration should provide the maximum amount of 
physical accessibility feasible.
    As proposed, Sec.  84.23(c) required compliance with the American 
National Standards Institute (ANSI) standard on building accessibility 
as the minimum necessary for compliance with the accessibility 
requirement of Sec.  84.23 (a) and (b). The regerence to the ANSI 
standard created some ambiguity, since the standard itself provides for 
waivers where other methods are equally effective in providing 
accessibility to the facility. Moreover, the Secretary does not wish to 
discourage innovation in barrier-free construction by requiring absolute 
adherence to a rigid design standard. Accordingly, Sec.  84.23 (c) has 
been revised to permit departures from particular requirements of the 
ANSI standard where the recipient can demonstrate that equivalent access 
to the facility is provided.
    Section 84.23(d) of the proposed regulation, providing for a limited 
deferral of action concerning facilities that are subject to section 502 
as well as section 504 of the Act, has been deleted. The Secretary 
believes that the provision is unnecessary and inappropriate to this 
regulation. The Department will, however, seek to coordinate enforcement 
activities under this regulation with those of the Architectural and 
Transportation Barriers Compliance Board.

        subpart d--preschool, elementary, and secondary education

    Subpart D sets forth requirements for nondiscrimination in 
preschool, elementary, secondary, and adult education programs and 
activities, including secondary vocational education programs. In this 
context, the term ``adult education'' refers only to those educational 
programs and activities for adults that are operated by elementary and 
secondary schools.
    The provisions of Subpart D apply to state and local educational 
agencies. Although the subpart applies, in general, to both public and 
private education programs and activities that are federally assisted, 
Sec. Sec.  84.32 and 84.33 apply only to public programs and Sec.  84.39 
applies only to private programs; Sec. Sec.  84.35 and 84.36 apply both 
to public programs and to those private programs that include special 
services for handicapped students.
    Subpart B generally conforms to the standards established for the 
education of handicapped persons in Mills v. Board of Education of the 
District of Columbia, 348 F. Supp. 866 (D.D.C. 1972), Pennsylvania 
Association for Retarded Children v. Commonwealth of Pennsylvania, 344 
F. Supp. 1257 (E.D. 1971), 343 F. Supp. 279 (E.D. Pa. 1972), and Lebanks 
v. Spears, 60, F.R.D. 135 (E.D. La. 1973), as well as in the Education 
of the Handicapped Act, as amended by Pub. L. 94-142 (the EHA).

[[Page 502]]

    The basic requirements common to those cases, to the EHA, and to 
this regulation are (1) that handicapped persons, regardless of the 
nature or severity of their handicap, be provided a free appropriate 
public education, (2) that handicapped students be educated with 
nonhandicapped students to the maximum extent appropriate to their 
needs, (3) that educational agencies undertake to identify and locate 
all unserved handicapped children, (4) that evaluation procedures be 
improved in order to avoid the inappropriate education that results from 
the misclassification of students, and (5) that procedural safeguard be 
established to enable parents and guardians to influence decisions 
regarding the evaluation and placement of their children. These 
requirements are designed to ensure that no handicapped child is 
excluded from school on the basis of handicap and, if a recipient 
demonstrates that placement in a regular educational setting cannot be 
achieved satisfactorily, that the student is provided with adequate 
alternative services suited to the student's needs without additional 
cost to the student's parents or guardian. Thus, a recipient that 
operates a public school system must either educate handicapped children 
in its regular program or provide such children with an appropriate 
alternative education at public expense.
    It is not the intention of the Department, except in extraordinary 
circumstances, to review the result of individual placement and other 
educational decisions, so long as the school district complies with the 
``process'' requirements of this subpart (concerning identification and 
location, evaluation, and due process procedures). However, the 
Department will place a high priority on investigating cases which may 
involve exclusion of a child from the education system or a pattern or 
practice of discriminatory placements or education.
    22. Location and notification. Section 84.32 requires public schools 
to take steps annually to identify and locate handicapped children who 
are not receiving an education and to publicize to handicapped children 
and their parents the rights and duties established by section 504 and 
this regulation. This section has been shortened without substantive 
change.
    23. Free appropriate public education. Former Sec. Sec.  84.34 
(``Free education'') and 84.36(a) (``Suitable education'') have been 
consolidated and revised in new Sec.  84.33. Under Sec.  84.34(a), a 
recipient is responsible for providing a free appropriate public 
education to each qualified handicapped person who is in the recipient's 
jurisdiction. The word ``in'' encompasses the concepts of both domicile 
and actual residence. If a recipient places a child in a program other 
than its own, it remains financially responsible for the child, whether 
or not the other program is operated by another recipient or educational 
agency. Moreover, a recipient may not place a child in a program that is 
inappropriate or that otherwise violates the requirements of Subpart D. 
And in no case may a recipient refuse to provide services to a 
handicapped child in its jurisdiction because of another person's or 
entity's failure to assume financial responsibility.
    Section 84.33(b) concerns the provision of appropriate educational 
services to handicapped children. To be appropriate, such services must 
be designed to meet handicapped children's individual educational needs 
to the same extent that those of nonhandicapped children are met. An 
appropriate education could consist of education in regular classes, 
education in regular classes with the use of supplementary services, or 
special education and related services. Special education may include 
specially designed instruction in classrooms, at home, or in private or 
public institutions and may be accompanied by such related services as 
developmental, corrective, and other supportive services (including 
psychological, counseling, and medical diagnostic services). The 
placement of the child must however, be consistent with the requirements 
of Sec.  84.34 and be suited to his or her educational needs.
    The quality of the educational services provided to handicapped 
students must equal that of the services provided to nonhandicapped 
students; thus, handicapped student's teachers must be trained in the 
instruction of persons with the handicap in question and appropriate 
materials and equipment must be available. The Department is aware that 
the supply of adequately trained teachers may, at least at the outset of 
the imposition of this requirement, be insufficient to meet the demand 
of all recipients. This factor will be considered in determining the 
appropriateness of the remedy for noncompliance with this section. A new 
Sec.  84.33(b)(2) has been added, which allows this requirement to be 
met through the full implementation of an individualized education 
program developed in accordance with the standards of the EHA.
    Paragraph (c) of Sec.  84.33 sets forth the specific financial 
obligations of a recipient. If a recipient does not itself provide 
handicapped persons with the requisite services, it must assume the cost 
of any alternate placement. If, however, a recipient offers adequate 
services and if alternate placement is chosen by a student's parent or 
guardian, the recipient need not assume the cost of the outside 
services. (If the parent or guardian believes that his or her child 
cannot be suitably educated in the recipient's program, he or she may 
make use of the procedures established in Sec.  84.36.) Under this 
paragraph, a recipient's obligation extends beyond the provision of 
tuition payments in the case of placement outside the regular program. 
Adequate

[[Page 503]]

transportation must also be provided. Recipients must also pay for 
psychological services and those medical services necessary for 
diagnostic and evaluative purposes.
    If the recipient places a student, because of his or her handicap, 
in a program that necessitates his or her being away from home, the 
payments must also cover room and board and nonmedical care (including 
custodial and supervisory care). When residential care is necessitated 
not by the student's handicap but by factors such as the student's home 
conditions, the recipient is not required to pay the cost of room and 
board.
    Two new sentences have been added to paragraph (c)(1) to make clear 
that a recipient's financial obligations need not be met solely through 
its own funds. Recipients may rely on funds from any public or private 
source including insurers and similar third parties.
    The EHA requires a free appropriate education to be provided to 
handicapped children ``no later than September 1, 1978,'' but section 
504 contains no authority for delaying enforcement. To resolve this 
problem, a new paragraph (d) has been added to Sec.  84.33. Section 
84.33(d) requires recipients to achieve full compliance with the free 
appropriate public education requirements of Sec.  84.33 as 
expeditiously as possible, but in no event later than September 1, 1978. 
The provision also makes clear that, as of the effective date of this 
regulation, no recipient may exclude a qualified handicapped child from 
its educational program. This provision against exclusion is consistent 
with the order of providing services set forth in section 612(3) of the 
EHA, which places the highest priority on providing services to 
handicapped children who are not receiving an education.
    24. Educational setting. Section 84.34 prescribes standards for 
educating handicapped persons with nonhandicapped persons to the maximum 
extent appropriate to the needs of the handicapped person in question. A 
handicapped student may be removed from the regular educational setting 
only where the recipient can show that the needs of the student would, 
on balance, be served by placement in another setting.
    Although under Sec.  84.34, the needs of the handicapped person are 
determinative as to proper placement, it should be stressed that, where 
a handicapped student is so disruptive in a regular classroom that the 
education of other students is significantly impaired, the needs of the 
handicapped child cannot be met in that environment. Therefore, regular 
placement would not be appropriate to his or her needs and would not be 
required by Sec.  84.34.
    Among the factors to be considered in placing a child is the need to 
place the child as close to home as possible. A new sentence has been 
added to paragraph (a) requiring recipients to take this factor into 
account. As pointed out in several comments, the parents' right under 
Sec.  84.36 to challenge the placement of their child extends not only 
to placement in special classes or separate schools but also to 
placement in a distant school and, in particular, to residential 
placement. An equally appropriate educational program may exist closer 
to home; this issue may be raised by the parent or guardian under 
Sec. Sec.  84.34 and 84.36.
    New paragraph (b) specified that handicapped children must also be 
provided nonacademic services in as integrated a setting as possible. 
This requirement is especially important for children whose educational 
needs necessitate their being solely with other handicapped children 
during most of each day. To the maximum extent appropriate, children in 
residential settings are also to be provided opportunities for 
participation with other children.
    Section 84.34(c) (formerly Sec.  84.38) requires that any facilities 
that are identifiable as being for handicapped students be comparable in 
quality to other facilities of the recipient. A number of comments 
objected to this section on the basis that it encourages the creation 
and maintenance of such facilities. This is not the intent of the 
provision. A separate facility violates section 504 unless it is indeed 
necessary to the provision of an appropriate education to certain 
handicapped students. In those instances in which such facilities are 
necessary (as might be the case, for example, for severely retarded 
persons), this provision requires that the educational services provided 
be comparable to those provided in the facilities of the recipient that 
are not identifiable as being for handicapped persons.
    25. Evaluation and placement. Because the failure to provide 
handicapped persons with an appropriate education is so frequently the 
result of misclassification or misplacement, Sec.  84.33(b)(1) makes 
compliance with its provisions contingent upon adherence to certain 
procedures designed to ensure appropriate classification and placement. 
These procedures, delineated in Sec. Sec.  84.35 and 84.36, are 
concerned with testing and other evaluation methods and with procedural 
due process rights.
    Section 84.35(a) requires that an individual evaluation be conducted 
before any action is taken with respect either to the initial placement 
of a handicapped child in a regular or special education program or to 
any subsequent significant change in that placement. Thus, a full 
reevaluation is not required every time an adjustment in placement is 
made. ``Any action'' includes denials of placement.
    Paragraphs (b) and (c) of Sec.  84.35 establishes procedures 
designed to ensure that children are not misclassified, unnecessarily 
labeled

[[Page 504]]

as being handicapped, or incorrectly placed because of inappropriate 
selection, administration, or interpretation of evaluation materials. 
This problem has been extensively documented in ``Issues in the 
Classification of Children,'' a report by the Project on Classification 
of Exceptional Children, in which the HHS Interagency Task Force 
participated. The provisions of these paragraphs are aimed primarily at 
abuses in the placement process that result from misuse of, or undue or 
misplaced reliance on, standardized scholastic aptitude tests.
    Paragraph (b) has been shortened but not substantively changed. The 
requirement in former subparagraph (1) that recipients provide and 
administer evaluation materials in the native language of the student 
has been deleted as unnecessary, since the same requirement already 
exists under title VI and is more appropriately covered under that 
statute. Subparagraphs (1) and (2) are, in general, intended to prevent 
misinterpretation and similar misuse of test scores and, in particular, 
to avoid undue reliance on general intelligence tests. Subparagraph (3) 
requires a recipient to administer tests to a student with impaired 
sensory, manual, or speaking skills in whatever manner is necessary to 
avoid distortion of the test results by the impairment. Former 
subparagraph (4) has been deleted as unnecessarily repetitive of the 
other provisions of this paragraph.
    Paragraph (c) requires a recipient to draw upon a variety of sources 
in the evaluation process so that the possibility of error in 
classification is minimized. In particular, it requires that all 
significant factors relating to the learning process, including adaptive 
behavior, be considered. (Adaptive behavior is the effectiveness with 
which the individual meets the standards of personal independence and 
social responsibility expected of his or her age and cultural group.) 
Information from all sources must be documented and considered by a 
group of persons, and the procedure must ensure that the child is placed 
in the most integrated setting appropriate.
    The proposed regulation would have required a complete individual 
reevaluation of the student each year. The Department has concluded that 
it is inappropriate in the section 504 regulation to require full 
reevaluations on such a rigid schedule. Accordingly, Sec.  84.35(c) 
requires periodic reevaluations and specifies that reevaluations in 
accordance with the EHA will constitute compliance. The proposed 
regulation implementing the EHA allows reevaluation at three-year 
intervals except under certain specified circumstances.
    Under Sec.  84.36, a recipient must establish a system of due 
process procedures to be afforded to parents or guardians before the 
recipient takes any action regarding the identification, evaluation, or 
educational placement of a person who, because of handicap, needs or is 
believed to need special education or related services. This section has 
been revised. Because the due process procedures of the EHA, 
incorporated by reference in the proposed section 504 regulation, are 
inappropriate for some recipients not subject to that Act, the section 
now specifies minimum necessary procedures: notice, a right to inspect 
records, an impartial hearing with a right to representation by counsel, 
and a review procedure. The EHA procedures remain one means of meeting 
the regulation's due process requirements, however, and are recommended 
to recipients as a model.
    26. Nonacademic services. Section 84.37 requires a recipient to 
provide nonacademic and extracurricular services and activities in such 
manner as is necessary to afford handicapped students an equal 
opportunity for participation. Because these services and activities are 
part of a recipient's education program, they must, in accordance with 
the provisions of Sec.  84.34, be provided in the most integrated 
setting appropriate.
    Revised paragraph (c)(2) does permit separation or differentiation 
with respect to the provision of physical education and athletics 
activities, but only if qualified handicapped students are also allowed 
the opportunity to compete for regular teams or participate in regular 
activities. Most handicapped students are able to participate in one or 
more regular physical education and athletics activities. For example, a 
student in a wheelchair can participate in regular archery course, as 
can a deaf student in a wrestling course.
    Finally, the one-year transition period provided in former Sec.  
84.37(a)(3) was deleted in response to the almost unanimous objection of 
commenters to that provision.
    27. Preschool and adult education. Section 84.38 prohibits 
discrimination on the basis of handicap in preschool and adult education 
programs. Former paragraph (b), which emphasized that compensatory 
programs for disadvantaged children are subject to section 504, has been 
deleted as unnecessary, since it is comprehended by paragraph (a).
    28. Private education. Section 84.39 sets forth the requirements 
applicable to recipients that operate private education programs and 
activities. The obligations of these recipients have been changed in two 
significant respects: First, private schools are subject to the 
evaluation and due process provisions of the subpart only if they 
operate special education programs; second, under Sec.  84.39(b), they 
may charge more for providing services to handicapped students than to 
nonhandicapped students to the extent that additional charges can be 
justified by increased costs.
    Paragraph (a) of Sec.  84.39 is intended to make clear that 
recipients that operate private

[[Page 505]]

education programs and activities are not required to provide an 
appropriate education to handicapped students with special educational 
needs if the recipient does not offer programs designed to meet those 
needs. Thus, a private school that has no program for mentally retarded 
persons is neither required to admit such a person into its program nor 
to arrange or pay for the provision of the person's education in another 
program. A private recipient without a special program for blind 
students, however, would not be permitted to exclude, on the basis of 
blindness, a blind applicant who is able to participate in the regular 
program with minor adjustments in the manner in which the program is 
normally offered.

                   subpart e--postsecondary education

    Subpart E prescribes requirements for nondiscrimination in 
recruitment, admission, and treatment of students in postsecondary 
education programs and activities, including vocational education.
    29. Admission and recruitment. In addition to a general prohibition 
of discrimination on the basis of handicap in Sec.  84.42(a), the 
regulation delineates, in Sec.  84.42(b), specific prohibitions 
concerning the establishment of limitations on admission of handicapped 
students, the use of tests or selection criteria, and preadmission 
inquiry. Several changes have been made in this provision.
    Section 84.42(b) provides that postsecondary educational 
institutions may not use any test or criterion for admission that has a 
disproportionate, adverse effect on handicapped persons unless it has 
been validated as a predictor of academic success and alternate tests or 
criteria with a less disproportionate, adverse effect are shown by the 
Department to be available. There are two significant changes in this 
approach from the July 16 proposed regulation.
    First, many commenters expressed concern that Sec.  84.42(b)(2)(ii) 
could be interpreted to require a ``global search'' for alternate tests 
that do not have a disproportionate, adverse impact on handicapped 
persons. this was not the intent of the provision and, therefore, it has 
been amended to place the burden on the Director of the Office for Civil 
Rights, rather than on the recipient, to identify alternate tests.
    Second, a new paragraph (d), concerning validity studies, has been 
added. Under the proposed regulation, overall success in an education 
program, not just first-year grades, was the criterion against which 
admissions tests were to be validated. This approach has been changed to 
reflect the comment of professional testing services that use of first 
year grades would be less disruptive of present practice and that 
periodic validity studies against overall success in the education 
program would be sufficient check on the reliability of first-year 
grades.
    Section 84.42(b)(3) also requires a recipient to assure itself that 
admissions tests are selected and administered to applicants with 
impaired sensory, manual, or speaking skills in such manner as is 
necessary to avoid unfair distortion of test results. Methods have been 
developed for testing the aptitude and achievement of persons who are 
not able to take written tests or even to make the marks required for 
mechanically scored objective tests; in addition, methods for testing 
persons with visual or hearing impairments are available. A recipient, 
under this paragraph, must assure itself that such methods are used with 
respect to the selection and administration of any admissions tests that 
it uses.
    Section 84.42(b)(3)(iii) has been amended to require that admissions 
tests be administered in facilities that, on the whole, are accessible. 
In this context, on the whole means that not all of the facilities need 
be accessible so long as a sufficient number of facilities are available 
to handicapped persons.
    Revised Sec.  84.42(b)(4) generally prohibits preadmission inquiries 
as to whether an applicant has a handicap. The considerations that led 
to this revision are similar to those underlying the comparable revision 
of Sec.  84.14 on preemployment inquiries. The regulation does, however, 
allow inquiries to be made, after admission but before enrollment, as to 
handicaps that may require accommodation.
    New paragraph (c) parallels the section on preemployment inquiries 
and allows postsecondary institutions to inquire about applicants' 
handicaps before admission, subject to certain safeguards, if the 
purpose of the inquiry is to take remedial action to correct past 
discrimination or to take voluntary action to overcome the limited 
participation of handicapped persons in postsecondary educational 
institutions.
    Proposed Sec.  84.42(c), which would have allowed different 
admissions criteria in certain cases for handicapped persons, was widely 
misinterpreted in comments from both handicapped persons and recipients. 
We have concluded that the section is unnecessary, and it has been 
deleted.
    30. Treatment of students. Section 84.43 contains general provisions 
prohibiting the discriminatory treatment of qualified handicapped 
applicants. Paragraph (b) requires recipients to ensure that equal 
opportunities are provided to its handicapped students in education 
programs and activities that are not operated by the recipient. The 
recipient must be satisfied that the outside education program or 
activity as a whole is nondiscriminatory. For example, a college must 
ensure that discrimination on the basis of handicap does not occur in 
connection with teaching assignments of student teachers in elementary 
or secondary schools not operated by the college. Under the ``as a 
whole''

[[Page 506]]

wording, the college could continue to use elementary or secondary 
school systems that discriminate if, and only if, the college's student 
teaching program, when viewed in its entirety, offered handicapped 
student teachers the same range and quality of choice in student 
teaching assignments afforded nonhandicapped students.
    Paragraph (c) of this section prohibits a recipient from excluding 
qualified handicapped students from any course, course of study, or 
other part of its education program or activity. This paragraph is 
designed to eliminate the practice of excluding handicapped persons from 
specific courses and from areas of concentration because of factors such 
as ambulatory difficulties of the student or assumptions by the 
recipient that no job would be available in the area in question for a 
person with that handicap.
    New paragraph (d) requires postsecondary institutions to operate 
their programs and activities so that handicapped students are provided 
services in the most integrated setting appropriate. Thus, if a college 
had several elementary physics classes and had moved one such class to 
the first floor of the science building to accommodate students in 
wheelchairs, it would be a violation of this paragraph for the college 
to concentrate handicapped students with no mobility impairments in the 
same class.
    31. Academic adjustments. Paragraph (a) of Sec.  84.44 requires that 
a recipient make certain adjustments to academic requirements and 
practices that discriminate or have the effect of discriminating on the 
basis of handicap. This requirement, like its predecessor in the 
proposed regulation, does not obligate an institution to waive course or 
other academic requirements. But such institutions must accommodate 
those requirements to the needs of individual handicapped students. For 
example, an institution might permit an otherwise qualified handicapped 
student who is deaf to substitute an art appreciation or music history 
course for a required course in music appreciation or could modify the 
manner in which the music appreciation course is conducted for the deaf 
student. It shoud be stressed that academic requirements that can be 
demonstrated by the recipient to be essential to its program of 
instruction or to particular degrees need not be changed.
    Paragraph (b) provides that postsecondary institutions may not 
impose rules that have the effect of limiting the participation of 
handicapped students in the education program. Such rules include 
prohibition of tape recorders or braillers in classrooms and dog guides 
in campus buildings. Several recipients expressed concern about allowing 
students to tape record lectures because the professor may later want to 
copyright the lectures. This problem may be solved by requiring students 
to sign agreements that they will not release the tape recording or 
transcription or otherwise hinder the professor's ability to obtain a 
copyright.
    Paragraph (c) of this section, concerning the administration of 
course examinations to students with impaired sensory, manual, or 
speaking skills, parallels the regulation's provisions on admissions 
testing (Sec.  84.42(b)) and will be similarly interpreted.
    Under Sec.  84.44(d), a recipient must ensure that no handicapped 
student is subject to discrimination in the recipient's program because 
of the absence of necessary auxiliary educational aids. Colleges and 
universities expressed concern about the costs of compliance with this 
provision.
    The Department emphasizes that recipients can usually meet this 
obligation by assisting students in using existing resources for 
auxiliary aids such as state vocational rehabilitation agencies and 
private charitable organizations. Indeed, the Department anticipates 
that the bulk of auxiliary aids will be paid for by state and private 
agencies, not by colleges or universities. In those circumstances where 
the recipient institution must provide the educational auxiliary aid, 
the institution has flexibility in choosing the methods by which the 
aids will be supplied. For example, some universities have used students 
to work with the institution's handicapped students. Other institutions 
have used existing private agencies that tape texts for handicapped 
students free of charge in order to reduce the number of readers needed 
for visually impaired students.
    As long as no handicapped person is excluded from a program because 
of the lack of an appropriate aid, the recipient need not have all such 
aids on hand at all times. Thus, readers need not be available in the 
recipient's library at all times so long as the schedule of times when a 
reader is available is established, is adhered to, and is sufficient. Of 
course, recipients are not required to maintain a complete braille 
library.
    32. Housing. Section 84.45(a) requires postsecondary institutions to 
provide housing to handicapped students at the same cost as they provide 
it to other students and in a convenient, accessible, and comparable 
manner. Commenters, particularly blind persons pointed out that some 
handicapped persons can live in any college housing and need not wait to 
the end of the transition period in Subpart C to be offered the same 
variety and scope of housing accommodations given to nonhandicapped 
persons. The Department concurs with this position and will interpret 
this section accordingly.
    A number of colleges and universities reacted negatively to 
paragraph (b) of this section. It provides that, if a recipient assists 
in making off-campus housing available to its students, it should 
develop and implement procedures to assure itself that off-campus

[[Page 507]]

housing, as a whole, is available to handicapped students. Since 
postsecondary institutions are presently required to assure themselves 
that off-campus housing is provided in a manner that does not 
discriminate on the basis of sex (Sec.  86.32 of the title IX 
regulation), they may use the procedures developed under title IX in 
order to comply with Sec.  84.45(b). It should be emphasized that not 
every off-campus living accommodation need be made accessible to 
handicapped persons.
    33. Health and insurance. Section 84.46 of the proposed regulation, 
providing that recipients may not discriminate on the basis of handicap 
in the provision of health related services, has been deleted as 
duplicative of the general provisions of Sec.  84.43. This deletion 
represents no change in the obligation of recipients to provide 
nondiscriminatory health and insurance plans. The Department will 
continue to require that nondiscriminatory health services be provided 
to handicapped students. Recipients are not required, however, to 
provide specialized services and aids to handicapped persons in health 
programs. If, for example, a college infirmary treats only simple 
disorders such as cuts, bruises, and colds, its obligation to 
handicapped persons is to treat such disorders for them.
    34. Financial assistance. Section 84.46(a) (formerly Sec.  84.47), 
prohibiting discrimination in providing financial assistance, remains 
substantively the same. It provides that recipients may not provide less 
assistance to or limit the eligibility of qualified handicapped persons 
for such assistance, whether the assistance is provided directly by the 
recipient or by another entity through the recipient's sponsorship. 
Awards that are made under wills, trusts, or similar legal instruments 
in a discriminatory manner are permissible, but only if the overall 
effect of the recipient's provision of financial assistance is not 
discriminatory on the basis of handicap.
    It will not be considered discriminatory to deny, on the basis of 
handicap, an athletic scholarship to a handicapped person if the 
handicap renders the person unable to qualify for the award. For 
example, a student who has a neurological disorder might be denied a 
varsity football scholarship on the basis of his inability to play 
football, but a deaf person could not, on the basis of handicap, be 
denied a scholarship for the school's diving team. The deaf person 
could, however, be denied a scholarship on the basis of comparative 
diving ability.
    Commenters on Sec.  84.46(b), which applies to assistance in 
obtaining outside employment for students, expressed similar concerns to 
those raised under Sec.  84.43(b), concerning cooperative programs. This 
paragraph has been changed in the same manner as Sec.  84.43(b) to 
include the ``as a whole'' concept and will be interpreted in the same 
manner as Sec.  84.43(b).
    35. Nonacademic services. Section 84.47 (formerly Sec.  84.48) 
establishes nondiscrimination standards for physical education and 
athletics counseling and placement services, and social organizations. 
This section sets the same standards as does Sec.  84.38 of Subpart D, 
discussed above, and will be interpreted in a similar fashion.

             subpart f--health, welfare, and social services

    Subpart F applies to recipients that operate health, welfare, and 
social service programs. The Department received fewer comments on this 
subpart than on others.
    Although many commented that Subpart F lacked specificity, these 
commenters provided neither concrete suggestions nor additions. 
Nevertheless, some changes have been made, pursuant to comment, to 
clarify the obligations of recipients in specific areas. In addition, in 
an effort to reduce duplication in the regulation, the section governing 
recipients providing health services (proposed Sec.  84.52) has been 
consolidated with the section regulating providers of welfare and social 
services (proposed Sec.  84.53). Since the separate provisions that 
appeared in the proposed regulation were almost identical, no 
substantive change should be inferred from their consolidation.
    Several commenters asked whether Subpart F applies to vocational 
rehabilitation agencies whose purpose is to assist in the rehabilitation 
of handicapped persons. To the extent that such agencies receive 
financial assistance from the Department, they are covered by Subpart F 
and all other relevant subparts of the regulation. Nothing in this 
regulation, however, precludes such agencies from servicing only 
handicapped persons. Indeed, Sec.  84.4(c) permits recipients to offer 
services or benefits that are limited by federal law to handicapped 
persons or classes of handicapped persons.
    Many comments suggested requiring state health, welfare, and social 
service agencies to take an active role in the enforcement of section 
504 with regard to local health and social service providers. The 
Department believes that the possibility for federal-state cooperation 
in the administration and enforcement of section 504 warrants further 
consideration. Moreover, the Department will rely largely on state 
Medicaid agencies, as it has under title VI, for monitoring compliance 
by individual Medicaid providers.
    A number of comments also discussed whether section 504 should be 
read to require payment of compensation to institutionalized handicapped 
patients who perform services for the institution in which they reside. 
The Department of Labor has recently issued a proposed regulation under 
the Fair Labor Standards Act (FLSA) that covers the question of 
compensation for institutionalized

[[Page 508]]

persons, 42 FR 15224 (March 18, 1977). This Department will seek 
information and comment from the Department of Labor concerning that 
agency's experience administering the FLSA regulation.
    36. Health, welfare, and other social service providers. As already 
noted, Sec.  84.53 has been combined with proposed Sec.  84.53 into a 
single section covering health, welfare, and other social services. 
Section 84.52(a) has been expanded in several respects. The addition of 
new paragraph (a)(2) is intended to make clear the basic requirement of 
equal opportunity to receive benefits or services in the health, 
welfare, and social service areas. The paragraph parallels Sec. Sec.  
84.4(b)(ii) and 84.43(b). New paragraph (a)(3) requires the provision of 
effective benefits or services, as defined in Sec.  84.4(b)(2) (i.e., 
benefits or services which ``afford handicapped persons equal 
opportunity to obtain the same result (or) to gain the same benefit * * 
*'').
    Section 84.52(a) also includes provisions concerning the limitation 
of benefits or services to handicapped persons and the subjection of 
handicapped persons to different eligibility standards. (These 
provisions were previously included in the welfare recipient section 
(Sec.  84.53(a)).) One common misconception about the regulation is that 
it would require specialized hospitals and other health care providers 
to treat all handicapped persons. The regulation makes no such 
requirement. Thus, a burn treatment center need not provide other types 
of medical treatment to handicapped persons unless it provides such 
medical services to nonhandicapped persons. It could not, however, 
refuse to treat the burns of a deaf person because of his or her 
deafness.
    Commenters had raised the question of whether the prohibition 
against different standards of eligibility might preclude recipients 
from providing special services to handicapped persons or classes of 
handicapped persons. The regulation will not be so interpreted, and the 
specific section in question has been eliminated. Section 84.4(c) makes 
clear that special programs for handicapped persons are permitted.
    A new paragraph (a)(5) concerning the provision of different or 
separate services or benefits has been added. This provision prohibits 
such treatment unless necessary to provide qualified handicapped persons 
with benefits and services that are as effective as those provided to 
others.
    Section 84.52(a)(2) of the proposed regulation has been omitted as 
duplicative of revised Sec.  84.22 (b) and (c) in Subpart C. As 
discussed above, these sections permit health care providers to arrange 
to meet patients in accessible facilities and to make referrals in 
carefully limited circumstances.
    Section 84.52(a)(3) of the proposed regulation has been redesignated 
Sec.  84.52(b) and has been amended to cover written material concerning 
waivers of rights or consent to treatment as well as general notices 
concerning health benefits or services. The section requires the 
recipient to ensure that qualified handicapped persons are not denied 
effective notice because of their handicap. For example, recipients 
could use several different types of notice in order to reach persons 
with impaired vision or hearing, such as brailled messages, radio spots, 
and tacticle devices on cards or envelopes to inform blind persons of 
the need to call the recipient for further information.
    Sections 84.52(a)(4), 84.52(a)(5), and 84.52(b) have been omitted 
from the regulation as unnecessary. They are clearly comprehended by the 
more general sections banning discrimination.
    Section 84.52(c) is a new section requiring recipient hospitals to 
establish a procedure for effective communication with persons with 
impaired hearing for the purpose of providing emergency health care. 
Although it would be appropriate for a hospital to fulfill its 
responsibilities under this section by having a full-time interpreter 
for the deaf on staff, there may be other means of accomplishing the 
desired result of assuring that some means of communication is 
immediately available for deaf persons needing emergency treatment.
    Section 84.52(d), also a new provision, requires recipients with 
fifteen or more employees to provide appropriate auxiliary aids for 
persons with impaired sensory, manual, or speaking skills. Further, the 
Director may require a small provider to furnish auxiliary aids where 
the provision of aids would not adversely affect the ability of the 
recipient to provide its health benefits or service. Thus although a 
small nonprofit neighborhood clinic might not be obligated to have 
available an interpreter for deaf persons, the Director may require 
provision of such aids as may be reasonably available to ensure that 
qualified handicapped persons are not denied appropriate benefits or 
services because of their handicaps.
    37. Treatment of Drug Addicts and Alcoholics. Section 84.53 is a new 
section that prohibits discrimination in the treatment and admission of 
drug and alcohol addicts to hospitals and outpatient facilities. This 
section is included pursuant to section 407, Pub. L. 92-255, the Drug 
Abuse Office and Treatment Act of 1972 (21 U.S.C. 1174), as amended, and 
section 321, Public Law 91-616, the Comprehensive Alcohol Abuse and 
Alcoholism Prevention, Treatment, and Rehabilitation Act of 1970 (42 
U.S.C. 4581), as amended, and section 321, Public Law 93-282. Section 
504 itself also prohibits such discriminatory treatment and, in 
addition, prohibits similar discriminatory treatment by other types of 
health providers. Section 84.53 prohibits discrimination against drug 
abusers by operators of outpatient facilities, despite the fact

[[Page 509]]

that section 407 pertains only to hospitals, because of the broader 
application of section 504. This provision does not mean that all 
hospitals and outpatient facilities must treat drug addiction and 
alcoholism. It simply means, for example, that a cancer clinic may not 
refuse to treat cancer patients simply because they are also alcoholics.
    38. Education of institutionalized persons. The regulation retains 
Sec.  84.54 of the proposed regulation that requires that an appropriate 
education be provided to qualified handicapped persons who are confined 
to residential institutions or day care centers.

                          subpart g--procedures

    In Sec.  84.61, the Secretary has adopted the title VI complaint and 
enforcement procedures for use in implementing section 504 until such 
time as they are superseded by the issuance of a consolidated procedural 
regulation applicable to all of the civil rights statutes and executive 
orders administered by the Department.



 Sec. Appendix B to Part 84--Guidelines for Eliminating Discrimination 
  and Denial of Services on the Basis of Race, Color, National Origin, 
        Sex, and Handicap in Vocational Education Programs [Note]

    Note: For the text of these guidelines, see 45 CFR part 80, appendix 
B.

[44 FR 17168, Mar. 21, 1979]



   Sec. Appendix C to Part 84--Guidelines Relating to Health Care for 
                           Handicapped Infants

    (a) Interpretative guidelines relating to the applicability of this 
part to health care for handicapped infants. The following are 
interpretative guidelines of the Department set forth here to assist 
recipients and the public in understanding the Department's 
interpretation of section 504 and the regulations contained in this part 
as applied to matters concerning health care for handicapped infants. 
These interpretative guidelines are illustrative; they do not 
independently establish rules of conduct.
    (1) With respect to programs and activities receiving Federal 
financial assistance, health care providers may not, solely on the basis 
of present or anticipated physical or mental impairments of an infant, 
withhold treatment or nourishment from the infant who, in spite of such 
impairments, will medically benefit from the treatment or nourishment.
    (2) Futile treatment or treatment that will do no more than 
temporarily prolong the act of dying of a terminally ill infant is not 
considered treatment that will medically benefit the infant.
    (3) In determining whether certain possible treatments will be 
medically beneficial to an infant, reasonable medical judgments in 
selecting among alternative courses of treatment will be respected.
    (4) Section 504 and the provisions of this part are not applicable 
to parents (who are not recipients of Federal financial assistance). 
However, each recipient health care provider must in all aspects of its 
health care programs receiving Federal financial assistance provide 
health care and related services in a manner consistent with the 
requirements of section 504 and this part. Such aspects includes 
decisions on whether to report, as required by State law or otherwise, 
to the appropriate child protective services agency a suspected instance 
of medical neglect of a child, or to take other action to seek review or 
parental decisions to withhold consent for medically indicated 
treatment. Whenever parents make a decision to withhold consent for 
medically beneficial treatment or nourishment, such recipient providers 
may not, solely on the basis of the infant's present or anticipated 
future mental or physical impairments, fail to follow applicable 
procedures on reporting such incidents to the child protective services 
agency or to seek judicial review.
    (5) The following are examples of applying these interpretative 
guidelines. These examples are stated in the context of decisions made 
by recipient health care providers. Were these decisions made by 
parents, the guideline stated in section (a)(4) would apply. These 
examples assume no facts or complications other than those stated. 
Because every case must be examined on its individual facts, these are 
merely illustrative examples to assist in understanding the framework 
for applying the nondiscrimination requirements of section 504 and this 
part.
    (i) Withholding of medically beneficial surgery to correct an 
intestinal obstruction in an infant with Down's Syndrome when the 
withholding is based upon the anticipated future mental retardation of 
the infant and there are no medical contraindications to the surgery 
that would otherwise justify withholding the surgery would constitute a 
discriminatory act, violative of section 504.
    (ii) Withholding of treatment for medically correctable physical 
anomalies in children born with spina bifida when such denial is based 
on anticipated mental impairment paralysis or incontinence of the 
infant, rather than on reasonable medical judgments that treatment would 
be futile, too unlikely of success given complications in the particular 
case, or otherwise not of medical benefit to the infant, would 
constitute a discriminatory act, violative of section 504.

[[Page 510]]

    (iii) Withholding of medical treatment for an infant born with 
anencephaly, who will inevitably die within a short period of time, 
would not constitute a discriminatory act because the treatment would be 
futile and do no more than temporarily prolong the act of dying.
    (iv) Withholding of certain potential treatments from a severely 
premature and low birth weight infant on the grounds of reasonable 
medical judgments concerning the improbability of success or risks of 
potential harm to the infant would not violate section 504.
    (b) Guidelines for HHS investigations relating to health care for 
handicapped infants. The following are guidelines of the Department in 
conducting investigations relating to health care for handicapped 
infants. They are set forth here to assist recipients and the public in 
understanding applicable investigative procedures. These guidelines do 
not establish rules of conduct, create or affect legally enforceable 
rights of any person, or modify existing rights, authorities or 
responsibilities pursuant to this part. These guidelines reflect the 
Department's recognition of the special circumstances presented in 
connection with complaints of suspected life-threatening noncompliance 
with this part involving health care for handicapped infants. These 
guidelines do not apply to other investigations pursuant to this part, 
or other civil rights statutes and rules. Deviations from these 
guidelines may occur when, in the judgment of the responsible Department 
official, other action is necessary to protect the life or health of a 
handicapped infant.
    (1) Unless impracticable, whenever the Department receives a 
complaint of suspected life-threatening noncompliance with this part in 
connection with health care for a handicapped infant in a program or 
activity receiving Federal financial assistance, HHS will immediately 
conduct a preliminary inquiry into the matter by initiating telephone 
contact with the recipient hospital to obtain information relating to 
the condition and treatment of the infant who is the subject of the 
complaint. The preliminary inquiry, which may include additional contact 
with the complainant and a requirement that pertinent records be 
provided to the Department, will generally be completed within 24 hours 
(or sooner if indicated) after receipt of the complaint.
    (2) Unless impracticable, whenever a recipient hospital has an 
Infant Care Review Committee, established and operated substantially in 
accordance with the provisions of 45 CFR 84.55(f), the Department will, 
as part of its preliminary inquiry, solicit the information available 
to, and the analysis and recommendations of, the ICRC. Unless, in the 
judgment of the responsible Department official, other action is 
necessary to protect the life or health of a handicapped infant, prior 
to initiating an on-site investigation, the Department will await 
receipt of this information from the ICRC for 24 hours (or less if 
indicated) after receipt of the complaint. The Department may require a 
subsequent written report of the ICRC's findings, accompanied by 
pertinent records and documentation.
    (3) On the basis of the information obtained during preliminary 
inquiry, including information provided by the hospital (including the 
hospital's ICRC, if any), information provided by the complainant, and 
all other information obtained, the Department will determine whether 
there is a need for an on-site investigation of the complaint. Whenever 
the Department determines that doubt remains that the recipient hospital 
or some other recipient is in compliance with this part or additional 
documentation is desired to substantiate a conclusion, the Department 
will initiate an on-site investigation or take some other appropriate 
action. Unless impracticable, prior to initiating an on-site 
investigation, the Department's medical consultant (referred to in 
paragraph 6) will contact the hospital's ICRC or appropriate medical 
personnel of the recipient hospital.
    (4) In conducting on-site investigations, when a recipient hospital 
has an ICRC established and operated substantially in accordance with 
the provisions of 45 CFR 84.55(f), the investigation will begin with, or 
include at the earliest practicable time, a meeting with the ICRC or its 
designees. In all on-site investigations, the Department will make every 
effort to minimize any potential inconvenience or disruption, 
accommodate the schedules of health care professionals and avoid making 
medical records unavailable. The Department will also seek to coordinate 
its investigation with any related investigations by the state child 
protective services agency so as to minimize potential disruption.
    (5) It is the policy of the Department to make no comment to the 
public or media regarding the substance of a pending preliminary inquiry 
or investigation.
    (6) The Department will obtain the assistance of a qualified medical 
consultant to evaluate the medical information (including medical 
records) obtained in the course of a preliminary inquiry or 
investigation. The name, title and telephone number of the Department's 
medical consultant will be made available to the recipient hospital. The 
Department's medical consultant will, if appropriate, contact medical 
personnel of the recipient hospital in connection with the preliminary 
inquiry, investigation or medical consultant's evaluation. To the extent 
practicable, the medical consultant will be a specialist with respect to 
the condition of the infant who is the subject of the preliminary

[[Page 511]]

inquiry or investigation. The medical consultant may be an employee of 
the Department or another person who has agreed to serve, with or 
without compensation, in that capacity.
    (7) The Department will advise the recipient hospital of its 
conclusions as soon as possible following the completion of a 
preliminary inquiry or investigation. Whenever final administrative 
findings following an investigation of a complaint of suspected life-
threatening noncompliance cannot be made promptly, the Department will 
seek to notify the recipient and the complainant of the Department's 
decision on whether the matter will be immediately referred to the 
Department of Justice pursuant to 45 CFR 80.8.
    (8) Except as necessary to determine or effect compliance, the 
Department will (i) in conducting preliminary inquiries and 
investigations, permit information provided by the recipient hospital to 
the Department to be furnished without names or other identifying 
information relating to the infant and the infant's family; and (ii) to 
the extent permitted by law, safeguard the confidentiality of 
information obtained.

[49 FR 1653, Jan. 12, 1984]



PART 85_ENFORCEMENT OF NONDISCRIMINATION ON THE BASIS OF HANDICAP IN PROGRAMS 
OR ACTIVITIES CONDUCTED BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES--
Table of Contents



Sec.
85.1 Purpose.
85.2 Application.
85.3 Definitions.
85.4-85.10 [Reserved]
85.11 Self-evaluation.
85.12 Notice.
85.13-85.20 [Reserved]
85.21 General prohibitions against discrimination.
85.22-85.30 [Reserved]
85.31 Employment.
85.32-85.40 [Reserved]
85.41 Program accessibility: Discrimination prohibited.
85.42 Program accessibility: Existing facilities.
85.43 Program accessibility: New construction and alterations.
85.44-85.50 [Reserved]
85.51 Communications.
85.52-85.60 [Reserved]
85.61 Compliance procedures.
85.62 Coordination and compliance responsibilities.

    Authority: 29 U.S.C. 794.

    Source: 53 FR 25603, July 8, 1988, unless otherwise noted.

    Editorial Note: At the request of the Department of Health and Human 
Services, the ``Section-by-Section Analysis'' portion of the preamble of 
the document published at 53 FR 25595, July 8, 1988, as corrected at 53 
FR 26559, July 13, 1988, appears at the end of part 85.



Sec.  85.1  Purpose.

    The purpose of this part is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of handicap in programs 
or activities conducted by Executive agencies or the United States 
Postal Service.



Sec.  85.2  Application.

    This part applies to all programs or activities conducted by the 
agency, except for programs or activities conducted outside the United 
States that do not involve individuals with handicaps in the United 
States.



Sec.  85.3  Definitions.

    For purposes of this part, the term--
    Agency means the Department of Health and Human Services or any 
component part of the Department of Health and Human Services that 
conducts a program or activity covered by this part. Component agency 
means such component part.
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TDD's) interpreters,

[[Page 512]]

notetakers, written materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf of classes or third parties shall 
describe or identify (by name, if possible) the alleged victims of 
discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Individual with Handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment. As used in this definition, the phrase:
    (1) Physical or mental impairment includes:
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genito-urinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech and hearing impairments, cerebral palsy, 
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, 
diabetes, mental retardation, emotional illness, and drug addiction and 
alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning and working.
    (3) Has a record of such impairment means has a history of, or is 
misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means:
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation.
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    OCR means the Office for Civil Rights of the Department of Health 
and Human Services.
    OCR Director/Special Assistant means the Director of the Office for 
Civil Rights, who serves concurrently as the Special Assistant to the 
Secretary for Civil Rights, or a designee of the Director/Special 
Assistant.
    Qualified individual with handicaps means:
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, an individual with handicaps who is a 
member of a class of persons otherwise entitled by statute, regulation, 
or agency policy to receive educational services from the agency;
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a particular 
level of accomplishment, an individual with handicaps who meets the 
essential eligibility requirements and who can achieve the purpose of 
the program or activity without modifications in the program or activity 
that the agency can demonstrate would result in a fundamental alteration 
in its nature; and
    (3) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and

[[Page 513]]

    (4) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1613.702(f), which is made applicable 
to this part by Sec.  85.31.
    Secretary means the Secretary of the Department of Health and Human 
Services or his/her designee.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617); 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of 1978 (Pub. L. 95-602, 92 Stat. 2955); the 
Rehabilitation Act Amendments of 1986 (Pub. L 99-566, 100 Stat. 1810); 
and the Civil Rights Restoration Act of 1987 (Pub. L. 100-259, 102 Stat. 
28). As used in this part, section 504 applies only to programs or 
activities conducted by the agency and not to federally assisted 
programs.



Sec. Sec.  85.4-85.10  [Reserved]



Sec.  85.11  Self-evaluation.

    (a) The agency shall, within one year of the effective date of this 
part, evaluate its current policies and practices, and the effects 
thereof, that do not or may not meet the requirements of this part, and, 
to the extent modification of any such policies and practices is 
required, the agency shall proceed to make the necessary modifications. 
Any new operating or staff divisions established within the agency shall 
have one year from the date of their establishment to carry out this 
evaluation.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-evaluation by 
submitting comments (both oral and written).
    (c) The agency shall, for at least three years following completion 
of the self-evaluation, maintain on file and make available for public 
inspection and copying--
    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made.



Sec.  85.12  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this part and its applicability 
to the programs or activities conducted by the agency, and make such 
information available to them in such a manner as the agency head finds 
necessary to apprise such persons of the protections against 
discrimination assured them by section 504 and this part.



Sec. Sec.  85.13-85.20  [Reserved]



Sec.  85.21  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b) (1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aids, benefits, or services to 
individuals with handicaps or to any class or individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aids, benefits or services 
that are as effective as those provided to others;

[[Page 514]]

    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of a planning or advisory board; or
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified individual with handicaps 
the opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.
    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with handicaps 
to discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified individuals with handicaps to 
discrimination on the basis of handicap. However, the programs or 
activities of entities that are licensed or certified by the agency are 
not, themselves, covered by this part.
    (c) The exclusion of individuals without handicaps from the benefits 
of a program limited by Federal statute or Executive order to 
individuals with handicaps or the exclusion of a specific class of 
individuals with handicaps from a program limited by Federal statute or 
Executive order to a different class of individuals with handicaps is 
not prohibited by this part.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Sec. Sec.  85.22-85.30  [Reserved]



Sec.  85.31  Employment.

    No qualified individuals with handicaps shall, on the basis of 
handicap, be subjected to discrimination in employment under any program 
or activity conducted by the agency. The definitions, requirements, and 
procedures of section 501 of the Rehabilitation Act of 1973 (9 U.S.C. 
791), as established by the Equal Employment Opportunity Commission in 9 
CFR part 1613, shall apply to employment in federally conducted programs 
and activities.



Sec. Sec.  85.32-85.40  [Reserved]



Sec.  85.41  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec.  85.42, no qualified individual 
with handicaps shall, because the agency's facilities are inaccessible 
to or unusable by such persons, be denied the benefits of, be excluded 
from participation in, or otherwise be subjected to discrimination under 
any program or activity conducted by the agency.



Sec.  85.42  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with handicaps; or

[[Page 515]]

    (2) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would result in 
undue financial and administrative burdens, the agency has the burden of 
proving that compliance with Sec.  85.42(a) would result in such 
alteration or burdens. The decision that compliance would result in such 
alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity in question, 
and must be accompanied by a written statement of reasons for reaching 
that conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
individuals with handicaps receive the benefits and services of the 
program or activity.
    (b) Methods. (1) The agency may comply with the requirements of this 
section through such means as redesign of equipment, reassignment of 
services to accessible buildings, assignment of aides to beneficiaries, 
home visits, delivery of services at alternate accessible sites, 
alteration of existing facilities and construction of new facilities, 
use of accessible rolling stock, or any other methods that result in 
making its programs or activities readily accessible to and usable by 
individuals with handicaps. The agency is not required to make 
structural changes in existing facilities where other methods are 
effective in achieving compliance with this section. The agency, in 
making alterations to existing buildings, shall meet accessibility 
requirements to the extent compelled by the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), and any regulations 
implementing it.
    (2) In choosing among available methods for meeting the requirements 
of this section, the agency shall give priority to those methods that 
offer programs and activities to qualified individuals with handicaps in 
the most integrated setting appropriate.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section within 60 days of the 
effective date of this part except where structural changes in 
facilities are undertaken; such changes shall be made within three years 
of the effective date of this part, but, in any event, as expeditiously 
as possible.
    (d) Transition plan. In the event that structural changes to 
facilities must be undertaken to achieve program accessibility, and it 
is not expected that such changes can be completed within six months, 
the agency shall develop, within six months of the effective date of 
this part, a transition plan setting forth the steps necessary to 
complete such changes. The agency shall provide an opportunity to 
interested persons, including individuals with handicaps or 
organizations representing individuals with handicaps, to participate in 
the development of the transition plan by submitting comments (both oral 
and written). A copy of the transition plan shall be made available for 
public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for the implementation of the 
plan.



Sec.  85.43  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, or on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements,

[[Page 516]]

and standards of the Architectural Barriers Act (42 U.S.C. 4151-4157) as 
established in 41 CFR 101-19.600 to 101-19.607 apply to buildings 
covered by this section.



Sec. Sec.  85.44-85.50  [Reserved]



Sec.  85.51  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, program or activity conducted 
by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunications devices for deaf persons (TDD's) or 
equally effective telecommunication systems shall be used to communicate 
with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec.  85.51 would result 
in such alteration or burdens. The decision that compliance would result 
in such alteration or burdens must be made by the agency head or his or 
her designee after considering all agency resources available for use in 
the funding and operation of the conducted program or activity in 
question and must be accompanied by a written statement of the reasons 
for reaching that conclusion. If an action required to comply with this 
section would result in such an alteration or such burdens, the agency 
shall take any other action that would not result in such an alteration 
or such burdens but would nevertheless ensure that, to the maximum 
extent possible, individuals with handicaps receive the benefits and 
services of the program or activity.



Sec. Sec.  85.52-85.60  [Reserved]



Sec.  85.61  Compliance procedures.

    (a) Except as provided in paragraph (c) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs or activities conducted by the agency.
    (b) Responsibility for the implementation and operation of this 
section shall be vested in the CCR Director/Special Assistant.
    (c) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791) and HHS Instruction 1613-3. Part 1613 requires complainants 
to obtain pre-complaint counseling within 30 days of the alleged 
discriminatory act, and to file complaints within 15 days of the close 
of counseling. Responsibility for the acceptance, investigation, and the 
rendering of decisions with respect to employment complaints is vested 
in the Assistant Secretary for Personnel Administration.
    (d) OCR shall accept and investigate all complete complaints for 
which it

[[Page 517]]

has jurisdiction. All complete complaints must be filed within 180 days 
of the alleged act of discrimination. OCR may extend this time for good 
cause.
    (e) If OCR receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate Federal 
government entity.
    (f) OCR shall notify the Architectural and Transportation Barriers 
Compliance Board upon receipt of any complaint alleging that a building 
or facility that is subject to the Architectural Barriers Act of 1968, 
as amended (42 U.S.C. 4151-4157), is not readily accessible to and 
usable by individuals with handicaps.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, OCR shall notify the complainant of the results of 
the investigations in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 60 days of receipt from 
the agency of the letter required by Sec.  85.61(g). OCR may extend this 
time for good cause.
    (i) Timely appeals shall be accepted and processed by the OCR 
Director/Special Assistant. Decisions on such appeals shall not be heard 
by the person who made the initial decision.
    (j) OCR shall notify the complainant of the results of the appeal 
within 60 days of the receipt of the request. If OCR determines that it 
needs additional information from the complainant, it shall have 60 days 
from the date it receives the additional information to make its 
determination on the appeal.
    (k) The time limits cited in (g) and (j) above may be extended with 
the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to a component agency or other Federal agencies, except 
that the authority for making the final determination may not be 
delegated.

[53 FR 25603, July 8, 1988; 53 FR 26559, July 13, 1988]



Sec.  85.62  Coordination and compliance responsibilities.

    (a) Each component agency shall be primarily responsible for 
compliance with this part in connection with the programs and activities 
it conducts.
    (b) The OCR Director/Special Assistant shall have the overall 
responsibility to coordinate implementation of this part. The OCR 
Director/Special Assistant shall have authority to conduct 
investigations, to conduct compliance reviews, and to initiate such 
other actions as may be necessary to facilitate and ensure effective 
implementation of and compliance with, this part.
    (c) If as a result of an investigation or in connection with any 
other compliance or implementation activity, the OCR Director/Special 
Assistant determines that a component agency appears to be in 
noncompliance with its responsibilities under this part, OCR will 
undertake appropriate action with the component agency to assure 
compliance. In the event that OCR and the component agency are unable to 
agree on a resolution of any particular matter, the matter shall be 
submitted to the Secretary for resolution.

    Editorial Note: At the request of the Department of Health and Human 
Services, the ``Section-by-Section Analysis'' portion of the preamble of 
the document published at 53 FR 25595, July 8, 1988, as corrected at 53 
FR 26559, July 13, 1988, follows:

   Section-by-Section Analysis of Regulation and Response to Comments

    Where no discussion of comments follows the analysis of a section, 
no comments have been received thereon.

                          Section 85.1 Purpose.

    Section 85.1 states the purpose of the rule, which is to effectuate 
section 119 of the Rehabilitation, Comprehensive Services, and 
Developmental Disabilities Amendments of 1978, which amended section 504 
of the Rehabilitation Act of 1973 to prohibit discrimination on the 
basis of handicap in programs or activities conducted by Executive 
agencies or the United States Postal Service.

[[Page 518]]

                        Section 85.2 Application.

    The proposed regulation covers all programs and activities conducted 
by the Department of Health and Human Services (``HHS'' or the 
``agency'').
    This includes the following components:

The Office of the Secretary
    Office of the Under Secretary
    Office of the Deputy Under Secretary
    Office of the Assistant Secretary for Public Affairs
    Office of the Assistant Secretary for Legislation
    Office of the Assistant Secretary for Planning and Evaluation
    Office of the Assistant Secretary for Management and Budget
    Office of the Assistant Secretary for Peronnel Administration
    Office of the General Counsel
    Office of Inspector General
    Office for Civil Rights
    Office of Consumer Affairs
Office of Human Development Services
    Office of the Assistant Secretary for Human Development Services
    Administration on Aging
    Administration for Children, Youth and Families
    Administration for Native Americans
    Administration on Developmental Disabilities
Public Health Service
    Office of the Assistant Secretary for Health
    Agency for Toxic Substances and Disease Registry
    Alcohol, Drug Abuse and Mental Health Administration
    Centers for Disease Control
    Food and Drug Administration
    Health Resources and Services Administration
    Indian Health Service
    National Institutes of Health
Health Care Financing Administration
Social Security Administration
Family Support Administration.

    Under this section, a federally conducted program or activity is, in 
simple terms, anything a Federal agency does. Aside from employment, 
there are two major categories of federally conducted programs or 
activities covered by this regulation: those involving general public 
contact as part of ongoing agency operations, and those directly 
administered by the agency for program beneficiaries and participants. 
Activities in the first category include communication with the public 
(telephone contacts, office walk-ins, or interviews) and the public's 
use of the agency's facilities. Activities in the second category 
include programs that provide Federal services or benefits. This 
regulation does not, however, apply to programs or activities conducted 
outside the United States that do not involve individuals with handicaps 
in the United States.
    The major programs subject to this regulation are listed below. Each 
of the components listed above occupies facilities which the public may 
have occasion to visit, engages in written and oral communication with 
the public, and hires Federal employees. In addition, some components 
operate programs which involve extensive public use, as summarized 
below:

    Office of the Secretary--No major operating programs or activities 
conducted directly by the Federal government.
    Office of Human Development Services--No major operating programs or 
activities conducted directly by the Federal government. \1\
---------------------------------------------------------------------------

    \1\ Financial assistance programs conducted through grants to States 
and other recipients are covered by the section 504 rule for federally 
assisted programs at 45 CFR part 84.
---------------------------------------------------------------------------

    Public Health Service--Directly operated programs include the Indian 
Health Service, and intramural research conducted by the National 
Institutes of Health. \1\
    Health Care Financing Administration--Directly operates the Medicare 
program. \1\
    Social Security Administration--Directly operates the Old Age, 
Survivors, and Disability Insurance, and Supplemental Security Income 
for the Aged, Blind, and Disabled programs.
    Family Support Administration--No major operating programs or 
activities conducted directly by the Federal government. \1\

    One commenter urged the inclusion of a program operated by one 
component of the Office of the Secretary, and for a list of all programs 
and activities to be appended to the regulation. In light of the fact 
that all programs and activities are covered, that a comprehensive list 
of all programs would be very lengthy, and that such a list would have 
to be amended frequently as new programs are enacted and existing 
programs expire, the above list appears to be sufficient.

                        Section 85.3 Definitions.

    Agency. For purposes of this part agency means the Department of 
Health and Human Services or any component part of the Department of 
Health and Human Services that conducts a program or activity covered by 
this part. Component agency means any such component part.
    Assistant Attorney General. Assistant Attorney General refers to the 
Assistant Attorney General, Civil Rights Division, United States 
Department of Justice.

[[Page 519]]

    Auxiliary aids. Auxiliary aids means services or devices that enable 
persons with impaired sensory, manual, or speaking skills to have an 
equal opportunity to participate in, and enjoy the benefits of, the 
agency's programs or activities. The definition provides examples of 
commonly used auxiliary aids. Although auxiliary aids are required 
explicitly only by Sec.  85.51(a)(1), they may also be necessary to meet 
other requirements of this regulation.
    Two commenters suggested expanding the definition of auxiliary aids 
and one of them further suggested re-naming auxiliary aids to read aids 
for reasonable accommodation and specifically include the services of 
attendants.
    The items set out in Sec.  85.3 are clearly described as examples, 
and are not intended to constitute an exhaustive list. By giving 
examples rather than by including a list, other aids can be used, and, 
in appropriate cases, required, without amending the regulation. In 
certain instances, the services of attendants may indeed be appropriate; 
in those instances, they will fall under the definition in Sec.  85.3. 
Therefore, there is no need to change the text of the regulations.
    Complete complaint. Complete complaint is defined to include all of 
the information necessary to enable the agency to investigate the 
complaint. The definition is necessary, because the 180 day period for 
the agency's investigation (see Sec.  85.61(g)) begins when the agency 
receives a complete complaint.
    Two commenters stated their belief that the definition of complete 
complaint is too restrictive, and urged language which would give the 
complainant specific information as to what additional information is 
needed, and a further 30 days to submit such information, failing which 
the complaint would be dismissed without prejudice, and the complainant 
would be so informed.
    Procedures similar to this suggestion are currently in place, and 
complainants will be given reasonable opportunities to complete the 
information submitted. There appears to be no need to spell these 
procedures out in the regulation.
    Facility. The definition of facility is similar to that in the 
section 504 coordination regulation for federally assisted programs (28 
CFR 41.3(f)), except that the term rolling stock or other conveyances 
has been added and the phrase or interest in such property has been 
deleted because the term facility, as used in this part, refers to 
structures and not to intangible property rights. It should, however, be 
noted that this part applies to all programs and activities conducted by 
the agency regardless of whether the facility in which they are 
conducted is owned, leased, or used on some other basis by the agency. 
The term facility is used in Sec. Sec.  85.41, 85.42, and 85.61(f).
    One commenter proposed not to delete the phrase or interest in such 
property. As previously stated, the phrase or interest in such property 
has been deleted because the term facility, as used in this part, refers 
to structures and not to intangible property rights.
    Individual with Handicaps. The definition of individual with 
handicaps is identical to the definition of handicapped person appearing 
in the section 504 coordination regulation for federally assisted 
programs (28 CFR 41.31), and the HHS regulation for federally assisted 
programs (45 CFR 84.3(j)). Although section 103(d) of the Rehabilitation 
Act Amendments of 1986 changed the statutory term handicapped individual 
to individual with handicaps, the legislative history of the amendment 
indicates that no substantive change was intended. Thus, although the 
term has been changed in this regulation to be consistent with the 
statute as amended, the definition is unchanged. In particular, although 
the term as revised refers to handicaps in the plural, it does not 
exclude persons who have only one handicap.
    One commenter suggested that we add sensory to the phrase physical 
or mental impairment. Since the definition set out in Sec.  85.3 
specifically includes the sense organs among the body systems whose 
impairment constitutes a handicap, we have not found it necessary to 
amend the regulation.
    OCR. OCR means the Office for Civil Rights of the Department of 
Health and Human Services.
    OCR Director/Special Assistant means the Director of the Office for 
Civil Rights, who serves concurrently as the Special Assistant to the 
Secretary for Civil Rights, or a designee of the OCR Director/Special 
Assistant.
    Qualified individual with handicaps. The definition of qualified 
individual with handicaps is a revised version of the definition of 
qualified handicapped person appearing in the section 504 coordination 
regulation for federally assisted programs (28 CFR 41.32) and the HHS 
section 504 regulation for federally assisted programs (45 CFR 84.3(k)).
    Paragraph (1) is an adaptation of existing definitions of qualified 
handicapped person for purposes of federally assisted preschool, 
elementary, and secondary education programs (see, e.g., 45 CFR 
84.3(k)(2)). It provides that an individual with handicaps is qualified 
for preschool, elementary, or secondary education programs conducted by 
the agency, if he or she is a member of a class of persons otherwise 
entitled by statute, regulation, or agency policy to receive these 
services from the agency. In other words, an individual with handicaps 
is qualified if, considering all factors other than the handicapping 
condition, he or she is entitled to receive educational services from 
the agency.

[[Page 520]]

    Paragraph (2) deviates from existing regulations for federally 
assisted programs because of intervening court decisions. It defines 
qualified individual with handicaps with regard to any program other 
than those covered by paragraph (1) under which a person is required to 
perform services or to achieve a level of accomplishment. In such 
programs, a qualified individual with handicaps is one who can achieve 
the purpose of the program without modifications in the program that the 
agency can demonstrate would result in a fundamental alteration in its 
nature. This definition reflects the decision of the Supreme Court in 
Davis.
    In that case, the Court ruled that a hearing-impaired applicant to a 
nursing school was not a qualified handicapped person because her 
hearing impairment would prevent her from participating in the clinical 
training portion of the program. The Court found that, if the program 
were modified so as to enable the respondent to participate (by 
exempting her from the clinical training requirements), she would not 
receive even a rough equivalent of the training a nursing program 
normally gives. Id. at 410. It also found that the purpose of [the] 
program was to train persons who could serve the nursing profession in 
all customary ways, Id. at 413, and that the respondent would be unable, 
because of her hearing impairment, to perform some functions expected of 
a registered nurse. It, therefore, concluded that the school was not 
required by section 504 to make such modifications that would result in 
a fundamental alteration in the nature of the program. Id. at 410.
    We have incorporated the Court's language in the definition of 
qualified individual with handicaps in order to make clear that such a 
person must be able to participate in the program offered by the agency. 
The agency is required to make modifications in order to enable an 
applicant with handicaps to participate, but is not required to offer a 
program of a fundamentally different nature. The test is whether, with 
appropriate modifications, the applicant can achieve the purpose of the 
program offered, not whether the applicant could benefit or obtain 
results from some other program that the agency does not offer. Although 
the revised definition allows exclusion of some individuals with 
handicaps from some programs, it requires that an individual with 
handicaps who is capable of achieving the purpose of the program must be 
accommodated, provided that the modifications do not fundamentally alter 
the purpose of the program.
    One commenter proposed inserting the second sentence from the above 
paragraph into the regulatory text. We believe that the use of this 
language in the preamble is sufficient.
    Another commenter commended HHS for the discussion of Davis, and the 
cases interpreting the Davis decision, in order to explain why the 
language of this part does not precisely track that of the regulations 
concerning federally assisted recipients (45 CFR part 84). Two other 
commenters stated their view that incorporating Davis and Alexander into 
the regulation was unduly restrictive, and that the differences between 
this part and part 84 would result in holding HHS to a lesser standard 
than HHS holds recipients of Federal financial assistance.
    We believe that the Supreme Court's decision in Davis as well as the 
subsequent lower court decisions following Davis interpret section 504 
and that it is necessary to reflect those decisions in the Department's 
regulation. The suggested changes are therefore not being adopted.
    The agency has the burden of demonstrating that a proposed 
modification would constitute a fundamental alteration in the nature of 
its program or activity. Furthermore, in demonstrating that a 
modification would result in such an alteration, the agency must follow 
the procedures established in Sec. Sec.  85.42(a) and 85.51(d), which 
are discussed below, for demonstrating that an action would result in 
undue financial and administrative burdens to the agency. That is, the 
decision must be made by the agency head or his or her designee in 
writing after consideration of all resources which are legally available 
to the agency for the purpose, and must be accompanied by an explanation 
of the reasons for the decision. If the agency head determines that an 
action would result in a fundamental alteration, the agency must 
consider options that would enable the individual with handicaps to 
achieve the purpose of the program but would not result in such an 
alteration.
    Two commenters suggested that the total resources of the agency be 
considered in determining undue burden. Because many Department funds 
are earmarked for specific purposes and are therefore unavailable for 
use elsewhere, the entire agency budget is not an appropriate 
consideration.
    For programs or activities which do not fall under either of the 
first two paragraphs, paragraph (3) adopts the existing definition of 
qualified handicapped person with respect to services (28 CFR 41.32(b)) 
in the coordination regulation for programs receiving Federal financial 
assistance. Under this definition, a qualified individual with handicaps 
is an individual with handicaps who meets the essential eligibility 
requirements for participation in the program or activity.
    Paragraph (4) explains that qualified individual with handicaps 
means qualified handicapped person as that term is defined for purposes 
of employment in the EEOC regulation at 29 CFR 1613.702(f), which is 
made applicable to this part by Sec.  85.31. Nothing in this part 
changes existing regulations pertaining to employment.

[[Page 521]]

    One commenter proposed using the general section 504 definition of 
qualified handicapped person in employment cases rather than the 
definition of the EEOC regulation. The definition has been supplied by 
the Equal Employment Opportunity Commission which coordinates all 
employment discrimination matters throughout the government. It is also 
the Department's view that it is important to have a uniform definition 
of what constitutes employment discrimination throughout the Federal 
government.
    Secretary means the Secretary of the Department of Health and Human 
Services or the Secretary's designee.
    Section 504. This definition makes clear that, as used in this part, 
section 504 applies only to programs or activities conducted by the 
agency itself and not to programs or activities to which it provides 
Federal financial assistance.

                     Section 85.11 Self-evaluation.

    The agency shall conduct a self-evaluation of its compliance with 
section 504 within one year of the effective date of this regulation. 
The self-evaluation requirement is present in the existing section 504 
coordination regulation for programs or activities receiving Federal 
financial assistance (28 CFR 41.5(b)(2)) and the HHS regulations for 
federally assisted programs (45 CFR 84.6(k)). Experience has 
demonstrated the self-evaluation process to be a valuable means of 
establishing a working relationship with individuals with handicaps that 
promotes both effective and efficient implementation of section 504.
    One commenter stated that a three-year retention period is 
insufficient, and proposed that self-evaluations be kept indefinitely. 
The regulation requires the self-evaluation to be kept for a minimum of 
three years, but does not include a maximum. It is expected that the 
self-evaluation will be retained for the period provided in current 
document retention policies.
    Another commenter proposed that copies of the self-evaluation be 
made available for copying as well as for public inspection. This 
proposal has been adopted.
    A further commenter proposed the inclusion of provisions for 
assurances, transition plans and specific modification requirements. We 
believe that while assurances are appropriate--and can be specifically 
enforced--in section 504 regulations for federally assisted programs or 
activities, all of the entities involved in this part are under the 
control of the Secretary, who can issue the necessary directives; 
assurances are therefore not required.
    The final rule provides for participation in the self-evaluation 
process by individuals with handicaps or organizations representing 
individuals with handicaps by submitting comments, which may include the 
development of transition plans. It is expected that component agencies 
will consult with individuals with handicaps among their own staff in 
the course of preparing self-evaluations.
    Because modification requirements are intended to address any 
potential problems in the agency's programs or activities, they are not 
specified in the regulation.

                          Section 85.12 Notice.

    Section 85.12 requires the agency to disseminate sufficient 
information to employees, applicants, participants, beneficiaries, and 
other interested persons to apprise them of the rights and protections 
afforded by section 504 and this part. Methods of providing this 
information include, for example, the publication of information in 
handbooks, manuals, and pamphlets that are distributed to the public to 
describe the agency's programs and activities or in connection with 
recruitment; the display of informative posters in service centers and 
other public places; or the broadcasting of information by television or 
radio.
    One commenter suggested the inclusion of a reference to recruitment 
materials in the above examples. Such a reference has been included.

       Section 85.21 General prohibitions against discrimination.

    Section 85.21 is an adaptation of the corresponding section of the 
section 504 coordination regulation for programs and activities 
receiving Federal financial assistance (28 CFR 41.51).
    Paragraph (a) restates the nondiscrimination mandate of section 504. 
The remaining paragraphs in Sec.  85.21 establish the general principles 
for analyzing whether any particular action of the agency violates this 
mandate. These principles serve as the analytical foundation for the 
remaining sections of the part. If the agency violates a provision in 
any of the subsequent sections, it will also violate one of the general 
prohibitions found in Sec.  85.21. When there is no applicable 
subsequent provision, the general prohibitions stated in this section 
apply.
    Paragraph (b) prohibits overt denials of equal treatment of 
individuals with handicaps. The agency may not refuse to provide an 
individual with handicaps with an equal opportunity to participate in or 
benefit from its program simply because the person is handicapped. Such 
blatantly exclusionary practices could result from the use of 
irrebuttable presumptions that absolutely exclude certain classes of 
disabled persons (e.g., epileptics, hearing-impaired persons, persons 
with heart ailments) from participation in programs or activities 
without regard to an individual's actual ability to participate. Use of 
an irrebuttable presumption is

[[Page 522]]

permissible only when in all cases a physical condition by its very 
nature would prevent an individual from meeting the essential 
eligibility requirements for participation in the activity in question. 
It would be permissible, therefore, to exclude without an individual 
evaluation all persons who are blind in both eyes from eligibility for a 
license to operate a commercial vehicle in interstate commerce; but it 
may not be permissible to automatically disqualify all those who are 
blind in just one eye.
    In addition, section 504 prohibits more than just the most obvious 
denials of equal treatment. It is not enough to admit persons in 
wheelchairs to a program if the facilities in which the program is 
conducted are inaccessible. Paragraph (b)(1)(iii), therefore, requires 
that the opportunity to participate or benefit afforded to an individual 
with handicaps be as effective as that afforded to others. The later 
sections on program accessibility (Sec. Sec.  85.41-43) and 
communication (Sec.  85.51) are specific applications of this principle.
    Despite the mandate of paragraph (d) that the agency administer its 
programs and activities in the most integrated setting appropriate to 
the needs of qualified individuals with handicaps, paragraph (b)(1)(iv), 
in conjunction with paragraph (d), permits the agency to develop 
separate or different aids, benefits, or services when necessary to 
provide individuals with handicaps with an equal opportunity to 
participate in or benefit from the agency's programs or activities. 
Paragraph (b)(1)(iv) requires that different or separate aids, benefits, 
or services be provided only when necessary to ensure that the aids, 
benefits, or services are as effective as those provided to others. Even 
when separate or different aids, benefits or services would be more 
effective, paragraph (b)(2) provides that a qualified individual with 
handicaps still has the right to choose to participate in the program 
that is not designed to accommodate individuals with handicaps.
    Paragraph (b)(1)(v) prohibits the agency from denying a qualified 
individual with handicaps the opportunity to participate as a member of 
a planning or advisory board.
    Paragraph (b)(1)(vi) prohibits the agency from limiting a qualified 
individual with handicaps in the enjoyment of any right, privilege, 
advantage, or opportunity enjoyed by others receiving any aid, benefit, 
or service.
    Paragraph (b)(3) prohibits the agency from utilizing criteria or 
methods of administration that deny individuals with handicaps access to 
the agency's programs or activities. The phrase criteria or methods of 
administration refers to official written agency policies, as well as 
the actual practices of the agency. This paragraph prohibits both 
blatantly exclusionary policies or practices and nonessential policies 
and practices that are neutral on their face, but deny individuals with 
handicaps an effective opportunity to participate.
    Paragraph (b)(4) specifically applies the prohibition enunciated in 
Sec.  85.21(b)(3) to the process of selecting sites for construction of 
new facilities or existing facilities to be used by the agency. 
Paragraph (b)(4) does not apply to construction of additional buildings 
at an existing site.
    Paragraph (b)(5) prohibits the agency, in the selection of 
procurement contractors, from using criteria that subject qualified 
individuals with handicaps to discrimination on the basis of handicap.
    Paragraph (b)(6) prohibits the agency from discriminating against 
qualified individuals with handicaps on the basis of handicap in the 
granting of licenses or certifications. A person is a qualified 
individual with handicaps with respect to licensing or certification if 
he or she can meet the essential eligibility requirements for receiving 
the license or certification (see Sec.  85.3).
    In addition, the agency may not establish requirements for the 
programs or activities of licensees or certified entities that subject 
qualified individuals with handicaps to discrimination on the basis of 
handicap. For example, the agency must comply with this requirement when 
establishing safety standards for the operations of licensees. In that 
case, the agency must ensure that the standards it promulgates do not 
discriminate against the employment of qualified individuals with 
handicaps in an impermissible manner.
    Paragraph (b)(6) does not extend section 504 directly to the 
programs or activities of licensees or certified entities themselves. 
The programs or activities of Federal licensees or certified entities 
are not themselves federally conducted programs or activities; nor are 
they programs or activities receiving Federal financial assistance 
merely by virtue of the Federal license or certificate. However, as 
noted above, section 504 may affect the content of the rules established 
by the agency for the operation of the program or activity of the 
licensee or certified entity and thereby indirectly affect limited 
aspects of their operations.
    One commenter suggested pointing out that Federal licensees or 
certified entities, having received services from Federal employees 
during the process of licensing or certification, thereby become 
Federally assisted recipients, and are covered by 45 CFR part 84. Such 
an argument is beyond the scope of this part, and is therefore not being 
included.
    Another commenter suggested including language such as that found in 
45 CFR 84.4(b)(1) to the effect that agencies may not perpetuate 
discrimination against qualified

[[Page 523]]

individuals with handicaps by providing significant assistance to an 
agency, organization or person that discriminates on the basis of 
handicap. Assistance from the agency that would provide significant 
support to an organization constitutes Federal financial assistance and 
the organization, as a recipient of such assistance, would be covered by 
the section 504 regulation for federally assisted programs.
    Paragraph (c) provides that programs conducted pursuant to Federal 
statute or Executive order that are designed to benefit only individuals 
with handicaps or a given class of individuals with handicaps may be 
limited to individuals those with handicaps.
    Paragraph (d) provides that the agency must administer programs and 
activities in the most integrated setting appropriate to the next of 
qualified individuals with handicaps, i.e. in a setting that enables 
individuals with handicaps to interact with nonhandicapped individuals 
to the fullest extent possible.

                        Section 85.31 Employment.

    Section 85.31 prohibits discrimination on the basis of handicap in 
employment by the agency. Courts have held that section 504, as amended 
in 1978, covers the employment practices of Executive agencies. Gardner 
v. Morris, 752 F.2d 1271, 1277 (8th Cir. 1985); Smith v. United States 
Postal Service, 742 F.2d 257, 259-60 (6th Cir. 1984); Prewitt v. United 
States Postal Service, 662 F.2d 292, 302-04 (5th Cir. 1981). Contra 
McGuiness v. United States Postal Service, 744 F.2d 1318, 1320-21 (7th 
Cir. 1984); Boyd v. United States Postal Service, 752 F.2d 410, 413-14 
(9th Cir. 1985).
    Courts uniformly have held that, in order to give effect to section 
501 of the Rehabilitation Act, which covers Federal employment, the 
administrative procedures of section 501 must be followed in processing 
complaints of employment discrimination under section 504. Morgan v. 
United States Postal Service, 798 F.2d 1162, 1164-65 (8th Cir. 1986); 
Smith, 742 F.2d at 262; Prewitt, 662 F.2d at 304. Accordingly, Sec.  
85.31 (Employment) of this rule adopts the definitions, requirements, 
and procedures of section 501 as established in regulations of the EEOC 
at 29 CFR part 1613. Responsibility for coordinating enforcement of 
Federal laws prohibiting discrimination in employment is assigned to the 
EEOC by Executive Order 12067 (3 CFR, 1978 Comp., p. 206). Under this 
authority, the EEOC establishes government-wide standards on 
nondiscrimination in employment on the basis of handicap.
    One commenter proposed that the general definition of qualified 
individual with handicaps be used in this section, instead of that used 
under section 501. We believe that the above paragraphs sufficiently 
explain the need for using the section 501 definition.
    In addition to this section, Sec.  85.61(c) specifies that the 
agency will use the existing EEOC procedures to resolve allegations of 
employment discrimination.

     Section 85.41 Program accessibility: Discrimination prohibited.

    Section 85.41 states the general nondiscrimination principle 
underlying the program accessibility requirements of Sec. Sec.  85.42 
and 85.43.

        Section 85.42 Program accessibility: Existing facilities.

    This part adopts the program accessibility concept found in the 
existing section 504 coordination regulation for programs or activities 
receiving Federal financial assistance (28 CFR 41.57) with certain 
modifications. Thus, Sec.  85.42 requires that each agency program or 
activity, when viewed in its entirety, be readily accessible to and 
usable by individuals with handicaps. The part also makes clear that the 
agency is not required to make each of its existing facilities 
accessible (Sec.  85.42(a)(1)). However, Sec.  85.42, unlike 28 CFR 
41.57, places explicit limits on the agency's obligation to ensure 
program accessibility (Sec.  85.42(a)(2)).
    One commenter stated that the provisions of Sec.  85.42(a)(1) were 
negatively worded and may reflect a misinterpretation of the decision of 
the Supreme Court in Grove City College v. Bell, 465 U.S. 555 (1984), 
and argued for deletion of this language.
    The language is identical to that in the section 504 regulation for 
federally assisted programs or activities. We believe that the inclusion 
of this language is necessary in order to make clear that, while every 
aspect of every Federal program or activity need not be accessible, each 
program or activity, when viewed as a whole, must be accessible.
    Another commenter recommended adding the language ``where other 
methods are equally effective in achieving compliance from Sec.  
84.42(b) to Sec.  84.42(a)(1). We believe that, because Sec.  84.42 (a) 
and (b) treat different aspects of the subject, their language must 
necessarily differ.
    Paragraph (a)(2) generally codifies recent case law that defines the 
scope of the agency's obligation to ensure program accessibility. This 
paragraph provides that in meeting the program accessibility 
requirement, the agency is not required to take any action that would 
result in a fundamental alteration in the nature of its program or 
activity, or in undue financial and administrative burdens. A similar 
limitation is provided in Sec.  85.51(d). This provision is based on the 
Supreme Court's holding in Southeastern Community College v. Davis, 442 
U.S. 397 (1979), that section 504 does not require program modifications 
that result in a fundamental alteration in the nature of a program, and 
on

[[Page 524]]

the Court's statement that section 504 does not require modifications 
that would result in ``undue financial and administrative burdens.'' 442 
U.S. at 412. Since Davis, circuit courts have applied this limitation on 
a showing that only one of the two ``undue burdens'' would be created as 
a result of the modification sought to be imposed under section 504. 
See, e.g., Dopico v. Goldschmidt, 687 F.2d 644 (2d Cir. 1982); American 
Public Transit Association v. Lewis, 655 F.2d 1272 (D.C. Cir. 1981).
    Paragraph (a)(2) and Sec.  85.51(d) are also supported by the 
Supreme Court's decision in Alexander v. Choate, 469 U.S. 287 (1985). 
Alexander involved a challenge to the State of Tennessee's reduction of 
inpatient hospital care coverage under Medicaid from 20 to 14 days per 
year. Plaintiffs argued that this reduction violated section 504 because 
it had an adverse impact on handicapped persons. The Court assumed 
without deciding that section 504 reaches at least some conduct that has 
an unjustifiable disparate impact on handicapped people, but held that 
the reduction was not ``the sort of disparate impact'' discrimination 
that might be prohibited by section 504 or its implementing regulation. 
Id at 299.
    Relying on Davis, the Court said that section 504 guarantees 
qualified handicapped persons ``meaningful access to the benefits the 
grantee offers,'' id. at 301, and that ``reasonable adjustments in the 
nature of the benefit offered must at times be made to assure meaningful 
access.'' Id. n.21 (emphasis added). However, section 504 does not 
require `` `changes,' `adjustments,' or `modifications' to existing 
programs that would be `substantial' * * * or that would constitute 
`fundamental alteration[s] in the nature of a program.' '' Id. at n.20 
(citations omitted). Alexander supports the position, based on Davis and 
the earlier lower court decisions, that in some situations, certain 
accommodations for a handicapped person may so alter an agency's program 
or activity, or entail such extensive costs and administrative burdens 
that the refusal to undertake the accommodations is not discriminatory. 
Thus, failure to include such an ``undue burdens'' provision could lead 
to judicial invalidation of the regulation or reversal of a particular 
enforcement action taken pursuant to the regulation.
    This paragraph, however, does not establish an absolute defense; it 
does not relieve the agency of all obligations to individuals with 
handicaps. Although the agency is not required to take actions that 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens, it 
nevertheless must take any other steps necessary to ensure that 
individuals with handicaps receive the benefits and services of the 
federally conducted program or activity.
    It is our view that compliance with Sec.  85.42(a) would in most 
cases not result in undue financial and administrative burdens on the 
agency. In determining whether financial and administrative burdens are 
undue, all agency resources available for use in the funding and 
operation of the conducted program or activity should be considered. The 
burden of proving that compliance with Sec.  85.42(a) would 
fundamentally alter the nature of a program or activity or would result 
in undue financial and administrative burdens rests with the agency. The 
decision that compliance would result in such alteration or burdens must 
be made by the agency head or his or her designee, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. Any person who believes that he or she or any specific class 
of persons has been injured by the agency head's decision or failure to 
make a decision may file a complaint under the compliance procedures 
established in Sec.  85.61. The opportunity to file such a complaint 
responds to one commenter's suggestion that review by a high level 
Department official be assured.
    Paragraph (b)(1) sets forth a number of means by which program 
accessibility may be achieved, including redesign of equipment, 
reassignment of services to accessible buildings, and provision of 
aides. In choosing among methods, the agency shall give priority 
consideration to those that will be consistent with provision of 
services in the most integrated setting appropriate to the needs of 
individuals with handicaps. Structural changes in existing facilities 
are required only when there is no other feasible way to make the 
agency's program accessible. (It should be noted that ``structural 
changes'' include all physical changes to a facility; the term does not 
refer only to changes to structural features, such as removal of or 
alteration to a load-bearing structural member.) The agency may comply 
with the program accessibility requirement by delivering services at 
alternate accessible sites or making home visits as appropriate.
    One commenter proposed that methods other than structural changes to 
ensure accessibility should be ``equally effective''. The regulations 
implementing section 504 for federally assisted programs do not contain 
such language. The addition of the proposed language would impose a 
regulatory standard on the Department not required of recipients. In 
view of the fact that the 1978 amendments were intended to apply the 
same requirements to federally conducted programs as apply to federally 
assisted programs, the proposed language is not being adopted.
    Paragraphs (c) and (d) establish time periods for complying with the 
program accessibility requirement. As currently required for federally 
assisted programs by 28 CFR

[[Page 525]]

41.57(b), the agency must make any necessary structural changes in 
facilities as soon as practicable, but in no event later than three (3) 
years after the effective date of this part. Where structural 
modifications are required and it is not expected that these can be 
completed within six months, a transition plan should be developed 
within six months of the effective date of this part. Aside from 
structural changes, all other necessary steps to achieve compliance 
shall be taken within sixty days.
    One commenter proposes to limit the time allowed for making 
structural modifications to one year. We note that the basic requirement 
is that these changes be made ``as soon as practicable,'' and that the 
three-year limit is the maximum period of time. Furthermore, the three-
year maximum for transition plans is identical to that contained in the 
regulations for federally assisted recipients.

 Section 85.43 Program accessibility: New construction and alterations.

    Overlapping coverage exists with respect to new construction and 
alterations under section 504 and the Architectural Barriers Act of 
1968, as amended (42 U.S.C. 4151-4157). Section 85.43 provides that 
those buildings that are constructed or altered by, on behalf of, or for 
the use of the agency shall be designed, constructed, or altered to be 
readily accessible to and usable by individuals with handicaps in 
accordance with 41 CFR part 101-19, 101-19.600 to 101-19.607 (GSA 
regulation which incorporates the Uniform Federal Accessibility 
Standards). This standard was promulgated pursuant to the Architectural 
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157). We believe that 
it is appropriate to adopt the existing Architectural Barriers Act 
standard for section 504 compliance because new and altered buildings 
subject to this regulation are also subject to the Architectural 
Barriers Act and because adoption of the standard will avoid duplicative 
and possibly inconsistent standards.
    Existing buildings leased by the agency after the effective date of 
this regulation are not required by the regulation to meet accessibility 
standards simply by virtue of being leased. They are subject, however, 
to the program accessibility standards for existing facilities in Sec.  
85.42. To the extent the buildings are newly constructed or altered, 
they must also meet the new constructions and alteration requirements of 
Sec.  85.43.
    Federal practice under section 504 has always treated newly leased 
buildings as subject to the existing facility program accessibility 
standard. Unlike the construction of new buildings where architectural 
barriers can be avoided at little or no cost, the application of new 
construction standards to an existing building being leased raises the 
same prospect of retrofitting buildings as the use of an existing 
Federal facility, and the agency believes that same program 
accessibility standards should apply to both owned and leased existing 
buildings.
    In Rose v. United States Postal Service, 774 F.2d 1355 (9th Cir. 
1985), the Ninth Circuit held that the Architectural Barriers Act 
requires accessibility at the time of lease. The Rose court did not 
address the question of whether section 504 likewise requires 
accessibility as a condition of lease, and the case was remanded to the 
District Court for, among other things, consideration of this issue. Two 
commenters urged that leased buildings be required to be accessible at 
the time of lease. The agency may provide more specific guidance on 
section 504 requirements for leased buildings after the litigation is 
completed.

                      Section 85.51 Communications.

    Section 85.51 requires the agency to take appropriate steps to 
ensure effective communication with personnel of other Federal entities, 
applicants, participants, and members of the public. These steps shall 
include procedures for determining when auxiliary aids are necessary 
under Sec.  85.1(a)(1) to afford an individual with handicaps an equal 
opportunity to participate in, and enjoy the benefits of, the agency's 
program or activity. They shall also include an opportunity for 
individuals with handicaps to request the auxiliary aids of their 
choice. This expressed choice shall be given primary consideration by 
the agency (Sec.  85.51(a)(1)(i)). The agency shall honor the choice 
unless it can demonstrate that another effective means of communication 
exists or that use of the means chosen would not be required under Sec.  
85.51(d). That paragraph limits the obligations of the agency to ensure 
effective communication in accordance with Davis and the circuit court 
opinions interpreting it (see supra preamble discussion of Sec.  
85.42(c)(2)). Unless not required by Sec.  85.51(d), the agency shall 
provide auxiliary aids at no cost to the individual with handicaps.
    One commenter proposed that the choice of auxiliary aid made by the 
individual with handicaps should govern unless it would constitute an 
undue hardship on the agency. We believe that the language set out above 
is adequate to ensure consideration of an individual's preference.
    Another commenter proposed that the regulation require all films and 
videotapes produced by the agency to be captioned for the hearing-
impaired. The Department intends to examine all appropriate methods of 
ensuring effective communication.
    The same commenter applauded HHS for the inclusion of the language 
requiring HHS to inform individuals with handicaps of their section 504 
rights.

[[Page 526]]

    The discussion of Sec.  85.42(a), Program accessibility, Existing 
facilities, regarding the determination of what constitutes undue 
financial and administrative burdens, also applies to Sec.  85.51(d) and 
should be referred to for a complete understanding of the agency's 
obligation to comply with Sec.  85.51.
    In some circumstances, a notepad and written materials may be 
sufficient to permit effective communication with a hearing-impaired 
person. In many circumstances, however, they may not be, particularly 
when the information being communicated is complex or exchanged for a 
lengthy period of time (e.g. a meeting) or where the hearing-impaired 
applicant or participant is not skilled in spoken or written language. 
In these cases, a sign language interpreter may be appropriate.
    One commenter proposed changing the language to state that notepads 
rarely suffice for communication with the hearing-impaired. Considering 
that a significant number of the hearing-impaired may not be skilled in 
sign language, we believe that the language used is appropriate.
    For vision-impaired persons, effective communication might be 
achieved by several means, including readers and audio recordings. In 
general, the agency intends to inform the public of (1) the 
communications services it offers to afford individuals with handicaps 
an equal opportunity to participate in or benefit from its programs and 
activities, (2) the opportunity to request a particular mode of 
communication, and (3) the agency's preferences regarding auxiliary aids 
if it can demonstrate that several different modes are effective.
    The agency shall ensure effective communication with vision-impaired 
and hearing-impaired persons involved in proceedings conducted by the 
agency. Auxiliary aids must be afforded where necessary to ensure 
effective communication at the proceedings. If sign language 
interpreters are necessary, the agency may require that it be given 
reasonable notice prior to the proceedings of the need for an 
interpreter. Moreover, the agency need not provide individually 
prescribed devices, readers for personal use or study, or other devices 
of a personal nature (Sec.  85.51(a)(1)(ii)). For example, the agency 
need not provide eye glasses or hearing aids to applicants or 
participants in its programs. Similarly, the regulation does not require 
the agency to provide wheelchairs to persons with mobility impairments.
    One commenter proposed that the items which agencies are not 
required to provide and the circumstances involved be described in more 
detail. We believe that the description given is sufficient, because the 
interpretation of this provision will be made on a case-by-case basis.
    Paragraph (b) requires the agency to ensure that individuals with 
handicaps can obtain information concerning accessible services, 
activities, and facilities.
    Paragraph (c) requires the agency to provide signage at inaccessible 
facilities that direct users to locations with information about 
accessible facilities.
    One commenter suggested specifically mentioning the international 
symbol for deafness, and placing such signs at the main entrance of 
buildings equipped to service the hearing-impaired. We believe that the 
language contained in Sec.  85.51 (b) and (c) requires the agency to 
ensure that individuals with handicaps, including those with impaired 
hearing, can obtain information regarding accessibility, and that this 
requirement is sufficient to afford flexibility on the part of the 
agency regarding use of appropriate signage.
    One commenter proposed adding the words ``in the most integrated 
setting appropriate'' to the language in Sec.  85.51(d). This language 
already appears elsewhere in the regulation, e.g. in Sec.  85.42(b)(2), 
and it is the Department's intention to act in accordance with that 
provision.

                  Section 85.61 Compliance procedures.

    Paragraph (a) specifies that paragraphs (b) and (d) through (l) of 
this section establish the procedures for processing complaints other 
than employment complaints. Paragraph (c) provides that the agency will 
process employment complaints according to procedures established in 
existing regulations of the EEOC (29 CFR part 1613) pursuant to section 
501 of the Rehabilitation Act of 1973 (29 U.S.C. 791).
    Paragraph (b) designates the official responsible for coordinating 
implementation of Sec.  85.61. The NPRM stated that responsibility for 
the implementation and operation of this ``part'' shall be vested in the 
OCR Director/Special Assistant. The final rule has been revised by 
replacing the word ``part'' with the word ``section'' to clarify the 
responsibility for coordinating implementation of Sec.  85.61.
    The agency is required to accept and investigate all complete 
complaints (Sec.  85.61(d)). Two commenters suggested that a complainant 
have an opportunity to remedy an incomplete complaint. Current 
administrative procedures provide for this practice and it need not be 
included in the text of the regulation.
    If the agency determines that it does not have jurisdiction over a 
complaint, it shall promptly notify the complainant and make reasonable 
efforts to refer the complaint to the appropriate entity of the Federal 
Government (Sec.  85.61(e)). One commenter pointed out that where a 
reference to another entity of the Federal government is required, the 
obligation to refer should be absolute, not limited to reasonable 
efforts. The language ``shall make reasonable efforts to refer'' is

[[Page 527]]

not intended to minimize the Department's obligation.
    Paragraph (f) requires the agency to notify the Architectural and 
Transportation Barriers Compliance Board (ATBCB) upon receipt of a 
complaint alleging that a building or facility subject to the 
Architectural Barriers Act was designed, constructed, or altered in a 
manner that does not provide ready access and use by individuals with 
handicaps.
    Paragraph (g) requires the agency to provide to the complainant, in 
writing, findings of fact and conclusions of law, the relief granted if 
noncompliance is found, and notice of the right to appeal (Sec.  
85.61(g)). One appeal within the agency shall be provided (Sec.  
85.61(i)). The appeal will not be heard by the same person who made the 
initial determination of compliance or noncompliance.
    Paragraph (1) permits the agency to delegate its authority for 
investigating complaints to other Federal agencies. However, the 
statutory obligation of the agency to make a final determination of 
compliance or noncompliance may not be delegated.
    Commenters have suggested the following:
    Notifying complainants whenever their complaints are referred to 
another agency. Current administrative procedures provide for this 
practice and it need not be included in the text of the regulation.
    Describing the basic parameters for submitting or obtaining evidence 
used to decide appeals. Since the grounds for appeal may be extremely 
varied, it would not be practicable to set out parameters for every 
appeal.
    Including a statement as to complainants' rights to judicial review. 
These rights are statutory and beyond the scope of this regulation.
    Obtaining the expertise of ATBCB in appropriate cases. A provision 
regarding notification of ATBCB is already included in the regulation.
    Including a statement that all other regulations, forms and 
directives issued by HHS are superseded by the nondiscrimination 
requirements of this part. The Department views any other issuances 
falling short of the requirements of this regulation as insufficient to 
ensure compliance and therefore such a statement is unnecessary.
    Provisions for attorneys fees and compensation to the prevailing 
party. Such provisions are statutory and beyond the scope of this 
regulation.

       Section 85.62 Coordination and compliance responsibilities.

    Section 85.62 sets out the respective responsibilities of the 
components of HHS and of the Director, OCR/Special Assistant in the 
implementation of section 504 to programs and activities conducted by 
HHS.
    Paragraph (c) specifies the respective roles of OCR and of the HHS 
component in cases in which noncompliance is found.
    In the event that OCR and the HHS component cannot agree on a 
resolution of any particular matter, such matter will be submitted to 
the Secretary for resolution.



PART 86_NONDISCRIMINATION ON THE BASIS OF SEX IN EDUCATION PROGRAMS 
OR ACTIVITIES RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents



                         Subpart A_Introduction

Sec.
86.1 Purpose and effective date.
86.2 Definitions.
86.3 Remedial and affirmative action and self-evaluation.
86.4 Assurance required.
86.5 Transfers of property.
86.6 Effect of other requirements.
86.7 Effect of employment opportunities.
86.8 Designation of responsible employee and adoption of grievance 
          procedures.
86.9 Dissemination of policy.

                           Subpart B_Coverage

86.11 Application.
86.12 Educational institutions controlled by religious organizations.
86.13 Military and merchant marine educational institutions.
86.14 Membership practices of certain organizations.
86.15 Admissions.
86.16 Educational institutions eligible to submit transition plans.
86.17 Transition plans.
86.18 Amendments to conform to statutory exemptions.
86.19-86.20 [Reserved]

     Subpart C_Discrimination on the Basis of Sex In Admission and 
                         Recruitment Prohibited

86.21 Admission.
86.22 Preference in admission.
86.23 Recruitment.
86.24-86.30 [Reserved]

 Subpart D_Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited

86.31 Education programs or activities.
86.32 Housing.
86.33 Comparable facilities.
86.34 Access to course offerings.
86.35 Access to schools operated by L.E.A.s.
86.36 Counseling and use of appraisal and counseling materials.

[[Page 528]]

86.37 Financial assistance.
86.38 Employment assistance to students.
86.39 Health and insurance benefits and services.
86.40 Marital or parental status.
86.41 Athletics.
86.42 Textbooks and curricular material.
86.43-86.50 [Reserved]

Subpart E_Discrimination on the Basis of Sex In Employment in Education 
                    Programs or Activities Prohibited

86.51 Employment.
86.52 Employment criteria.
86.53 Recruitment.
86.54 Compensation.
86.55 Job classification and structure.
86.56 Fringe benefits.
86.57 Marital or parental status.
86.58 Effect of State or local law or other requirements.
86.59 Advertising.
86.60 Pre-employment inquiries.
86.61 Sex as bona-fide occupational qualification.
86.62-86.70 [Reserved]

                     Subpart F_Procedures [Interim]

86.71 Enforcement procedures.

Subject Index to Title IX Preamble and Regulation
Appendix A to Part 86--Guidelines For Eliminating Discrimination and 
          Denial of Services on the Basis of Race, Color, National 
          Origin, Sex, and Handicap in Vocational Education Programs 
          [Note]

    Authority: 20 U.S.C. 1681 through 1688; Pub. L. 100-259, 102 Stat. 
28 (Mar. 22, 1988).

    Source: 40 FR 24137, June 4, 1975, unless otherwise noted.



                         Subpart A_Introduction



Sec.  86.1  Purpose and effective date.

    The purpose of this part is to effectuate title IX of the Education 
Amendments of 1972, as amended by Pub. L. 93-568, 88 Stat. 1855 (except 
sections 904 and 906 of those Amendments) which is designed to eliminate 
(with certain exceptions) discrimination on the basis of sex in any 
education program or activity receiving Federal financial assistance, 
whether or not such program or activity is offered or sponsored by an 
educational institution as defined in this part. This part is also 
intended to effectuate section 844 of the Education Amendments of 1974, 
Pub. L. 93-380, 88 Stat. 484. The effective date of this part shall be 
July 21, 1975.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682, as amended by Pub. L. 93-568, 88 Stat. 1855, and sec. 
844, Education Amendments of 1974, 88 Stat. 484, Pub. L. 93-380)



Sec.  86.2  Definitions.

    As used in this part, the term--
    (a) Title IX means title IX of the Education Amendments of 1972, 
Pub. L. 92-318, as amended by section 3 of Pub. L. 93-568, 88 Stat. 
1855, except sections 904 and 906 thereof; 20 U.S.C. 1681, 1682, 1683, 
1685, 1686, 1687, 1688.
    (b) Department means the Department of Health and Human Services.
    (c) Secretary means the Secretary of Health and Human Services.
    (d) Director means the Director of the Office for Civil Rights of 
the Department.
    (e) Reviewing Authority means that component of the Department 
delegated authority by the Secretary to appoint, and to review the 
decisions of, administrative law judges in cases arising under this 
part.
    (f) Administrative law judge means a person appointed by the 
reviewing authority to preside over a hearing held under this part.
    (g) Federal financial assistance means any of the following, when 
authorized or extended under a law administered by the Department:
    (1) A grant or loan of Federal financial assistance, including funds 
made available for:
    (i) The acquisition, construction, renovation, restoration, or 
repair of a building or facility or any portion thereof; and
    (ii) Scholarships, loans, grants, wages or other funds extended to 
any entity for payment to or on behalf of students admitted to that 
entity, or extended directly to such students for payment to that 
entity.
    (2) A grant of Federal real or personal property or any interest 
therein, including surplus property, and the proceeds of the sale or 
transfer of such property, if the Federal share of the fair market value 
of the property is not, upon such sale or transfer, properly accounted 
for to the Federal Government.

[[Page 529]]

    (3) Provision of the services of Federal personnel.
    (4) Sale or lease of Federal property or any interest therein at 
nominal consideration, or at consideration reduced for the purpose of 
assisting the recipient or in recognition of public interest to be 
served thereby, or permission to use Federal property or any interest 
therein without consideration.
    (5) Any other contract, agreement, or arrangement which has as one 
of its purposes the provision of assistance to any education program or 
activity, except a contract of insurance or guaranty.
    (h) Program or activity and program means all of the operations of--
    (1)(i) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (ii) The entity of such a State or local government that distributes 
Federal financial assistance and each such department or agency (and 
each other State or local government entity) to which the assistance is 
extended, in the case of assistance to a State or local government;
    (2)(i) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (ii) A local educational agency (as defined in 20 U.S.C. 7801), 
system of vocational education, or other school system;
    (3)(i) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (A) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (B) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (ii) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (4) Any other entity which is established by two or more of the 
entities described in paragraph (h)(1), (2), or (3) of this section; any 
part of which is extended Federal financial assistance.
    (i) Recipient means any State or political subdivision thereof, or 
any instrumentality of a State or political subdivision thereof, any 
public or private agency, institution, or organization, or other entity, 
or any person, to whom Federal financial assistance is extended directly 
or through another recipient and which operates an education program or 
activity which receives such assistance, including any subunit, 
successor, assignee, or transferee thereof.
    (j) Applicant means one who submits an application, request, or plan 
required to be approved by a Department official, or by a recipient, as 
a condition to becoming a recipient.
    (k) Educational institution means a local educational agency 
(L.E.A.) as defined by section 801(f) of the Elementary and Secondary 
Education Act of 1965 (20 U.S.C. 881), a preschool, a private elementary 
or secondary school, or an applicant or recipient of the type defined by 
paragraph (l), (m), (n), or (o) of this section.
    (l) Institution of graduate higher education means an institution 
which:
    (1) Offers academic study beyond the bachelor of arts or bachelor of 
science degree, whether or not leading to a certificate of any higher 
degree in the liberal arts and sciences; or
    (2) Awards any degree in a professional field beyond the first 
professional degree (regardless of whether the first professional degree 
in such field is awarded by an institution of undergraduate higher 
education or professional education); or
    (3) Awards no degree and offers no further academic study, but 
operates ordinarily for the purpose of facilitating research by persons 
who have received the highest graduate degree in any field of study.
    (m) Institution of undergraduate higher education means:
    (1) An institution offering at least two but less than four years of 
college level study beyond the high school level, leading to a diploma 
or an associate degree, or wholly or principally creditable toward a 
baccalaureate degree; or
    (2) An institution offering academic study leading to a 
baccalaureate degree; or

[[Page 530]]

    (3) An agency or body which certifies credentials or offers degrees, 
but which may or may not offer academic study.
    (n) Institution of professional education means an institution 
(except any institution of undergraduate higher education) which offers 
a program of academic study that leads to a first professional degree in 
a field for which there is a national specialized accrediting agency 
recognized by the Secretary of Education.
    (o) Institution of vocational education means a school or 
institution (except an institution of professional or graduate or 
undergraduate higher education) which has as its primary purpose 
preparation of students to pursue a technical, skilled, or semiskilled 
occupation or trade, or to pursue study in a technical field, whether or 
not the school or institution offers certificates, diplomas, or degrees 
and whether or not it offers fulltime study.
    (p) Administratively separate unit means a school, department or 
college of an educational institution (other than a local educational 
agency) admission to which is independent of admission to any other 
component of such institution.
    (q) Admission means selection for part-time, full-time, special, 
associate, transfer, exchange, or any other enrollment, membership, or 
matriculation in or at an education program or activity operated by a 
recipient.
    (r) Student means a person who has gained admission.
    (s) Transition plan means a plan subject to the approval of the 
United States Commissioner of Education pursuant to section 901(a)(2) of 
the Education Amendments of 1972, under which an educational institution 
operates in making the transition from being an educational institution 
which admits only students of one sex to being one which admits students 
of both sexes without discrimination.

(Secs. 901, 902, 908, Education Amendments of 1972, 20 U.S.C. 1681, 
1682, 1687)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24320, May 9, 2005; 85 
FR 37243, June 19, 2020]



Sec.  86.3  Remedial and affirmative action and self-evaluation.

    (a) Remedial action. If the Director finds that a recipient has 
discriminated against persons on the basis of sex in an education 
program or activity, such recipient shall take such remedial action as 
the Director deems necessary to overcome the effects of such 
discrimination.
    (b) Affirmative action. In the absence of a finding of 
discrimination on the basis of sex in an education program or activity, 
a recipient may take affirmative action to overcome the effects of 
conditions which resulted in limited participation therein by persons of 
a particular sex. Nothing herein shall be interpreted to alter any 
affirmative action obligations which a recipient may have under 
Executive Order 11246.
    (c) Self-evaluation. Each recipient education institution shall, 
within one year of the effective date of this part:
    (1) Evaluate, in terms of the requirements of this part, its current 
policies and practices and the effects thereof concerning admission of 
students, treatment of students, and employment of both academic and 
non-academic personnel working in connection with the recipient's 
education program or activity;
    (2) Modify any of these policies and practices which do not or may 
not meet the requirements of this part; and
    (3) Take appropriate remedial steps to eliminate the effects of any 
discrimination which resulted or may have resulted from adherence to 
these policies and practices.
    (d) Availability of self-evaluation and related materials. 
Recipients shall maintain on file for at least three years following 
completion of the evaluation required under paragraph (c) of this 
section, and shall provide to the Director upon request, a description 
of any modifications made pursuant to paragraph (c) (2) of this section 
and of any remedial steps taken pursuant to paragraph (c) (3) of this 
section.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 28, 1975]

[[Page 531]]



Sec.  86.4  Assurance required.

    (a) General. Every application for Federal financial assistance for 
any education program or activity shall as condition of its approval 
contain or be accompanied by an assurance from the applicant or 
recipient, satisfactory to the Director, that the education program or 
activity operated by the applicant or recipient and to which this part 
applies will be operated in compliance with this part. An assurance of 
compliance with this part shall not be satisfactory to the Director if 
the applicant or recipient to whom such assurance applies fails to 
commit itself to take whatever remedial action is necessary in 
accordance with Sec.  86.3(a) to eliminate existing discrimination on 
the basis of sex or to eliminate the effects of past discrimination 
whether occurring prior or subsequent to the submission to the Director 
of such assurance.
    (b) Duration of obligation. (1) In the case of Federal financial 
assistance extended to provide real property or structures thereon, such 
assurance shall obligate the recipient or, in the case of a subsequent 
transfer, the transferee, for the period during which the real property 
or structures are used to provide an education program or activity.
    (2) In the case of Federal financial assistance extended to provide 
personal property, such assurance shall obligate the recipient for the 
period during which it retains ownership or possession of the property.
    (3) In all other cases such assurance shall obligate the recipient 
for the period during which Federal financial assistance is extended.
    (c) Form. The Director will specify the form of the assurances 
required by paragraph (a) of this section and the extent to which such 
assurances will be required of the applicant's or recipient's 
subgrantees, contractors, subcontractors, transferees, or successors in 
interest.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005]



Sec.  86.5  Transfers of property.

    If a recipient sells or otherwise transfers property financed in 
whole or in part with Federal financial assistance to a transferee which 
operates any education program or activity, and the Federal share of the 
fair market value of the property is not upon such sale or transfer 
properly accounted for to the Federal Government both the transferor and 
the transferee shall be deemed to be recipients, subject to the 
provisions of subpart B of this part.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.6  Effect of other requirements.

    (a) Effect of other Federal provisions. The obligations imposed by 
this part are independent of, and do not alter, obligations not to 
discriminate on the basis of sex imposed by Executive Order 11246, as 
amended; sections 799A and 845 of the Public Health Service Act (42 
U.S.C. 295h-9 and 298b-2); Title VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000e et seq.); the Equal Pay Act (29 U.S.C. 206 and 206(d)); and 
any other Act of Congress or Federal regulation.


(Secs. 901, 902, 905, Education Amendments of 1972, 86 Stat. 373, 374, 
375; 20 U.S.C. 1681, 1682, 1685)

    (b) Effect of State or local law or other requirements. The 
obligation to comply with this part is not obviated or alleviated by any 
State or local law or other requirement which would render any applicant 
or student ineligible, or limit the eligibility of any applicant or 
student, on the basis of sex, to practice any occupation or profession.
    (c) Effect of rules or regulations of private organizations. The 
obligation to comply with this part is not obviated or alleviated by any 
rule or regulation of any organization, club, athletic or other league, 
or association which would render any applicant or student ineligible to 
participate or limit the eligibility or participation of any applicant 
or student, on the basis of sex, in any education program or activity

[[Page 532]]

operated by a recipient and which receives Federal financial assistance.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005]



Sec.  86.7  Effect of employment opportunities.

    The obligation to comply with this part is not obviated or 
alleviated because employment opportunities in any occupation or 
profession are or may be more limited for members of one sex than for 
members of the other sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.8  Designation of responsible employee and adoption of 
grievance procedures.

    (a) Designation of responsible employee. Each recipient shall 
designate at least one employee to coordinate its efforts to comply with 
and carry out its responsibilities under this part, including any 
investigation of any complaint communicated to such recipient alleging 
its noncompliance with this part or alleging any actions which would be 
prohibited by this part. The recipient shall notify all its students and 
employees of the name, office address and telephone number of the 
employee or employees appointed pursuant to this paragraph.
    (b) Complaint procedure of recipient. A recipient shall adopt and 
publish grievance procedures providing for prompt and equitable 
resolution of student and employee complaints alleging any action which 
would be prohibited by this part.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.9  Dissemination of policy.

    (a) Notification of policy. (1) Each recipient shall implement 
specific and continuing steps to notify applicants for admission and 
employment, students and parents of elementary and secondary school 
students, employees, sources of referral of applicants for admission and 
employment, and all unions or professional organizations holding 
collective bargaining or professional agreements with the recipient, 
that it does not discriminate on the basis of sex in the educational 
programs or activities which it operates, and that is required by title 
IX and this part not to discriminate in such a manner. Such notification 
shall contain such information, and be made in such manner, as the 
Director finds necessary to apprise such persons of the protections 
against discrimination assured them by title IX and this part, but shall 
state at least that the requirement not to discriminate in education 
programs and activities extends to employment therein, and to admission 
thereto unless Subpart C does not apply to the recipient, and that 
inquiries concerning the application of title IX and this part to such 
recipient may be referred to the employee designated pursuant to Sec.  
86.8, or to the Director.
    (2) Each recipient shall make the initial notification required by 
paragraph (a) (1) of this section within 90 days of the effective date 
of this part or of the date this part first applies to such recipient, 
whichever comes later, which notification shall include publication in:
    (i) Local newspapers;
    (ii) Newspapers and magazines operated by such recipient or by 
student, alumnae, or alumni groups for or in connection with such 
recipient; and
    (iii) Memoranda or other written communications distributed to every 
student and employee of such recipient.
    (b) Publications. (1) Each recipient shall prominently include a 
statement of the policy described in paragraph (a) of this section in 
each announcement, bulletin, catalog, or application form which it makes 
available to any person of a type, described in paragraph (a) of this 
section, or which is otherwise used in connection with the recruitment 
of students or employees.
    (2) A recipient shall not use or distribute a publication of the 
type described in this paragraph which suggests, by text or 
illustration, that such recipient treats applicants, students, or 
employees differently on the basis of sex except as such treatment is 
permitted by this part.
    (c) Distribution. Each recipient shall distribute without 
discrimination on

[[Page 533]]

the basis of sex each publication described in paragraph (b) of this 
section, and shall apprise each of its admission and employment 
recruitment representatives of the policy of nondiscrimination described 
in paragraph (a) of this section, and require such representatives to 
adhere to such policy.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



                           Subpart B_Coverage



Sec.  86.11  Application.

    Except as provided in this subpart, this part 86 applies to every 
recipient and to the education program or activity operated by such 
recipient which receives Federal financial assistance.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005]



Sec.  86.12  Educational institutions controlled by religious organizations.

    (a) Application. This part does not apply to an educational 
institution which is controlled by a religious organization to the 
extent application of this part would not be consistent with the 
religious tenets of such organization.
    (b) Exemption. An educational institution which wishes to claim the 
exemption set forth in paragraph (a) of this section, shall do so by 
submitting in writing to the Director a statement by the highest ranking 
official of the institution, identifying the provisions of this part 
which conflict with a specific tenet of the religious organization.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.13  Military and merchant marine educational institutions.

    This part does not apply to an educational institution whose primary 
purpose is the training of individuals for a military service of the 
United States or for the merchant marine.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.14  Membership practices of certain organizations.

    (a) Social fraternities and sororities. This part does not apply to 
the membership practices of social fraternities and sororities which are 
exempt from taxation under section 501(a) of the Internal Revenue Code 
of 1954, the active membership of which consists primarily of students 
in attendance at institutions of higher education.
    (b) YMCA, YWCA, Girl Scouts, Boy Scouts and Camp Fire Girls. This 
part does not apply to the membership practices of the Young Men's 
Christian Association, the Young Women's Christian Association, the Girl 
Scouts, the Boy Scouts and Camp Fire Girls.
    (c) Voluntary youth service organizations. This part does not apply 
to the membership practices of voluntary youth service organizations 
which are exempt from taxation under section 501(a) of the Internal 
Revenue Code of 1954 and the membership of which has been traditionally 
limited to members of one sex and principally to persons of less than 
nineteen years of age.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682; sec. 3(a) of Pub. L. 93-568, 88 Stat. 1862 amending 
sec. 901)



Sec.  86.15  Admissions.

    (a) Admissions to educational institutions prior to June 24, 1973, 
are not covered by this part.
    (b) Administratively separate units. For the purposes only of this 
section, Sec. Sec.  86.16 and 86.17, and subpart C, each 
administratively separate unit shall be deemed to be an educational 
institution.
    (c) Application of subpart C. Except as provided in paragraphs (d) 
and (e) of this section, subpart C applies to each recipient. A 
recipient to which subpart C applies shall not discriminate on the basis 
of sex in admission or recruitment in violation of that subpart.
    (d) Educational institutions. Except as provided in paragraph (e) of 
this section as to recipients which are educational institutions, 
Subpart C applies only to institutions of vocational education, 
professional education, graduate higher education, and public 
institutions of undergraduate higher education.

[[Page 534]]

    (e) Public institutions of undergraduate higher education. Subpart C 
does not apply to any public institution of undergraduate higher 
education which traditionally and continually from its establishment has 
had a policy of admitting only students of one sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 28, 1975]



Sec.  86.16  Educational institutions eligible to submit transition plans.

    (a) Application. This section applies to each educational 
institution to which subpart C applies which:
    (1) Admitted only students of one sex as regular students as of June 
23, 1972; or
    (2) Admitted only students of one sex as regular students as of June 
23, 1965, but thereafter admitted as regular students, students of the 
sex not admitted prior to June 23, 1965.
    (b) Provision for transition plans. An educational institution to 
which this section applies shall not discriminate on the basis of sex in 
admission or recruitment in violation of subpart C unless it is carrying 
out a transition plan approved by the United States Commissioner of 
Education as described in Sec.  86.17, which plan provides for the 
elimination of such discrimination by the earliest practicable date but 
in no event later than June 23, 1979.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.17  Transition plans.

    (a) Submission of plans. An institution to which Sec.  86.16 applies 
and which is composed of more than one administratively separate unit 
may submit either a single transition plan applicable to all such units, 
or a separate transition plan applicable to each such unit.
    (b) Content of plans. In order to be approved by the United States 
Commissioner of Education, a transition plan shall:
    (1) State the name, address, and Federal Interagency Committee on 
Education (FICE) Code of the educational institution submitting such 
plan, the administratively separate units to which the plan is 
applicable, and the name, address, and telephone number of the person to 
whom questions concerning the plan may be addressed. The person who 
submits the plan shall be the chief administrator or president of the 
institution, or another individual legally authorized to bind the 
institution to all actions set forth in the plan.
    (2) State whether the educational institution or administratively 
separate unit admits students of both sexes, as regular students and, if 
so, when it began to do so.
    (3) Identify and describe with respect to the educational 
institution or administratively separate unit any obstacles to admitting 
students without discrimination on the basis of sex.
    (4) Describe in detail the steps necessary to eliminate as soon as 
practicable each obstacle so identified and indicate the schedule for 
taking these steps and the individual directly responsible for their 
implementation.
    (5) Include estimates of the number of students, by sex, expected to 
apply for, be admitted to, and enter each class during the period 
covered by the plan.
    (c) Nondiscrimination. No policy or practice of a recipient to which 
Sec.  86.16 applies shall result in treatment of applicants to or 
students of such recipient in violation of Subpart C unless such 
treatment is necessitated by an obstacle identified in paragraph (b)(3) 
of this section and a schedule for eliminating that obstacle has been 
provided as required by paragraph (b)(4) of this section.
    (d) Effects of past exclusion. To overcome the effects of past 
exclusion of students on the basis of sex, each educational institution 
to which Sec.  86.16 applies shall include in its transition plan, and 
shall implement, specific steps designed to encourage individuals of the 
previously excluded sex to apply for admission to such institution. Such 
steps shall include instituting recruitment programs which emphasize the 
institution's commitment to enrolling students of the sex previously 
excluded.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 28, 1975]

[[Page 535]]



Sec.  86.18  Amendments to conform to statutory exemptions.

    (a) Nothing in this part shall be construed to force or require any 
individual or hospital or any other institution, program, or activity 
receiving Federal funds to perform or pay for an abortion.
    (b) Nothing in this part shall be construed to require or prohibit 
any person, or public or private entity, to provide or pay for any 
benefit or service, including the use of facilities, related to an 
abortion. Nothing in the preceding sentence shall be construed to permit 
a penalty to be imposed on any person or individual because such person 
or individual is seeking or has received any benefit or service related 
to a legal abortion.
    (c) This part shall be construed consistently with, as applicable, 
the First Amendment to the Constitution, Title IX's religious exemptions 
(20 U.S.C. 1681(a)(3) and 1687(4)), the Religious Freedom Restoration 
Act (42 U.S.C. 2000b et seq.), and provisions related to abortion in the 
Church Amendments (42 U.S.C. 300a-7), the Coats-Snowe Amendment (42 
U.S.C. 238n), section 1303 of the Patient Protection and Affordable Care 
Act (42 U.S.C. 18023), and appropriation rider provisions relating to 
abortion, to the extent they remain in effect or applicable, such as the 
Hyde Amendment (e.g., Consolidated Appropriations Act, 2019, Pub. L. 
115-245, Div. B, secs. 506-07), the Helms Amendment (e.g., Continuing 
Appropriations Act, 2019, Pub. L. 116-6, Div. F, Title III), and the 
Weldon Amendment (e.g., Consolidated Appropriations Act, 2019, Pub. L. 
115-245, Div. B, sec. 507(d)).

[85 FR 37243, June 19, 2020]



Sec. Sec.  86.19-86.20  [Reserved]



     Subpart C_Discrimination on the Basis of Sex in Admission and 
                         Recruitment Prohibited



Sec.  86.21  Admission.

    (a) General. No person shall, on the basis of sex, be denied 
admission, or be subjected to discrimination in admission, by any 
recipient to which this subpart applies, except as provided in 
Sec. Sec.  86.16 and 86.17.
    (b) Specific prohibitions. (1) In determining whether a person 
satisfies any policy or criterion for admission, or in making any offer 
of admission, a recipient to which this subpart applies shall not:
    (i) Give preference to one person over another on the basis of sex, 
by ranking applicants separately on such basis, or otherwise;
    (ii) Apply numerical limitations upon the number or proportion of 
persons of either sex who may be admitted; or
    (iii) Otherwise treat one individual differently from another on the 
basis of sex.
    (2) A recipient shall not administer or operate any test or other 
criterion for admission which has a disproportionately adverse effect on 
persons on the basis of sex unless the use of such test or criterion is 
shown to predict validly success in the education program or activity in 
question and alternative tests or criteria which do not have such a 
disproportionately adverse effect are shown to be unavailable.
    (c) Prohibitions relating to marital or parental status. In 
determining whether a person satisfies any policy or criterion for 
admission, or in making any offer of admission, a recipient to which 
this subpart applies:
    (1) Shall not apply any rule concerning the actual or potential 
parental, family, or marital status of a student or applicant which 
treats persons differently on the basis of sex;
    (2) Shall not discriminate against or exclude any person on the 
basis of pregnancy, childbirth, termination of pregnancy, or recovery 
therefrom, or establish or follow any rule or practice which so 
discriminates or excludes;
    (3) Shall treat disabilities related to pregnancy, childbirth, 
termination of pregnancy, or recovery therefrom in the same manner and 
under the same policies as any other temporary disability or physical 
condition; and
    (4) Shall not make pre-admission inquiry as to the marital status of 
an applicant for admission, including whether such applicant is ``Miss'' 
or ``Mrs.'' A recipient may make pre-admission inquiry as to the sex of 
an applicant for admision, but only if such inquiry is

[[Page 536]]

made equally of such applicants of both sexes and if the results of such 
inquiry are not used in connection with discrimination prohibited by 
this part.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.22  Preference in admission.

    A recipient to which this subpart applies shall not give preference 
to applicants for admission, on the basis of attendance at any 
educational institution or other school or entity which admits as 
students or predominantly members of one sex, if the giving of such 
preference has the effect of discriminating on the basis of sex in 
violation of this subpart.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.23  Recruitment.

    (a) Nondiscriminatory recruitment. A recipient to which this subpart 
applies shall not discriminate on the basis of sex in the recruitment 
and admission of students. A recipient may be required to undertake 
additional recruitment efforts for one sex as remedial action pursuant 
to Sec.  86.3(a), and may choose to undertake such efforts as 
affirmative action pursuant to Sec.  86.3(b).
    (b) Recruitment at certain institutions. A recipient to which this 
subpart applies shall not recruit primarily or exclusively at 
educational institutions, schools or entities which admit as students 
only or predominantly members of one sex, if such actions have the 
effect of discriminating on the basis of sex in violation of this 
subpart.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec. Sec.  86.24-86.30  [Reserved]



 Subpart D_Discrimination on the Basis of Sex in Education Programs or 
                          Activities Prohibited



Sec.  86.31  Education programs or activities.

    (a) General. Except as provided elsewhere in this part, no person 
shall, on the basis of sex, be excluded from participation in, be denied 
the benefits of, or be subjected to discrimination under any academic, 
extracurricular, research, occupational training, or other education 
program or activity operated by a recipient which receives Federal 
financial assistance. This subpart does not apply to actions of a 
recipient in connection with admission of its students to an education 
program or activity of (1) a recipient to which Subpart C does not 
apply, or (2) an entity, not a recipient, to which Subpart C would not 
apply if the entity were a recipient.
    (b) Specific prohibitions. Except as provided in this subsection, in 
providing any aid, benefit, or service to a student, a recipient shall 
not, on the basis of sex:
    (1) Treat one person differently from another in determining whether 
such person satisfies any requirement or condition for the provision of 
such aid, benefit, or service;
    (2) Provide different aid, benefits, or services or provide aid, 
benefits, or services in a different manner;
    (3) Deny any person any such aid, benefit, or service;
    (4) Subject any person to separate or different rules of behavior, 
sanctions, or other treatment;
    (5) Apply any rule concerning the domicile or residence of a student 
or applicant, including eligibility for in-State fees and tuition;
    (6) Aid or perpetuate discrimination against any person by providing 
significant assistance to any agency, organization, or person which 
discriminates on the basis of sex in providing any aid, benefit or 
service to students or employees;
    (7) Otherwise limit any person in the enjoyment of any right, 
privilege, advantage, or opportunity.
    (c) Assistance administered by a recipient educational institution 
to study at a foreign institution. A recipient educational institution 
may administer or assist in the administration of scholarships, 
fellowships, or other awards established by foreign or domestic wills, 
trusts, or similar legal instruments, or by acts of foreign governments 
and restricted to members of one sex, which are designed to provide 
opportunities to study abroad, and which are awarded to students who are 
already matriculating at or who are graduates of the

[[Page 537]]

recipient institution; Provided, a recipient educational institution 
which administers or assists in the administration of such scholarships, 
fellowship, or other awards which are restricted to members of one sex 
provides, or otherwise makes available reasonable opportunities for 
similar studies for members of the other sex. Such opportunities may be 
derived from either domestic or foreign sources.
    (d) Aid, benefits, or services not provided by recipient. (1) This 
paragraph applies to any recipient which requires participation by any 
applicant, student, or employee in any education program or activity not 
operated wholly by such recipient, or which facilitates, permits, or 
considers such participation as part of or equivalent to an education 
program or activity operated by such recipient, including participation 
in educational consortia and cooperative employment and student-teaching 
assignments.
    (2) Such recipient;
    (i) Shall develop and implement a procedure designed to assure 
itself that the operator or sponsor of such other education program or 
activity takes no action affecting any applicant, student, or employee 
of such recipient which this part would prohibit such recipient from 
taking; and
    (ii) Shall not facilitate, require, permit, or consider such 
participation if such action occurs.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005; 85 
FR 37244, June 19, 2020]



Sec.  86.32  Housing.

    (a) Generally. A recipient shall not, on the basis of sex, apply 
different rules or regulations, impose different fees or requirements, 
or offer different services or benefits related to housing, except as 
provided in this section (including housing provided only to married 
students).
    (b) Housing provided by recipient. (1) A recipient may provide 
separate housing on the basis of sex.
    (2) Housing provided by a recipient to students of one sex, when 
compared to that provided to students of the other sex, shall be as a 
whole:
    (i) Proportionate in quantity to the number of students of that sex 
applying for such housing; and
    (ii) Comparable in quality and cost to the student.
    (c) Other housing. (1) A recipient shall not, on the basis of sex, 
administer different policies or practices concerning occupancy by its 
students of housing other than provided by such recipient.
    (2) A recipient which, through solicitation, listing, approval of 
housing, or otherwise, assists any agency, organization, or person in 
making housing available to any of its students, shall take such 
reasonable action as may be necessary to assure itself that such housing 
as is provided to students of one sex, when compared to that provided to 
students of the other sex, is as a whole: (i) Proportionate in quantity 
and (ii) comparable in quality and cost to the student. A recipient may 
render such assistance to any agency, organization, or person which 
provides all or part of such housing to students only of one sex.

(Secs. 901, 902, 907, Education Amendments of 1972, 86 Stat. 373, 374, 
375; 20 U.S.C. 1681, 1682, 1686)



Sec.  86.33  Comparable facilities.

    A recipient may provide separate toilet, locker room, and shower 
facilities on the basis of sex, but such facilities provided for 
students of one sex shall be comparable to such facilities provided for 
students of the other sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374)



Sec.  86.34  Access to course offerings.

    A recipient shall not provide any course or otherwise carry out any 
of its education program or activity separately on the basis of sex, or 
require or refuse participation therein by any of its students on such 
basis, including health, physical education, industrial, business, 
vocational, technical, home economics, music, and adult education 
courses.
    (a) With respect to classes and activities in physical education at 
the elementary school level, the recipient shall comply fully with this 
section as expeditiously as possible but in no

[[Page 538]]

event later than one year from the effective date of this regulation. 
With respect to physical education classes and activities at the 
secondary and post-secondary levels, the recipient shall comply fully 
with this section as expeditiously as possible but in no event later 
than three years from the effective date of this regulation.
    (b) This section does not prohibit grouping of students in physical 
education classes and activities by ability as assessed by objective 
standards of individual performance developed and applied without regard 
to sex.
    (c) This section does not prohibit separation of students by sex 
within physical education classes or activities during participation in 
wrestling, boxing, rugby, ice hockey, football, basketball and other 
sports the purpose or major activity of which involves bodily contact.
    (d) Where use of a single standard of measuring skill or progress in 
a physical education class has an adverse effect on members of one sex, 
the recipient shall use appropriate standards which do not have such 
effect.
    (e) Portions of classes in elementary and secondary schools which 
deal exclusively with human sexuality may be conducted in separate 
sessions for boys and girls.
    (f) Recipients may make requirements based on vocal range or quality 
which may result in a chorus or choruses of one or predominantly one 
sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.35  Access to schools operated by L.E.A.s.

    A recipient which is a local educational agency shall not, on the 
basis of sex, exclude any person from admission to:
    (a) Any institution of vocational education operated by such 
recipient; or
    (b) Any other school or educational unit operated by such recipient, 
unless such recipient otherwise makes available to such person, pursuant 
to the same policies and criteria of admission, courses, services, and 
facilities comparable to each course, service, and facility offered in 
or through such schools.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.36  Counseling and use of appraisal and counseling materials.

    (a) Counseling. A recipient shall not discriminate against any 
person on the basis of sex in the counseling or guidance of students or 
applicants for admission.
    (b) Use of appraisal and counseling materials. A recipient which 
uses testing or other materials for appraising or counseling students 
shall not use different materials for students on the basis of their sex 
or use materials which permit or require different treatment of students 
on such basis unless such different materials cover the same occupations 
and interest areas and the use of such different materials is shown to 
be essential to eliminate sex bias. Recipients shall develop and use 
internal procedures for ensuring that such materials do not discriminate 
on the basis of sex. Where the use of a counseling test or other 
instrument results in a substantially disproportionate number of members 
of one sex in any particular course of study or classification, the 
recipient shall take such action as is necessary to assure itself that 
such disproportion is not the result of discrimination in the instrument 
or its application.
    (c) Disproportion in classes. Where a recipient finds that a 
particular class contains a substantially disproportionate number of 
individuals of one sex, the recipient shall take such action as is 
necessary to assure itself that such disproportion is not the result of 
discrimination on the basis of sex in counseling or appraisal materials 
or by counselors.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.37  Financial assistance.

    (a) General. Except as provided in paragraphs (b) and (c) of this 
section, in providing financial assistance to any of its students, a 
recipient shall not: (1) On the basis of sex, provide different amount 
or types of such assistance, limit eligibility for such assistance

[[Page 539]]

which is of any particular type or source, apply different criteria, or 
otherwise discriminate; (2) through solicitation, listing, approval, 
provision of facilities or other services, assist any foundation, trust, 
agency, organization, or person which provides assistance to any of such 
recipient's students in a manner which discriminates on the basis of 
sex; or (3) apply any rule or assist in application of any rule 
concerning eligibility for such assistance which treats persons of one 
sex differently from persons of the other sex with regard to marital or 
parental status.
    (b) Financial aid established by certain legal instruments. (1) A 
recipient may administer or assist in the administration of 
scholarships, fellowships, or other forms of financial assistance 
established pursuant to domestic or foreign wills, trusts, bequests, or 
similar legal instruments or by acts of a foreign government which 
requires that awards be made to members of a particular sex specified 
therein; Provided, That the overall effect of the award of such sex-
restricted scholarships, fellowships, and other forms of financial 
assistance does not discriminate on the basis of sex.
    (2) To ensure nondiscriminatory awards of assistance as required in 
paragraph (b)(1) of this section, recipients shall develop and use 
procedures under which:
    (i) Students are selected for award of financial assistance on the 
basis of nondiscriminatory criteria and not on the basis of availability 
of funds restricted to members of a particular sex;
    (ii) An appropriate sex-restricted scholarship, fellowship, or other 
form of financial assistance is allocated to each student selected under 
paragraph (b)(2)(i) of this section; and
    (iii) No student is denied the award for which he or she was 
selected under paragraph (b)(2)(i) of this section because of the 
absence of a scholarship, fellowship, or other form of financial 
assistance designated for a member of that student's sex.
    (c) Athletic scholarships. (1) To the extent that a recipient awards 
athletic scholarships or grants-in-aid, it must provide reasonable 
opportunities for such awards for members of each sex in proportion to 
the number of students of each sex participating in interscholastic or 
intercollegiate athletics.
    (2) Separate athletic scholarships or grants-in-aid for members of 
each sex may be provided as part of separate athletic teams for members 
of each sex to the extent consistent with this paragraph and Sec.  
86.41.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682; and sec. 844, Education Amendments of 1974, Pub. L. 
93-380, 88 Stat. 484)

[40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 28, 1975]



Sec.  86.38  Employment assistance to students.

    (a) Assistance by recipient in making available outside employment. 
A recipient which assists any agency, organization or person in making 
employment available to any of its students:
    (1) Shall assure itself that such employment is made available 
without discrimination on the basis of sex; and
    (2) Shall not render such services to any agency, organization, or 
person which discriminates on the basis of sex in its employment 
practices.
    (b) Employment of students by recipients. A recipient which employs 
any of its students shall not do so in a manner which violates subpart E 
of this part.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.39  Health and insurance benefits and services.

    In providing a medical, hospital, accident, or life insurance 
benefit, service, policy, or plan to any of its students, a recipient 
shall not discriminate on the basis of sex, or provide such benefit, 
service, policy, or plan in a manner which would violate Subpart E of 
this part if it were provided to employees of the recipient. This 
section shall not prohibit a recipient from providing any benefit or 
service which may be used by a different proportion of students of one 
sex than of the other, including family planning services. However, any 
recipient which provides full coverage health service shall provide 
gynecological care.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[[Page 540]]



Sec.  86.40  Marital or parental status.

    (a) Status generally. A recipient shall not apply any rule 
concerning a student's actual or potential parental, family, or marital 
status which treats students differently on the basis of sex.
    (b) Pregnancy and related conditions. (1) A recipent shall not 
discriminate against any student, or exclude any student from its 
education program or activity, including any class or extracurricular 
activity, on the basis of such student's pregnancy, childbirth, false 
pregnancy, termination of pregnancy or recovery therefrom, unless the 
student requests voluntarily to participate in a separate portion of the 
program or activity of the recipient.
    (2) A recipient may require such a student to obtain the 
certification of a physician that the student is physically and 
emotionally able to continue participation so long as such a 
certification is required of all students for other physical or 
emotional conditions requiring the attention of a physician.
    (3) A recipient which operates a portion of its education program or 
activity separately for pregnant students, admittance to which is 
completely voluntary on the part of the student as provided in paragraph 
(b)(1) of this section shall ensure that the separate portion is 
comparable to that offered to non-pregnant students.
    (4) A recipient shall treat pregnancy, childbirth, false pregnancy, 
termination of pregnancy and recovery therefrom in the same manner and 
under the same policies as any other temporary disability with respect 
to any medical or hospital benefit, service, plan or policy which such 
recipient administers, operates, offers, or participates in with respect 
to students admitted to the recipient's educational program or activity.
    (5) In the case of a recipient which does not maintain a leave 
policy for its students, or in the case of a student who does not 
otherwise qualify for leave under such a policy, a recipient shall treat 
pregnancy, childbirth, false pregnancy, termination of pregnancy and 
recovery therefrom as a justification for a leave of absence for so long 
a period of time as is deemed medically necessary by the student's 
physician, at the conclusion of which the student shall be reinstated to 
the status which she held when the leave began.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005]



Sec.  86.41  Athletics.

    (a) General. No person shall, on the basis of sex, be excluded from 
participation in, be denied the benefits of, be treated differently from 
another person or otherwise be discriminated against in any 
interscholastic, intercollegiate, club or intramural athletics offered 
by a recipient, and no recipient shall provide any such athletics 
separately on such basis.
    (b) Separate teams. Notwithstanding the requirements of paragraph 
(a) of this section, a recipient may operate or sponsor separate teams 
for members of each sex where selection for such teams is based upon 
competitive skill or the activity involved is a contact sport. However, 
where a recipient operates or sponsors a team in a particular sport for 
members of one sex but operates or sponsors no such team for members of 
the other sex, and athletic opportunities for members of that sex have 
previously been limited, members of the excluded sex must be allowed to 
try-out for the team offered unless the sport involved is a contact 
sport. For the purposes of this part, contact sports include boxing, 
wrestling, rugby, ice hockey, football, basketball and other sports the 
purpose of major activity of which involves bodily contact.
    (c) Equal opportunity. A recipient which operates or sponsors 
interscholastic, intercollegiate, club or intramural athletics shall 
provide equal athletic opportunity for members of both sexes. In 
determining whether equal opportunities are available the Director will 
consider, among other factors:
    (1) Whether the selection of sports and levels of competition 
effectively accommodate the interests and abilities of members of both 
sexes;
    (2) The provision of equipment and supplies;
    (3) Scheduling of games and practice time;
    (4) Travel and per diem allowance;

[[Page 541]]

    (5) Opportunity to receive coaching and academic tutoring;
    (6) Assignment and compensation of coaches and tutors;
    (7) Provision of locker rooms, practice and competitive facilities;
    (8) Provision of medical and training facilities and services;
    (9) Provision of housing and dining facilities and services;
    (10) Publicity.

Unequal aggregate expenditures for members of each sex or unequal 
expenditures for male and female teams if a recipient operates or 
sponsors separate teams will not constitute noncompliance with this 
section, but the Director may consider the failure to provide necessary 
funds for teams for one sex in assessing equality of opportunity for 
members of each sex.
    (d) Adjustment period. A recipient which operates or sponsors 
interscholastic, intercollegiate, club or intramural athletics at the 
elementary school level shall comply fully with this section as 
expeditiously as possible but in no event later than one year from the 
effective date of this regulation. A recipient which operates or 
sponsors interscholastic, intercollegiate, club or intramural athletics 
at the secondary or post-secondary school level shall comply fully with 
this section as expeditiously as possible but in no event later than 
three years from the effective date of this regulation.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682; and sec. 844, Education Amendments of 1974, Pub. L. 
93-380, 88 Stat. 484)

[40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 28, 1975]



Sec.  86.42  Textbooks and curricular material.

    Nothing in this regulation shall be interpreted as requiring or 
prohibiting or abridging in any way the use of particular textbooks or 
curricular materials.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec. Sec.  86.43-86.50  [Reserved]



Subpart E_Discrimination on the Basis of Sex in Employment in Education 
                    Programs or Activities Prohibited



Sec.  86.51  Employment.

    (a) General. (1) No person shall, on the basis of sex, be excluded 
from participation in, be denied the benefits of, or be subjected to 
discrimination in employment, or recruitment, consideration, or 
selection therefor, whether full-time or part-time, under any education 
program or activity operated by a recipient which receives Federal 
financial assistance.
    (2) A recipient shall make all employment decisions in any education 
program or activity operated by such recipient in a nondiscriminatory 
manner and shall not limit, segregate, or classify applicants or 
employees in any way which could adversely affect any applicant's or 
employee's employment opportunities or status because of sex.
    (3) A recipient shall not enter into any contractual or other 
relationship which directly or indirectly has the effect of subjecting 
employees or students to discrimination prohibited by this subpart, 
including relationships with employment and referral agencies, with 
labor unions, and with organizations providing or administering fringe 
benefits to employees of the recipient.
    (4) A recipient shall not grant preferences to applicants for 
employment on the basis of attendance at any educational institution or 
entity which admits as students only or predominantly members of one 
sex, if the giving of such preferences has the effect of discriminating 
on the basis of sex in violation of this part.
    (b) Application. The provisions of this subpart apply to:
    (1) Recruitment, advertising, and the process of application for 
employment;
    (2) Hiring, upgrading, promotion, consideration for and award of 
tenure, demotion, transfer, layoff, termination, application of nepotism 
policies, right of return from layoff, and rehiring;

[[Page 542]]

    (3) Rates of pay or any other form of compensation, and changes in 
compensation;
    (4) Job assignments, classifications and structure, including 
position descriptions, lines of progression, and seniority lists;
    (5) The terms of any collective bargaining agreement;
    (6) Granting and return from leaves of absence, leave for pregnancy, 
childbirth, false pregnancy, termination of pregnancy, leave for persons 
of either sex to care for children or dependents, or any other leave;
    (7) Fringe benefits available by virtue of employment, whether or 
not administered by the recipient;
    (8) Selection and financial support for training, including 
apprenticeship, professional meetings, conferences, and other related 
activities, selection for tuition assistance, selection for sabbaticals 
and leaves of absence to pursue training;
    (9) Employer-sponsored activities, including those that are social 
or recreational; and
    (10) Any other term, condition, or privilege of employment.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24137, June 4, 1975, as amended at 70 FR 24321, May 9, 2005]



Sec.  86.52  Employment criteria.

    A recipient shall not administer or operate any test or other 
criterion for any employment opportunity which has a disproportionately 
adverse effect on persons on the basis of sex unless:
    (a) Use of such test or other criterion is shown to predict validly 
successful performance in the position in question; and
    (b) Alternative tests or criteria for such purpose, which do not 
have such disproportionately adverse effect, are shown to be 
unavailable.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.53  Recruitment.

    (a) Nondiscriminatory recruitment and hiring. A recipient shall not 
discriminate on the basis of sex in the recruitment and hiring of 
employees. Where a recipient has been found to be presently 
discriminating on the basis of sex in the recruitment or hiring of 
employees, or has been found to have in the past so discriminated, the 
recipient shall recruit members of the sex so discriminated against so 
as to overcome the effects of such past or present discrimination.
    (b) Recruitment patterns. A recipient shall not recruit primarily or 
exclusively at entities which furnish as applicants only or 
predominantly members of one sex if such actions have the effect of 
discriminating on the basis of sex in violation of this subpart.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.54  Compensation.

    A recipient shall not make or enforce any policy or practice which, 
on the basis of sex:
    (a) Makes distinctions in rates of pay or other compensation;
    (b) Results in the payment of wages to employees of one sex at a 
rate less than that paid to employees of the opposite sex for equal work 
on jobs the performance of which requires equal skill, effort, and 
responsibility, and which are performed under similar working 
conditions.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.55  Job classification and structure.

    A recipient shall not:
    (a) Classify a job as being for males or for females;
    (b) Maintain or establish separate lines of progression, seniority 
lists, career ladders, or tenure systems based on sex; or
    (c) Maintain or establish separate lines of progression, seniority 
systems, career ladders, or tenure systems for similar jobs, position 
descriptions, or job requirements which classify persons on the basis of 
sex, unless sex is a bona-fide occupational qualification for the 
positions in question as set forth in Sec.  86.61.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)

[40 FR 24128, June 4, 1975; 40 FR 39506, Aug. 28, 1975]

[[Page 543]]



Sec.  86.56  Fringe benefits.

    (a) Fringe benefits defined. For purposes of this part, fringe 
benefits means: Any medical, hospital, accident, life insurance or 
retirement benefit, service, policy or plan, any profit-sharing or bonus 
plan, leave, and any other benefit or service of employment not subject 
to the provision of Sec.  86.54.
    (b) Prohibitions. A recipient shall not:
    (1) Discriminate on the basis of sex with regard to making fringe 
benefits available to employees or make fringe benefits available to 
spouses, families, or dependents of employees differently upon the basis 
of the employee's sex;
    (2) Administer, operate, offer, or participate in a fringe benefit 
plan which does not provide either for equal periodic benefits for 
members of each sex, or for equal contributions to the plan by such 
recipient for members of each sex; or
    (3) Administer, operate, offer, or participate in a pension or 
retirement plan which establishes different optional or compulsory 
retirement ages based on sex or which otherwise discriminates in 
benefits on the basis of sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.57  Marital or parental status.

    (a) General. A recipient shall not apply any policy or take any 
employment action:
    (1) Concerning the potential marital, parental, or family status of 
an employee or applicant for employment which treats persons differently 
on the basis of sex; or
    (2) Which is based upon whether an employee or applicant for 
employment is the head of household or principal wage earner in such 
employee's or applicant's family unit.
    (b) Pregnancy. A recipient shall not discriminate against or exclude 
from employment any employee or applicant for employment on the basis of 
pregnancy, childbirth, false pregnancy, termination of pregnancy, or 
recovery therefrom.
    (c) Pregnancy as a temporary disability. A recipient shall treat 
pregnancy, childbirth, false pregnancy, termination of pregnancy, and 
recovery therefrom and any temporary disability resulting therefrom as 
any other temporary disability for all job related purposes, including 
commencement, duration and extensions of leave, payment of disability 
income, accrual of seniority and any other benefit or service, and 
reinstatement, and under any fringe benefit offered to employees by 
virtue of employment.
    (d) Pregnancy leave. In the case of a recipient which does not 
maintain a leave policy for its employees, or in the case of an employee 
with insufficient leave or accrued employment time to qualify for leave 
under such a policy, a recipient shall treat pregnancy, childbirth, 
false pregnancy, termination of pregnancy and recovery therefrom as a 
justification for a leave of absence without pay for a reasonable period 
of time, at the conclusion of which the employee shall be reinstated to 
the status which she held when the leave began or to a comparable 
position, without decrease in rate of compensation or loss of 
promotional opportunities, or any other right or privilege of 
employment.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.58  Effect of State or local law or other requirements.

    (a) Prohibitory requirements. The obligation to comply with this 
subpart is not obviated or alleviated by the existence of any State or 
local law or other requirement which imposes prohibitions or limits upon 
employment of members of one sex which are not imposed upon members of 
the other sex.
    (b) Benefits. A recipient which provides any compensation, service, 
or benefit to members of one sex pursuant to a State or local law or 
other requirement shall provide the same compensation, service, or 
benefit to members of the other sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.59  Advertising.

    A recipient shall not in any advertising related to employment 
indicate preference, limitation, specification, or discrimination based 
on sex unless sex

[[Page 544]]

is a bona-fide occupational qualification for the particular job in 
question.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.60  Pre-employment inquiries.

    (a) Marital status. A recipient shall not make pre-employment 
inquiry as to the marital status of an applicant for employment, 
including whether such applicant is ``Miss or Mrs.''
    (b) Sex. A recipient may make pre-employment inquiry as to the sex 
of an applicant for employment, but only if such inquiry is made equally 
of such applicants of both sexes and if the results of such inquiry are 
not used in connection with discrimination prohibited by this part.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec.  86.61  Sex as a bona-fide occupational qualification.

    A recipient may take action otherwise prohibited by this subpart 
provided it is shown that sex is a bona-fide occupational qualification 
for that action, such that consideration of sex with regard to such 
action is essential to successful operation of the employment function 
concerned. A recipient shall not take action pursuant to this section 
which is based upon alleged comparative employment characteristics or 
stereotyped characterizations of one or the other sex, or upon 
preference based on sex of the recipient, employees, students, or other 
persons, but nothing contained in this section shall prevent a recipient 
from considering an employee's sex in relation to employment in a locker 
room or toilet facility used only by members of one sex.

(Secs. 901, 902, Education Amendments of 1972, 86 Stat. 373, 374; 20 
U.S.C. 1681, 1682)



Sec. Sec.  86.62-86.70  [Reserved]



                     Subpart F_Procedures [Interim]



Sec.  86.71  Enforcement procedures.

    For the purposes of implementing this part, the procedural 
provisions applicable to Title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d) are hereby adopted and incorporated herein by reference. 
These procedures may be found at 45 CFR 80.6 through 80.11 and 45 CFR 
part 81.

[85 FR 37244, June 19, 2020]



       Sec. Subject Index to Title IX Preamble and Regulation \1\
---------------------------------------------------------------------------

    \1\ Preamble paragraph numbers are in brackets [ ].
---------------------------------------------------------------------------

                                    A

Access to Course Offerings [43, 55, 56, 57, 58]; 86.34
Access to Schools Operated by LEA's, [44]; 86.35
Admissions, [5, 6, 30]; 86.15, 86.21
    Affirmative and remedial action, [16, 17, 24]; 86.3 (a), (b)
    Administratively separate units, [30];86.15(b), 86.2(o)
    Educational Institutions, [30], 86.15(d), 86.2(n)
    General, 86.21(a), 86.2(p),
    Prohibitions relating to marital and parental status, [32, 36]; 
86.21(c)
    Professional schools, [30], 86.2(m)
    Public institutions of undergraduate higher education, 86.15(e)
    Recruitment, [34, 35]; 86.23
    Specific prohibitions, 86.21(b)
    Tests, [31]; 86.21(b)(2)
    Preference in admission, [35]; 86.22
Advertising, 86.59
Affirmative Action, see ``Remedial and Affirmative Actions''
Assistance to ``outside'' discriminatory organizations, [40, 53]; 
          86.31(b)(7), (c)
Assurances, [18]; 86.4
    Duration of obligation, 86.4(b)
    Form, 86.4(c)
Athletics, [69 to 78]; 86.41
    Adjustment period, [78]; 86.41(d)
    Contact sport defined, 86.41(d)
    Equal opportunity, [76, 77]; 86.41(d)
    Determining factors, 86.41(c) (i) to (x)
    Equipment, 86.41(c)
    Expenditures, 86.41(c)
    Facilities, 86.41(c)
    Travel, 86.41(c)
    Scholarships, [64, 65]; 86.37(d)
    General, [69, 70, 71, 72, 73, 74, 75]; 86.41(a)
    Separate teams, [75]; 86.41(b)

                                    B

BFOQ, [96]; 86.61

                                    C

Comparable facilities
    Housing, [42, 54]; 86.32
    Other, 86.33, 86.35(b)
Compensation, [84, 87, 92]; 86.54
Counseling
    Disproportionate classes, [45, 59]; 86.36(c)
    General, [45, 59]; 86.36(a)

[[Page 545]]

    Materials, [45, 59]; 86.36(b)
Course Offerings
    Adjustment period, [55]; 86.34(a) (i)
    General, [7, 43]; 86.34
    Music classes, [43]; 86.34(f)
    Physical education, [43, 56, 58];
    Sex education, [43, 57]; 86.34(e)
Coverage, [5]; 86.11 to 86.17
    Exemptions
Curricular materials, [52]; 86.42(a)

                                    D

Definitions, [14, 15]; 86.2(a) to (r)
Designation of responsible employee, [20, 22]; 86.8(a), (b)
Dissemination of policy, [21]; 86.9
    Distribution, 86.9(c)
    Notification of policy, [21]; 86.9(a)
    Publications, 86.9(b)
Dress codes 86.31(b) (4)

                                    E

Education Institutions
    Controlled by religious organizations, 86.12
    Application, [28, 29]; 86.12(a)
    Exemption, [26]; 86.12(b)
Education Program and Activities
    Benefiting from Federal financial assistance, [10, 11]; 86.11
    General, [10, 11, 53]; 86.31(a)
    Programs not operated by recipient, [41, 54]; 86.31(c)
    Specific prohibitions, [38, 39, 40, 53]; 86.31 (b)
Effective Date, [3]
    Employee responsible for Title IX, see ``Designation of Responsible 
Employee''
Employment
    Advertising, 86.59
    Application, 86.51(b)
    Compensation, [84, 92]; 86.54
    Employment criteria, 86.52
    Fringe benefits, [88, 89]; 86.56
    General, [81, 82, 87]; 86.51
    Job Classification and Structure, 86.55
    Marital and Parental Status, 86.57
    Pregnancy, [85, 93]; 86.57(b)
    Pregnancy as Temporary Disability, [85, 93]; 86.57(c)
    Pregnancy Leave, [85, 93, 94]; 86.57(d)
Pre-Employment Inquiry
    Recruitment, [83, 90, 91, 95]
    Sex as a BFOQ, [96]; 86.61
    Student Employment, [66]; 86.38
    Tenure, 86.51(b) (2)
Exemptions, [5, 27, 28, 29, 30, 53]; 86.12(b), 86.13, 86.14, 86.15(a), 
          86.15(d), 86.16

                                    F

Federal Financial Assistance, 86.2(a)
Financial Assistance to students, [46, 60, 61]; 86.37
    Athletic Scholarships, [46, 64, 65]; 86.37(d)
    Foreign institutions, study at [63]; 86.31(c)
    General, 86.37
    Non-need scholarships, [62]; 86.37(b)
    Pooling of sex-restrictive, [46, 61, 62]; 86.37(b)
    Sex-restrictive assistance through foreign or domestic wills [46, 
61, 62]; 86.37(b)
Foreign Scholarships, see ``Financial assistance'' 86.37 and 
          ``Assistance to `outside' discriminatory organizations'', 
          86.31(c)
Fraternities/Sororities
    Social, [53, 27, 28]; 86.14(a)
    Business/professional, [40, 53, 27, 28]; 86.31(b) (7)
    Honor societies, [40, 53]; 86.31(b) (7)
Fringe benefits, [67, 88, 89]; 86.56, 86.39
    Part-time employees, [89]

                                    G

Grievance Procedure, see ``Designation of responsible employee'', 
          86.8(a) (b)

                                    H

Health and Insurance Benefits and Services, [67, 88, 93]; 86.39, 86.56
Honor societies, [40, 53]; 86.31(b) (7)
Housing, 86.32
    Generally, [42]; 86.32(b)
    Provided by recipient, 86.32(b)
    Other housing, [54]; 86.32(c)

                                    J

Job Classification and Structure, 86.55

                                    L

LEA's, [44]; 86.35

                                    M

Marital and Parental Status
    Employment
    General, [85, 93, 94]; 86.57
    Pregnancy, [85, 93, 94]; 86.57(b)
    Pregnancy as a temporary disability, [85, 93, 94]; 86.57(c)
    Pregnancy leave, [85, 93, 94]; 86.57(d)
    Students
    General, [49]; 86.40(a) (b)
    Pregnancy and related conditions, [50]; 86.40(b) (1) (2) (3) (4) (5)
    Class participation, [50]; 86.40(b) (1)
    Physician certification, [50]; 86.40(b) (2)
    Special classes, [50]; 86.40(b) (3)
    Temporary leave, [50]; 86.40(b) (4) (5)
Membership Practices of Social fraternities and sororities, [27, 28, 
          53]; 86.14(a)
    Voluntary youth service organizations, [27, 28, 53]; 86.14(c)
    YMCA, YWCA and others, [27, 28, 53]; 86.14(b)
Military and Merchant Marine Educational Institutions, [29]; 86.13

                                    P

Pooling, see ``Financial Assistance'', 86.37
Pre-employment Inquiries
    Marital status, [86, 95]; 86.60(a)
    Sex, 86.60(b)
Preference in Admissions, [35]; 86.22

[[Page 546]]

    See also ``Remedial and Affirmative Action''
Pregnancy, Employment
    General, [85, 93, 94]; 86.57
    Pregnancy, [85, 93, 94]; 86.57(b)
    Pregnancy as temporary disability, [85, 93, 94]; 86.57(c)
    Pregnancy leave, [85, 93, 94]; 86.57(d)
    Students
    General, [49, 50]; 86.40(a) and (b)
    Pregnancy and related conditions; [50]; 86.40(b) (1) to (5)
    Class Participation, [50, 55, 58]; 86.40(b) (1)
    Physical certification, [50]; 86.40(b) (2)
    Special class, [50]; 86.40 (b) (3)
    Temporary leave, [50]; 86.40(b) (4), (5)
Private Undergraduate Professional Schools, [30]; 86.15(d)
Purpose of Regulation, [13]; 86.1

                                    R

Real Property, 86.2(g)
Recruitment
    Employment
    Nondiscrimination, [83, 91]; 86.53(a)
    Patterns, 86.53(b)
Student
    Nondiscrimination, [34, 35]; 86.23(a)
    Recruitment at certain institutions, 86.23 (b)
Religious Organizations
    Application, [29, 28]; 86.12(a)
    Exemption, [26]; 86.12(b)
Remedial and Affirmative Actions, [16, 17, 24]; 86.3

                                    S

Scholarships, see ``Financial Assistance'', 86.37
Self-evaluation, [16, 22]; 86.3(c) (d)
Surplus Property (see Transfer of Property 86.5)
    Duration of obligation 86.4(b)
    Real Property 86.4(b) (1)

                                    T

Textbooks and curricular materials, [52, 79, 80]; 86.42
Termination of funds, [10, 11]
Transfer of property, 86.5
Transition Plans
    Content of plans, 86.17(b)
    Different from Adjustment period, [78]; 86.41(d)
 Submission of plans, 86.17(a)





 Sec. Appendix A to Part 86--Guidelines for Eliminating Discrimination 
  and Denial of Services on the Basis of Race, Color, National Origin, 
        Sex, and Handicap in Vocational Education Programs [Note]

    Note: For the text of these guidelines, see 45 CFR part 80, appendix 
B.

[44 FR 17168, Mar. 21, 1979]



PART 87_EQUAL TREATMENT FOR FAITH-BASED ORGANIZATIONS--Table of Contents



Sec.
87.1 Definitions.
87.2 Applicability.
87.3 Faith-based organizations and Federal financial assistance.
87.4 Severability.

Appendix A to Part 87--Notice or Announcement of Award Opportunities
Appendix B to Part 87--Notice of Award or Contract

    Authority: 5 U.S.C. 301; 42 U.S.C. 2000bb et seq.

    Source: 81 FR 19426, Apr. 4, 2016, unless otherwise noted.



Sec.  87.1  Definitions.

    The following definitions apply for the purposes of this part.
    (a) Direct Federal financial assistance, Federal financial 
assistance provided directly, or direct funding means financial 
assistance received by an entity selected by the Government or a pass-
through entity (as defined in this part) to carry out a service (e.g., 
by contract, grant, or cooperative agreement). References to Federal 
financial assistance will be deemed to be references to direct Federal 
financial assistance, unless the referenced assistance meets the 
definition of indirect Federal financial assistance or Federal financial 
assistance provided indirectly.
    (b) Directly funded means funded by means of direct Federal 
financial assistance.
    (c) Indirect Federal financial assistance or Federal financial 
assistance provided indirectly means financial assistance received by a 
service provider when the service provider is paid for services rendered 
by means of a voucher, certificate, or other means of government-

[[Page 547]]

funded payment provided to a beneficiary who is able to make a choice of 
a service provider.
    (d) Federal financial assistance does not include a tax credit, 
deduction, exemption, guaranty contract, or the use of any assistance by 
any individual who is the ultimate beneficiary under any such program.
    (e) Pass-through entity means an entity, including a nonprofit or 
nongovernmental organization, acting under a contract, grant, or other 
agreement with the Federal Government or with a State or local 
government, such as a State administering agency, that accepts direct 
Federal financial assistance as a primary recipient or grantee and 
distributes that assistance to other organizations that, in turn, 
provide government funded social services.
    (f) Recipient means a non-Federal entity that receives a Federal 
award directly from a Federal awarding agency to carry out an activity 
under a Federal program. The term recipient does not include 
subrecipients, but does include pass-through entities.
    (g) Religious exercise has the meaning given to the term in 42 
U.S.C. 2000cc-5(7)(A).

[85 FR 82145, Dec. 17, 2020]



Sec.  87.2  Applicability.

    This part applies to grants awarded in HHS social service programs 
governed by either the Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements at 45 CFR part 75 or Block Grant 
regulations at 45 CFR part 96, except as provided in paragraphs (a) and 
(b) of this section.
    (a) Discretionary grants. This part is not applicable to the 
discretionary grant programs that are governed Substance Abuse and 
Mental Health Services Administration (SAMHSA) Charitable Choice 
regulations found at 42 CFR part 54a. This part is also not applicable 
to discretionary grant programs that are governed by the Community 
Services Block Grant (CSBG) Charitable Choice regulations at 45 CFR part 
1050, with the exception of Sec. Sec.  87.1 and 87.3(i) through (l) 
which do apply to such CSBG discretionary grants. Discretionary grants 
authorized by the Child Care and Development Block Grant Act are also 
not governed by this part.
    (b) Formula and block grants. This part does not apply to non-
discretionary and block grant programs governed by the SAMHSA Charitable 
Choice regulations found at 42 CFR part 54, or the Temporary Assistance 
for Needy Families (TANF) Charitable Choice regulations at 45 CFR part 
260. Block grants governed by the CSBG Charitable Choice regulations at 
45 CFR part 1050 are not subject to this part, with the exception that 
Sec. Sec.  87.1 and 87.3(i) through (l) do apply to such CSBG block 
grants. This part is not applicable to Child Care and Development Block 
Grants governed by 45 CFR part 98.



Sec.  87.3  Faith-based organizations and Federal financial assistance.

    (a) Faith-based organizations are eligible, on the same basis as any 
other organization, and considering any permissible accommodation, to 
participate in any HHS awarding agency program or service for which they 
are otherwise eligible. The HHS awarding agency program or service shall 
provide such accommodation as is consistent with Federal law, the 
Attorney General's Memorandum of October 6, 2017 (Federal Law 
Protections for Religious Liberty), and the Religion Clauses of the 
First Amendment to the U.S. Constitution. Neither the HHS awarding 
agency nor any State or local government or other pass-through entity 
receiving funds under any HHS awarding agency program or service shall, 
in the selection of service providers, discriminate against an 
organization on the basis of the organization's religious character, 
affiliation, or exercise. Notices or announcements of award 
opportunities and notices of award or contracts shall include language 
substantially similar to that in appendices A and B of this part. For 
purposes of this part, to discriminate against an organization on the 
basis of the organization's religious exercise means to disfavor an 
organization, including by failing to select an organization, 
disqualifying an organization, or imposing any condition or selection 
criterion that otherwise disfavors or

[[Page 548]]

penalizes an organization in the selection process or has such an 
effect:
    (1) Because of conduct that would not be considered grounds to 
disfavor a secular organization;
    (2) Because of conduct that must or could be granted an appropriate 
accommodation in a manner consistent with the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb through 2000bb-4) or the Religion 
Clauses of the First Amendment to the Constitution; or
    (3) Because of the actual or suspected religious motivation of the 
organization's religious exercise.
    (b) Organizations that receive direct financial assistance from an 
HHS awarding agency may not engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization) as part of 
the programs or services funded with direct financial assistance from 
the HHS awarding agency, or in any other manner prohibited by law. If an 
organization conducts such activities, the activities must be offered 
separately, in time or location, from the programs or services funded 
with direct financial assistance from the HHS awarding agency, and 
participation must be voluntary for beneficiaries of the programs or 
services funded with such assistance. The use of indirect Federal 
financial assistance is not subject to this restriction. Nothing in this 
part restricts HHS's authority under applicable Federal law to fund 
activities, such as the provision of chaplaincy services, that can be 
directly funded by the Government consistent with the Establishment 
Clause.
    (c) A faith-based organization that participates in HHS awarding-
agency funded programs or services will retain its autonomy; right of 
expression; religious character; and independence from Federal, State, 
and local governments, and may continue to carry out its mission, 
including the definition, development, practice, and expression of its 
religious beliefs. A faith-based organization may use space in its 
facilities to provide programs or services funded with financial 
assistance from the HHS awarding agency without concealing, removing, or 
altering religious art, icons, scriptures, or other religious symbols. 
Such a faith-based organization retains its authority over its internal 
governance, and it may retain religious terms in its name, select its 
board members on the basis of their acceptance of or adherence to the 
religious tenets of the organization, and include religious references 
in its mission statements and other governing documents. In addition, a 
faith-based organization that receives financial assistance from the HHS 
awarding agency does not lose the protections of law.

    Note 1 to paragraph (c): Memorandum for All Executive Departments 
and Agencies, From the Attorney General, ``Federal Law Protections for 
Religious Liberty'' (Oct. 6, 2017) (describing Federal law protections 
for religious liberty).

    (d) An organization, whether faith-based or not, that receives 
Federal financial assistance shall not, with respect to services or 
activities funded by such financial assistance, discriminate against a 
program beneficiary or prospective program beneficiary on the basis of 
religion, a religious belief, a refusal to hold a religious belief, or a 
refusal to attend or participate in a religious practice. However, a 
faith-based organization receiving indirect Federal financial assistance 
need not modify any religious components or integration with respect to 
its program activities to accommodate a beneficiary who chooses to 
expend the indirect aid on the organization's program and may require 
attendance at all activities that are fundamental to the program.
    (e) No grant document, agreement, covenant, memorandum of 
understanding, policy, or regulation used by an HHS awarding agency or a 
State or local government in administering Federal financial assistance 
from the HHS awarding agency shall require faith-based organizations to 
provide assurances or notices where they are not required of non-faith-
based organizations. Any restrictions on the use of grant funds shall 
apply equally to faith-based and non-faith-based organizations. All 
organizations, whether faith-based or not, that participate in HHS 
awarding agency programs or services must carry out eligible activities 
in accordance with all program requirements (except where modified or

[[Page 549]]

exempted by any required or appropriate religious accommodations) 
including those prohibiting the use of direct Federal financial 
assistance to engage in explicitly religious activities. No grant 
document, agreement, covenant, memorandum of understanding, policy, or 
regulation used by an HHS awarding agency or a State or local government 
in administering Federal financial assistance from the HHS awarding 
agency shall disqualify faith-based organizations from participating in 
the HHS awarding agency's programs or services because such 
organizations are motivated or influenced by religious faith to provide 
social services, or because of their religious character or affiliation, 
or on grounds that discriminate against organizations on the basis of 
the organizations' religious exercise, as defined in this part.
    (f) A faith-based organization's exemption from the Federal 
prohibition on employment discrimination on the basis of religion, set 
forth in the Civil Rights Act of 1964, 42 U.S.C. 2000e-1 and 2000e-2 and 
the Americans with Disabilities Act, 42 U.S.C. 12113(d)(2), is not 
forfeited when the faith-based organization receives direct or indirect 
Federal financial assistance from an HHS awarding agency. An 
organization qualifying for such exemption may select its employees on 
the basis of their acceptance of or adherence to the religious tenets of 
the organization. Recipients should consult with the appropriate HHS 
awarding agency program office if they have questions about the scope of 
any applicable requirement, including in light of any additional 
constitutional or statutory protections or requirements that may apply.
    (g) In general, the HHS awarding agency does not require that a 
recipient, including a faith-based organization, obtain tax-exempt 
status under section 501(c)(3) of the Internal Revenue Code to be 
eligible for funding under HHS awarding agency programs. Many grant 
programs, however, do require an organization to be a nonprofit 
organization in order to be eligible for funding. Funding announcements 
and other grant application solicitations that require organizations to 
have nonprofit status will specifically so indicate in the eligibility 
section of the solicitation. In addition, any solicitation that requires 
an organization to maintain tax-exempt status will expressly state the 
statutory authority for requiring such status. Recipients should consult 
with the appropriate HHS awarding agency program office to determine the 
scope of any applicable requirements. In HHS awarding agency programs in 
which an applicant must show that it is a nonprofit organization, the 
applicant may do so by any of the following means:
    (1) Proof that the Internal Revenue Service currently recognizes the 
applicant as an organization to which contributions are tax deductible 
under section 501(c)(3) of the Internal Revenue Code;
    (2) A statement from a State or other governmental taxing body or 
the State secretary of State certifying that:
    (i) The organization is a nonprofit organization operating within 
the State; and
    (ii) No part of its net earnings may benefit any private shareholder 
or individual;
    (3) A certified copy of the applicant's certificate of incorporation 
or similar document that clearly establishes the nonprofit status of the 
applicant;
    (4) Any item described in paragraphs (g)(1) through (3) of this 
section, if that item applies to a State or national parent 
organization, together with a statement by the State or parent 
organization that the applicant is a local nonprofit affiliate; or
    (5) For an entity that holds a sincerely held religious belief that 
it cannot apply for a determination as an entity that is tax-exempt 
under section 501(c)(3) of the Internal Revenue Code, evidence 
sufficient to establish that the entity would otherwise qualify as a 
nonprofit organization under any of paragraphs (g)(1) through (4) of 
this section.
    (h) If a recipient contributes its own funds in excess of those 
funds required by a matching or grant agreement to supplement HHS 
awarding agency-supported activities, the recipient has the option to 
segregate those additional funds or commingle them with the Federal 
award funds. If the funds are commingled, the provisions of this part 
shall apply to all of the commingled

[[Page 550]]

funds in the same manner, and to the same extent, as the provisions 
apply to the Federal funds. With respect to the matching funds, the 
provisions of this part apply irrespective of whether such funds are 
commingled with Federal funds or segregated.
    (i) Decisions about awards of direct Federal financial assistance 
must be made on the basis of merit, not on the basis of the religious 
affiliation, or lack thereof, of a recipient organization, and must be 
free from political interference or even the appearance of such 
interference.
    (j) Neither the HHS awarding agency nor any State or local 
government or other pass-through entity receiving funds under any HHS 
awarding agency program or service shall construe these provisions in 
such a way as to advantage or disadvantage faith-based organizations 
affiliated with historic or well-established religions or sects in 
comparison with other religions or sects.
    (k) If a pass-through entity, acting under a contract, grant, or 
other agreement with the Federal Government or with a State or local 
government that is administering a program supported by Federal 
financial assistance, is given the authority under the contract, grant, 
or agreement to select non-governmental organizations to provide 
services funded by the Federal Government, the pass-through entity must 
ensure compliance with the provisions of this part and any implementing 
regulations or guidance by the sub-recipient. If the pass-through entity 
is a non-governmental organization, it retains all other rights of a 
non-governmental organization under the program's statutory and 
regulatory provisions.

[85 FR 82146, Dec. 17, 2020]



Sec.  87.4  Severability.

    Any provision of this part held to be invalid or unenforceable by 
its terms, or as applied to any person or circumstance, shall be 
construed so as to continue to give maximum effect to the provision 
permitted by law, unless such holding shall be one of utter invalidity 
or unenforceability, in which event the provision shall be severable 
from this part and shall not affect the remainder thereof or the 
application of the provision to other persons not similarly situated or 
to other, dissimilar circumstances.

[85 FR 82147, Dec. 17, 2020]



      Sec. Appendix A to Part 87--Notice or Announcement of Award 
                              Opportunities

    (a) Faith-based organizations may apply for this award on the same 
basis as any other organization, as set forth at and, subject to the 
protections and requirements of this part and 42 U.S.C. 2000bb et seq., 
the Department will not, in the selection of recipients, discriminate 
against an organization on the basis of the organization's religious 
character, affiliation, or exercise.
    (b) A faith-based organization that participates in this program 
will retain its independence from the Government and may continue to 
carry out its mission consistent with religious freedom, 
nondiscrimination, and conscience protections in Federal law, including 
the Free Speech and Free Exercise Clauses of the First Amendment of the 
U.S. Constitution, the Religious Freedom Restoration Act (42 U.S.C. 
2000bb et seq.), the Coats-Snowe Amendment (42 U.S.C. 238n), Title VII 
of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1(a) and 2000e-2(e)), 
the Americans with Disabilities Act, 42 U.S.C. 12113(d)(2), section 1553 
of the Patient Protection and Affordable Care Act (42 U.S.C. 18113), the 
Weldon Amendment (e.g., Further Consolidated Appropriations Act, 2020, 
Public Law 116-94, 133 Stat. 2534, 2607, div. A, sec. 507(d) (Dec. 20, 
2019)), or any related or similar Federal laws or regulations. Religious 
accommodations may also be sought under many of these religious freedom 
and conscience protection laws.
    (c) A faith-based organization may not use direct financial 
assistance from the Department to engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization). Such an 
organization also may not, in providing services funded by the 
Department, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion, a religious belief, a 
refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice.

[85 FR 82147, Dec. 17, 2020]



         Sec. Appendix B to Part 87--Notice of Award or Contract

    (a) A faith-based organization that participates in this program 
retains its independence from the Government and may continue

[[Page 551]]

to carry out its mission consistent with religious freedom, 
nondiscrimination, and conscience protections in Federal law, including 
the Free Speech and Free Exercise Clauses of the First Amendment of the 
U.S. Constitution, the Religious Freedom Restoration Act (42 U.S.C. 
2000bb et seq.), the Coats-Snowe Amendment (42 U.S.C. 238n), Title VII 
of the Civil Rights Act of 1964 (42 U.S.C. 2000e-1(a) and 2000e-2(e)), 
the Americans with Disabilities Act (42 U.S.C. 12113(d)(2)), section 
1553 of the Patient Protection and Affordable Care Act (42 U.S.C. 
18113), the Weldon Amendment (see, e.g., Further Consolidated 
Appropriations Act, 2020, Public Law 116-94, div. A, sec. 507(d), 133 
Stat. 2534, 2607 (Dec. 20, 2019)), or any related or similar Federal 
laws or regulations. Religious accommodations may also be sought under 
many of these religious freedom, nondiscrimination, and conscience 
protection laws.
    (b) A faith-based organization may not use direct financial 
assistance from the Department to engage in any explicitly religious 
activities (including activities that involve overt religious content 
such as worship, religious instruction, or proselytization). Such an 
organization also may not, in providing services funded by the 
Department, discriminate against a program beneficiary or prospective 
program beneficiary on the basis of religion, a religious belief, a 
refusal to hold a religious belief, or a refusal to attend or 
participate in a religious practice.

[85 FR 82147, Dec. 17, 2020]



PART 88_PROTECTING STATUTORY CONSCIENCE RIGHTS IN HEALTH CARE; 
DELEGATIONS OF AUTHORITY--Table of Contents



Sec.
88.1 Purpose.
88.2 Definitions.
88.3 Applicable requirements and prohibitions.
88.4 Assurance and certification of compliance requirements.
88.5 Notice of rights under Federal conscience and anti-discrimination 
          laws.
88.6 Compliance requirements.
88.7 Enforcement authority.
88.8 Relationship to other laws.
88.9 Rule of construction.
88.10 Severability.

Appendix A to Part 88--Model Text: Notice of Rights Under Federal 
          Conscience and Anti-Discrimination Laws

    Authority: 42 U.S.C. 300a-7 (the Church Amendments); 42 U.S.C. 238n 
(Coats-Snowe Amendment); the Weldon Amendment (e.g., Pub. L. 115-245, 
Div. B, sec. 507(d)); 42 U.S.C. 18113 (Section 1553 of the Affordable 
Care Act); Medicare Advantage (e.g., Pub. L. 115-245, Div. B, sec. 209); 
the Helms, Biden, 1978, and 1985 Amendments, 22 U.S.C. 2151b(f) (e.g., 
Pub. L. 116-6, Div. F, sec. 7018); 22 U.S.C. 7631(d); 29 U.S.C. 
669(a)(5); 42 U.S.C. 300gg-92; 42 U.S.C. 1302(a); 42 U.S.C. 18041(a) 
(Section 1321 of the Affordable Care Act); 42 U.S.C. 18081 (Section 1411 
of the Affordable Care Act); 42 U.S.C. 18023 (Section 1303 of the 
Affordable Care Act); 26 U.S.C. 5000A(d)(2); 42 U.S.C. 18031; 42 U.S.C. 
280g-1(d); 42 U.S.C. 290bb-36(f); 42 U.S.C. 1315; 42 U.S.C. 1315a; 42 
U.S.C. 1320a-1; 42 U.S.C. 1320c-11; 42 U.S.C. 1395cc(f); 42 U.S.C. 
1395i-3; 42 U.S.C. 1395i-5; 42 U.S.C. 1395w-22(j)(3)(B); 42 U.S.C. 
1395w-26; 42 U.S.C. 1395w-27; 42 U.S.C. 1395x; 42 U.S.C. 1396a; 42 
U.S.C. 1396a(w)(3); 42 U.S.C. 1396f; 42 U.S.C. 1396r; 42 U.S.C. 
1396s(c)(2)(B)(ii); 42 U.S.C. 1396u-2(b)(3)(B); 42 U.S.C. 1397j-1(b); 42 
U.S.C. 5106i(a); 42 U.S.C. 14406; 5 U.S.C. 301; 40 U.S.C. 121(c); 42 
U.S.C. 263a(f)(1)(E); 45 CFR parts 75 and 96; 48 CFR chapter 1; 48 CFR 
parts 300 thru 370; 2 CFR part 376.

    Source: 84 FR 23263, May 21, 2019, unless otherwise noted.



Sec.  88.1  Purpose.

    The purpose of this part is to provide for the implementation and 
enforcement of the Federal conscience and anti-discrimination laws 
listed in Sec.  88.3. Such laws, for example, protect the rights of 
individuals, entities, and health care entities to refuse to perform, 
assist in the performance of, or undergo certain health care services or 
research activities to which they may object for religious, moral, 
ethical, or other reasons. Such laws also protect patients from being 
subjected to certain health care or services over their conscientious 
objection. Consistent with their objective to protect the conscience and 
associated anti-discrimination rights of individuals, entities, and 
health care entities, the statutory provisions and the regulatory 
provisions contained in this part are to be interpreted and implemented 
broadly to effectuate their protective purposes.



Sec.  88.2  Definitions.

    For the purposes of this part:
    Assist in the performance means to take an action that has a 
specific, reasonable, and articulable connection to furthering a 
procedure or a part of a health service program or research activity 
undertaken by or with another person or entity. This may include

[[Page 552]]

counseling, referral, training, or otherwise making arrangements for the 
procedure or a part of a health service program or research activity, 
depending on whether aid is provided by such actions.
    Department means the Department of Health and Human Services and any 
component thereof.
    Discriminate or discrimination includes, as applicable to, and to 
the extent permitted by, the applicable statute:
    (1) To withhold, reduce, exclude from, terminate, restrict, or make 
unavailable or deny any grant, contract, subcontract, cooperative 
agreement, loan, license, certification, accreditation, employment, 
title, or other similar instrument, position, or status;
    (2) To withhold, reduce, exclude from, terminate, restrict, or make 
unavailable or deny any benefit or privilege or impose any penalty; or
    (3) To utilize any criterion, method of administration, or site 
selection, including the enactment, application, or enforcement of laws, 
regulations, policies, or procedures directly or through contractual or 
other arrangements, that subjects individuals or entities protected 
under this part to any adverse treatment with respect to individuals, 
entities, or conduct protected under this part on grounds prohibited 
under an applicable statute encompassed by this part.
    (4) Notwithstanding paragraphs (1) through (3) of this definition, 
an entity subject to any prohibition in this part shall not be regarded 
as having engaged in discrimination against a protected entity where the 
entity offers and the protected entity voluntarily accepts an effective 
accommodation for the exercise of such protected entity's protected 
conduct, religious beliefs, or moral convictions. In determining whether 
any entity has engaged in discriminatory action with respect to any 
complaint or compliance review under this part, OCR will take into 
account the degree to which an entity had implemented policies to 
provide effective accommodations for the exercise of protected conduct, 
religious beliefs, or moral convictions under this part and whether or 
not the entity took any adverse action against a protected entity on the 
basis of protected conduct, beliefs, or convictions before the provision 
of any accommodation.
    (5) Notwithstanding paragraphs (1) through (3) of this definition, 
an entity subject to any prohibition in this part may require a 
protected entity to inform it of objections to performing, referring 
for, participating in, or assisting in the performance of specific 
procedures, programs, research, counseling, or treatments, but only to 
the extent that there is a reasonable likelihood that the protected 
entity may be asked in good faith to perform, refer for, participate in, 
or assist in the performance of, any act or conduct just described. Such 
inquiry may only occur after the hiring of, contracting with, or 
awarding of a grant or benefit to a protected entity, and once per 
calendar year thereafter, unless supported by a persuasive 
justification.
    (6) The taking of steps by an entity subject to prohibitions in this 
part to use alternate staff or methods to provide or further any 
objected-to conduct identified in paragraph (5) of this definition would 
not, by itself, constitute discrimination or a prohibited referral, if 
such entity does not require any additional action by, or does not take 
any adverse action against, the objecting protected entity (including 
individuals or health care entities), and if such methods do not exclude 
protected entities from fields of practice on the basis of their 
protected objections. Entities subject to prohibitions in this part may 
also inform the public of the availability of alternate staff or methods 
to provide or further the objected-to conduct, but such entity may not 
do so in a manner that constitutes adverse or retaliatory action against 
an objecting entity.
    Entity means a ``person'' as defined in 1 U.S.C. 1; the Department; 
a State, political subdivision of any State, instrumentality of any 
State or political subdivision thereof; any public agency, public 
institution, public organization, or other public entity in any State or 
political subdivision of any State; or, as applicable, a foreign 
government, foreign nongovernmental organization, or intergovernmental 
organization (such as the United Nations or its affiliated agencies).

[[Page 553]]

    Federal financial assistance includes:
    (1) Grants and loans of Federal funds;
    (2) The grant or loan of Federal property and interests in property;
    (3) The detail of Federal personnel;
    (4) The sale or lease of, and the permission to use (on other than a 
casual or transient basis), Federal property or any interest in such 
property without consideration or at a nominal consideration, or at a 
consideration which is reduced for the purpose of assisting the 
recipient or in recognition of the public interest to be served by such 
sale or lease to the recipient; and
    (5) Any agreement or other contract between the Federal government 
and a recipient that has as one of its purposes the provision of a 
subsidy to the recipient.
    Health care entity includes:
    (1) For purposes of the Coats-Snowe Amendment (42 U.S.C. 238n) and 
the subsections of this part implementing that law (Sec.  88.3(b)), an 
individual physician or other health care professional, including a 
pharmacist; health care personnel; a participant in a program of 
training in the health professions; an applicant for training or study 
in the health professions; a post-graduate physician training program; a 
hospital; a medical laboratory; an entity engaging in biomedical or 
behavioral research; a pharmacy; or any other health care provider or 
health care facility. As applicable, components of State or local 
governments may be health care entities under the Coats-Snowe Amendment; 
and
    (2) For purposes of the Weldon Amendment (e.g., Department of 
Defense and Labor, Health and Human Services, and Education 
Appropriations Act, 2019, and Continuing Appropriations Act, 2019, Pub. 
L. 115-245, Div. B., sec. 507(d), 132 Stat. 2981, 3118 (Sept. 28, 
2018)), Patient Protection and Affordable Care Act section 1553 (42 
U.S.C. 18113), and to sections of this part implementing those laws 
(Sec.  88.3(c) and (e)), an individual physician or other health care 
professional, including a pharmacist; health care personnel; a 
participant in a program of training in the health professions; an 
applicant for training or study in the health professions; a post-
graduate physician training program; a hospital; a medical laboratory; 
an entity engaging in biomedical or behavioral research; a pharmacy; a 
provider-sponsored organization; a health maintenance organization; a 
health insurance issuer; a health insurance plan (including group or 
individual plans); a plan sponsor or third-party administrator; or any 
other kind of health care organization, facility, or plan. As 
applicable, components of State or local governments may be health care 
entities under the Weldon Amendment and Patient Protection and 
Affordable Care Act section 1553.
    Health service program includes the provision or administration of 
any health or health-related services or research activities, health 
benefits, health or health-related insurance coverage, health studies, 
or any other service related to health or wellness, whether directly; 
through payments, grants, contracts, or other instruments; through 
insurance; or otherwise.
    Instrument is the means by which Federal funds are conveyed to a 
recipient and includes grants, cooperative agreements, contracts, grants 
under a contract, memoranda of understanding, loans, loan guarantees, 
stipends, and any other funding or employment instrument or contract.
    OCR means the Office for Civil Rights of the Department of Health 
and Human Services.
    Recipient means any State, political subdivision of any State, 
instrumentality of any State or political subdivision thereof, and any 
person or any public or private agency, institution, organization, or 
other entity in any State, including any successor, assign, or 
transferee thereof, to whom Federal financial assistance is extended 
directly from the Department or a component of the Department, or who 
otherwise receives Federal funds directly from the Department or a 
component of the Department, but such term does not include any ultimate 
beneficiary. The term may include a foreign government, foreign 
nongovernmental organization, or intergovernmental organization (such as 
the United Nations or its affiliated agencies).
    Referral or refer for includes the provision of information in oral, 
written,

[[Page 554]]

or electronic form (including names, addresses, phone numbers, email or 
web addresses, directions, instructions, descriptions, or other 
information resources), where the purpose or reasonably foreseeable 
outcome of provision of the information is to assist a person in 
receiving funding or financing for, training in, obtaining, or 
performing a particular health care service, program, activity, or 
procedure.
    State includes, in addition to the several States, the District of 
Columbia. For those provisions related to or relying upon the Public 
Health Service Act, the term ``State'' includes the several States, the 
District of Columbia, the Commonwealth of Puerto Rico, Guam, the 
Northern Mariana Islands, the U.S. Virgin Islands, American Samoa, and 
the Trust Territory of the Pacific Islands. For those provisions related 
to or relying upon the Social Security Act, such as Medicaid or the 
Children's Health Insurance Program, the term ``State'' shall be defined 
in accordance with the definition of ``State'' found at 42 U.S.C. 1301.
    Sub-recipient means any State, political subdivision of any State, 
instrumentality of any State or political subdivision thereof, or any 
person or any public or private agency, institution, organization, or 
other entity in any State, including any successor, assign, or 
transferee thereof, to whom there is a pass-through of Federal financial 
assistance or Federal funds from the Department through a recipient or 
another sub-recipient, but such term does not include any ultimate 
beneficiary. The term may include a foreign government, foreign 
nongovernmental organization, or intergovernmental organization (such as 
the United Nations or its affiliated agencies).
    Workforce means employees, volunteers, trainees, contractors, and 
other persons whose conduct, in the performance of work for an entity or 
health care entity, is under the direct control of such entity or health 
care entity, whether or not they are paid by the entity or health care 
entity, as well as health care providers holding privileges with the 
entity or health care entity.



Sec.  88.3  Applicable requirements and prohibitions.

    (a) The Church Amendments, 42 U.S.C. 300a-7--(1) Applicability. (i) 
The Department is required to comply with paragraphs (a)(2)(i) through 
(vii) of this section and Sec.  88.6 of this part.
    (ii) Any State or local government or subdivision thereof and any 
other public entity is required to comply with paragraphs (a)(2)(i) 
through (iii) of this section.
    (iii) Any entity that receives a grant, contract, loan, or loan 
guarantee under the Public Health Service Act (42 U.S.C. 201 et seq.) 
after June 18, 1973, is required to comply with paragraph (a)(2)(iv) of 
this section and Sec. Sec.  88.4 and 88.6 of this part.
    (iv) Any entity that receives a grant or contract for biomedical or 
behavioral research under any program administered by the Secretary of 
Health and Human Services after July 12, 1974, is required to comply 
with paragraph (a)(2)(v) of this section and Sec. Sec.  88.4 and 88.6 of 
this part.
    (v) The Department and any entity that receives funds for any health 
service program or research activity under any program administered by 
the Secretary of Health and Human Services is required to comply with 
paragraph (a)(2)(vi) of this section and Sec. Sec.  88.4 and 88.6 of 
this part.
    (vi) Any entity that receives, after September 29, 1979, any grant, 
contract, loan, loan guarantee, or interest subsidy under the Public 
Health Service Act or the Developmental Disabilities Assistance and Bill 
of Rights Act of 2000 [42 U.S.C. 15001 et seq.] is required to comply 
with paragraph (a)(2)(vii) of this section and Sec. Sec.  88.4 and 88.6 
of this part.
    (2) Requirements and prohibitions. (i) Pursuant to 42 U.S.C. 300a-
7(b)(1), the receipt of a grant, contract, loan, or loan guarantee under 
the Public Health Service Act by any individual does not authorize 
entities to which this paragraph (a)(2)(i) applies to require such 
individual to perform or assist in the performance of any sterilization 
procedure or abortion if his performance or assistance in the 
performance of such procedure or abortion would be contrary to his 
religious beliefs or moral convictions.

[[Page 555]]

    (ii) Pursuant to 42 U.S.C. 300a-7(b)(2)(A), the receipt of a grant, 
contract, loan, or loan guarantee under the Public Health Service Act by 
any recipient does not authorize entities to which this paragraph 
(a)(2)(ii) applies to require such recipient to make its facilities 
available for the performance of any sterilization procedure or abortion 
if the performance of such procedure or abortion in such facilities is 
prohibited by the recipient on the basis of religious beliefs or moral 
convictions.
    (iii) Pursuant to 42 U.S.C. 300a-7(b)(2)(B), the receipt of a grant, 
contract, loan, or loan guarantee under the Public Health Service Act by 
any recipient does not authorize entities to which this paragraph 
(a)(2)(iii) applies to require such recipient to provide personnel for 
the performance or assistance in the performance of any sterilization 
procedure or abortion if the performance or assistance in the 
performance of such procedure or abortion by such personnel would be 
contrary to the religious beliefs or moral convictions of such 
personnel.
    (iv) Pursuant to 42 U.S.C. 300a-7(c)(1), entities to which this 
paragraph (a)(2)(iv) applies shall not discriminate against any 
physician or other health care personnel in employment, promotion, 
termination of employment, or extension of staff or other privileges 
because such physician or other health care personnel performed or 
assisted in the performance of a lawful sterilization procedure or 
abortion, because he refused to perform or assist in the performance of 
a lawful sterilization procedure or abortion on the grounds that his 
performance or assistance in the performance of such procedure or 
abortion would be contrary to his religious beliefs or moral 
convictions, or because of his religious beliefs or moral convictions 
respecting sterilization procedures or abortions.
    (v) Pursuant to 42 U.S.C. 300a-7(c)(2), entities to which this 
paragraph (a)(2)(v) applies shall not discriminate against any physician 
or other health care personnel in employment, promotion, termination of 
employment, or extension of staff or other privileges because such 
physician or other health care personnel performed or assisted in the 
performance of any lawful health service or research activity, because 
he refused to perform or assist in the performance of any such service 
or activity on the grounds that his performance or assistance in the 
performance of such service or activity would be contrary to his 
religious beliefs or moral convictions, or because of his religious 
beliefs or moral convictions respecting any such service or activity.
    (vi) Pursuant to 42 U.S.C. 300a-7(d), entities to which this 
paragraph (a)(2)(vi) applies shall not require any individual to perform 
or assist in the performance of any part of a health service program or 
research activity funded in whole or in part under a program 
administered by the Secretary of Health and Human Services if the 
individual's performance or assistance in the performance of such part 
of such program or activity would be contrary to his religious beliefs 
or moral convictions.
    (vii) Pursuant to 42 U.S.C. 300a-7(e), entities to which this 
paragraph (a)(2)(vii) applies shall not deny admission to or otherwise 
discriminate against any applicant (including applicants for internships 
and residencies) for training or study because of the applicant's 
reluctance or willingness to counsel, suggest, recommend, assist, or in 
any way participate in the performance of abortions or sterilizations 
contrary to, or consistent with, the applicant's religious beliefs or 
moral convictions.
    (b) The Coats-Snowe Amendment (Section 245 of the Public Health 
Service Act), 42 U.S.C. 238n--(1) Applicability. (i) The Department is 
required to comply with paragraphs (b)(2)(i) through (ii) of this 
section and Sec.  88.6 of this part.
    (ii) Any State or local government or subdivision thereof that 
receives Federal financial assistance, including Federal payments 
provided as reimbursement for carrying out health-related activities, is 
required to comply with paragraphs (b)(2)(i) through (ii) of this 
section and Sec. Sec.  88.4 and 88.6 of this part.
    (2) Requirements and prohibitions. (i) Pursuant to 42 U.S.C. 
238n(a)(1), (2), and (3), entities to which this paragraph (b)(2)(i) 
applies shall not subject any

[[Page 556]]

health care entity to discrimination on the basis that the health care 
entity--
    (A) Refuses to undergo training in the performance of induced 
abortions, to require or provide such training, to perform such 
abortions, or to provide referrals for such training or such abortions;
    (B) Refuses to make arrangements for any of the activities specified 
in (b)(2)(i)(A); or
    (C) Attends or attended a post-graduate physician training program 
or any other program of training in the health professions that does not 
or did not perform induced abortions or require, provide, or refer for 
training in the performance of induced abortions, or make arrangements 
for the provision of such training.
    (ii) Pursuant to 42 U.S.C. 238n(b), entities to which this paragraph 
(b)(2)(ii) applies shall not, for the purposes of granting a legal 
status to a health care entity (including a license or certificate), or 
providing such entity with financial assistance, services, or benefits, 
fail to deem accredited any postgraduate physician training program that 
would be accredited but for the accrediting agency's reliance upon 
accreditation standards that require an entity to perform an induced 
abortion or that require an entity to require, provide, or refer for 
training in the performance of induced abortions or make arrangements 
for such training, regardless of whether such standards provide 
exceptions or exemptions. Entities to which this paragraph (b)(2)(ii) 
applies and which are involved in such matters shall formulate such 
regulations or other mechanisms, or enter into such agreements with 
accrediting agencies, as are necessary to comply with this paragraph.
    (c) Weldon Amendment (See, e.g., Pub. L. 115-245, Div. B, sec. 
507(d))--(1) Applicability. (i) The Department and its programs, while 
operating under an appropriations act that contains the Weldon 
Amendment, are required to comply with paragraph (c)(2) of this section 
and Sec.  88.6 of this part.
    (ii) Any State or local government that receives funds under an 
appropriations act for the Department that contains the Weldon Amendment 
is required to comply with paragraph (c)(2) of this section and 
Sec. Sec.  88.4 and 88.6 of this part.
    (2) Prohibition. The entities to which this paragraph (c)(2) applies 
shall not subject any institutional or individual health care entity to 
discrimination on the basis that the health care entity does not 
provide, pay for, provide coverage of, or refer for, abortion.
    (d) Medicare Advantage (See, e.g., Pub. L. 115-245, Div. B, sec. 
209)--(1) Applicability. The Department, while operating under an 
appropriations act that contains a provision with respect to the 
Medicare Advantage program as set forth by Public Law 115-245, Div. B, 
sec. 209, is required to comply with paragraph (d)(2) of this section 
and Sec.  88.6 of this part.
    (2) Prohibition. The entities to which this paragraph (d)(2) applies 
shall not deny participation in the Medicare Advantage program to an 
otherwise eligible entity (including a Provider Sponsored Organization) 
because that entity informs the Secretary that it will not provide, pay 
for, provide coverage of, or provide referrals for abortions.
    (e) Section 1553 of the Affordable Care Act, 42 U.S.C. 18113--(1) 
Applicability. (i) The Department is required to comply with paragraph 
(e)(2) of this section and Sec.  88.6 of this part.
    (ii) Any State or local government that receives Federal financial 
assistance under the Patient Protection and Affordable Care Act (or 
under an amendment made by the Patient Protection and Affordable Care 
Act) is required to comply with paragraph (e)(2) of this section and 
Sec. Sec.  88.4 and 88.6 of this part.
    (iii) Any health care provider that receives Federal financial 
assistance under the Patient Protection and Affordable Care Act (or 
under an amendment made by the Patient Protection and Affordable Care 
Act) is required to comply with paragraph (e)(2) of this section and 
Sec. Sec.  88.4 and 88.6 of this part.
    (iv) Any health plan created under the Patient Protection and 
Affordable Care Act (or under an amendment made by the Patient 
Protection and Affordable Care Act) is required to comply with paragraph 
(e)(2) of this section and Sec. Sec.  88.4 and 88.6 of this part.
    (2) Prohibition. The entities to which this paragraph (e)(2) applies 
shall not

[[Page 557]]

subject an individual or institutional health care entity to 
discrimination on the basis that the entity does not provide any health 
care item or service furnished for the purpose of causing, or for the 
purpose of assisting in causing, the death of any individual, such as by 
assisted suicide, euthanasia, or mercy killing. Nothing in this 
paragraph shall be construed to apply to, or to affect, any limitation 
relating to:
    (i) The withholding or withdrawing of medical treatment or medical 
care;
    (ii) The withholding or withdrawing of nutrition or hydration;
    (iii) Abortion; or
    (iv) The use of an item, good, benefit, or service furnished for the 
purpose of alleviating pain or discomfort, even if such use may increase 
the risk of death, so long as such item, good, benefit, or service is 
not also furnished for the purpose of causing, or the purpose of 
assisting in causing, death, for any reason.
    (f) Section 1303 of the Affordable Care Act, 42 U.S.C. 18023--(1) 
Applicability. (i) The Department is required to comply with paragraph 
(f)(2)(i) of this section and Sec.  88.6 of this part.
    (ii) Qualified health plans, as defined under 42 U.S.C. 18021, 
offered through any Exchange created under the Patient Protection and 
Affordable Care Act, are required to comply with paragraphs (f)(2)(i) 
and (ii) of this section and Sec. Sec.  88.4 and 88.6 of this part.
    (2) Requirements and prohibitions. (i) Pursuant to 42 U.S.C. 
18023(b)(1)(A)(i), entities to which this paragraph (f)(2)(i) applies 
shall not construe anything in Title I of the Patient Protection and 
Affordable Care Act (or any amendment made by Title I of the Patient 
Protection and Affordable Care Act) to require a qualified health plan 
to provide coverage of abortion or abortion-related services as 
described in 42 U.S.C. 18023(b)(1)(B)(i) or (ii) as part of its 
essential health benefits for any plan year.
    (ii) Pursuant to 42 U.S.C. 18023(b)(4), entities to which this 
paragraph (f)(2)(ii) applies shall not discriminate against any 
individual health care provider or health care facility because of its 
unwillingness to provide, pay for, provide coverage of, or refer for 
abortions.
    (g) Section 1411 of the Affordable Care Act, 42 U.S.C. 18081--(1) 
Applicability. The Department shall comply with paragraph (g)(2) of this 
section and Sec.  88.6 of this part.
    (2) Requirement. The Department shall provide a certification 
documenting a religious exemption from the individual responsibility 
requirement and penalty under the Patient Protection and Affordable Care 
Act and shall coordinate with State Health Benefit Exchanges in the 
implementing of the certification requirements of 42 U.S.C. 
18031(d)(4)(H)(ii) where applicable to:
    (i) Any applicant for such a certificate for any month who provides 
information demonstrating that the applicant:
    (A) Is an adherent of religious tenets or teachings by reason of 
which he is conscientiously opposed to acceptance of the benefits of any 
private or public insurance which makes payments in the event of death, 
disability, old-age, or retirement or makes payments toward the cost of, 
or provides services for, medical care (including the benefits of any 
insurance system established by the Social Security Act), or
    (B) Is an adherent of religious tenets or teachings that are not 
described in paragraph (g)(2)(i)(A) of this section, who relies solely 
on a religious method of healing, and for whom the acceptance of medical 
health services would be inconsistent with the religious beliefs of the 
individual, and the application for the certificate includes an 
attestation that the individual has not received medical health services 
during the preceding taxable year.
    (1) For purposes of this paragraph (g)(2)(i)(B), ``medical health 
services'' does not include routine dental, vision and hearing services, 
midwifery services, vaccinations, necessary medical services provided to 
children, services required by law or by a third party, and such other 
services as the Secretary may provide in implementing section 
1311(d)(4)(H) of the Patient Protection and Affordable Care Act; and
    (2) [Reserved]
    (ii) Any applicant for such a certificate for any month who provides 
information demonstrating that the applicant is a member of a ``health 
care

[[Page 558]]

sharing ministry,'' as defined in 26 U.S.C. 5000A(d)(2)(B)(ii), for the 
month.
    (h) Counseling and referral provisions of 42 U.S.C. 1395w-
22(j)(3)(B) and 1396u-2(b)(3)(B))--(1) Applicability. (i) The Department 
is required to comply with paragraphs (h)(2)(i) and (ii) of this section 
and Sec.  88.6 of this part.
    (ii) Any State agency that administers a Medicaid program is 
required to comply with paragraph (h)(2)(ii) of this section and 
Sec. Sec.  88.4 and 88.6 of this part.
    (2) Requirements and prohibitions. (i) Pursuant to 42 U.S.C. 1395w-
22(j)(3)(B), entities to which this paragraph (h)(2)(i) applies shall 
not construe 42 U.S.C. 1395w-22(j)(3)(A) or 42 CFR 422.206(a) to require 
a Medicare Advantage organization to provide, reimburse for, or provide 
coverage of, a counseling or referral service if the organization 
offering the plan:
    (A) Objects to the provision of such service on moral or religious 
grounds, and
    (B) In the manner and through the written instrumentalities such 
organization deems appropriate, makes available information on its 
policies regarding such service to prospective enrollees before or 
during enrollment and to enrollees within 90 days after the date that 
the organization adopts a change in policy regarding such a counseling 
or referral service.
    (ii) Pursuant to 42 U.S.C. 1396u-2(b)(3)(B), entities to which this 
paragraph (h)(2)(ii) applies shall not construe 42 U.S.C. 1396u-
2(b)(3)(A) or 42 CFR 438.102(a)(1) to require a Medicaid managed care 
organization to provide, reimburse for, or provide coverage of, a 
counseling or referral service if the organization:
    (A) Objects to the provision of such service on moral or religious 
grounds, and
    (B) In the manner and through the written instrumentalities such 
organization deems appropriate, makes available information on its 
policies regarding such service to prospective enrollees before or 
during enrollment and to enrollees within 90 days after the date that 
the organization adopts a change in policy regarding such a counseling 
or referral service.
    (i) Advance Directives, 42 U.S.C. 1395cc(f), 1396a(w)(3), and 
14406--(1) Applicability. (i) The Department is required to comply with 
paragraph (i)(2) of this section and Sec.  88.6 of this part with 
respect to the Medicare and Medicaid programs.
    (ii) Any State agency that administers a Medicaid program is 
required to comply with paragraph (i)(2) of this section and Sec. Sec.  
88.4 and 88.6 of this part with respect to its Medicaid program.
    (2) Prohibitions. The entities to which this paragraph (i)(2) 
applies shall not:
    (i) Construe 42 U.S.C. 1395cc(f) or 1396a(w)(3) to require any 
provider or organization, or any employee of such a provider or 
organization, to inform or counsel any individual regarding any right to 
obtain an item or service furnished for the purpose of causing, or the 
purpose of assisting in causing, the death of the individual, such as by 
assisted suicide, euthanasia, or mercy killing; or to apply to or affect 
any requirement with respect to a portion of an advance directive that 
directs the purposeful causing of, or the purposeful assisting in 
causing, the death of any individual, such as by assisted suicide, 
euthanasia, or mercy killing; or
    (ii) Construe 42 U.S.C. 1396a to prohibit the application of a State 
law which allows for an objection on the basis of conscience for any 
health care provider or any agent of such provider which as a matter of 
conscience cannot implement an advance directive.
    (j) Global Health Programs, 22 U.S.C. 7631(d)--(1) Applicability. 
(i) The Department is required to comply with paragraph (j)(2) of this 
section and Sec.  88.6 of this part.
    (ii) Any entity that is authorized by statute, regulation, or 
agreement to obligate Federal financial assistance under section 104A of 
the Foreign Assistance Act of 1961 (22 U.S.C. 2151b-2), under Chapter 83 
of Title 22 of the U.S. Code or under the Tom Lantos and Henry J. Hyde 
United States Global Leadership Against HIV/AIDS, Tuberculosis, and 
Malaria Reauthorization Act of 2008, to the extent such Federal 
financial assistance is administered by the Secretary, is required to 
comply with paragraph (j)(2) of this section and Sec. Sec.  88.4 and 
88.6 of this part.

[[Page 559]]

    (2) Prohibitions. The entities to which this paragraph (j)(2) 
applies shall not:
    (i) Require an organization, including a faith-based organization, 
that is otherwise eligible to receive assistance under section 104A of 
the Foreign Assistance Act of 1961 (22 U.S.C. 2151b-2), under Chapter 83 
of Title 22 of the U.S. Code, or under the Tom Lantos and Henry J. Hyde 
United States Global Leadership Against HIV/AIDS, Tuberculosis, and 
Malaria Reauthorization Act of 2008, to the extent such assistance is 
administered by the Secretary, for HIV/AIDS prevention, treatment, or 
care to, as a condition of such assistance:
    (A) Endorse or utilize a multisectoral or comprehensive approach to 
combating HIV/AIDS; or
    (B) Endorse, utilize, make a referral to, become integrated with, or 
otherwise participate in any program or activity to which the 
organization has a religious or moral objection.
    (ii) Discriminate against an organization, including a faith-based 
organization, that is otherwise eligible to receive assistance under 
section 104A of the Foreign Assistance Act of 1961 (22 U.S.C. 2151b-2), 
under Chapter 83 of Title 22 of the U.S. Code, or under the Tom Lantos 
and Henry J. Hyde United States Global Leadership Against HIV/AIDS, 
Tuberculosis, and Malaria Reauthorization Act of 2008, to the extent 
such assistance is administered by the Secretary, for HIV/AIDS 
prevention, treatment, or care, in the solicitation or issuance of 
grants, contracts, or cooperative agreements under such provisions of 
law for refusing to meet any requirement described in paragraph 
(j)(2)(i) of this section.
    (k) The Helms, Biden, 1978, and 1985 Amendments, 22 U.S.C. 2151b(f); 
see, e.g., Consolidated Appropriations Act, 2019, Public Law 116-6, Div. 
F, sec. 7018--(1) Applicability. (i) The Department is required to 
comply with paragraph (k)(2)(i) of this section and Sec.  88.6 of this 
part.
    (ii) Any entity that is authorized by statute, regulation, or 
agreement to obligate or expend Federal financial assistance under part 
I of the Foreign Assistance Act of 1961, as amended (22 U.S.C. 2151b-2), 
to the extent administered by the Secretary, is required to comply with 
paragraph (k)(2)(i) of this section and Sec. Sec.  88.4 and 88.6 of this 
part.
    (iii) Any entity that receives Federal financial assistance under 
part I of the Foreign Assistance Act of 1961, as amended (22 U.S.C. 
2151b-2), to the extent administered by the Secretary, is required to 
comply with paragraph (k)(2)(ii) of this section and Sec. Sec.  88.4 and 
88.6 of this part.
    (2) Prohibitions. (i) The entities to which this paragraph (k)(2)(i) 
applies shall not:
    (A) Permit Federal financial assistance identified in paragraph 
(k)(1)(ii) of this section to be used in a manner that would violate 
provisions in paragraphs (k)(2)(ii)(A)(1) through (5) of this section 
related to abortions and involuntary sterilizations.
    (B) Obligate or expend Federal financial assistance under an 
appropriations act that contains the 1985 Amendment and identified in 
paragraph (k)(1)(ii) of this section for any country or organization if 
the President certifies that the use of these funds by any such country 
or organization would violate provisions in paragraphs (k)(2)(ii)(A)(1) 
through (5) of this section related to abortions and involuntary 
sterilizations.
    (ii) The entities to which this paragraph (k)(2)(ii) applies shall 
not:
    (A) Use such Federal financial assistance identified in paragraph 
(k)(1)(iii) of this section to:
    (1) Pay for the performance of abortions as a method of family 
planning;
    (2) Motivate or coerce any person to practice abortions;
    (3) Pay for the performance of involuntary sterilizations as a 
method of family planning;
    (4) Coerce or provide any financial incentive to any person to 
undergo sterilizations; or
    (5) Pay for any biomedical research that relates in whole or in 
part, to methods of, or the performance of, abortions or involuntary 
sterilization as a means of family planning.
    (B) Obligate or expend Federal financial assistance under an 
appropriations act that contains the 1985 Amendment and identified in 
paragraph (k)(1)(iii) of this section for any country or organization if 
the President certifies that the use of these funds by any such

[[Page 560]]

country or organization would violate provisions in paragraphs 
(k)(2)(ii)(A)(1) through (5) of this section related to abortions and 
involuntary sterilizations.
    (l) Newborn and Infant Hearing Loss Screening, 42 U.S.C. 280g-1(d)--
(1) Applicability. The Department is required to comply with paragraph 
(l)(2) of this section and Sec.  88.6 of this part.
    (2) Requirement. The Department shall not construe 42 U.S.C. 280g-1 
to preempt or prohibit any State law that does not require the screening 
for hearing loss of children of parents who object to the screening on 
the grounds that it conflicts with the parents' religious beliefs.
    (m) Medical Screening, Examination, Diagnosis, Treatment, or Other 
Health Care or Services, 42 U.S.C. 1396f--(1) Applicability. The 
Department is required to comply with paragraph (m)(2) of this section 
and Sec.  88.6 of this part.
    (2) Requirements and prohibitions. The Department shall not construe 
anything in 42 U.S.C. 1396 et seq. to require a State agency that 
administers a State Medicaid Plan to compel any person to undergo any 
medical screening, examination, diagnosis, or treatment or to accept any 
other health care or services provided under such plan for any purpose 
(other than for the purpose of discovering and preventing the spread of 
infection or contagious disease or for the purpose of protecting 
environmental health), if such person objects (or, in case such person 
is a child, his parent or guardian objects) thereto on religious 
grounds.
    (n) Occupational Illness Examinations and Tests, 29 U.S.C. 
669(a)(5)--(1) Applicability. (i) The Department is required to comply 
with paragraph (n)(2) of this section and Sec.  88.6 of this part.
    (ii) Any recipient of grants or contracts under 29 U.S.C. 669, to 
the extent administered by the Secretary, is required to comply with 
paragraph (n)(2) of this section and Sec. Sec.  88.4 and 88.6 of this 
part.
    (2) Requirements. Entities to which this paragraph (n)(2) applies 
shall not deem any provision of 29 U.S.C. 651 et seq. to authorize or 
require medical examination, immunization, or treatment, as provided 
under 29 U.S.C. 669, for those who object thereto on religious grounds, 
except where such is necessary for the protection of the health or 
safety of others.
    (o) Vaccination, 42 U.S.C. 1396s(c)(2)(B)(ii)--(1) Applicability. 
(i) The Department is required to comply with paragraph (o)(2) of this 
section and Sec.  88.6 of this part.
    (ii) Any State agency that administers a pediatric vaccine 
distribution program under 42 U.S.C. 1396s is required to comply with 
paragraph (o)(2) of this section and Sec. Sec.  88.4 and 88.6 of this 
part.
    (2) Requirement. The entities to which this paragraph (o)(2) applies 
shall ensure that, under any State-administered pediatric vaccine 
distribution program under 42 U.S.C. 1396s, the provider agreement 
executed by any program-registered provider, as defined under 42 U.S.C. 
1396s(c)(1), includes the requirement that the program-registered 
provider will provide pediatric vaccines in compliance with all 
applicable State law relating to any religious or other exemption. Such 
State law may include State statutory, regulatory, or constitutional 
protections for conscience and religious freedom, where applicable.
    (p) Specific Assessment, Prevention and Treatment Services, 42 
U.S.C. 290bb-36(f), 5106i(a)--(1) Applicability. (i) The Department is 
required to comply with paragraphs (p)(2)(i) through (iii) of this 
section and Sec.  88.6 of this part.
    (ii) Any State, political subdivision, public organization, private 
nonprofit organization, institution of higher education, or tribal 
organization actively involved with the State-sponsored statewide or 
tribal youth suicide early intervention and prevention strategy, 
designated by a State to develop or direct the State-sponsored Statewide 
youth suicide early intervention and prevention strategy under 42 U.S.C. 
290bb-36 and that receives a grant or cooperative agreement thereunder, 
is required to comply with paragraph (p)(2)(iii) of this section and 
Sec. Sec.  88.4 and 88.6 of this part.
    (iii) Any federally recognized Indian tribe or tribal organization 
(as defined in the Indian Self-Determination and Education Assistance 
Act (25 U.S.C.

[[Page 561]]

5301 et seq.)) or an urban Indian organization (as defined in the Indian 
Health Care Improvement Act (25 U.S.C. 1601 et seq.)) that is actively 
involved in the development and continuation of a tribal youth suicide 
early intervention and prevention strategy under 42 U.S.C. 290bb-36 and 
that receives a grant or cooperative agreement thereunder is required to 
comply with paragraph (p)(2)(iii) of this section.
    (iv) Any entity that receives funds under 42 U.S.C. chapter 67, 
subchapters I or III is required to comply with paragraphs (p)(2)(i) and 
(ii) of this section and Sec. Sec.  88.4 and 88.6 of this part.
    (2) Requirements and prohibitions. (i) Entities to which this 
paragraph (p)(2)(i) applies shall not construe the receipt of funds 
under or anything in 42 U.S.C. chapter 67, subchapters I or III as 
establishing any Federal requirement that a parent or legal guardian 
provide a child any medical service or treatment against the religious 
beliefs of the parent or legal guardian.
    (ii) Entities to which this paragraph (p)(2)(ii) applies shall not 
construe the receipt of funds under or anything in 42 U.S.C. chapter 67, 
subchapters I or III as requiring a State to find, or prohibiting a 
State from finding, child abuse or neglect in cases in which a parent or 
legal guardian relies solely or partially upon spiritual means rather 
than medical treatment, in accordance with the religious beliefs of the 
parent or legal guardian.
    (iii) Entities to which this paragraph (p)(2)(iii) applies shall not 
construe anything in 42 U.S.C. 290bb-36 to require suicide assessment, 
early intervention, or treatment services for youth whose parents or 
legal guardians object based on the parents' or legal guardians' 
religious beliefs or moral objections.
    (q) Religious nonmedical health care, 42 U.S.C. 1320a-1(h), 1320c-
11, 1395i-5, 1395x(e), 1395x(y)(1), 1396a(a), and 1397j-1(b)--(1) 
Applicability. (i) The Department is required to comply with paragraphs 
(q)(2)(i) through (iv) of this section and Sec.  88.6 of this part.
    (ii) Any State agency that makes an agreement with the Secretary 
pursuant to 42 U.S.C. 1320a-1(b) is required to comply with paragraph 
(q)(2)(i) of this section and Sec. Sec.  88.4 and 88.6 of this part.
    (iii) Any entity receiving Federal financial assistance from 
participating in Medicare is required to comply with paragraphs 
(q)(2)(ii) of this section and Sec. Sec.  88.4 and 88.6 of this part.
    (iv) Any entity, including a State, receiving Federal financial 
assistance from participating in Medicaid, including any entity 
receiving Federal financial assistance through CHIP that is used to 
expand Medicaid, is required to comply with paragraphs (q)(2)(iii) of 
this section and Sec. Sec.  88.4 and 88.6 of this part.
    (v) Any entity, including a State or local government or subdivision 
thereof, receiving Federal financial assistance under subtitle B of 
Title XX of the Social Security Act (42 U.S.C. 1397j-1397m-5) is 
required to comply with paragraph (q)(2)(iv) of this section and 
Sec. Sec.  88.4 and 88.6 of this part.
    (2) Requirements and prohibitions. (i) The entities to which this 
paragraph (q)(2)(i) applies shall not apply the provisions of 42 U.S.C. 
1320a-1 to a religious nonmedical health care institution as defined in 
42 U.S.C. 1395x(ss)(1).
    (ii) With respect to a religious nonmedical health care institution 
as defined in 42 U.S.C. 1395x(ss)(1), the entities to which this 
paragraph (q)(2)(ii) applies shall not:
    (A) Fail or refuse to make a payment under part A of subchapter 
XVIII of chapter 7 of Title 42 of the U.S. Code for inpatient hospital 
services, post-hospital extended care services, or home health services 
furnished to an individual by a religious nonmedical health care 
institution that is a hospital as defined in 42 U.S.C. 1395x(e), a 
skilled nursing facility as defined in 42 U.S.C. 1395x(y), or a home 
health agency as defined in 42 U.S.C. 1395x(aaa), respectively, if the 
condition under 42 U.S.C. 1395i-5(a)(2) is satisfied and an individual 
makes an election pursuant to 1395i-5(b) that:
    (1) Such individual is conscientiously opposed to acceptance of 
medical care or treatment other than medical care or treatment 
(including medical and other health services) that is:
    (i) Received involuntarily, or
    (ii) Required under Federal or State law or law of a political 
subdivision of a State; and

[[Page 562]]

    (2) Acceptance of such medical treatment would be inconsistent with 
such individual's sincere religious beliefs, or
    (B) In administering 42 U.S.C. 1395i-5 or 1395x(ss)(1):
    (1) Require any patient of a religious nonmedical health care 
institution to undergo medical screening, examination, diagnosis, 
prognosis, or treatment or to accept any other medical health care 
service, if such patient (or legal representative of the patient) 
objects to such service on religious grounds, or
    (2) Subject a religious nonmedical health care institution or its 
personnel to any medical supervision, regulation, or control, insofar as 
such supervision, regulation, or control would be contrary to the 
religious beliefs observed by the institution or such personnel, or
    (C) Subject religious nonmedical health care institution to the 
provisions of part B of subchapter XI of Chapter 7 of Title 42 of the 
U.S. Code.
    (iii) Pursuant to 42 U.S.C. 1396a(a), the entities to which this 
paragraph (q)(2)(iii) applies shall not fail or refuse to exempt a 
religious nonmedical health care institution from the Medicaid 
requirements to:
    (A) Meet State standards described in 42 U.S.C. 1396a(a)(9)(A);
    (B) Be evaluated under 42 U.S.C. 1396a(a)(33), on the 
appropriateness and quality of care and services;
    (C) Undergo a regular program, under 42 U.S.C. 1396(a)(31), of 
independent professional review, including medical evaluation, of 
services in an intermediate care facility for persons with mental 
disabilities; and
    (D) Meet the requirements of 42 U.S.C. 1396(b)(i)(4) to establish a 
utilization review plan consistent with, or superior to, the utilization 
review plan criteria under 42 U.S.C. 1395x(k) for Medicare.
    (iv) Pursuant to 42 U.S.C. 1397j-1(b), the entities to which this 
paragraph (q)(2)(iv) applies shall not construe subtitle B of Title XX 
of the Social Security Act (42 U.S.C. 1397j-1397m-5) to interfere with 
or abridge an elder's right to practice his or her religion through 
reliance on prayer alone for healing when this choice:
    (A) Is contemporaneously expressed, either orally or in writing, 
with respect to a specific illness or injury which the elder has at the 
time of the decision by an elder who is competent at the time of the 
decision;
    (B) Is previously set forth in a living will, health care proxy, or 
other advance directive document that is validly executed and applied 
under State law; or
    (C) May be unambiguously deduced from the elder's life history.



Sec.  88.4  Assurance and certification of compliance requirements.

    (a) In general--(1) Assurance. Except for an application or 
recipient to which paragraph (c) of this section applies, every 
application for Federal financial assistance or Federal funds from the 
Department to which Sec.  88.3 of this part applies shall, as a 
condition of the approval, renewal, or extension of any Federal 
financial assistance or Federal funds from the Department pursuant to 
the application, provide, contain, or be accompanied by an assurance 
that the applicant or recipient will comply with applicable Federal 
conscience and anti-discrimination laws and this part.
    (2) Certification. Except for an application or recipient to which 
paragraph (c) of this section applies, every application for Federal 
financial assistance or Federal funds from the Department to which Sec.  
88.3 of this part applies, shall, as a condition of the approval, 
renewal, or extension of any Federal financial assistance or Federal 
funds from the Department pursuant to the application, provide, contain, 
or be accompanied by, a certification that the applicant or recipient 
will comply with applicable Federal conscience and anti-discrimination 
laws and this part.
    (b) Specific requirements--(1) Timing. Entities who are already 
recipients as of the effective date of this part or any applicants shall 
submit the assurance required in paragraph (a)(1) of this section and 
the certification required in paragraph (a)(2) of this section as a 
condition of any application or reapplication for funds to which this 
part applies, through any instrument or as a condition of an amendment 
or modification of the instrument that extends the term of such 
instrument or adds additional funds to it. Submission may be required 
more frequently if:

[[Page 563]]

    (i) The applicant or recipient fails to meet a requirement of this 
part, or
    (ii) OCR or the relevant Department component has reason to suspect 
or cause to investigate the possibility of such failure.
    (2) Form and manner. Applicants or recipients shall submit the 
assurance required in paragraph (a)(1) of this section and the 
certification required in paragraph (a)(2) of this section in the form 
and manner that OCR, in coordination with the relevant Department 
component, specifies, or shall submit them in a separate writing signed 
by the applicant's or recipient's officer or other person authorized to 
bind the applicant or recipient.
    (3) Duration of obligation. The assurance required in paragraph 
(a)(1) of this section and the certification required in paragraph 
(a)(2) of this section will obligate the recipient for the period during 
which the Department extends Federal financial assistance or Federal 
funds from the Department to a recipient.
    (4) Compliance requirement. Submission of an assurance or 
certification required under this section will not relieve a recipient 
of the obligation to take and complete any action necessary to come into 
compliance with Federal conscience and anti-discrimination laws and this 
part prior to, at the time of, or subsequent to, the submission of such 
assurance or certification.
    (5) Condition of continued receipt. Provision of a compliant 
assurance and certification shall constitute a condition of continued 
receipt of Federal financial assistance or Federal funds from the 
Department and is binding upon the applicant or recipient, its 
successors, assigns, or transferees for the period during which such 
Federal financial assistance or Federal funds from the Department are 
provided.
    (6) Assurances and certifications in applications. An applicant or 
recipient may incorporate the assurances and certifications by reference 
in subsequent applications to the Department or Department component if 
prior assurances or certifications are initially provided in the same 
fiscal or calendar year, as applicable.
    (7) Enforcement of assurances and certifications. The Department, 
Department components, and OCR shall have the right to seek enforcement 
of the assurances and certifications required in this section.
    (8) Remedies for failure to make assurances and certifications. If 
an applicant or recipient fails or refuses to furnish an assurance or 
certification required under this section, OCR, in coordination with the 
relevant Department component, may effect compliance by any of the 
mechanisms provided in Sec.  88.7.
    (c) Exceptions. The following persons or entities shall not be 
required to comply with paragraphs (a)(1) and (2) of this section, 
provided that such persons or entities are not recipients of Federal 
financial assistance or other Federal funds from the Department through 
another instrument, program, or mechanism, other than those set forth in 
paragraphs (c)(1) through (4) of this section:
    (1) A physician, as defined in 42 U.S.C. 1395x(r), physician office, 
pharmacist, pharmacy, or other health care practitioner participating in 
Part B of the Medicare program;
    (2) A recipient of Federal financial assistance or other Federal 
funds from the Department awarded under certain grant programs currently 
administered by the Administration for Children and Families, the 
purpose of which is either solely financial assistance unrelated to 
health care or which is otherwise unrelated to health care provision, 
and which, in addition, does not involve--
    (i) Medical or behavioral research;
    (ii) Health care providers; or
    (iii) Any significant likelihood of referral for the provision of 
health care;
    (3) A recipient of Federal financial assistance or other Federal 
funds from the Department awarded under certain grant programs currently 
administered by the Administration on Community Living, the purpose of 
which is either solely financial assistance unrelated to health care or 
which is otherwise unrelated to health care provision, and which, in 
addition, does not involve--
    (i) Medical or behavioral research;
    (ii) Health care providers; or
    (iii) Any significant likelihood of referral for the provision of 
health care.

[[Page 564]]

    (4) Indian Tribes and Tribal Organizations when contracting with the 
Indian Health Service under the Indian Self-Determination and Education 
Assistance Act.



Sec.  88.5  Notice of rights under Federal conscience 
and anti-discrimination laws.

    (a) In general. In investigating a complaint or conducting a 
compliance review, OCR will consider an entity's voluntary posting of a 
notice of nondiscrimination as non-dispositive evidence of compliance 
with the applicable substantive provisions of this part, to the extent 
such notices are provided according to the provisions of this section 
and are relevant to the particular investigation or compliance review.
    (b) Placement of the notice text. In evaluating the Department's or 
a recipient's compliance with this part, OCR will take into account 
whether, as applicable and appropriate, the Department or recipient has 
provided the notice under this section:
    (1) On the Department or recipient's website(s);
    (2) In a prominent and conspicuous physical location in Department 
or recipient establishments where notices to the public and notices to 
its workforce are customarily posted to permit ready observation;
    (3) In a personnel manual or other substantially similar document 
for members of the Department or recipient's workforce;
    (4) In applications to the Department or recipient for inclusion in 
the workforce or for participation in a service, benefit, or other 
program, including for training or study; and
    (5) In any student handbook or other substantially similar document 
for students participating in a program of training or study, including 
for post-graduate interns, residents, and fellows.
    (6) Such that the text of the notice is large and conspicuous enough 
to be read easily and is presented in a format, location, or manner that 
impedes or prevents the notice being altered, defaced, removed, or 
covered by other material.
    (c) Content of the notice text. The recipient and the Department 
should consider using the model text provided in appendix A for the 
notice, but may tailor its notice to address its particular 
circumstances and to more specifically address the laws that apply to it 
under this rule.
    (d) Combined nondiscrimination notices. The Department and each 
recipient may post the notice text provided in appendix A of this part, 
or a notice it drafts itself, along with the content of other notices 
(such as other non-discrimination notices).



Sec.  88.6  Compliance requirements.

    (a) In general. The Department and each recipient has primary 
responsibility to ensure that it is in compliance with Federal 
conscience and anti-discrimination laws and this part, and shall take 
steps to eliminate any violations of the Federal conscience and anti-
discrimination laws and this part. If a sub-recipient is found to have 
violated the Federal conscience and anti-discrimination laws, the 
recipient from whom the sub-recipient received funds may be subject to 
the imposition of funding restrictions or any appropriate remedies 
available under this part, depending on the facts and circumstances.
    (b) Records and information. The Department, each recipient, and 
each sub-recipient shall maintain complete and accurate records 
evidencing compliance with Federal conscience and anti-discrimination 
laws and this part, and afford OCR, upon request, reasonable access to 
such records and information in a timely manner and to the extent OCR 
finds necessary to determine compliance with the Federal conscience and 
anti-discrimination laws and this part. Such records:
    (1) Shall be maintained for a period of three years from the date 
the record was created or obtained by the recipient or sub-recipient;
    (2) Shall contain any information maintained by the recipient or 
sub-recipient that pertains to discrimination on the basis of religious 
belief or moral conviction, including, without limitation, any 
complaints; statements, policies, or notices concerning discrimination 
on the basis of religious belief or

[[Page 565]]

moral conviction; procedures for accommodating employees' or other 
protected individuals' religious beliefs or moral convictions; and 
records of requests for such religious or moral accommodation and the 
recipient or sub-recipient's response to such requests; and
    (3) May be maintained in any form and manner that affords OCR with 
reasonable access to them in a timely manner.
    (c) Cooperation. The Department, each recipient, and each sub-
recipient shall cooperate with any compliance review, investigation, 
interview, or other part of OCR's enforcement process, which may include 
production of documents, participation in interviews, response to data 
requests, and making available of premises for inspection where 
relevant. Failure to cooperate may result in an OCR referral to the 
Department of Justice, in coordination with the Department's Office of 
the General Counsel, for further enforcement in Federal court or 
otherwise. Each recipient or sub-recipient shall permit access by OCR 
during normal business hours to such of its books, records, accounts, 
and other sources of information, as well as its facilities, as may be 
pertinent to ascertain compliance with this part. Asserted 
considerations of privacy or confidentiality may not operate to bar OCR 
from evaluating or seeking to enforce compliance with this part. 
Information of a confidential nature obtained in connection with 
compliance reviews, investigations, or other enforcement activities 
shall not be disclosed except as required in formal enforcement 
proceedings or as otherwise required by law.
    (d) Reporting requirement. If a recipient or sub-recipient is 
subject to a determination by OCR of noncompliance with this part, the 
recipient or sub-recipient must, in any application for new or renewed 
Federal financial assistance or Departmental funding in the three years 
following such determination, disclose the existence of the 
determination of noncompliance. This includes a requirement that 
recipients disclose any OCR determinations made against their sub-
recipients.
    (e) Intimidating or retaliatory acts prohibited. Neither the 
Department nor any recipient or sub-recipient shall intimidate, 
threaten, coerce, or discriminate against any entity for the purpose of 
interfering with any right or privilege under the Federal conscience and 
anti-discrimination laws or this part, or because such entity has made a 
complaint or participated in any manner in an investigation or review 
under the Federal conscience and anti-discrimination laws or this part.



Sec.  88.7  Enforcement authority.

    (a) In general. OCR has been delegated the authority to facilitate 
and coordinate the Department's enforcement of the Federal conscience 
and anti-discrimination laws, which includes the authority to:
    (1) Receive and handle complaints;
    (2) Initiate compliance reviews;
    (3) Conduct investigations;
    (4) Coordinate compliance within the Department;
    (5) Seek voluntary resolutions of complaints;
    (6) In coordination with the relevant component or components of the 
Department and the Office of the General Counsel, make enforcement 
referrals to the Department of Justice;
    (7) In coordination with the relevant Departmental funding 
component, utilize existing regulations for involuntary enforcement, 
such as those that apply to grants, contracts, or CMS programs; and
    (8) In coordination with the relevant component or components of the 
Department, coordinate other appropriate remedial action as the 
Department deems necessary and as allowed by law and applicable 
regulation.
    (b) Complaints. Any entity, whether individually, as a member of a 
class, on behalf of others, or on behalf of an entity, may file a 
complaint with OCR alleging any potential violation of Federal 
conscience and anti-discrimination laws or this part. OCR shall 
coordinate handling of complaints with the relevant Department 
component(s). The complaint filer is not required to be the entity whose 
rights under the Federal conscience and anti-discrimination laws or this 
part have been potentially violated.

[[Page 566]]

    (c) Compliance reviews. OCR may conduct compliance reviews or use 
other similar procedures as necessary to permit OCR to investigate and 
review the practices of the Department, Department components, 
recipients, and sub-recipients to determine whether they are complying 
with Federal conscience and anti-discrimination laws and this part. OCR 
may initiate a compliance review of an entity subject to this part based 
on information from a complaint or other source that causes OCR to 
suspect non-compliance by such entity with this part or the laws 
implemented by this part.
    (d) Investigations. OCR shall make a prompt investigation, whenever 
a compliance review, report, complaint, or any other information found 
by OCR indicates a threatened, potential, or actual failure to comply 
with Federal conscience and anti-discrimination laws or this part. The 
investigation should include, where appropriate, a review of the 
pertinent practices, policies, communications, documents, compliance 
history, circumstances under which the possible noncompliance occurred, 
and other factors relevant to determining whether the Department, 
Department component, recipient, or sub-recipient has failed to comply. 
OCR shall use fact-finding methods including site visits; interviews 
with the complainants, Department component, recipients, sub-recipients, 
or third-parties; and written data or discovery requests. OCR may seek 
the assistance of any State agency.
    (e) Failure to respond. Absent good cause, the failure of an entity 
that is subject to this part to respond to a request for information or 
to a data or document request within 45 days of OCR's request shall 
constitute a violation of this part.
    (f) Related administrative or judicial proceeding. Consistent with 
other applicable Federal laws, testimony and other evidence obtained in 
an investigation or compliance review conducted under this part may be 
used by the Department for, and offered into evidence in, any 
administrative or judicial proceeding related to this part.
    (g) Supervision and coordination. If as a result of an 
investigation, compliance review, or other enforcement activity, OCR 
determines that a Department component appears to be in noncompliance 
with its responsibilities under Federal conscience and anti-
discrimination laws or this part, OCR will undertake appropriate action 
with the component to assure compliance. In the event that OCR and the 
Department component are unable to agree on a resolution of any 
particular matter, the matter shall be submitted to the Secretary for 
resolution. OCR may from time to time request the assistance of 
officials of the Department in carrying out responsibilities in 
connection with the enforcement of Federal conscience and anti-
discrimination laws and this part, including the achievement of 
effective coordination and maximum uniformity within the Department.
    (h) Referral to the Department of Justice. If as a result of an 
investigation, compliance review, or other enforcement activity, OCR 
determines that a recipient or sub-recipient is not in compliance with 
the Federal conscience and anti-discrimination laws or this part, OCR 
may, in coordination with the relevant Department component and the 
Office of the General Counsel, make referrals to the Department of 
Justice, for further enforcement in Federal court or otherwise. OCR may 
also make referrals to the Department of Justice, in coordination with 
the Office of the General Counsel, concerning potential violations of 18 
U.S.C. 1001 or 42 U.S.C. 300a-8 for enforcement or other appropriate 
action.
    (i) Resolution of matters. (1) If an investigation or compliance 
review reveals that no action is warranted, OCR will so inform any party 
who has been notified of the existence of the investigation or 
compliance review, if any, in writing.
    (2) If an investigation or compliance review indicates a failure to 
comply with Federal conscience and anti-discrimination laws or this 
part, OCR will so inform the relevant parties and the matter will be 
resolved by informal means whenever possible. Attempts to resolve 
matters informally shall not preclude OCR from simultaneously pursuing 
any action described in paragraphs (a)(5) through (7) of this section.

[[Page 567]]

    (3) If OCR determines that there is a failure to comply with Federal 
conscience and anti-discrimination laws or this part, compliance with 
these laws and this part may be effected by the following actions, taken 
in coordination with the relevant Department component, and pursuant to 
statutes and regulations which govern the administration of contracts 
(e.g., Federal Acquisition Regulation), grants (e.g., 45 CFR part 75) 
and CMS funding arrangements (e.g., the Social Security Act):
    (i) Temporarily withholding Federal financial assistance or other 
Federal funds, in whole or in part, pending correction of the 
deficiency;
    (ii) Denying use of Federal financial assistance or other Federal 
funds from the Department, including any applicable matching credit, in 
whole or in part;
    (iii) Wholly or partly suspending award activities;
    (iv) Terminating Federal financial assistance or other Federal funds 
from the Department, in whole or in part;
    (v) Denying or withholding, in whole or in part, new Federal 
financial assistance or other Federal funds from the Department 
administered by or through the Secretary for which an application or 
approval is required, including renewal or continuation of existing 
programs or activities or authorization of new activities;
    (vi) In coordination with the Office of the General Counsel, 
referring the matter to the Attorney General for proceedings to enforce 
any rights of the United States, or obligations of the recipient or sub-
recipient, under Federal law or this part; and
    (vii) Taking any other remedies that may be legally available.
    (j) Noncompliance with Sec.  88.4. If a recipient of Federal 
financial assistance or applicant therefor fails or refuses to furnish 
an assurance or certification required under Sec.  88.4 or otherwise 
fails or refuses to comply with a requirement imposed by or pursuant to 
that section, OCR, in coordination with the relevant Department 
component, may effect compliance by any of the remedies provided in 
paragraph (i) of this section. The Department shall not be required to 
provide assistance in such a case during the pendency of the 
administrative proceedings brought under such paragraph.



Sec.  88.8  Relationship to other laws.

    Nothing in this part shall be construed to preempt any Federal, 
State, or local law that is equally or more protective of religious 
freedom and moral convictions. Nothing in this part shall be construed 
to narrow the meaning or application of any State or Federal law 
protecting free exercise of religious beliefs or moral convictions.



Sec.  88.9  Rule of construction.

    This part shall be construed in favor of a broad protection of the 
free exercise of religious beliefs and moral convictions, to the maximum 
extent permitted by the Constitution and the terms of the Federal 
conscience and anti-discrimination laws.



Sec.  88.10  Severability.

    Any provision of this part held to be invalid or unenforceable 
either by its terms or as applied to any entity or circumstance shall be 
construed so as to continue to give the maximum effect to the provision 
permitted by law, unless such holding shall be one of utter invalidity 
or unenforceability, in which event such provision shall be severable 
from this part, which shall remain in full force and effect to the 
maximum extent permitted by law. A severed provision shall not affect 
the remainder of this part or the application of the provision to other 
persons or entities not similarly situated or to other, dissimilar 
circumstances.



 Sec. Appendix A to Part 88--Model Text: Notice of Rights Under Federal 
                 Conscience and Anti-Discrimination Laws

    [Name of recipient, the Department, or Department component] 
complies with applicable Federal conscience and anti-discrimination laws 
prohibiting exclusion, adverse treatment, coercion, or other 
discrimination against individuals or entities on the basis of their 
religious beliefs or moral convictions. You may have the right under 
Federal law to decline to perform, assist in the performance of, refer 
for, undergo, or pay for certain health care-related treatments, 
research, or services (such as abortion or assisted suicide, among 
others) that violate your conscience, religious beliefs, or moral 
convictions.

[[Page 568]]

    If you believe that [Name of recipient, the Department, or 
Department component] has failed to accommodate your conscientious, 
religious, or moral objection, or has discriminated against you on those 
grounds, you can file a conscience and religious freedom complaint with 
the U.S. Department of Health and Human Services, Office for Civil 
Rights, electronically through the Office for Civil Rights Complaint 
Portal, available at https://ocrportal.hhs.gov/ocr /portal/lobby.jsf or 
by mail or phone at: U.S. Department of Health and Human Services, 200 
Independence Avenue SW, Room 509F, HHH Building Washington, DC 20201, 1-
800-368-1019, 800-537-7697 (TDD). Complaint forms and more information 
about Federal conscience and anti-discrimination laws are available at 
http://www.hhs.gov/conscience.



PART 89_ORGANIZATIONAL INTEGRITY OF ENTITIES IMPLEMENTING PROGRAMS 
AND ACTIVITIES UNDER THE LEADERSHIP ACT--Table of Contents



Sec.
89.1 Applicability and requirements.
89.2 Definitions.
89.3 Organizational integrity of recipients.

    Authority: Section 301(f) of the Leadership Act, Pub. L. 108-25, as 
amended (22 U.S.C. 7631(f)) and 5 U.S.C. 301.

    Source: 75 FR 18763, Apr. 13, 2010, unless otherwise noted.



Sec.  89.1  Applicability and requirements.

    (a) This regulation applies to all recipients unless they are 
exempted from the policy requirement by the Leadership Act or other 
statute.
    (b) The Department of Health and Human Services (HHS) components 
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 requirement shall also be included in 
the award documents for any grant, cooperative agreement or other 
funding instrument involving Leadership Act HIV/AIDS funds entered into 
with the recipient.



Sec.  89.2  Definitions.

    For the purposes of this part:
    Commercial sex act means any sex act on account of which anything of 
value is given to or received by any person.
    Leadership Act means the United States Leadership Against HIV/AIDS, 
Tuberculosis, and Malaria Act of 2003, Public Law 108-25, as amended (22 
U.S.C. 7601-7682).
    Prostitution means procuring or providing any commercial sex act.
    Recipients are contractors, grantees, applicants or awardees who 
receive Leadership Act funds for HIV/AIDS programs directly or 
indirectly from HHS.
    Sex trafficking means the recruitment, harboring, transportation, 
provision, or obtaining of a person for the purpose of a commercial sex 
act.



Sec.  89.3  Organizational integrity of recipients.

    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:
    (a) The affiliated organization receives no transfer of Leadership 
Act HIV/AIDS funds, and Leadership Act HIV/AIDS funds do not subsidize 
restricted activities; and
    (b) The recipient is, to the extent practicable in the 
circumstances, 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 separation exists. The 
presence or absence of any one or more factors relating to legal, 
physical, and financial separation will not be determinative. Factors 
relevant to this determination shall include, but not be limited to, the 
following:
    (1) Whether the organization is a legally separate entity;

[[Page 569]]

    (2) The existence of separate personnel or other allocation of 
personnel that maintains adequate separation of the activities of the 
affiliated organization from the recipient;
    (3) The existence of separate accounting and timekeeping records;
    (4) The degree of separation of the recipient's facilities from 
facilities in which restricted activities occur; and
    (5) The extent to which signs and other forms of identification that 
distinguish the recipient from the affiliated organization are present.



PART 90_NONDISCRIMINATION ON THE BASIS OF AGE IN PROGRAMS OR ACTIVITIES 
RECEIVING FEDERAL FINANCIAL ASSISTANCE--Table of Contents



                            Subpart A_General

Sec.
90.1 What is the purpose of the Age Discrimination Act of 1975?
90.2 What is the purpose of these regulations?
90.3 What programs or activities does the Age Discrimination Act of 1975 
          cover?
90.4 How are the terms in the regulations defined?

                  Subpart B_What is Age Discrimination?

           Standards for Determining Discriminatory Practices

90.11 Purpose of this subpart.
90.12 Rules against age discrimination.
90.13 Definitions of normal operation and statutory objective.
90.14 Exceptions to the rules against age discrimination. Normal 
          operation or statutory objective of any program or activity.
90.15 Exceptions to the rules against age discrimination. Reasonable 
          factors other than age.
90.16 Burden of proof.

    Subpart C_What are the Responsibilities of the Federal Agencies?

90.31 Issuance of regulations.
90.32 Review of agency policies and administrative practices.
90.33 Interagency cooperation.
90.34 Agency reports.

    Subpart D_Investigation, Conciliation and Enforcement Procedures

90.41 What is the purpose of this subpart?
90.42 What responsibilities do recipients and agencies have generally to 
          ensure compliance with the Act?
90.43 What specific responsibilities do agencies and recipients have to 
          ensure compliance with the Act?
90.44 Compliance reviews.
90.45 Information requirements.
90.46 Prohibition against intimidation or retaliation.
90.47 What further provisions must an agency make in order to enforce 
          its regulations after an investigation indicates that a 
          violation of the Act has been committed?
90.48 Alternate funds disbursal procedure.
90.49 Remedial and affirmative action by recipients.
90.50 Exhaustion of administrative remedies.

        Subpart E_Future Review of Age Discrimination Regulations

90.61 Review of general regulations.
90.62 Review of agency regulations.

    Authority: Age Discrimination Act of 1975, as amended, 42 U.S.C. 
6101 et seq.

    Source: 44 FR 33776, June 12, 1979, unless otherwise noted.



                            Subpart A_General



Sec.  90.1  What is the purpose of the Age Discrimination Act of 1975?

    The Age Discrimination Act of 1975, as amended, is designed to 
prohibit discrimination on the basis of age in programs or activities 
receiving Federal financial assistance. The Act also permits federally 
assisted programs or activities, and recipients of Federal funds, to 
continue to use certain age distinctions and factors other than age 
which meet the requirements of the Act and these regulations.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24321, May 9, 2005]



Sec.  90.2  What is the purpose of these regulations?

    (a) The purpose of these regulations is to state general, 
government-wide rules for the implementation of the Age Discrimination 
Act of 1975, as amended, and to guide each agency in the preparation of 
agency-specific age discrimination regulations.
    (b) These regulations apply to each Federal agency which provides 
Federal

[[Page 570]]

financial assistance to any program or activity.



Sec.  90.3  What programs or activities does the Age Discrimination Act 
of 1975 cover?

    (a) The Age Discrimination Act of 1975 applies to any program or 
activity receiving Federal financial assistance, including programs or 
activities receiving funds under the State and Local Fiscal Assistance 
Act of 1972 (31 U.S.C. 1221 et seq.).
    (b) The Age Discrimination Act of 1975 does not apply to:
    (1) An age distinction contained in that part of a Federal, State or 
local statute or ordinance adopted by an elected, general purpose 
legislative body which:
    (i) Provides any benefits or assistance to persons based on age; or
    (ii) Establishes criteria for participation in age-related terms; or
    (iii) Describes intended beneficiaries or target groups in age-
related terms.
    (2) Any employment practice of any employer, employment agency, 
labor organization, or any labor-management joint apprenticeship 
training program, except for any program or activity receiving Federal 
financial assistance for public service employment under the 
Comprehensive Employment and Training Act of 1974 (CETA), (29 U.S.C. 801 
et seq.).



Sec.  90.4  How are the terms in these regulations defined?

    As used in these regulations, the term:
    Act means the Age Discrimination Act of 1975, as amended, (Title III 
of Pub. L. 94-135).
    Action means any act, activity, policy, rule, standard, or method of 
administration; or the use of any policy, rule, standard, or method of 
administration.
    Age means how old a person is, or the number of elapsed years form 
the date of a person's birth.
    Age distinction means any action using age or an age-related term.
    Age-related term means a word or words which necessarily imply a 
particular age or range of ages (for example, children, adult, older 
persons, but not student).
    Agency means a Federal department or agency that is empowered to 
extend financial assistance.
    Federal financial assistance means any grant, entitlement, loan, 
cooperative agreement, contract (other than a procurement contract or a 
contract of insurance or guaranty), or any other arrangement by which 
the agency provides or otherwise makes available assistance in the form 
of:
    (a) Funds;
    (b) Services of Federal personnel; or
    (c) Real and personal property or any interest in or use of 
property, including:
    (1) Transfers or leases of property for less than fair market value 
or for reduced consideration; and
    (2) Proceeds from a subsequent transfer or lease of property if the 
Federal share of its fair market value is not returned to the Federal 
Government.
    Program or activity means all of the operations of--
    (a)(1) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or
    (2) The entity of such State or local government that distributes 
Federal financial assistance and each such department or agency (and 
each other State or local government entity) to which the assistance is 
extended, in the case of assistance to a State or local government;
    (b)(1) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (2) A local educational agency (as defined in 20 U.S.C. 7801), 
system of vocational education, or other school system;
    (c)(1) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (i) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (ii) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (2) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any

[[Page 571]]

other corporation, partnership, private organization, or sole 
proprietorship; or
    (d) Any other entity which is established by two or more of the 
entities described in paragraph (a), (b), or (c) of this definition; any 
part of which is extended Federal financial assistance.
    Recipient means any State or its political subdivision, any 
instrumentality of a State or its political sub-division, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended, directly or 
through another recipient. Recipient includes any successor, assignee, 
or transferee, but excludes the ultimate beneficiary of the assistance.
    Secretary means the Secretary of the Department of Health and Human 
Services.
    United States means the fifty States, the District of Columbia, 
Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the 
Canal Zone, the Trust Territory of the Pacific Islands, the Northern 
Marianas, and the territories and possessions of the United States.

(42 U.S.C. 6107)

[44 FR 33776, June 12, 1979, as amended at 70 FR 24321, May 9, 2005]



                  Subpart B_What is Age Discrimination?

           Standards for Determining Discriminatory Practices



Sec.  90.11  Purpose of this subpart.

    The purpose of this subpart is to set forth the prohibitions against 
age discrimination and the exceptions to those prohibitions.



Sec.  90.12  Rules against age discrimination.

    The rules stated in this section are limited by the exceptions 
contained in Sec. Sec.  90.14, and 90.15 of these regulations.
    (a) General rule: No person in the United states shall, on the basis 
of age, be excluded from participation in, be denied the benefits of, or 
be subjected to discrimination under, any program or activity receiving 
Federal financial assistance.
    (b) Specific rules: A recipient may not, in any program or activity 
receiving Federal financial assistance, directly or through contractual, 
licensing, or other arrangements use age distinctions or take any other 
actions which have the effect, on the basis of age, of:
    (1) Excluding individuals from, denying them the benefits of, or 
subjecting them to discrimination under, a program or activity receiving 
Federal financial assistance, or
    (2) Denying or limiting individuals in their opportunity to 
participate in any program or activity receiving Federal financial 
assistance.
    (c) The specific forms of age discrimination listed in paragraph (b) 
of this section do not necessarily constitute a complete list.



Sec.  90.13  Definitions of normal operation and statutory objective.

    For purposes of Sec. Sec.  90.14, and 90.15, the terms normal 
operation and statutory objective shall have the following meaning:
    (a) Normal operation means the operation of a program or activity 
without significant changes that would impair its ability to meet its 
objectives.
    (b) Statutory objective means any purpose of a program or activity 
expressly stated in any Federal statute, State statute, or local statute 
or ordinance adopted by an elected, general purpose legislative body.



Sec.  90.14  Exceptions to the rules against age discrimination. 
Normal operation or statutory objective of any program or activity.

    A recipient is permitted to take an action, otherwise prohibited by 
Sec.  90.12, if the action reasonably takes into account age as a factor 
necessary to the normal operation or the achievement of any statutory 
objective of a program or activity. An action reasonably takes into 
account age as a factor necessary to the normal operation or the 
achievement of any statutory objective of a program or activity, if:
    (a) Age is used as a measure or approximation of one or more other 
characteristics; and
    (b) The other characteristic(s) must be measured or approximated in 
order

[[Page 572]]

for the normal operation of the program or activity to continue, or to 
achieve any statutory objective of the program or activity; and
    (c) The other characteristic(s) can be reasonably measured or 
approximated by the use of age; and
    (d) The other characteristic(s) are impractical to measure directly 
on an individual basis.



Sec.  90.15  Exceptions to the rules against age discrimination. 
Reasonable factors other than age.

    A recipient is permitted to take an action otherwise prohibited by 
Sec.  90.12 which is based on a factor other than age, even though that 
action may have a disproportionate effect on persons of different ages. 
An action may be based on a factor other than age only if the factor 
bears a direct and substantial relationship to the normal operation of 
the program or activity or to the achievement of a statutory objective.



Sec.  90.16  Burden of proof.

    The burden of proving that an age distinction or other action falls 
within the exceptions outlined in Sec. Sec.  90.14 and 90.15 is on the 
recipient of Federal financial assistance.



    Subpart C_What are the Responsibilities of the Federal Agencies?



Sec.  90.31  Issuance of regulations.

    (a) The head of each agency which extends Federal financial 
assistance to any program or activity shall publish proposed and final 
age discrimination regulations in the Federal Register to:
    (1) Carry out the provisions of section 303 of the Age 
Discrimination Act of 1975; and
    (2) Provide for appropriate investigative, conciliation, and 
enforcement procedures.
    (b) Each agency shall publish its proposed agency age discrimination 
regulations no later than 90 days after the publication date of the 
final general, government-wide age discrimination regulations.
    (c) Each agency shall submit its final agency regulations to HHS for 
review no later than 120 days after publication of proposed agency age 
discrimination regulations.
    (d) Final agency age discrimination regulations shall be consistent 
with these general, government-wide age discrimination regulations and 
shall not be published until the Secretary approves them.
    (e) Each agency shall include in its regulations a provision 
governing the operation of an alternate funds disbursal procedure as 
described in Sec.  90.48 of these regulations.
    (f) Each agency shall publish an appendix to its final age 
discrimination regulations containing a list of each age distinction 
provided in a Federal statute or in regulations affecting financial 
assistance administered by the agency.



Sec.  90.32  Review of agency policies and administrative practices.

    (a) Each agency shall conduct a review of age distinctions it 
imposes on its recipients by regulations, policies, and administrative 
practices. The purpose of this review is to identify how age 
distinctions are used by each Federal agency and whether those age 
distinctions are permissible under the Act and implementing regulations.
    (b) No later than 12 months from the date the agency published its 
final regulations, the agency shall publish, for public comment, a 
report in the Federal Register containing:
    (1) The results of the review conducted under paragraph (a) of this 
section;
    (2) A list of the age distinctions contained in regulations which 
are to be continued;
    (3) The justification under the requirements of the Act and these 
regulations for each age distinction to be continued;
    (4) A list of the age distinctions not contained in regulations but 
which will be adopted by regulation under the Administrative Procedure 
Act using the notice and comment procedures specified in 5 U.S.C. 553; 
and
    (5) A list of the age distinctions to be eliminated.
    (c) Beginning with the effective date of an agency's final 
regulations, the agency may not impose a new age distinction unless the 
age distinction is

[[Page 573]]

adopted by regulation under the Administrative Procedure Act using the 
notice and comment procedures specified in 5 U.S.C. 553.
    (d) Beginning 12 months after the publication of its age 
discrimination regulations, an agency may not continue an existing age 
distinction, unless the age distinction has already been adopted by 
regulation or is adopted by regulation under the Administrative 
Procedure Act using the notice and comment procedures specified in 5 
U.S.C. 553.



Sec.  90.33  Interagency cooperation.

    Where two or more agencies provide Federal financial assistance to a 
recipient or class of recipients, the Secretary may designate one of the 
agencies as the sole agency for all compliance and enforcement purposes 
with respect to those recipients, except for the ordering of termination 
of funds and the notification of the appropriate committees of Congress.



Sec.  90.34  Agency reports.

    Each agency shall submit to the Secretary not later than December 31 
of each year, beginning in 1979, a report which:
    (a) Describes in detail the steps taken during the preceding fiscal 
year to carry out the Act; and
    (b) Contains data on the frequency, type, and resolution of 
complaints and on any compliance reviews, sufficient to permit analysis 
of the agency's progress in reducing age discrimination in programs or 
activities receiving Federal financial assistance from the agency; and
    (c) Contains data directly relevant to the extent of any pattern or 
practice of age discrimination which the agency has identified in any 
programs or activities receiving Federal financial assistance from the 
agency and to progress toward eliminating it; and
    (d) Contains evaluative or interpretative information which the 
agency determines is useful in analyzing agency progress in reducing age 
discrimination in programs or activities receiving Federal financial 
assistance from the agency; and
    (e) Contains whatever other data the Secretary may require.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24321, May 9, 2005]



    Subpart D_Investigation, Conciliation and Enforcement Procedures



Sec.  90.41  What is the purpose of this subpart?

    This subpart sets forth requirements for the establishment of 
compliance, investigation, conciliation, and enforcement procedures by 
agencies which extend Federal financial assistance.



Sec.  90.42  What responsibilities do recipients and agencies have generally 
to ensure compliance with the Act?

    (a) A recipient has primary responsibility to ensure that its 
programs or activities are in compliance with the Age Discrimination Act 
and shall take steps to eliminate violations of the Act. A recipient 
also has responsibility to maintain records, provide information, and to 
afford access to its records to an agency to the extent required to 
determine whether it is in compliance with the Act.
    (b) An agency has responsibility to attempt to secure recipient 
compliance with the Act by voluntary means. This may include the use of 
the services of appropriate Federal, State, local, or private 
organizations. An agency also has the responsibility to enforce the Age 
Discrimination Act when a recipient fails to eliminate violations of the 
Act.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24322, May 9, 2005]



Sec.  90.43  What specific responsibilities do agencies and recipients have 
to ensure compliance with the Act?

    (a) Written notice, technical assistance, and educational materials. 
Each agency shall: (1) Provide written notice to each recipient of its 
obligations under the Act. The notice shall include a requirement that 
where the recipient initially receiving funds makes the funds available 
to a sub-recipient, the recipient must notify the sub-recipient of its 
obligations under the Act.

[[Page 574]]

    (2) Provide technical assistance, where necessary, to recipients to 
aid them in complying with the Act.
    (3) Make available educational materials setting forth the rights 
and obligations of beneficiaries and recipients under the Act.
    (b) Self-evaluation. (1) Each agency shall require each recipient 
employing the equivalent of 15 or more full time employees to complete a 
written self-evaluation of its compliance under the Act within 18 months 
of the effective date of the agency regulations.
    (2) Each recipient's self-evaluation shall identify and justify each 
age distinction imposed by the recipient.
    (3) Each recipient shall take corrective and remedial action 
whenever a self-evaluation indicates a violation of the Act.
    (4) Each recipient shall make the self-evaluation available on 
request to the agency and to the public for a period of 3 years 
following its completion.
    (c) Complaints--(1) Receipt of complaints. Each agency shall 
establish a complaint processing procedure which includes the following:
    (i) A procedure for the filing of complaints with the agency;
    (ii) A review of complaints to assure that they fall within the 
coverage of the Act and contain all information necessary for further 
processing;
    (iii) Notice to the complainant and the recipient of their rights 
and obligations under the complaint procedure, including the right to 
have a representative at all stages of the complaint procedure; and
    (iv) Notice to the complainant and the recipient (or their 
representatives) of their right to contact the agency for information 
and assistance regarding the complaint resolution process.
    (2) Prompt resolution of complaints. Each agency shall establish 
procedures for the prompt resolution of complaints. These procedures 
shall require each recipient and complainant to participate actively in 
efforts toward speedy resolution of the complaint.
    (3) Mediation of complaints. Each agency shall promptly refer all 
complaints which fall within the coverage of the Act to a mediation 
agency designated by the Secretary.
    (i) The referring agency shall require the participation of the 
recipient and the complainant in the mediation process, although both 
parties need not meet with the mediator at the same time.
    (ii) If the complainant and recipient reach a mutually satisfactory 
resolution of the complaint during the mediation period, they shall 
reduce the agreement to writing. The mediator shall send a copy of the 
settlement to the referring agency. No further action shall be taken 
based on that complaint unless it appears that the complainant or the 
recipient is failing to comply with the agreement.
    (iii) Not more than 60 days after the agency receives the complaint, 
the mediator shall return a still unresolved complaint to the referring 
agency for initial investigation. The mediator may return a complaint at 
any time before the end of the 60 day period if it appears that the 
complaint cannot be resolved through mediation.
    (iv) The mediator shall protect the confidentiality of all 
information obtained in the course of the mediation process. No mediator 
shall testify in any adjudicative proceeding, produce any document, or 
otherwise disclose any information obtained in the course of the 
mediation process without prior approval of the head of the agency 
appointing the mediator.
    (4) Federal initial investigation. Each agency shall investigate 
complaints unresolved after mediation or reopened because of a violation 
of the mediation agreement. As part of the initial investigation, the 
agency shall use informal fact finding methods including joint or 
individual discussions with the complainant and the recipient to 
establish the facts, and, if possible, resolve the complaint to the 
mutual satisfaction of the parties. The agency may seek the assistance 
of any involved State agency.
    (5) Formal investigation, conciliation, and hearing. If the agency 
cannot resolve the complaint during the early stages of the 
investigation, it shall:
    (i) Complete the investigation of the complaint.
    (ii) Attempt to achieve voluntary compliance satisfactory to the 
agency,

[[Page 575]]

if the investigation indicates a violation.
    (iii) Arrange for enforcement as described in Sec.  90.47, if 
necessary.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24322, May 9, 2005]



Sec.  90.44  Compliance reviews.

    (a) Each agency shall provide in its regulations that it may conduct 
compliance reviews, pre-award reviews, and other similar procedures 
which permit the agency to investigate, and correct, violations of the 
Act without regard to its procedures for handling complaints.
    (b) If a compliance review or pre-award review indicates a violation 
of the Act, the agency shall attempt to achieve voluntary compliance 
with the Act. If voluntary compliance cannot be achieved, the agency 
shall arrange for enforcement as described in Sec.  90.47.



Sec.  90.45  Information requirements.

    Each agency shall provide in its regulations a requirement that the 
recipient:
    (a) Provide to the agency information necessary to determine whether 
the recipient is in compliance with the Act; and
    (b) Permit reasonable access by the agency to the books, records, 
accounts, and other recipient facilities and sources of information to 
the extent necessary to determine whether a recipient is in compliance 
with the Act.



Sec.  90.46  Prohibition against intimidation or retaliation.

    Each agency shall provide in its regulations that recipients may not 
engage in acts of intimidation or retaliation against any person who:
    (a) Attempts to assert a right protected by the Act; or
    (b) Cooperates in any mediation, investigation, hearing, or other 
part of the agency's investigation, conciliation, and enforcement 
process.



Sec.  90.47  What further provisions must an agency make in order 
to enforce its regulations after an investigation indicates that a violation 
of the Act has been committed?

    (a) Each agency shall provide for enforcement of its regulations 
through:
    (1) Termination of a recipient's Federal financial assistance under 
the program or activity involved where the recipient has violated the 
Act or the agency's regulations. The determination of the recipient's 
violation may be made only after a recipient has had an opportunity for 
a hearing on the record before an administrative law judge.
    (2) Any other means authorized by law including but not limited to:
    (i) Referral to the Department of Justice for proceedings to enforce 
any rights of the United States or obligations of the recipient created 
by the Act or the agency's regulations.
    (ii) Use of any requirement of or referral to any Federal, State, or 
local government agency which will have the effect of correcting a 
violation of the Act or implementing regulations.
    (b) Any termination under paragraph (a)(1) shall be limited to the 
particular recipient and particular program or activity receiving 
Federal financial assistance or portion thereof found to be in violation 
of the Act or agency regulations. No termination shall be based in whole 
or in part on a finding with respect to any program or activity which 
does not receive Federal financial assistance.
    (c) No action under paragraph (a) of this section may be taken 
until:
    (1) The head of the agency involved has advised the recipient of its 
failure to comply with the Act or the agency's regulations and has 
determined that voluntary compliance cannot be obtained.
    (2) Thirty days have elapsed after the head of the agency involved 
has sent a written report of the circumstances and grounds of the action 
to the committees of the Congress having legislative jurisdiction over 
the program or activity involved. A report shall be filed whenever any 
action is taken under paragraph (a) of this section.
    (d) An agency may defer granting new Federal financial assistance to 
a recipient when termination proceedings under paragraph (a)(1) of this 
section are initiated.
    (1) New Federal financial assistance includes all assistance 
administered by

[[Page 576]]

or through the agency for which an application or approval, including 
renewal or continuation of existing activities, or authorization of new 
activities, is required during the deferral period. New Federal 
financial assistance does not include assistance approved prior to the 
beginning of termination proceedings or to increases in funding as a 
result of changed computation of formula awards.
    (2) A deferral may not begin until the recipient has received a 
notice of opportunity for a hearing under paragraph (a)(1). A deferral 
may not continue for more than 60 days unless a hearing has begun within 
that time or the time for beginning the hearing has been extended by 
mutual consent of the recipient and the agency. A deferral may not 
continue for more than 30 days after the close of the hearing, unless 
the hearing results in a finding against the recipient.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24322, May 9, 2005]



Sec.  90.48  Alternate funds disbursal procedure.

    When an agency withholds funds from a recipient under its 
regulations issued under Sec.  90.31, the head of the agency may 
disburse the withheld funds so directly to any public or non-profit 
private organization or agency, or State or political subdivision of the 
State. These alternate recipients must demonstrate the ability to comply 
with the agency's regulations issued under this Act and to achieve the 
goals of the Federal statute authorizing the Federal financial 
assistance.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24322, May 9, 2005]



Sec.  90.49  Remedial and affirmative action by recipients.

    (a) Where a recipient is found to have discriminated on the basis of 
age, the recipient shall take any remedial action which the agency may 
require to overcome the effects of the discrimination. If another 
recipient exercises control over the recipient that has discriminated, 
both recipients may be required to take remedial action.
    (b) Even in the absence of a finding of discrimination, a recipient 
may take affirmative action to overcome the effects of conditions that 
resulted in limited participation in the recipient's program or activity 
on the basis of age.
    (c) If a recipient operating a program or activity which serves the 
elderly or children in addition to persons of other ages, provides 
special benefits to the elderly or to children the provision of those 
benefits shall be presumed to be voluntary affirmative action provided 
that it does not have the effect of excluding otherwise eligible persons 
from participation in the program or activity.

[44 FR 33776, June 12, 1979, as amended at 70 FR 24322, May 9, 2005]



Sec.  90.50  Exhaustion of administrative remedies.

    (a) The agency shall provide in its regulations that a complainant 
may file a civil action following the exhaustion of adminstrative 
remedies under the Act. Administrative remedies are exhausted if:
    (1) 180 days have elapsed since the complainant filed the complaint 
and the agency has made no finding with regard to the complaint; or
    (2) The agency issues any finding in favor of the recipient.
    (b) If either of the conditions set forth in Sec.  90.50(a) is 
satisfied the agency shall:
    (1) Promptly advise the complainant of this fact; and
    (2) Advise the complainant of his or her right, under section 305(e) 
of the Act, to bring a civil action for injunctive relief that will 
effect the purposes of the Act; and
    (3) Inform the complainant:
    (i) That a civil action can only be brought in a United States 
district court for the district in which the recipient is found or 
transacts business;
    (ii) That a complainant prevailing in a civil action has the right 
to be awarded the costs of the action, including reasonable attorney's 
fees, but that these costs must be demanded in the complaint;
    (iii) That before commencing the action the complainant shall give 
30 days notice by registered mail to the Secretary, the Attorney General 
of the United States, the head of the granting agency, and the 
recipient;

[[Page 577]]

    (iv) That the notice shall state: the alleged violation of the Act; 
the relief requested; the court in which the action will be brought; and 
whether or not attorney's fees are demanded in the event the complainant 
prevails; and
    (v) That no action shall be brought if the same alleged violation of 
the Act by the same recipient is the subject of a pending action in any 
court of the United States.



        Subpart E_Future Review of Age Discrimination Regulations



Sec.  90.61  Review of general regulations.

    The Secretary shall review the effectiveness of these regulations in 
securing compliance with the Act. As part of this review, 30 months 
after the effective date of these regulations, the Secretary shall 
publish a notice of opportunity for public comment on the effectiveness 
of the regulations. The Secretary will assess the comments and publish 
the results of the review and assessment in the Federal Register.



Sec.  90.62  Review of agency regulations.

    Each agency shall review the effectiveness of its regulations in 
securing compliance with the Act. As part of this review, 30 months 
after the effective date of its regulations, each agency shall publish a 
notice of opportunity for public comment on the effectiveness of the 
agency regulations. Each agency shall assess the comments and publish 
the results of the review in the Federal Register.



PART 91_NONDISCRIMINATION ON THE BASIS OF AGE IN PROGRAMS OR ACTIVITIES 
RECEIVING FEDERAL FINANCIAL ASSISTANCE FROM HHS--Table of Contents



                            Subpart A_General

Sec.
91.1 What is the purpose of the Age Discrimination Act of 1975?
91.2 What is the purpose of HHS' age discrimination regulations?
91.3 To what programs or activities do these regulations apply?
91.4 Definition of terms used in these regulations.

         Subpart B_Standards for Determining Age Discrimination

91.11 Rules against age discrimination.
91.12 Definitions of normal operation and statutory objective.
91.13 Exceptions to the rules against age discrimination: Normal 
          operation or statutory objective of any program or activity.
91.14 Exceptions to the rules against age discrimination: Reasonable 
          factors other than age.
91.15 Burden of proof.
91.16 Affirmative action by recipient.
91.17 Special benefits for children and the elderly.
91.18 Age distinctions contained in HHS regulations.

                   Subpart C_Duties of HHS Recipients

91.31 General responsibilities.
91.32 Notice to subrecipients and beneficiaries.
91.33 Assurance of compliance and recipient assessment of age 
          distinctions.
91.34 Information requirements.

    Subpart D_Investigation, Conciliation, and Enforcement Procedures

91.41 Compliance reviews.
91.42 Complaints.
91.43 Mediation.
91.44 Investigation.
91.45 Prohibition against intimidation or retaliation.
91.46 Compliance procedure.
91.47 Hearings, decisions, post-termination proceedings.
91.48 Remedial action by recipient.
91.49 Alternate funds disbursal procedure.
91.50 Exhaustion of administrative remedies.

    Authority: Age Discrimination Act of 1975, as amended, 42 U.S.C. 
6101 et seq. (45 CFR part 90).

    Source: 47 FR 57858, Dec. 28, 1982, unless otherwise noted.



                            Subpart A_General



Sec.  91.1  What is the purpose of the Age Discrimination Act of 1975?

    The Age Discrimination Act of 1975, as amended, is designed to 
prohibit discrimination on the basis of age in programs or activities 
receiving Federal financial assistance. The Act also permits federally 
assisted programs or activities, and recipients of Federal funds, to 
continue to use certain age distinctions and factors other than age

[[Page 578]]

which meet the requirements of the Act and these regulations.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.2  What is the purpose of HHS' age discrimination regulations?

    The purpose of these regulations is to set out HHS' policies and 
procedures under the Age Discrimination Act of 1975 and the general age 
discrimination regulations at 45 CFR part 90. \1\ The Act and the 
general regulations prohibit discrimination on the basis of age in 
programs or activities receiving Federal financial assistance. The Act 
and the general regulations permit federally assisted programs or 
activities, and recipients of Federal funds, to continue to use age 
distinctions and factors other than age which meet the requirements of 
the Act and its implementing regulations.
---------------------------------------------------------------------------

    \1\ Published at 44 FR 33768, June 12, 1979.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.3  To what programs or activities do these regulations apply?

    (a) The Act and these regulations apply to each HHS recipient and to 
each program or activity operated by the recipient which receives 
Federal financial assistance provided by HHS.
    (b) The Act and these regulations do not apply to:
    (1) An age distinction contained in that part of a Federal, State, 
or local statute or ordinance adopted by an elected, general purpose 
legislative body which:
    (i) Provides any benefits or assistance to persons based on age; or
    (ii) Establishes criteria for participation in age-related terms; or
    (iii) Describes intended beneficiaries or target groups in age-
related terms.
    (2) Any employment practice of any employer, employment agency, 
labor organization, or any labor-management joint apprenticeship 
training program, except for any program or activity receiving Federal 
financial assistance for public service employment under the 
Comprehensive Employment and Training Act (CETA), (29 U.S.C. 801 et 
seq.)

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.4  Definition of terms used in these regulations.

    As used in these regulations, the term:
    Act means the Age Discrimination Act of 1975, as amended, (Title III 
of Pub. L. 94-135).
    Action means any act, activity, policy, rule, standard, or method of 
administration; or the use of any policy, rule, standard, or method of 
administration.
    Age means how old a person is, or the number of years from the date 
of a person's birth.
    Age distinction means any action using age or an age-related term.
    Age-related term means a word or words which necessarily imply a 
particular age or range of ages (for example, children, adult, older 
persons, but not student).
    Agency means a Federal department or agency that is empowered to 
extend financial assistance.
    Federal financial assistance means any grant, entitlement, loan, 
cooperative agreement, contract (other than a procurement contract or a 
contract of insurance or guaranty), or any other arrangement by which 
the agency provides or otherwise makes available assistance in the form 
of:
    (a) Funds; or
    (b) Services of Federal personnel; or
    (c) Real and personal property or any interest in or use of 
property, including:
    (1) Transfers or leases of property for less than fair market value 
or for reduced consideration; and
    (2) Proceeds from a subsequent transfer or lease of property if the 
Federal share of its fair market value is not returned to the Federal 
Government.
    HHS means the United States Department of Health and Human Services.
    Program or activity means all of the operations of--
    (a)(1) A department, agency, special purpose district, or other 
instrumentality of a State or of a local government; or

[[Page 579]]

    (2) The entity of such State or local government that distributes 
Federal financial assistance and each such department or agency (and 
each other State or local government entity) to which the assistance is 
extended, in the case of assistance to a State or local government;
    (b)(1) A college, university, or other postsecondary institution, or 
a public system of higher education; or
    (2) A local educational agency (as defined in 20 U.S.C. 7801), 
system of vocational education, or other school system;
    (c)(1) An entire corporation, partnership, or other private 
organization, or an entire sole proprietorship--
    (i) If assistance is extended to such corporation, partnership, 
private organization, or sole proprietorship as a whole; or
    (ii) Which is principally engaged in the business of providing 
education, health care, housing, social services, or parks and 
recreation; or
    (2) The entire plant or other comparable, geographically separate 
facility to which Federal financial assistance is extended, in the case 
of any other corporation, partnership, private organization, or sole 
proprietorship; or
    (d) Any other entity which is established by two or more of the 
entities described in paragraph (a), (b), or (c) of this definition; any 
part of which is extended Federal financial assistance.
    Recipient means any State or its political subdivision, any 
instrumentality of a State or its political subdivision, any public or 
private agency, institution, organization, or other entity, or any 
person to which Federal financial assistance is extended, directly or 
through another recipient. Recipient includes any successor, assignee, 
or transferee, but excludes the ultimate beneficiary of the assistance.
    Secretary means the Secretary of Health and Human Services, or his 
or her designee.
    Subrecipient means any of the entities in the definition of 
recipient to which a recipient extends or passes on Federal financial 
assistance. A subrecipient is generally regarded as a recipient of 
Federal financial assistance and has all the duties of a recipient in 
these regulations.
    United States means the fifty States, the District of Columbia, 
Puerto Rico, the Virgin Islands, American Samoa, Guam, Wake Island, the 
Canal Zone, the Trust Territory of the Pacific Islands, the Northern 
Marianas, and the territories and possessions of the United States.

(Authority: 42 U.S.C. 6107)

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



         Subpart B_Standards for Determining Age Discrimination



Sec.  91.11  Rules against age discrimination.

    The rules stated in this section are limited by the exceptions 
contained in Sec. Sec.  91.13 and 91.14 of these regulations.
    (a) General rule: No person in the United States shall, on the basis 
of age, be excluded from participation in, be denied the benefits of, or 
be subjected to discrimination under, any program or activity receiving 
Federal financial assistance.
    (b) Specific rules: A recipient may not, in any program or activity 
receiving Federal financial assistance, directly or through contractual 
licensing, or other arrangements, use age distinctions or take any other 
actions which have the effect, on the basis of age, of:
    (1) Excluding individuals from, denying them the benefits of, or 
subjecting them to discrimination under, a program or activity receiving 
Federal financial assistance; or
    (2) Denying or limiting individuals in their opportunity to 
participate in any program or activity receiving Federal financial 
assistance.
    (c) The specific forms of age discrimination listed in paragraph (b) 
of this section do not necessarily constitute a complete list.



Sec.  91.12  Definitions of normal operation and statutory objective.

    For purposes of Sec. Sec.  91.13 and 91.14, the terms normal 
operation and statutory objective shall have the following meaning:
    (a) Normal operation means the operation of a program or activity 
without

[[Page 580]]

significant changes that would impair its ability to meet its 
objectives.
    (b) Statutory objective means any purpose of a program or activity 
expressly stated in any Federal statute, State statute, or local statute 
or ordinance adopted by an elected, general purpose legislative body.



Sec.  91.13  Exceptions to the rules against age discrimination: 
Normal operation or statutory objective of any program or activity.

    A recipient is permitted to take an action, otherwise prohibited by 
Sec.  91.11, if the action reasonably takes into account age as a factor 
necessary to the normal operation or the achievement of any statutory 
objective of a program or activity. An action reasonably takes into 
account age as a factor necessary to the normal operation or the 
achievement of any statutory objective of a program or activity, if:
    (a) Age is used as a measure or approximation of one or more other 
characteristics; and
    (b) The other characteristic(s) must be measured or approximated in 
order for the normal operation of the program or activity to continue, 
or to achieve any statutory objective of the program or activity; and
    (c) The other characteristic(s) can be reasonably measured or 
approximated by the use of age; and
    (d) The other characteristic(s) are impractical to measure directly 
on an individual basis.



Sec.  91.14  Exceptions to the rules against age discrimination: 
Reasonable factors other than age.

    A recipient is permitted to take an action otherwise prohibited by 
Sec.  91.11 which is based on a factor other than age, even though that 
action may have a disproportionate effect on persons of different ages. 
An action may be based on a factor other than age only if the factor 
bears a direct and substantial relationship to the normal operation of 
the program or activity or to the achievement of a statutory objective.



Sec.  91.15  Burden of proof.

    The burden of proving that an age distinction or other action falls 
within the exceptions outlined in Sec. Sec.  91.13 and 91.14 is on the 
recipient of Federal financial assistance.



Sec.  91.16  Affirmative action by recipient.

    Even in the absence of a finding of discrimination, a recipient may 
take affirmative action to overcome the effects of conditions that 
resulted in limited participation in the recipient's program or activity 
on the basis of age.



Sec.  91.17  Special benefits for children and the elderly.

    If a recipient operating a program or activity provides special 
benefits to the elderly or to children, such use of age distinctions 
shall be presumed to be necessary to the normal operation of the program 
or activity, notwithstanding the provisions of Sec.  91.13.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.18  Age distinctions contained in HHS regulations.

    Any age distinctions contained in a rule or regulation issued by HHS 
shall be presumed to be necessary to the achievement of a statutory 
objective of the program or activity to which the rule or regulation 
applies, notwithstanding the provisions of Sec.  91.13.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



                   Subpart C_Duties of HHS Recipients



Sec.  91.31  General responsibilities.

    Each HHS recipient has primary responsibility to ensure that its 
programs or activities are in compliance with the Act and these 
regulations, and shall take steps to eliminate violations of the Act. A 
recipient also has responsibility to maintain records, provide 
information, and to afford HHS access to its records to the extent HHS 
finds necessary to determine whether the recipient is in compliance with 
the Act and these regulations.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.32  Notice to subrecipients and beneficiaries.

    (a) Where a recipient passes on Federal financial assistance from 
HHS to

[[Page 581]]

subrecipients, the recipient shall provide the subrecipients written 
notice of their obligations under the Act and these regulations.
    (b) Each recipient shall make necessary information about the Act 
and these regulations available to its beneficiaries in order to inform 
them about the protections against discrimination provided by the Act 
and these regulations.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.33  Assurance of compliance and recipient assessment 
of age distinctions.

    (a) Each recipient of Federal financial assistance from HHS shall 
sign a written assurance as specified by HHS that it will comply with 
the Act and these regulations.
    (b) Recipient assessment of age distinctions. (1) As part of a 
compliance review under Sec.  91.41 or complaint investigation under 
Sec.  91.44, HHS may require a recipient employing the equivalent of 15 
or more employees to complete a written self-evaluation, in a manner 
specified by the responsible Department official, of any age distinction 
imposed in its program or activity receiving Federal financial 
assistance from HHS to assess the recipient's compliance with the Act.
    (2) Whenever an assessment indicates a violation of the Act and the 
HHS regulations, the recipient shall take corrective action.



Sec.  91.34  Information requirements.

    Each recipient shall:
    (a) Keep records in a form and containing information which HHS 
determines may be necessary to ascertain whether the recipient is 
complying with the Act and these regulations.
    (b) Provide to HHS, upon request, information and reports which HHS 
determines are necessary to ascertain whether the recipient is complying 
with the Act and these regulations.
    (c) Permit reasonable access by HHS to the books, records, accounts, 
and other recipient facilities and sources of information to the extent 
HHS determines is necessary to ascertain whether the recipient is 
complying with the Act and these regulations.



    Subpart D_Investigation, Conciliation, and Enforcement Procedures



Sec.  91.41  Compliance reviews.

    (a) HHS may conduct compliance reviews and pre-award reviews or use 
other similar procedures that will permit it to investigate and correct 
violations of the Act and these regulations. HHS may conduct these 
reviews even in the absence of a complaint against a recipient. The 
reviews may be as comprehensive as necessary to determine whether a 
violation of the Act and these regulations has occurred.
    (b) If a compliance review or pre-award review indicates a violation 
of the Act or these regulations, HHS will attempt to achieve voluntary 
compliance with the Act. If voluntary compliance cannot be achieved, HHS 
will arrange for enforcement as described in Sec.  91.46.



Sec.  91.42  Complaints.

    (a) Any person, individually or as a member of a class or on behalf 
of others, may file a complaint with HHS, alleging discrimination 
prohibited by the Act or these regulations based on an action occurring 
on or after July 1, 1979. A complainant shall file a complaint within 
180 days from the date the complainant first had knowledge of the 
alleged act of discrimination. However, for good cause shown, HHS may 
extend this time limit.
    (b) HHS will consider the date a complaint is filed to be the date 
upon which the complaint is sufficent to be processed.
    (c) HHS will attempt to facilitate the filing of complaints wherever 
possible, including taking the following measures:
    (1) Accepting as a sufficient complaint, any written statement which 
identifies the parties involved and the date the complainant first had 
knowledge of the alleged violation, describes generally the action or 
practice complained of, and is signed by the complainant.
    (2) Freely permitting a complainant to add information to the 
complaint to meet the requirements of a sufficient complaint.

[[Page 582]]

    (3) Notifying the complainant and the recipient of their rights and 
obligations under the complaint procedure, including the right to have a 
representative at all stages of the complaint procedure.
    (4) Notifying the complainant and the recipient (or their 
representatives) of their right to contact HHS for information and 
assistance regarding the complaint resolution process.
    (d) HHS will return to the complainant any complaint outside the 
jurisdiction of these regulations, and will state the reason(s) why it 
is outside the jurisdiction of these regulations.



Sec.  91.43  Mediation.

    (a) HHS will promptly refer to a mediation agency designated by the 
Secretary all sufficient complaints that:
    (1) Fall within the jurisdiction of the Act and these regulations, 
unless the age distinction complained of is clearly within an exception; 
and,
    (2) Contain all information necessary for further processing.
    (b) Both the complainant and the recipient shall participate in the 
mediation process to the extent necessary to reach an agreement or make 
an informed judgment that an agreement is not possible.
    (c) If the complainant and the recipient reach an agreement, the 
mediator shall prepare a written statement of the agreement and have the 
complainant and the recipient sign it. The mediator shall send a copy of 
the agreement to HHS. HHS will take no further action on the complaint 
unless the complainant or the recipient fails to comply with the 
agreement.
    (d) The mediator shall protect the confidentiality of all 
information obtained in the course of the mediation process. No mediator 
shall testify in any adjudicative proceeding, produce any document, or 
otherwise disclose any information obtained in the course of the 
mediation process without prior approval of the head of the mediation 
agency.
    (e) The mediation will proceed for a maximum of 60 days after a 
complaint is filed with HHS. Mediation ends if:
    (1) 60 days elapse from the time the complaint is filed; or
    (2) Prior to the end of that 60-day period, an agreement is reached; 
or
    (3) Prior to the end of that 60-day period, the mediator determines 
that an agreement cannot be reached.

This 60-day period may be extended by the mediator, with the concurrence 
of HHS, for not more than 30 days if the mediator determines that 
agreement will likely be reached during such extended period.
    (f) The mediator shall return unresolved complaints to HHS.



Sec.  91.44  Investigation.

    (a) Informal investigation. (1) HHS will investigate complaints that 
are unresolved after mediation or are reopened because of a violation of 
a mediation agreement.
    (2) As part of the initial investigation HHS will use informal fact 
finding methods, including joint or separate discussions with the 
complainant and recipient, to establish the fact and, if possible, 
settle the complaint on terms that are mutually agreeable to the 
parties. HHS may seek the assistance of any involved State agency.
    (3) HHS will put any agreement in writing and have it signed by the 
parties and an authorized official at HHS.
    (4) The settlement shall not affect the operation of any other 
enforcement effort of HHS, including compliance reviews and 
investigation of other complaints which may involve the recipient.
    (5) The settlement is not a finding of discrimination against a 
recipient.
    (b) Formal investigation. If HHS cannot resolve the complaint 
through informal investigation, it will begin to develop formal findings 
through further investigation of the complaint. If the investigation 
indicates a violation of these regulations HHS will attempt to obtain 
voluntary compliance. If HHS cannot obtain voluntary compliance it will 
begin enforcement as described in Sec.  91.46.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.45  Prohibition against intimidation or retaliation.

    A recipient may not engage in acts of intimidation or retaliation 
against any person who:

[[Page 583]]

    (a) Attempts to assert a right protected by the Act or these 
regulations; or
    (b) Cooperates in any mediation, investigation, hearing, or other 
part of HHS' investigation, conciliation, and enforcement process.



Sec.  91.46  Compliance procedure.

    (a) HHS may enforce the Act and these regulations through:
    (1) Termination of a recipient's Federal financial assistance from 
HHS under the program or activity involved where the recipient has 
violated the Act or these regulations. The determination of the 
recipient's violation may be made only after a recipient has had an 
opportunity for a hearing on the record before an administrative law 
judge.
    (2) Any other means authorized by law including but not limited to:
    (i) Referral to the Department of Justice for proceedings to enforce 
any rights of the United States or obligations of the recipient created 
by the Act or these regulations.
    (ii) Use of any requirement of or referral to any Federal, State, or 
local government agency that will have the effect of correcting a 
violation of the Act or these regulations.
    (b) HHS will limit any termination under Sec.  91.46(a)(1) to the 
particular recipient and particular program or activity or part of such 
program or activity HHS finds in violation of these regulations. HHS 
will not base any part of a termination on a finding with respect to any 
program or activity of the recipient which does not receive Federal 
financial assistance from HHS.
    (c) HHS will take no action under paragraph (a) until:
    (1) The Secretary has advised the recipient of its failure to comply 
with the Act and these regulations and has determined that voluntary 
compliance cannot be obtained.
    (2) Thirty days have elapsed after the Secretary has sent a written 
report of the circumstances and grounds of the action to the committees 
of the Congress having legislative jurisdiction over the program or 
activity involved. The Secretary will file a report whenever any action 
is taken under paragraph (a).
    (d) HHS also may defer granting new Federal financial assistance 
from HHS to a recipient when a hearing under Sec.  91.46(a)(1) is 
initiated.
    (1) New Federal financial assistance from HHS includes all 
assistance for which HHS requires an application or approval, including 
renewal or continuation of existing activities, or authorization of new 
activities, during the deferral period. New Federal financial assistance 
from HHS does not include increases in funding as a result of changed 
computation of formula awards or assistance approved prior to the 
beginning of a hearing under Sec.  91.46(a)(1).
    (2) HHS will not begin a deferral until the recipient has received a 
notice of an opportunity for a hearing under Sec.  91.46(a)(1). HHS will 
not continue a deferral for more than 60 days unless a hearing has begun 
within that time or the time for beginning the hearing has been extended 
by mutual consent of the recipient and the Secretary. HHS will not 
continue a deferral for more than 30 days after the close of the 
hearing, unless the hearing results in a finding against the recipient.
    (3) HHS will limit any deferral to the particular recipient and 
particular program or activity or part of such program or activity HHS 
finds in violation of these regulations. HHS will not base any part of a 
deferral on a finding with respect to any program or activity of the 
recipient which does not, and would not in connection with the new 
funds, receive Federal financial assistance from HHS.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.47  Hearings, decisions, post-termination proceedings.

    Certain HHS procedural provisions applicable to Title VI of the 
Civil Rights Act of 1964 apply to HHS enforcement of these regulations. 
They are found at 45 CFR 80.9 through 80.11 and 45 CFR part 81.



Sec.  91.48  Remedial action by recipient.

    Where HHS finds a recipient has discriminated on the basis of age, 
the recipient shall take any remedial action that HHS may require to 
overcome the

[[Page 584]]

effects of the discrimination. If another recipient exercises control 
over the recipient that has discriminated, HHS may require both 
recipients to take remedial action.



Sec.  91.49  Alternate funds disbursal procedure.

    (a) When HHS withholds funds from a recipient under these 
regulations, the Secretary may disburse the withheld funds directly to 
an alternate recipient: any public or non-profit private organization or 
agency, or State or political subdivision of the State.
    (b) The Secretary will require any alternate recipient to 
demonstrate:
    (1) The ability to comply with these regulations; and
    (2) The ability to achieve the goals of the Federal statute 
authorizing the Federal financial assistance.

[47 FR 57858, Dec. 28, 1982, as amended at 70 FR 24322, May 9, 2005]



Sec.  91.50  Exhaustion of administrative remedies.

    (a) A complainant may file a civil action following the exhaustion 
of administrative remedies under the Act. Administrative remedies are 
exhausted if:
    (1) 180 days have elapsed since the complainant filed the complaint 
and HHS has made no finding with regard to the complaint; or
    (2) HHS issues any finding in favor of the recipient.
    (b) If HHS fails to make a finding within 180 days or issues a 
finding in favor of the recipient, HHS shall:
    (1) Promptly advise the complainant of this fact; and
    (2) Advise the complainant of his or her right to bring a civil 
action for injunctive relief; and
    (3) Inform the complainant:
    (i) That the complainant may bring a civil action only in a United 
States district court for the district in which the recipient is found 
or transacts business;
    (ii) That a complainant prevailing in a civil action has the right 
to be awarded the costs of the action, including reasonable attorney's 
fees, but that the complainant must demand these costs in the complaint;
    (iii) That before commencing the action the complainant shall give 
30 days notice by registered mail to the Secretary, the Attorney General 
of the United States, and the recipient;
    (iv) That the notice must state: the alleged violation of the Act; 
the relief requested; the court in which the complainant is bringing the 
action; and, whether or not attorney's fees are demanded in the event 
the complainant prevails; and
    (v) That the complainant may not bring an action if the same alleged 
violation of the Act by the same recipient is the subject of a pending 
action in any court of the United States.



  PART 92_NONDISCRIMINATION ON THE BASIS OF RACE, COLOR, NATIONAL ORIGIN, 
  SEX, AGE, OR DISABILITY IN HEALTH PROGRAMS OR ACTIVITIES RECEIVING FEDERAL 
  FINANCIAL ASSISTANCE AND PROGRAMS OR ACTIVITIES ADMINISTERED BY THE DEPARTMENT 
  OF HEALTH AND HUMAN SERVICES UNDER TITLE I OF THE PATIENT PROTECTION 
  AND AFFORDABLE CARE ACT OR BY ENTITIES ESTABLISHED UNDER SUCH TITLE--
  Table of Contents



                      Subpart A_General Provisions

Sec.
92.1 Purpose.
92.2 Nondiscrimination requirements.
92.3 Scope of application.
92.4 Assurances.
92.5 Enforcement mechanisms.
92.6 Relationship to other laws.

    Subpart B_Specific Applications to Health Programs or Activities

92.101 Meaningful access for individuals with limited English 
          proficiency.
92.102 Effective communication for individuals with disabilities.
92.103 Accessibility standards for buildings and facilities.
92.104 Accessibility of information and communication technology.
92.105 Requirement to make reasonable modifications.

    Authority: 42 U.S.C. 18116; 5 U.S.C. 301, Pub. L. 100-259, 102 Stat. 
28 (Mar. 22 1988); 42 U.S.C. 2000d et seq. (Title VI of the Civil Rights 
Act of 1964, as amended); 29 U.S.C. 794 (Section 504 of the 
Rehabilitation Act of 1973, as amended); 20 U.S.C. 1681 et seq. (Title 
IX of the Education Amendments of 1972, as

[[Page 585]]

amended); 42 U.S.C. 6101 et seq.; (Age Discrimination Act of 1975, as 
amended); Lau v. Nichols, 414 U.S. 563 (1974).

    Source: 85 FR 37244, June 19, 2020, unless otherwise noted.



                      Subpart A_General Provisions



Sec.  92.1  Purpose.

    The purpose of this part is to provide for the enforcement of 
section 1557 of the Patient Protection and Affordable Care Act, 42 
U.S.C. 18116, prohibiting discrimination under any health program or 
activity receiving Federal financial assistance, or under any program or 
activity administered by an Executive agency, or by any entity 
established, under Title I of such law, on the grounds of race, color, 
national origin, sex, age, or disability, except as provided in Title I 
of such law (or any amendment thereto). Section 1557 requires the 
application of the enforcement mechanisms under Title VI of the Civil 
Rights Act of 1964 (42 U.S.C. 2000d et seq.), Title IX of the Education 
Amendments of 1972 (20 U.S.C. 1681 et seq.), the Age Discrimination Act 
of 1975 (42 U.S.C. 6101 et seq.), and Section 504 of the Rehabilitation 
Act of 1973 (29 U.S.C. 794) for purposes of violations of Section 1557 
and this part.



Sec.  92.2  Nondiscrimination requirements.

    (a) Except as provided in Title I of the Patient Protection and 
Affordable Care Act (or any amendment thereto), an individual shall not, 
on any of the grounds set forth in paragraph (b) of this section, be 
excluded from participation in, be denied the benefits of, or be 
subjected to discrimination under any health program or activity, any 
part of which is receiving Federal financial assistance (including 
credits, subsidies, or contracts of insurance) provided by the U.S. 
Department of Health and Human Services; or under any program or 
activity administered by the Department under such Title; or under any 
program or activity administered by any entity established under such 
Title.
    (b) The grounds are the grounds prohibited under the following 
statutes:
    (1) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et 
seq.) (race, color, national origin);
    (2) Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et 
seq.) (sex);
    (3) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.) 
(age); or
    (4) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794) 
(disability).



Sec.  92.3  Scope of application.

    (a) Except as otherwise provided in this part, this part applies to
    (1) Any health program or activity, any part of which is receiving 
Federal financial assistance (including credits, subsidies, or contracts 
of insurance) provided by the Department;
    (2) Any program or activity administered by the Department under 
Title I of the Patient Protection and Affordable Care Act; or
    (3) Any program or activity administered by any entity established 
under such Title.
    (b) As used in this part, ``health program or activity'' encompasses 
all of the operations of entities principally engaged in the business of 
providing healthcare that receive Federal financial assistance as 
described in paragraph (a)(1) of this section. For any entity not 
principally engaged in the business of providing healthcare, the 
requirements applicable to a ``health program or activity'' under this 
part shall apply to such entity's operations only to the extent any such 
operation receives Federal financial assistance as described in 
paragraph (a)(1) of this section.
    (c) For purposes of this part, an entity principally or otherwise 
engaged in the business of providing health insurance shall not, by 
virtue of such provision, be considered to be principally engaged in the 
business of providing healthcare.
    (d) Any provision of this part held to be invalid or unenforceable 
by its terms, or as applied to any person or circumstance, shall be 
construed so as to continue to give maximum effect to the provision 
permitted by law, unless such holding shall be one of utter invalidity 
or unenforceability, in which event the provision shall be severable 
from this part and shall not affect the

[[Page 586]]

remainder thereof or the application of the provision to other persons 
not similarly situated or to other, dissimilar circumstances.



Sec.  92.4  Assurances.

    (a) Assurances. An entity applying for Federal financial assistance 
to which this part applies shall, as a condition of any application for 
Federal financial assistance, submit an assurance, on a form specified 
by the Director of the Department's Office for Civil Rights, that the 
entity's health programs or activities will be operated in compliance 
with section 1557 and this part. A health insurance issuer seeking 
certification to participate in an Exchange or a State seeking approval 
to operate a State Exchange to which section 1557 or this part applies 
shall, as a condition of certification or approval, submit an assurance, 
on a form specified by the Director of the Department's Office for Civil 
Rights, that the health program or activity will be operated in 
compliance with section 1557 and this part. An applicant or entity may 
incorporate this assurance by reference in subsequent applications to 
the Department for Federal financial assistance or requests for 
certification to participate in an Exchange or approval to operate a 
State Exchange.
    (b) Duration of obligation. The duration of the assurances required 
by this subpart is the same as the duration of the assurances required 
in the Department's regulations implementing section 504 at 45 CFR 
84.5(b).
    (c) Covenants. When Federal financial assistance is provided in the 
form of real property or interest, the same conditions apply as those 
contained in the Department's regulations implementing section 504 at 45 
CFR 84.5(c), except that the nondiscrimination obligation applies to 
discrimination on all bases covered under section 1557 and this part.



Sec.  92.5  Enforcement mechanisms.

    (a) The enforcement mechanisms provided for, and available under, 
Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.), 
Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.), 
the Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.), or Section 
504 of the Rehabilitation Act of 1973 (29 U.S.C. 794), including under 
the Department's regulations implementing those statutes, shall apply 
for purposes of violations of Sec.  92.2 of this part.
    (b) The Director of the Office for Civil Rights has been delegated 
the authority to enforce 42 U.S.C. 18116 and this part, which includes 
the authority to handle complaints, initiate and conduct compliance 
reviews, conduct investigations, supervise and coordinate compliance 
within the Department, make enforcement referrals to the Department of 
Justice, in coordination with the Office of the General Counsel and the 
relevant component or components of the Department, and take other 
appropriate remedial action as the Director deems necessary, in 
coordination with the relevant component or components of the 
Department, and as allowed by law to overcome the effects of violations 
of 42 U.S.C. 18116 or of this part.



Sec.  92.6  Relationship to other laws.

    (a) Nothing in this part shall be construed to invalidate or limit 
the rights, remedies, procedures, or legal standards available to 
individuals aggrieved under Title VI of the Civil Rights Act of 1964 (42 
U.S.C. 2000d et seq.), Title VII of the Civil Rights Act of 1964 (42 
U.S.C. 2000e et seq.), Title IX of the Education Amendments of 1972 (20 
U.S.C. 1681 et seq.), the Age Discrimination Act of 1975 (42 U.S.C. 6101 
et seq.), or Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794), or to supersede State laws that provide additional protections 
against discrimination on any basis described in Sec.  92.2 of this 
part.
    (b) Insofar as the application of any requirement under this part 
would violate, depart from, or contradict definitions, exemptions, 
affirmative rights, or protections provided by any of the statutes cited 
in paragraph (a) of this section or provided by the Architectural 
Barriers Act of 1968 (42 U.S.C. 4151 et seq.); the Americans with 
Disabilities Act of 1990, as amended by the Americans with Disabilities 
Act Amendments Act of 2008 (42 U.S.C. 12181 et seq.), Section 508 of the 
Rehabilitation Act of 1973, as amended (29 U.S.C. 794d), the Coats-Snowe 
Amendment (42 U.S.C.

[[Page 587]]

238n), the Church Amendments (42 U.S.C. 300a-7), the Religious Freedom 
Restoration Act (42 U.S.C. 2000bb et seq.), Section 1553 of the Patient 
Protection and Affordable Care Act (42 U.S.C. 18113), Section 1303 of 
the Patient Protection and Affordable Care Act (42 U.S.C. 18023), the 
Weldon Amendment (Consolidated Appropriations Act, 2019, Pub. L. 115-
245, Div. B sec. 209 and sec. 506(d) (Sept. 28, 2018)), or any related, 
successor, or similar Federal laws or regulations, such application 
shall not be imposed or required.



    Subpart B_Specific Applications to Health Programs or Activities



Sec.  92.101  Meaningful access for individuals with limited 
English proficiency.

    (a) Any entity operating or administering a health program or 
activity subject to this part shall take reasonable steps to ensure 
meaningful access to such programs or activities by limited English 
proficient individuals.
    (b) Specific applications--(1) Enforcement discretion. In evaluating 
whether any entity to which paragraph (a) of this section applies has 
complied with paragraph (a) of this section, the Director of the 
Department's Office for Civil Rights may assess how such entity balances 
the following four factors:
    (i) The number or proportion of limited English proficient 
individuals eligible to be served or likely to be encountered in the 
eligible service population;
    (ii) The frequency with which LEP individuals come in contact with 
the entity's health program, activity, or service;
    (iii) The nature and importance of the entity's health program, 
activity, or service; and
    (iv) The resources available to the entity and costs.
    (2) Language assistance services requirements. Where paragraph (a) 
of this section, in light of the entity's individualized assessment of 
the four factors set forth in paragraph (b)(1) of this section, requires 
the provision of language assistance services, such services must be 
provided free of charge, be accurate and timely, and protect the privacy 
and independence of the individual with limited English proficiency. 
Language assistance services may include:
    (i) Oral language assistance, including interpretation in non-
English languages provided in-person or remotely by a qualified 
interpreter for an individual with limited English proficiency, and the 
use of qualified bilingual or multilingual staff to communicate directly 
with individuals with limited English proficiency; and
    (ii) Written translation, performed by a qualified translator, of 
written content in paper or electronic form into languages other than 
English.
    (3) Specific requirements for interpreter and translation services. 
(i) Where paragraph (a) of this section, in light of the entity's 
individualized assessment of the four factors set forth in paragraph 
(b)(1) of this section, requires the provision of interpreter services, 
they must be provided by an interpreter who:
    (A) Adheres to generally accepted interpreter ethics principles, 
including client confidentiality;
    (B) Has demonstrated proficiency in speaking and understanding at 
least spoken English and the spoken language in need of interpretation; 
and
    (C) Is able to interpret effectively, accurately, and impartially, 
both receptively and expressly, to and from such language(s) and 
English, using any necessary specialized vocabulary, terminology and 
phraseology.
    (ii) Where paragraph (a) of this section, in light of the entity's 
individualized assessment of the four factors set forth in paragraph 
(b)(1) of this section, requires the provision of translation services 
for written content (in paper or electronic form), they must be provided 
by a translator who:
    (A) Adheres to generally accepted translator ethics principles, 
including client confidentiality;
    (B) Has demonstrated proficiency in writing and understanding at 
least written English and the written language in need of translation; 
and
    (C) Is able to translate effectively, accurately, and impartially to 
and from such language(s) and English, using any necessary specialized 
vocabulary, terminology and phraseology.

[[Page 588]]

    (iii) If remote audio interpreting services are required to comply 
with paragraph (a) of this section, in light of the entity's 
individualized assessment of the four factors set forth in paragraph 
(b)(1) of this section, the entity to which section 1557 applies (as 
defined in Sec.  92.3 of this part) shall provide:
    (A) Real-time, audio over a dedicated high-speed, wide-bandwidth 
video connection or wireless connection that delivers high-quality audio 
without lags or irregular pauses in communication;
    (B) A clear, audible transmission of voices; and
    (C) Adequate training to users of the technology and other involved 
individuals so that they may quickly and efficiently set up and operate 
the remote interpreting services.
    (4) Restricted use of certain persons to interpret or facilitate 
communication. If an entity is required by paragraph (a) of this 
section, in light of the entity's individualized assessment of the four 
factors set forth in paragraph (b)(1) of this section, to provide 
interpretation services, such entity shall not:
    (i) Require an individual with limited English proficiency to 
provide his or her own interpreter;
    (ii) Rely on an adult accompanying an individual with limited 
English proficiency to interpret or facilitate communication, except
    (A) In an emergency involving an imminent threat to the safety or 
welfare of an individual or the public, where there is no qualified 
interpreter for the individual with limited English proficiency 
immediately available; or
    (B) Where the individual with limited English proficiency 
specifically requests that the accompanying adult interpret or 
facilitate communication, the accompanying adult agrees to provide such 
assistance, and reliance on that adult for such assistance is 
appropriate under the circumstances;
    (iii) Rely on a minor child to interpret or facilitate 
communication, except in an emergency involving an imminent threat to 
the safety or welfare of an individual or the public, where there is no 
qualified interpreter for the individual with limited English 
proficiency immediately available; or
    (iv) Rely on staff other than qualified bilingual/multilingual staff 
to communicate directly with individuals with limited English 
proficiency.
    (c) Acceptance of language assistance services is not required. 
Nothing in this section shall be construed to require an individual with 
limited English proficiency to accept language assistance services.



Sec.  92.102  Effective communication for individuals with disabilities.

    (a) Any entity operating or administering a program or activity 
under this part shall take appropriate steps to ensure that 
communications with individuals with disabilities are as effective as 
communications with others in such programs or activities, in accordance 
with the standards found at 28 CFR 35.160 through 35.164. Where the 
regulatory provisions referenced in this section use the term ``public 
entity,'' the term ``entity'' shall apply in its place.
    (b) A recipient or State Exchange shall provide appropriate 
auxiliary aids and services, including interpreters and information in 
alternate formats, to individuals with impaired sensory, manual, or 
speaking skills, where necessary to afford such persons an equal 
opportunity to benefit from the service in question.
    (1) Auxiliary aids and services include:
    (i) Interpreters on-site or through video remote interpreting (VRI) 
services, as defined in 28 CFR 35.104 and 36.303(f); note takers; real-
time computer-aided transcription services; written materials; exchange 
of written notes; telephone handset amplifiers; assistive listening 
devices; assistive listening systems; telephones compatible with hearing 
aids; closed caption decoders; open and closed captioning, including 
real-time captioning; voice, text, and video-based telecommunication 
products and systems, text telephones (TTYs), videophones, and captioned 
telephones, or equally effective telecommunications devices; videotext 
displays; accessible information and communication technology; or other 
effective methods of making aurally delivered information available to 
individuals who are deaf or hard of hearing; and

[[Page 589]]

    (ii) Readers; taped texts; audio recordings; Braille materials and 
displays; screen reader software; magnification software; optical 
readers; secondary auditory programs; large print materials; accessible 
information and communication technology; or other effective methods of 
making visually delivered materials available to individuals who are 
blind or have low vision.
    (2) When an entity is required to provide an interpreter under 
paragraph (b) of this section, the interpreting service shall be 
provided to individuals free of charge and in a timely manner, via a 
remote interpreting service or an onsite appearance, by an interpreter 
who
    (i) Adheres to generally accepted interpreter ethics principles, 
including client confidentiality; and
    (ii) Is able to interpret effectively, accurately, and impartially, 
both receptively and expressively, using any necessary specialized 
vocabulary, terminology and phraseology.
    (3) An interpreter for an individual with a disability for purposes 
of this section can include, for example, sign language interpreters, 
oral transliterators (individuals who represent or spell in the 
characters of another alphabet), and cued language transliterators 
(individuals who represent or spell by using a small number of 
handshapes).
    (c) Disability means, with respect to an individual, a physical or 
mental impairment that substantially limits one or more major life 
activities of such individual; a record of such an impairment; or being 
regarded as having such an impairment, as defined and construed in the 
Rehabilitation Act, 29 U.S.C. 705(9)(B), which incorporates the 
definition of disability in the Americans with Disabilities Act (ADA), 
as amended (42 U.S.C. 12102 et seq.). Where this part cross-references 
regulatory provisions that use the term ``handicap,'' ``handicap'' means 
``disability'' as defined in this section.



Sec.  92.103  Accessibility standards for buildings and facilities.

    (a) Each facility or part of a facility in which health programs or 
activities are conducted that is constructed or altered by or on behalf 
of, or for the use of, a recipient or State Exchange shall comply with 
the 2010 Standards, if the construction or alteration was commenced 
after July 18, 2016, except that if a facility or part of a facility in 
which health programs or activities are conducted that is constructed or 
altered by or on behalf of, or for the use of, a recipient or State 
Exchange, was not covered by the 2010 Standards prior to July 18, 2016, 
such facility or part of a facility shall comply with the 2010 Standards 
if the construction was commenced after January 18, 2018. Departures 
from particular technical and scoping requirements by the use of other 
methods are permitted where substantially equivalent or greater access 
to and usability of the facility is provided. All newly constructed or 
altered buildings or facilities subject to this section shall comply 
with the requirements for a ``public building or facility'' as defined 
in section 106.5 of the 2010 Standards.
    (b) Each facility or part of a facility in which health programs or 
activities under this part are conducted that is constructed or altered 
by or on behalf of, or for the use of, a recipient or State Exchange in 
conformance with the 1991 Standards at appendix D to 28 CFR part 36 or 
the 2010 Standards shall be deemed to comply with the requirements of 
this section and with 45 CFR 84.23(a) and (b) with respect to those 
facilities, if the construction or alteration was commenced on or before 
July 18, 2016. Each facility or part of a facility in which health 
programs or activities are conducted that is constructed or altered by 
or on behalf of, or for the use of, a recipient or State Exchange in 
conformance with UFAS shall be deemed to comply with the requirements of 
this section and with 45 CFR 84.23(a) and (b), if the construction was 
commenced on or before July 18, 2016 and such facility was not covered 
by the 1991 Standards or 2010 Standards.
    (c) For purposes of this part:
    (1) ``1991 Standards'' refers to the 1991 Americans with 
Disabilities Act Standards for Accessible Design at appendix D to 28 CFR 
part 36.
    (2) ``2010 Standards'' refers to the 2010 ADA Standards for 
Accessible Design, as defined in 28 CFR 35.104.

[[Page 590]]

    (3) ``UFAS'' refers to the Uniform Federal Accessibility Standards 
as promulgated in 49 FR 31528 (Aug. 7, 1984).



Sec.  92.104  Accessibility of information and communication technology.

    (a) Entities required to comply with Sec.  92.2, unless otherwise 
exempted by this part, shall ensure that their health programs or 
activities provided through information and communication technology are 
accessible to individuals with disabilities, unless doing so would 
result in undue financial and administrative burdens or a fundamental 
alteration in the nature of the health programs or activities. When 
undue financial and administrative burdens or a fundamental alteration 
exist, the covered entity shall provide information in a format other 
than an electronic format that would not result in such undue financial 
and administrative burdens or a fundamental alteration, but would 
ensure, to the maximum extent possible, that individuals with 
disabilities receive the benefits or services of the health program or 
activity that are provided through information and communication 
technology.
    (b) A recipient or State Exchange shall ensure that its health 
programs or activities provided through websites comply with the 
requirements of Title II of the Americans with Disabilities Act (42 
U.S.C. 12131 through 12165).
    (c) For purposes of this part, ``information and communication 
technology'' (ICT) means information technology and other equipment, 
systems, technologies, or processes, for which the principal function is 
the creation, manipulation, storage, display, receipt, or transmission 
of electronic data and information, as well as any associated content. 
Examples of ICT include computers and peripheral equipment; information 
kiosks and transaction machines; telecommunications equipment; customer 
premises equipment; multifunction office machines; software; 
applications; websites; videos; and, electronic documents.



Sec.  92.105  Requirement to make reasonable modifications.

    Any entity to which section 1557 applies (as defined in Sec.  92.3 
of this part) shall make reasonable modifications to its policies, 
practices, or procedures when such modifications are necessary to avoid 
discrimination on the basis of disability, unless the covered entity can 
demonstrate that making the modifications would fundamentally alter the 
nature of the health program or activity. For the purposes of this 
section, the term ``reasonable modifications'' shall be interpreted in a 
manner consistent with the term as set forth in the regulation 
promulgated under Title II of the Americans with Disabilities Act, at 28 
CFR 35.130(b)(7).



PART 93_NEW RESTRICTIONS ON LOBBYING--Table of Contents



                            Subpart A_General

Sec.
93.100 Conditions on use of funds.
93.105 Definitions.
93.110 Certification and disclosure.

                  Subpart B_Activities by Own Employees

93.200 Agency and legislative liaison.
93.205 Professional and technical services.
93.210 Reporting.

            Subpart C_Activities by Other than Own Employees

93.300 Professional and technical services.

                   Subpart D_Penalties and Enforcement

93.400 Penalties.
93.405 Penalty procedures.
93.410 Enforcement.

                          Subpart E_Exemptions

93.500 Secretary of Defense.

                        Subpart F_Agency Reports

93.600 Semi-annual compilation.
93.605 Inspector General report.

Appendix A to Part 93--Certification Regarding Lobbying
Appendix B to Part 93--Disclosure Form To Report Lobbying

    Authority: Section 319, Public Law 101-121 (31 U.S.C. 1352); (5 
U.S.C. 301).

    Source: 55 FR 6754, Feb. 26, 1990, unless otherwise noted.

    Cross Reference: See also Office of Management and Budget notice 
published at 54 FR 52306, December 20, 1989.

[[Page 591]]



                            Subpart A_General



Sec.  93.100  Conditions on use of funds.

    (a) No appropriated funds may be expended by the recipient of a 
Federal contract, grant, loan, or cooperative ageement to pay any person 
for influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with any of the following 
covered Federal actions: the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (b) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or cooperative agreement shall file with that 
agency a certification, set forth in appendix A to this part, that the 
person has not made, and will not make, any payment prohibited by 
paragraph (a) of this section.
    (c) Each person who requests or receives from an agency a Federal 
contract, grant, loan, or a cooperative agreement shall file with that 
agency a disclosure form, set forth in appendix B to this part, if such 
person has made or has agreed to make any payment using nonappropriated 
funds (to include profits from any covered Federal action), which would 
be prohibited under paragraph (a) of this section if paid for with 
appropriated funds.
    (d) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a statement, set forth in appendix A to this part, 
whether that person has made or has agreed to make any payment to 
influence or attempt to influence an officer or employee of any agency, 
a Member of Congress, an officer or employee of Congress, or an employee 
of a Member of Congress in connection with that loan insurance or 
guarantee.
    (e) Each person who requests or receives from an agency a commitment 
providing for the United States to insure or guarantee a loan shall file 
with that agency a disclosure form, set forth in appendix B to this 
part, if that person has made or has agreed to make any payment to 
influence or attempt to influence an officer or employee of any agency, 
a Member of Congress, an officer or employee of Congress, or an employee 
of a Member of Congress in connection with that loan insurance or 
guarantee.



Sec.  93.105  Definitions.

    For purposes of this part:
    (a) Agency, as defined in 5 U.S.C. 552(f), includes Federal 
executive departments and agencies as well as independent regulatory 
commissions and Government corporations, as defined in 31 U.S.C. 
9101(1).
    (b) Covered Federal action means any of the following Federal 
actions:
    (1) The awarding of any Federal contract;
    (2) The making of any Federal grant;
    (3) The making of any Federal loan;
    (4) The entering into of any cooperative agreement; and,
    (5) The extension, continuation, renewal, amendment, or modification 
of any Federal contract, grant, loan, or cooperative agreement.

Covered Federal action does not include receiving from an agency a 
commitment providing for the United States to insure or guarantee a 
loan. Loan guarantees and loan insurance are addressed independently 
within this part.
    (c) Federal contract means an acquisition contract awarded by an 
agency, including those subject to the Federal Acquisition Regulation 
(FAR), and any other acquisition contract for real or personal property 
or services not subject to the FAR.
    (d) Federal cooperative agreement means a cooperative agreement 
entered into by an agency.
    (e) Federal grant means an award of financial assistance in the form 
of money, or property in lieu of money, by the Federal Government or a 
direct appropriation made by law to any person. The term does not 
include technical assistance which provides services instead of money, 
or other assistance in the form of revenue sharing, loans, loan 
guarantees, loan insurance,

[[Page 592]]

interest subsidies, insurance, or direct United States cash assistance 
to an individual.
    (f) Federal loan means a loan made by an agency. The term does not 
include loan guarantee or loan insurance.
    (g) Indian tribe and tribal organization have the meaning provided 
in section 4 of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450B). Alaskan Natives are included under the definitions 
of Indian tribes in that Act.
    (h) Influencing or attempting to influence means making, with the 
intent to influence, any communication to or appearance before an 
officer or employee or any agency, a Member of Congress, an officer or 
employee of Congress, or an employee of a Member of Congress in 
connection with any covered Federal action.
    (i) Loan guarantee and loan insurance means an agency's guarantee or 
insurance of a loan made by a person.
    (j) Local government means a unit of government in a State and, if 
chartered, established, or otherwise recognized by a State for the 
performance of a governmental duty, including a local public authority, 
a special district, an intrastate district, a council of governments, a 
sponsor group representative organization, and any other instrumentality 
of a local government.
    (k) Officer or employee of an agency includes the following 
individuals who are employed by an agency:
    (1) An individual who is appointed to a position in the Government 
under title 5, U.S. Code, including a position under a temporary 
appointment;
    (2) A member of the uniformed services as defined in section 101(3), 
title 37, U.S. Code;
    (3) A special Government employee as defined in section 202, title 
18, U.S. Code; and,
    (4) An individual who is a member of a Federal advisory committee, 
as defined by the Federal Advisory Committee Act, title 5, U.S. Code 
appendix 2.
    (l) Person means an individual, corporation, company, association, 
authority, firm, partnership, society, State, and local government, 
regardless of whether such entity is operated for profit or not for 
profit. This term excludes an Indian tribe, tribal organization, or any 
other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (m) Reasonable compensation means, with respect to a regularly 
employed officer or employee of any person, compensation that is 
consistent with the normal compensation for such officer or employee for 
work that is not furnished to, not funded by, or not furnished in 
cooperation with the Federal Government.
    (n) Reasonable payment means, with respect to professional and other 
technical services, a payment in an amount that is consistent with the 
amount normally paid for such services in the private sector.
    (o) Recipient includes all contractors, subcontractors at any tier, 
and subgrantees at any tier of the recipient of funds received in 
connection with a Federal contract, grant, loan, or cooperative 
agreement. The term excludes an Indian tribe, tribal organization, or 
any other Indian organization with respect to expenditures specifically 
permitted by other Federal law.
    (p) Regularly employed means, with respect to an officer or employee 
of a person requesting or receiving a Federal contract, grant, loan, or 
cooperative agreement or a commitment providing for the United States to 
insure or guarantee a loan, an officer or employee who is employed by 
such person for at least 130 working days within one year immediately 
preceding the date of the submission that initiates agency consideration 
of such person for receipt of such contract, grant, loan, cooperative 
agreement, loan insurance commitment, or loan guarantee commitment. An 
officer or employee who is employed by such person for less than 130 
working days within one year immediately preceding the date of the 
submission that initiates agency consideration of such person shall be 
considered to be regularly employed as soon as he or she is employed by 
such person for 130 working days.
    (q) State means a State of the United States, the District of 
Columbia, the Commonwealth of Puerto Rico, a territory or possession of 
the United States, an agency or instrumentality of a

[[Page 593]]

State, and a multi-State, regional, or interstate entity having 
governmental duties and powers.



Sec.  93.110  Certification and disclosure.

    (a) Each person shall file a certification, and a disclosure form, 
if required, with each submission that initiates agency consideration of 
such person for:
    (1) Award of a Federal contract, grant, or cooperative agreement 
exceeding $100,000; or
    (2) An award of a Federal loan or a commitment providing for the 
United States to insure or guarantee a loan exceeding $150,000.
    (b) Each person shall file a certification, and a disclosure form, 
if required, upon receipt by such person of:
    (1) A Federal contract, grant, or cooperative agreement exceeding 
$100,000; or
    (2) A Federal loan or a commitment providing for the United States 
to insure or guarantee a loan exceeding $150,000,

unless such person previously filed a certification, and a disclosure 
form, if required, under paragraph (a) of this section.
    (c) Each person shall file a disclosure form at the end of each 
calendar quarter in which there occurs any event that requires 
disclosure or that materially affects the accuracy of the information 
contained in any disclosure form previously filed by such person under 
paragraphs (a) or (b) of this section. An event that materially affects 
the accuracy of the information reported includes:
    (1) A cumulative increase of $25,000 or more in the amount paid or 
expected to be paid for influencing or attempting to influence a covered 
Federal action; or
    (2) A change in the person(s) or individual(s) influencing or 
attempting to influence a covered Federal action; or,
    (3) A change in the officer(s), employee(s), or Member(s) contacted 
to influence or attempt to influence a covered Federal action.
    (d) Any person who requests or receives from a person referred to in 
paragraphs (a) or (b) of this section:
    (1) A subcontract exceeding $100,000 at any tier under a Federal 
contract;
    (2) A subgrant, contract, or subcontract exceeding $100,000 at any 
tier under a Federal grant;
    (3) A contract or subcontract exceeding $100,000 at any tier under a 
Federal loan exceeding $150,000; or,
    (4) A contract or subcontract exceeding $100,000 at any tier under a 
Federal cooperative agreement,

shall file a certification, and a disclosure form, if required, to the 
next tier above.
    (e) All disclosure forms, but not certifications, shall be forwarded 
from tier to tier until received by the person referred to in paragraphs 
(a) or (b) of this section. That person shall forward all disclosure 
forms to the agency.
    (f) Any certification or disclosure form filed under paragraph (e) 
of this section shall be treated as a material representation of fact 
upon which all receiving tiers shall rely. All liability arising from an 
erroneous representation shall be borne solely by the tier filing that 
representation and shall not be shared by any tier to which the 
erroneous representation is forwarded. Submitting an erroneous 
certification or disclosure constitutes a failure to file the required 
certification or disclosure, respectively. If a person fails to file a 
required certification or disclosure, the United States may pursue all 
available remedies, including those authorized by section 1352, title 
31, U.S. Code.
    (g) For awards and commitments in process prior to December 23, 
1989, but not made before that date, certifications shall be required at 
award or commitment, covering activities occurring between December 23, 
1989, and the date of award or commitment. However, for awards and 
commitments in process prior to the December 23, 1989 effective date of 
these provisions, but not made before December 23, 1989, disclosure 
forms shall not be required at time of award or commitment but shall be 
filed within 30 days.
    (h) No reporting is required for an activity paid for with 
appropriated funds if that activity is allowable under either subpart B 
or C.

[[Page 594]]



                  Subpart B_Activities by Own Employees



Sec.  93.200  Agency and legislative liaison.

    (a) The prohibition on the use of appropriated funds, in Sec.  
93.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement if 
the payment is for agency and legislative liaison activities not 
directly related to a covered Federal action.
    (b) For purposes of paragraph (a) of this section, providing any 
information specifically requested by an agency or Congress is allowable 
at any time.
    (c) For purposes of paragraph (a) of this section, the following 
agency and legislative liaison activities are allowable at any time only 
where they are not related to a specific solicitation for any covered 
Federal action:
    (1) Discussing with an agency (including individual demonstrations) 
the qualities and characteristics of the person's products or services, 
conditions or terms of sale, and service capabilities; and,
    (2) Technical discussions and other activities regarding the 
application or adaptation of the person's products or services for an 
agency's use.
    (d) For purposes of paragraph (a) of this section, the following 
agencies and legislative liaison activities are allowable only where 
they are prior to formal solicitation of any covered Federal action:
    (1) Providing any information not specifically requested but 
necessary for an agency to make an informed decision about initiation of 
a covered Federal action;
    (2) Technical discussions regarding the preparation of an 
unsolicited proposal prior to its official submission; and,
    (3) Capability presentations by persons seeking awards from an 
agency pursuant to the provisions of the Small Business Act, as amended 
by Public Law 95-507 and other subsequent amendments.
    (e) Only those activities expressly authorized by this section are 
allowable under this section.



Sec.  93.205  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec.  
93.100 (a), does not apply in the case of a payment of reasonable 
compensation made to an officer or employee of a person requesting or 
receiving a Federal contract, grant, loan, or cooperative agreement or 
an extension, continuation, renewal, amendment, or modification of a 
Federal contract, grant, loan, or cooperative agreement if payment is 
for professional or technical services rendered directly in the 
preparation, submission, or negotiation of any bid, proposal, or 
application for that Federal contract, grant, loan, or cooperative 
agreement or for meeting requirements imposed by or pursuant to law as a 
condition for receiving that Federal contract, grant, loan, or 
cooperative agreement.
    (b) For purposes of paragraph (a) of this section, professional and 
technical services shall be limited to advice and analysis directly 
applying any professional or technical discipline. For example, drafting 
of a legal document accompanying a bid or proposal by a lawyer is 
allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made

[[Page 595]]

by an engineer providing an engineering analysis prior to the 
preparation or submission of a bid or proposal are not allowable under 
this section since the engineer is providing technical services but not 
directly in the preparation, submission or negotiation of a covered 
Federal action.
    (c) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (d) Only those services expressly authorized by this section are 
allowable under this section.



Sec.  93.210  Reporting.

    No reporting is required with respect to payments of reasonable 
compensation made to regularly employed officers or employees of a 
person.



            Subpart C_Activities by Other than Own Employees



Sec.  93.300  Professional and technical services.

    (a) The prohibition on the use of appropriated funds, in Sec.  
93.100 (a), does not apply in the case of any reasonable payment to a 
person, other than an officer or employee of a person requesting or 
receiving a covered Federal action, if the payment is for professional 
or technical services rendered directly in the preparation, submission, 
or negotiation of any bid, proposal, or application for that Federal 
contract, grant, loan, or cooperative agreement or for meeting 
requirements imposed by or pursuant to law as a condition for receiving 
that Federal contract, grant, loan, or cooperative agreement.
    (b) The reporting requirements in Sec.  93.110 (a) and (b) regarding 
filing a disclosure form by each person, if required, shall not apply 
with respect to professional or technical services rendered directly in 
the preparation, submission, or negotiation of any commitment providing 
for the United States to insure or guarantee a loan.
    (c) For purposes of paragraph (a) of this section, professional and 
technical services shall be limited to advice and analysis directly 
applying any professional or technical discipline. For example, drafting 
or a legal document accompanying a bid or proposal by a lawyer is 
allowable. Similarly, technical advice provided by an engineer on the 
performance or operational capability of a piece of equipment rendered 
directly in the negotiation of a contract is allowable. However, 
communications with the intent to influence made by a professional (such 
as a licensed lawyer) or a technical person (such as a licensed 
accountant) are not allowable under this section unless they provide 
advice and analysis directly applying their professional or technical 
expertise and unless the advice or analysis is rendered directly and 
solely in the preparation, submission or negotiation of a covered 
Federal action. Thus, for example, communications with the intent to 
influence made by a lawyer that do not provide legal advice or analysis 
directly and solely related to the legal aspects of his or her client's 
proposal, but generally advocate one proposal over another are not 
allowable under this section because the lawyer is not providing 
professional legal services. Similarly, communications with the intent 
to influence made by an engineer providing an engineering analysis prior 
to the preparation or submission of a bid or proposal are not allowable 
under this section since the engineer is providing technical services 
but not directly in the preparation, submission or negotiation of a 
covered Federal action.
    (d) Requirements imposed by or pursuant to law as a condition for 
receiving a covered Federal award include those required by law or 
regulation, or reasonably expected to be required by law or regulation, 
and any other requirements in the actual award documents.
    (e) Persons other than officers or employees of a person requesting 
or receiving a covered Federal action include consultants and trade 
associations.
    (f) Only those services expressly authorized by this section are 
allowable under this section.

[[Page 596]]



                   Subpart D_Penalties and Enforcement



Sec.  93.400  Penalties.

    (a) Any person who makes an expenditure prohibited herein shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 \1\ for each such expenditure.
---------------------------------------------------------------------------

    \1\ The amounts specified in this section are updated annually, as 
adjusted in accordance with the Federal Civil Monetary Penalty Inflation 
Adjustment Act of 1990 (Pub. L. 101-140), as amended by the Federal 
Civil Penalties Inflation Adjustment Act Improvements Act of 2015 
(section 701 of Pub. L. 114-74). Annually adjusted amounts are published 
at 45 CFR part 102.
---------------------------------------------------------------------------

    (b) Any person who fails to file or amend the disclosure form (see 
appendix B to this part) to be filed or amended if required herein, 
shall be subject to a civil penalty of not less than $10,000 and not 
more than $100,000 for each such failure.
    (c) A filing or amended filing on or after the date on which an 
administrative action for the imposition of a civil penalty is commenced 
does not prevent the imposition of such civil penalty for a failure 
occurring before that date. An administrative action is commenced with 
respect to a failure when an investigating official determines in 
writing to commence an investigation of an allegation of such failure.
    (d) In determining whether to impose a civil penalty, and the amount 
of any such penalty, by reason of a violation by any person, the agency 
shall consider the nature, circumstances, extent, and gravity of the 
violation, the effect on the ability of such person to continue in 
business, any prior violations by such person, the degree of culpability 
of such person, the ability of the person to pay the penalty, and such 
other matters as may be appropriate.
    (e) First offenders under paragraphs (a) or (b) of this section 
shall be subject to a civil penalty of $10,000, absent aggravating 
circumstances. Second and subsequent offenses by persons shall be 
subject to an appropriate civil penalty between $10,000 and $100,000, as 
determined by the agency head or his or her designee.
    (f) An imposition of a civil penalty under this section does not 
prevent the United States from seeking any other remedy that may apply 
to the same conduct that is the basis for the imposition of such civil 
penalty.

[55 FR 6754, Feb. 26, 1990, as amended at 81 FR 61565, Sept. 6, 2016]



Sec.  93.405  Penalty procedures.

    Agencies shall impose and collect civil penalties pursuant to the 
provisions of the Program Fraud and Civil Remedies Act, 31 U.S.C. 
sections 3803 (except subsection (c)), 3804, 3805, 3806, 3807, 3808, and 
3812, insofar as these provisions are not inconsistent with the 
requirements herein.



Sec.  93.410  Enforcement.

    The head of each agency shall take such actions as are necessary to 
ensure that the provisions herein are vigorously implemented and 
enforced in that agency.



                          Subpart E_Exemptions



Sec.  93.500  Secretary of Defense.

    (a) The Secretary of Defense may exempt, on a case-by-case basis, a 
covered Federal action from the prohibition whenever the Secretary 
determines, in writing, that such an exemption is in the national 
interest. The Secretary shall transmit a copy of each such written 
exemption to Congress immediately after making such a determination.
    (b) The Department of Defense may issue supplemental regulations to 
implement paragraph (a) of this section.



                        Subpart F_Agency Reports



Sec.  93.600  Semi-annual compilation.

    (a) The head of each agency shall collect and compile the disclosure 
reports (see appendix B to this part) and, on May 31 and November 30 of 
each year, submit to the Secretary of the Senate and the Clerk of the 
House of Representatives a report containing a compilation of the 
information contained in the disclosure reports received during the six-
month period ending on March 31 or September 30, respectively, of that 
year.
    (b) The report, including the compilation, shall be available for 
public

[[Page 597]]

inspection 30 days after receipt of the report by the Secretary and the 
Clerk.
    (c) Information that involves intelligence matters shall be reported 
only to the Select Committee on Intelligence of the Senate, the 
Permanent Select Committee on Intelligence of the House of 
Representatives, and the Committees on Appropriations of the Senate and 
the House of Representatives in accordance with procedures agreed to by 
such committees. Such information shall not be available for public 
inspection.
    (d) Information that is classified under Executive Order 12356 or 
any successor order shall be reported only to the Committee on Foreign 
Relations of the Senate and the Committee on Foreign Affairs of the 
House of Representatives or the Committees on Armed Services of the 
Senate and the House of Representatives (whichever such committees have 
jurisdiction of matters involving such information) and to the 
Committees on Appropriations of the Senate and the House of 
Representatives in accordance with procedures agreed to by such 
committees. Such information shall not be available for public 
inspection.
    (e) The first semi-annual compilation shall be submitted on May 31, 
1990, and shall contain a compilation of the disclosure reports received 
from December 23, 1989 to March 31, 1990.
    (f) Major agencies, designated by the Office of Management and 
Budget (OMB), are required to provide machine-readable compilations to 
the Secretary of the Senate and the Clerk of the House of 
Representatives no later than with the compilations due on May 31, 1991. 
OMB shall provide detailed specifications in a memorandum to these 
agencies.
    (g) Non-major agencies are requested to provide machine-readable 
compilations to the Secretary of the Senate and the Clerk of the House 
of Representatives.
    (h) Agencies shall keep the originals of all disclosure reports in 
the official files of the agency.



Sec.  93.605  Inspector General report.

    (a) The Inspector General, or other official as specified in 
paragraph (b) of this section, of each agency shall prepare and submit 
to Congress each year, commencing with submission of the President's 
Budget in 1991, an evaluation of the compliance of that agency with, and 
the effectiveness of, the requirements herein. The evaluation may 
include any recommended changes that may be necessary to strengthen or 
improve the requirements.
    (b) In the case of an agency that does not have an Inspector 
General, the agency official comparable to an Inspector General shall 
prepare and submit the annual report, or, if there is no such comparable 
official, the head of the agency shall prepare and submit the annual 
report.
    (c) The annual report shall be submitted at the same time the agency 
submits its annual budget justifications to Congress.
    (d) The annual report shall include the following: All alleged 
violations relating to the agency's covered Federal actions during the 
year covered by the report, the actions taken by the head of the agency 
in the year covered by the report with respect to those alleged 
violations and alleged violations in previous years, and the amounts of 
civil penalties imposed by the agency in the year covered by the report.





      Sec. Appendix A to Part 93--Certification Regarding Lobbying

 Certification for Contracts, Grants, Loans, and Cooperative Agreements

    The undersigned certifies, to the best of his or her knowledge and 
belief, that:
    (1) No Federal appropriated funds have been paid or will be paid, by 
or on behalf of the undersigned, to any person for influencing or 
attempting to influence an officer or employee of an agency, a Member of 
Congress, an officer or employee of Congress, or an employee of a Member 
of Congress in connection with the awarding of any Federal contract, the 
making of any Federal grant, the making of any Federal loan, the 
entering into of any cooperative agreement, and the extension, 
continuation, renewal, amendment, or modification of any Federal 
contract, grant, loan, or cooperative agreement.
    (2) If any funds other than Federal appropriated funds have been 
paid or will be paid to any person for influencing or attempting to 
influence an officer or employee of any agency, a Member of Congress, an 
officer or employee of Congress, or an employee of a

[[Page 598]]

Member of Congress in connection with this Federal contract, grant, 
loan, or cooperative agreement, the undersigned shall complete and 
submit Standard Form-LLL, ``Disclosure Form to Report Lobbying,'' in 
accordance with its instructions.
    (3) The undersigned shall require that the language of this 
certification be included in the award documents for all subawards at 
all tiers (including subcontracts, subgrants, and contracts under 
grants, loans, and cooperative agreements) and that all subrecipients 
shall certify and disclose accordingly.
    This certification is a material representation of fact upon which 
reliance was placed when this transaction was made or entered into. 
Submission of this certification is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required certification shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 \1\ for each such failure.
---------------------------------------------------------------------------

    \1\ The amounts specified in Appendix A to Part 93 are updated 
annually, as adjusted in accordance with the Federal Civil Monetary 
Penalty Inflation Adjustment Act of 1990 (Pub. L. 101-140), as amended 
by the Federal Civil Penalties Inflation Adjustment Act Improvements Act 
of 2015 (section 701 of Pub. L. 114-74). Annually adjusted amounts are 
published at 45 CFR part 102.
---------------------------------------------------------------------------

            Statement for Loan Guarantees and Loan Insurance

    The undersigned states, to the best of his or her knowledge and 
belief, that:
    If any funds have been paid or will be paid to any person for 
influencing or attempting to influence an officer or employee of any 
agency, a Member of Congress, an officer or employee of Congress, or an 
employee of a Member of Congress in connection with this commitment 
providing for the United States to insure or guarantee a loan, the 
undersigned shall complete and submit Standard Form-LLL, ``Disclosure 
Form to Report Lobbying,'' in accordance with its instructions.
    Submission of this statement is a prerequisite for making or 
entering into this transaction imposed by section 1352, title 31, U.S. 
Code. Any person who fails to file the required statement shall be 
subject to a civil penalty of not less than $10,000 and not more than 
$100,000 for each such failure.

[55 FR 6754, Feb. 26, 1990, as amended at 81 FR 61565, Sept. 6, 2016]

[[Page 599]]



     Sec. Appendix B to Part 93--Disclosure Form To Report Lobbying
[GRAPHIC] [TIFF OMITTED] TC01JA91.003


[[Page 600]]


[GRAPHIC] [TIFF OMITTED] TC01JA91.004


[[Page 601]]


[GRAPHIC] [TIFF OMITTED] TC01JA91.005



PART 94_RESPONSIBLE PROSPECTIVE CONTRACTORS--Table of Contents



Sec.
94.1 Purpose.
94.2 Applicability.
94.3 Definitions.
94.4 Responsibilities of Institutions regarding Investigator financial 
          conflicts of interest.

[[Page 602]]

94.5 Management and reporting of financial conflicts of interest.
94.6 Remedies.

    Authority: 42 U.S.C. 216, 289b-1, 299c-4.

    Source: 76 FR 53288, Aug. 25, 2011, unless otherwise noted.



Sec.  94.1  Purpose.

    This part promotes objectivity in research by establishing standards 
that provide a reasonable expectation that the design, conduct, and 
reporting of research performed under PHS contracts will be free from 
bias resulting from Investigator financial conflicts of interest.



Sec.  94.2  Applicability.

    This part is applicable to each Institution that submits a proposal, 
or that receives, Public Health Service (PHS) research funding by means 
of a contract and, through the implementation of this part by the 
Institution, to each Investigator who is planning to participate in, or 
is participating in such research; provided, however, that this part 
does not apply to SBIR Program Phase I applications.



Sec.  94.3  Definitions.

    As used in this part:
    Contractor means an entity that provides property or services under 
contract for the direct benefit or use of the Federal Government.
    Disclosure of significant financial interests means an 
Investigator's disclosure of significant financial interests to an 
Institution.
    Financial conflict of interest (FCOI) means a significant financial 
interest that could directly and significantly affect the design, 
conduct, or reporting of PHS-funded research.
    FCOI report means an Institution's report of a financial conflict of 
interest to a PHS Awarding Component.
    Financial interest means anything of monetary value, whether or not 
the value is readily ascertainable.
    HHS means the United States Department of Health and Human Services, 
and any components of the Department to which the authority involved may 
be delegated.
    Institution means any domestic or foreign, public or private, entity 
or organization (excluding a Federal agency) that submits a proposal, or 
that receives, PHS research funding.
    Institutional responsibilities means an Investigator's professional 
responsibilities on behalf of the Institution, and as defined by the 
Institution in its policy on financial conflicts of interest, which may 
include for example: activities such as research, research consultation, 
teaching, professional practice, institutional committee memberships, 
and service on panels such as Institutional Review Boards or Data and 
Safety Monitoring Boards.
    Investigator means the project director or principal Investigator 
and any other person, regardless of title or position, who is 
responsible for the design, conduct, or reporting of research funded by 
the PHS, or proposed for such funding, which may include, for example, 
collaborators or consultants.
    Key personnel includes the PD/PI and any other personnel considered 
to be essential to work performance in accordance with HHSAR subpart 
352.242-70 and identified as key personnel in the contract proposal and 
contract.
    Manage means taking action to address a financial conflict of 
interest, which can include reducing or eliminating the financial 
conflict of interest, to ensure, to the extent possible, that the 
design, conduct, and reporting of research will be free from bias.
    PD/PI means a project director or principal Investigator of a PHS-
funded research project; the PD/PI is included in the definitions of key 
personnel and Investigator under this part.
    PHS means the Public Health Service of the U.S. Department of Health 
and Human Services, and any components of the PHS to which the authority 
involved may be delegated, including the National Institutes of Health 
(NIH).
    PHS Awarding Component means the organizational unit of the PHS that 
funds the research that is subject to this part.
    Public Health Service Act or PHS Act means the statute codified at 
42 U.S.C. 201 et seq.
    Research means a systematic investigation, study or experiment 
designed to develop or contribute to generalizable knowledge relating 
broadly to public health, including behavioral and

[[Page 603]]

social-sciences research. The term encompasses basic and applied 
research (e.g., a published article, book or book chapter) and product 
development (e.g., a diagnostic test or drug). As used in this part, the 
term includes any such activity for which research funding is available 
from a PHS Awarding Component through a contract, whether authorized 
under the PHS Act or other statutory authority.
    Significant financial interest means:
    (1) A financial interest consisting of one or more of the following 
interests of the Investigator (and those of the Investigator's spouse 
and dependent children) that reasonably appears to be related to the 
Investigator's institutional responsibilities:
    (i) With regard to any publicly traded entity, a significant 
financial interest exists if the value of any remuneration received from 
the entity in the twelve months preceding the disclosure and the value 
of any equity interest in the entity as of the date of disclosure, when 
aggregated, exceeds $5,000. For purposes of this definition, 
remuneration includes salary and any payment for services not otherwise 
identified as salary (e.g., consulting fees, honoraria, paid 
authorship); equity interest includes any stock, stock option, or other 
ownership interest, as determined through reference to public prices or 
other reasonable measures of fair market value;
    (ii) With regard to any non-publicly traded entity, a significant 
financial interest exists if the value of any remuneration received from 
the entity in the twelve months preceding the disclosure, when 
aggregated, exceeds $5,000, or when the Investigator (or the 
Investigator's spouse or dependent children) holds any equity interest 
(e.g., stock, stock option, or other ownership interest); or
    (iii) Intellectual property rights and interests (e.g., patents, 
copyrights), upon receipt of income related to such rights and 
interests.
    (2) Investigators also must disclose the occurrence of any 
reimbursed or sponsored travel (i.e., that which is paid on behalf of 
the Investigator and not reimbursed to the Investigator so that the 
exact monetary value may not be readily available), related to their 
Institutional responsibilities; provided, however, that this disclosure 
requirement does not apply to travel that is reimbursed or sponsored by 
a Federal, state, or local government agency, an Institution of higher 
education as defined at 20 U.S.C. 1001(a), an academic teaching 
hospital, a medical center, or a research institute that is affiliated 
with an Institution of higher education. The Institution's FCOI policy 
will specify the details of this disclosure, which will include, at a 
minimum, the purpose of the trip, the identity of the sponsor/organizer, 
the destination, and the duration. In accordance with the Institution's 
FCOI policy, the Institutional official(s) will determine if further 
information is needed, including a determination or disclosure of 
monetary value, in order to determine whether the travel constitutes an 
FCOI with the PHS-funded research.
    (3) The term significant financial interest does not include the 
following types of financial interests: salary, royalties, or other 
remuneration paid by the Institution to the Investigator if the 
Investigator is currently employed or otherwise appointed by the 
Institution, including intellectual property rights assigned to the 
Institution and agreements to share in royalties related to such rights; 
any ownership interest in the Institution held by the Investigator, if 
the Institution is a commercial or for-profit organization; income from 
investment vehicles, such as mutual funds and retirement accounts, as 
long as the Investigator does not directly control the investment 
decisions made in these vehicles; income from seminars, lectures, or 
teaching engagements sponsored by a Federal, state, or local government 
agency, an Institution of higher education as defined at 20 U.S.C. 
1001(a), an academic teaching hospital, a medical center, or a research 
institute that is affiliated with an Institution of higher education; or 
income from service on advisory committees or review panels for a 
Federal, state, or local government agency, an Institution of higher 
education as defined at 20 U.S.C. 1001(a), an academic teaching 
hospital, a medical center, or a research institute that is affiliated 
with an Institution of higher education.

[[Page 604]]

    Small Business Innovation Research (SBIR) Program means the 
extramural research program for small businesses that is established by 
the Awarding Components of the Public Health Service and certain other 
Federal agencies under Public Law 97-219, the Small Business Innovation 
Development Act, as amended. For purposes of this part, the term SBIR 
Program also includes the Small Business Technology Transfer (STTR) 
Program, which was established by Public Law 102-564.



Sec.  94.4  Responsibilities of Institutions regarding Investigator 
financial conflicts of interest.

    Each Institution shall:
    (a) Maintain an up-to-date, written, enforced policy on financial 
conflicts of interest that complies with this part, and make such policy 
available via a publicly accessible Web site. If the Institution does 
not have any current presence on a publicly accessible Web site (and 
only in those cases), the Institution shall make its written policy 
available to any requestor within five business days of a request. If, 
however, the Institution acquires a presence on a publicly accessible 
Web site during the time of the PHS award, the requirement to post the 
information on that Web site will apply within 30 calendar days. If an 
Institution maintains a policy on financial conflicts of interest that 
includes standards that are more stringent than this part (e.g., that 
require a more extensive disclosure of financial interests), the 
Institution shall adhere to its policy and shall provide FCOI reports 
regarding identified financial conflicts of interest to the PHS Awarding 
Component in accordance with the Institution's own standards and within 
the timeframe prescribed by this part.
    (b) Inform each Investigator of the Institution's policy on 
financial conflicts of interest, the Investigator's responsibilities 
regarding disclosure of significant financial interests, and of these 
regulations, and require each Investigator to complete training 
regarding the same prior to engaging in research related to any PHS-
funded contract and at least every four years, and immediately when any 
of the following circumstances apply:
    (1) The Institution revises its financial conflict of interest 
policies or procedures in any manner that affects the requirements of 
Investigators;
    (2) An Investigator is new to an Institution; or
    (3) An Institution finds that an Investigator is not in compliance 
with the Institution's financial conflict of interest policy or 
management plan.
    (c) If the Institution carries out the PHS-funded research through a 
subrecipient (e.g., subcontractors, or consortium members), the 
Institution (awardee Institution) must take reasonable steps to ensure 
that any subrecipient Investigator complies with this part by
    (1) Incorporating as part of a written agreement with the 
subrecipient terms that establish whether the financial conflicts of 
interest policy of the awardee Institution or that of the subrecipient 
will apply to the subrecipient's Investigators.
    (i) If the subrecipient's Investigators must comply with the 
subrecipient's financial conflicts of interest policy, the subrecipient 
shall certify as part of the agreement referenced above that its policy 
complies with this part. If the subrecipient cannot provide such 
certification, the agreement shall state that subrecipient Investigators 
are subject to the financial conflicts of interest policy of the awardee 
Institution for disclosing significant financial interests that are 
directly related to the subrecipient's work for the awardee Institution;
    (ii) Additionally, if the subrecipient's Investigators must comply 
with the subrecipient's financial conflicts of interest policy, the 
agreement referenced above shall specify time period(s) for the 
subrecipient to report all identified financial conflicts of interest to 
the awardee Institution. Such time period(s) shall be sufficient to 
enable the awardee Institution to provide timely FCOI reports, as 
necessary, to the PHS as required by this part;
    (iii) Alternatively, if the subrecipient's Investigators must comply 
with the awardee Institution's financial conflicts of interest policy, 
the agreement referenced above shall specify time period(s) for the 
subrecipient to submit

[[Page 605]]

all Investigator disclosures of significant financial interests to the 
awardee Institution. Such time period(s) shall be sufficient to enable 
the awardee Institution to comply timely with its review, management, 
and reporting obligations under this part.
    (2) Providing FCOI reports to the PHS Awarding Component regarding 
all financial conflicts of interest of all subrecipient Investigators 
consistent with this part, i.e., prior to the expenditure of funds and 
within 60 days of any subsequently identified FCOI.
    (d) Designate an institutional official(s) to solicit and review 
disclosures of significant financial interests from each Investigator 
who is planning to participate in, or is participating in, the PHS-
funded research.
    (e)(1) Require that each Investigator who is planning to participate 
in the PHS-funded research disclose to the Institution's designated 
official(s) the Investigator's significant financial interests (and 
those of the Investigator's spouse and dependent children) no later than 
date of submission of the Institution's proposal for PHS-funded 
research.
    (2) Require each Investigator who is participating in the PHS-funded 
research to submit an updated disclosure of significant financial 
interests at least annually, in accordance with the specific time period 
prescribed by the Institution, during the period of the award. Such 
disclosure shall include any information that was not disclosed 
initially to the Institution pursuant to paragraph (e)(1) of this 
section, or in a subsequent disclosure of significant financial 
interests (e.g., any financial conflict of interest identified on a PHS-
funded project that was transferred from another Institution), and shall 
include updated information regarding any previously disclosed 
significant financial interest (e.g., the updated value of a previously 
disclosed equity interest).
    (3) Require each Investigator who is participating in the PHS-funded 
research to submit an updated disclosure of significant financial 
interests within thirty days of discovering or acquiring (e.g., through 
purchase, marriage, or inheritance) a new significant financial 
interest.
    (f) Provide guidelines consistent with this part for the designated 
institutional official(s) to determine whether an Investigator's 
significant financial interest is related to PHS-funded research and, if 
so related, whether the significant financial interest is a financial 
conflict of interest. An Investigator's significant financial interest 
is related to PHS-funded research when the Institution, through its 
designated official(s), reasonably determines that the significant 
financial interest: Could be affected by the PHS-funded research; or is 
in an entity whose financial interest could be affected by the research. 
The Institution may involve the Investigator in the designated 
official(s)'s determination of whether a significant financial interest 
is related to the PHS-funded research. A financial conflict of interest 
exists when the Institution, through its designated official(s), 
reasonably determines that the significant financial interest could 
directly and significantly affect the design, conduct, or reporting of 
the PHS-funded research.
    (g) Take such actions as necessary to manage financial conflicts of 
interest, including any financial conflicts of a subrecipient 
Investigator pursuant to paragraph (c) of this section. Management of an 
identified financial conflict of interest requires development and 
implementation of a management plan and, if necessary, a retrospective 
review and mitigation report pursuant to Sec.  94.5(a).
    (h) Provide initial and ongoing FCOI reports to the PHS as required 
pursuant to Sec.  94.5(b).
    (i) Maintain records relating to all Investigator disclosures of 
financial interests and the Institution's review of, and response to, 
such disclosures (whether or not a disclosure resulted in the 
Institution's determination of a financial conflict of interest), and 
all actions under the Institution's policy or retrospective review, if 
applicable, for at least three years from the date of final payment or, 
where applicable, for the time periods specified in 48 CFR part 4, 
subpart 4.7.
    (j) Establish adequate enforcement mechanisms and provide for 
employee

[[Page 606]]

sanctions or other administrative actions to ensure Investigator 
compliance as appropriate.
    (k) Certify, in each contract proposal to which this part applies, 
that the Institution:
    (1) Has in effect at that Institution an up-to-date, written, and 
enforced administrative process to identify and manage financial 
conflicts of interest with respect to all research projects for which 
funding is sought or received from the PHS;
    (2) Shall promote and enforce Investigator compliance with this 
part's requirements including those pertaining to disclosure of 
significant financial interests;
    (3) Shall manage financial conflicts of interest and provide initial 
and ongoing FCOI reports to the PHS Awarding Component consistent with 
this part;
    (4) Agrees to make information available, promptly upon request, to 
the HHS relating to any Investigator disclosure of financial interests 
and the Institution's review of, and response to, such disclosure, 
whether or not the disclosure resulted in the Institution's 
determination of a financial conflict of interest; and
    (5) Shall fully comply with the requirements of this part.



Sec.  94.5  Management and reporting of financial conflicts of interest.

    (a) Management of financial conflicts of interest.
    (1) Prior to the Institution's expenditure of any funds under a PHS-
funded research project, the designated official(s) of an Institution 
shall, consistent with Sec.  94.4(f): review all Investigator 
disclosures of significant financial interests; determine whether any 
significant financial interests relate to PHS-funded research; determine 
whether a financial conflict of interest exists; and, if so, develop and 
implement a management plan that shall specify the actions that have 
been, and shall be, taken to manage such financial conflict of interest. 
Examples of conditions or restrictions that might be imposed to manage a 
financial conflict of interest include, but are not limited to:
    (i) Public disclosure of financial conflicts of interest (e.g., when 
presenting or publishing the research);
    (ii) For research projects involving human subjects research, 
disclosure of financial conflicts of interest directly to participants;
    (iii) Appointment of an independent monitor capable of taking 
measures to protect the design, conduct, and reporting of the research 
against bias, resulting from the financial conflict of interest;
    (iv) Modification of the research plan;
    (v) Change of personnel or personnel responsibilities, or 
disqualification of personnel from participation in all or a portion of 
the research;
    (vi) Reduction or elimination of the financial interest (e.g., sale 
of an equity interest); or
    (vii) Severance of relationships that create financial conflicts.
    (2) Whenever, in the course of an ongoing PHS-funded research 
project, an Investigator who is new to participating in the research 
project discloses a significant financial interest or an existing 
Investigator discloses a new significant financial interest to the 
Institution, the designated official(s) of the Institution shall, within 
sixty days: review the disclosure of the significant financial interest; 
determine whether it is related to PHS-funded research; determine 
whether a financial conflict of interest exists; and, if so, implement, 
on at least an interim basis, a management plan that shall specify the 
actions that have been, and will be, taken to manage such financial 
conflict of interest. Depending on the nature of the significant 
financial interest, an Institution may determine that additional interim 
measures are necessary with regard to the Investigator's participation 
in the PHS-funded research project between the date of disclosure and 
the completion of the Institution's review.
    (3) Whenever an Institution identifies a significant financial 
interest that was not disclosed timely by an Investigator or, for 
whatever reason, was not previously reviewed by the Institution during 
an ongoing PHS-funded research project (e.g., was not timely reviewed

[[Page 607]]

or reported by a subrecipient), the designated official(s) shall, within 
sixty days: review the significant financial interest; determine whether 
it is related to PHS-funded research; determine whether a financial 
conflict of interest exists; and, if so:
    (i) Implement, on at least an interim basis, a management plan that 
shall specify the actions that have been, and will be, taken to manage 
such financial conflict of interest going forward;
    (ii) (A) In addition, whenever a financial conflict of interest is 
not identified or managed in a timely manner including failure by the 
Investigator to disclose a significant financial interest that is 
determined by the Institution to constitute a financial conflict of 
interest; failure by the Institution to review or manage such a 
financial conflict of interest; or failure by the Investigator to comply 
with a financial conflict of interest management plan, the Institution 
shall, within 120 days of the Institution's determination of 
noncompliance, complete a retrospective review of the Investigator's 
activities and the PHS-funded research project to determine whether any 
PHS-funded research, or portion thereof, conducted during the time 
period of the noncompliance, was biased in the design, conduct, or 
reporting of such research.
    (B) The Institution is required to document the retrospective 
review; such documentation shall include, but not necessarily be limited 
to, all of the following key elements:
    (1) Project number;
    (2) Project title;
    (3) PD/PI or contact PD/PI if a multiple PD/PI model is used;
    (4) Name of the Investigator with the FCOI;
    (5) Name of the entity with which the Investigator has a financial 
conflict of interest;
    (6) Reason(s) for the retrospective review;
    (7) Detailed methodology used for the retrospective review (e.g., 
methodology of the review process, composition of the review panel, 
documents reviewed);
    (8) Findings of the review; and
    (9) Conclusions of the review.
    (iii) Based on the results of the retrospective review, if 
appropriate, the Institution shall update the previously submitted FCOI 
report, specifying the actions that will be taken to manage the 
financial conflict of interest going forward. If bias is found, the 
Institution is required to notify the PHS Awarding Component promptly 
and submit a mitigation report to the PHS Awarding Component. The 
mitigation report must include, at a minimum, the key elements 
documented in the retrospective review above and a description of the 
impact of the bias on the research project and the Institution's plan of 
action or actions taken to eliminate or mitigate the effect of the bias 
(e.g., impact on the research project; extent of harm done, including 
any qualitative and quantitative data to support any actual or future 
harm; analysis of whether the research project is salvageable). 
Thereafter, the Institution will submit FCOI reports annually, as 
specified elsewhere in this part. Depending on the nature of the 
financial conflict of interest, an Institution may determine that 
additional interim measures are necessary with regard to the 
Investigator's participation in the PHS-funded research project between 
the date that the financial conflict of interest or the Investigator's 
noncompliance is determined and the completion of the Institution's 
retrospective review.
    (4) Whenever an Institution implements a management plan pursuant to 
this part, the Institution shall monitor Investigator compliance with 
the management plan on an ongoing basis until the completion of the PHS-
funded research project.
    (5)(i) Prior to the Institution's expenditure of any funds under a 
PHS-funded research project, the Institution shall ensure public 
accessibility, via a publicly accessible Web site or written response to 
any requestor within five business days of a request, of information 
concerning any significant financial interest disclosed to the 
Institution that meets the following three criteria:
    (A) The significant financial interest was disclosed and is still 
held by key personnel as defined in this part;
    (B) The Institution determines that the significant financial 
interest is related to the PHS-funded research; and

[[Page 608]]

    (C) The Institution determines that the significant financial 
interest is a financial conflict of interest.
    (ii) The information that the Institution makes available via a 
publicly accessible Web site or written response to any requestor within 
five business days of a request, shall include, at a minimum, the 
following: The Investigator's name; the Investigator's title and role 
with respect to the research project; the name of the entity in which 
the significant financial interest is held; the nature of the 
significant financial interest; and the approximate dollar value of the 
significant financial interest (dollar ranges are permissible: $0-
$4,999; $5,000-$9,999; $10,000-$19,999; amounts between $20,000-$100,000 
by increments of $20,000; amounts above $100,000 by increments of 
$50,000), or a statement that the interest is one whose value cannot be 
readily determined through reference to public prices or other 
reasonable measures of fair market value.
    (iii) If the Institution uses a publicly accessible Web site for the 
purposes of this subsection, the information that the Institution posts 
shall be updated at least annually. In addition, the Institution shall 
update the Web site within sixty days of the Institution's receipt or 
identification of information concerning any additional significant 
financial interest of the senior/key personnel for the PHS-funded 
research project that was not previously disclosed, or upon the 
disclosure of a significant financial interest of senior/key personnel 
new to the PHS-funded research project, if the Institution determines 
that the significant financial interest is related to the PHS-funded 
research and is a financial conflict of interest. The Web site shall 
note that the information provided is current as of the date listed and 
is subject to updates, on at least an annual basis and within 60 days of 
the Institution's identification of a new financial conflict of 
interest. If the Institution responds to written requests for the 
purposes of this subsection, the Institution will note in its written 
response that the information provided is current as of the date of the 
correspondence and is subject to updates, on at least an annual basis 
and within 60 days of the Institution's identification of a new 
financial conflict of interest, which should be requested subsequently 
by the requestor.
    (iv) Information concerning the significant financial interests of 
an individual subject to paragraph (a)(5) of this section shall remain 
available, for responses to written requests or for posting via the 
Institution's publicly accessible Web site for at least three years from 
the date that the information was most recently updated.
    (6) In addition to the types of financial conflicts of interest as 
defined in this part that must be managed pursuant to this section, an 
Institution may require the management of other financial conflicts of 
interest in its policy on financial conflicts of interest, as the 
Institution deems appropriate.
    (b) Reporting of financial conflicts of interest.
    (1) Prior to the Institution's expenditure of any funds under a PHS-
funded research project, the Institution shall provide to the PHS 
Awarding Component an FCOI report regarding any Investigator's 
significant financial interest found by the Institution to be 
conflicting and ensure that the Institution has implemented a management 
plan in accordance with this part. In cases in which the Institution 
identifies a financial conflict of interest and eliminates it prior to 
the expenditure of PHS-awarded funds, the Institution shall not submit 
an FCOI report to the PHS Awarding Component.
    (2) For any significant financial interest that the Institution 
identifies as conflicting subsequent to the Institution's initial FCOI 
report during an ongoing PHS-funded research project (e.g., upon the 
participation of an Investigator who is new to the research project), 
the Institution shall provide to the PHS Awarding Component, within 
sixty days, an FCOI report regarding the financial conflict of interest 
and ensure that the Institution has implemented a management plan in 
accordance with this part. Pursuant to paragraph (a)(3)(ii) of this 
section, where such FCOI report involves a significant financial 
interest that was not disclosed timely by an Investigator or,

[[Page 609]]

for whatever reason, was not previously reviewed or managed by the 
Institution (e.g., was not timely reviewed or reported by a 
subrecipient), the Institution also is required to complete a 
retrospective review to determine whether any PHS-funded research, or 
portion thereof, conducted prior to the identification and management of 
the financial conflict of interest was biased in the design, conduct, or 
reporting of such research. Additionally, pursuant to paragraph 
(a)(3)(iii) of this section, if bias is found, the Institution is 
required to notify the PHS Awarding Component promptly and submit a 
mitigation report to the PHS Awarding Component.
    (3) Any FCOI report required under paragraphs (b)(1) or (b)(2) of 
this section shall include sufficient information to enable the PHS 
Awarding Component to understand the nature and extent of the financial 
conflict, and to assess the appropriateness of the Institution's 
management plan. Elements of the FCOI report shall include, but are not 
necessarily limited to the following:
    (i) Project/Contract number;
    (ii) PD/PI or Contact PD/PI if a multiple PD/PI model is used;
    (iii) Name of the Investigator with the financial conflict of 
interest;
    (iv) Name of the entity with which the Investigator has a financial 
conflict of interest;
    (v) Nature of the financial interest (e.g., equity, consulting fee, 
travel reimbursement, honorarium);
    (vi) Value of the financial interest (dollar ranges are permissible: 
$0-$4,999; $5,000-$9,999; $10,000-$19,999; amounts between $20,000-
$100,000 by increments of $20,000; amounts above $100,000 by increments 
of $50,000), or a statement that the interest is one whose value cannot 
be readily determined through reference to public prices or other 
reasonable measures of fair market value;
    (vii) A description of how the financial interest relates to the 
PHS-funded research and the basis for the Institution's determination 
that the financial interest conflicts with such research; and
    (viii) A description of the key elements of the Institution's 
management plan, including:
    (A) Role and principal duties of the conflicted Investigator in the 
research project;
    (B) Conditions of the management plan;
    (C) How the management plan is designed to safeguard objectivity in 
the research project;
    (D) Confirmation of the Investigator's agreement to the management 
plan;
    (E) How the management plan will be monitored to ensure Investigator 
compliance; and
    (F) Other information as needed.
    (4) For any financial conflict of interest previously reported by 
the Institution with regard to an ongoing PHS-funded research project, 
the Institution shall provide to the PHS Awarding Component an annual 
FCOI report that addresses the status of the financial conflict of 
interest and any changes to the management plan for the duration of the 
PHS-funded research project. The annual FCOI report shall specify 
whether the financial conflict is still being managed or explain why the 
financial conflict of interest no longer exists. The Institution shall 
provide annual FCOI reports to the PHS Awarding Component for the 
duration of the project period (including extensions with or without 
funds) in the time and manner specified by the PHS Awarding Component.
    (5) In addition to the types of financial conflicts of interest as 
defined in this part that must be reported pursuant to this section, an 
Institution may require the reporting of other financial conflicts of 
interest in its policy on financial conflicts of interest, as the 
Institution deems appropriate.



Sec.  94.6  Remedies.

    (a) If the failure of an Investigator to comply with an 
Institution's financial conflicts of interest policy or a financial 
conflict of interest management plan appears to have biased the design, 
conduct, or reporting of the PHS-funded research, the Institution shall 
promptly notify the PHS Awarding Component of the corrective action

[[Page 610]]

taken or to be taken. The PHS Awarding Component will consider the 
situation and, as necessary, take appropriate action, or refer the 
matter to the Institution for further action, which may include 
directions to the Institution on how to maintain appropriate objectivity 
in the PHS-funded research project.
    (b) The PHS Awarding Component and/or HHS may inquire at any time 
(before, during, or after award) into any Investigator disclosure of 
financial interests and the Institution's review of, and response to, 
such disclosure, regardless of whether or not the disclosure resulted in 
the Institution's determination of a financial conflict of interest. An 
Institution is required to submit, or permit on site review of, all 
records pertinent to compliance with this part. To the extent permitted 
by law, HHS will maintain the confidentiality of all records of 
financial interests. On the basis of its review of records or other 
information that may be available, the PHS Awarding Component may decide 
that a particular financial conflict of interest will bias the 
objectivity of the PHS-funded research to such an extent that further 
corrective action is needed or that the Institution has not managed the 
financial conflict of interest in accordance with this part. The PHS 
Awarding Component may determine that issuance of a Stop Work Order by 
the Contracting Officer or other enforcement action is necessary until 
the matter is resolved.
    (c) In any case in which the HHS determines that a PHS-funded 
project of clinical research whose purpose is to evaluate the safety or 
effectiveness of a drug, medical device, or treatment has been designed, 
conducted, or reported by an Investigator with a financial conflict of 
interest that was not managed or reported by the Institution as required 
by this part, the Institution shall require the Investigator involved to 
disclose the financial conflict of interest in each public presentation 
of the results of the research and to request an addendum to previously 
published presentations.



PART 95_GENERAL ADMINISTRATION_GRANT PROGRAMS (PUBLIC ASSISTANCE, 
MEDICAL ASSISTANCE AND STATE CHILDREN'S HEALTH INSURANCE PROGRAMS)--
Table of Contents



             Subpart A_Time Limits for States To File Claims

Sec.
95.1 Scope.
95.4 Definitions.
95.7 Time limit for claiming payment for expenditures made after 
          September 30, 1979.
95.10 Time limit for claiming payment for expenditures made before 
          October 1, 1979.
95.11 Payment of claims subject to appropriations restrictions.
95.13 In which quarter we consider an expenditure made.
95.19 Exceptions to time limits.
95.22 Meaning of good cause.
95.25 When to request a waiver for good cause.
95.28 What a waiver request for good cause must include.
95.31 Where to send a waiver request for good cause.
95.34 The decision to waive the time limit for good cause.

Subparts B-D [Reserved]

                     Subpart E_Cost Allocation Plans

95.501 Purpose.
95.503 Scope.
95.505 Definitions.
95.507 Plan requirements.
95.509 Cost allocation plan amendments and certifications.
95.511 Approval of the cost allocation plan or plan amendment.
95.515 Effective date of a cost allocation plan or plan amendment.
95.517 Claims for Federal financial participation.
95.519 Cost disallowance.

 Subpart F_Automatic Data Processing Equipment and Services_Conditions 
                for Federal Financial Participation (FFP)

                                 General

95.601 Scope and applicability.
95.605 Definitions.

                       Specific Conditions for FFP

95.610 Submission of advance planning documents.
95.611 Prior approval conditions.
95.612 Disallowance of Federal Financial Participation (FFP).

[[Page 611]]

95.613 Procurement standards.
95.615 Access to systems and records.
95.617 Software and ownership rights.
95.619 Use of ADP systems.
95.621 ADP reviews.
95.623 Reconsideration of denied FFP for failure to obtain prior 
          approval.
95.624 Consideration for FFP in emergency situations.
95.625 Increased FFP for certain ADP systems.
95.626 Independent Verification and Validation.
95.627 Waivers.

      Federal Financial Participation in Costs of ADP Acquisitions

95.631 Cost identification for purpose of FFP claims.
95.633 Nondiscrimination requirements.
95.635 Disallowance of Federal financial participation for automated 
          systems that fail to comply substantially with requirements.

                               Exemptions

95.641 Applicability of rules for charging equipment in subpart G of 
          this part.

      Subpart G_Equipment Acquired Under Public Assistance Programs

95.701 Purpose and scope of subpart.
95.703 Definitions.
95.705 Equipment costs--Federal financial participation.
95.707 Equipment management and disposition.

    Authority: 5 U.S.C. 301, 42 U.S.C. 622(b), 629b(a), 652(a), 652(d), 
654A, 671(a), 1302, and 1396a(a).



             Subpart A_Time Limits for States To File Claims

    Source: 46 FR 3529, Jan. 15, 1981, unless otherwise noted.



Sec.  95.1  Scope.

    (a) This subpart establishes a two year time limit (15 months in 
some cases) for a State to claim Federal financial participation in 
expenditures under State plans approved under the following titles of 
the Social Security Act:

    Title I--Grants to States for Old-Age Assistance and Medical 
Assistance for the Aged.
Title IV-A--Grants to States for Aid and Services to Needy Families with 
Dependent Children (except for Section 402(a)(19)(G) of the Act).
Title IV-B--Child Welfare Services.
Title IV-D--Child Support and Establishment of Paternity.
Title IV-E--Foster Care and Adoption Assistance.
Title X--Grants to States for Aid to the Blind.
Title XIV--Grants to States for Aid to the Permanently and Totally 
Disabled.
Title XVI--Grants to States for Aid to the Aged, Blind, or Disabled 
(AABD), or for Such Aid and Medical Assistance for the Aged.
Title XIX--Grants to States for Medical Assistance Programs.
Title XX--Grants to States for Services.
Title XXI--Grants to States for State Children's Health Insurance 
Programs.

    (b) This subpart also applies to claims for Federal financial 
participation by any State which are based on any provision of the Act 
that is enacted after issuance of these regulations and that provides, 
on an entitlement basis, for Federal financial participation in 
expenditures made under State plans or programs.
    (c) This subpart explains under what conditions the Secretary may 
decide to extend the time limit for filing claims when a State believes 
it has good cause for not meeting the time limit.

[46 FR 3529, Jan. 15, 1981, as amended at 65 FR 33632, May 24, 2000]



Sec.  95.4  Definitions.

    In this subpart--
    Adjustment to prior year costs means an adjustment in the amount of 
a particular cost item that was previously claimed under an interim rate 
concept and for which it is later determined that the cost is greater or 
less than that originally claimed.
    Audit exception means a proposed adjustment by the responsible 
Federal agency to any expenditure claimed by a State by virtue of an 
audit.
    Claim means a request for Federal financial participation in the 
manner and format required by our program regulations, and instructions 
or directives issued thereunder.
    Court-ordered retroactive payment means either a retroactive payment 
the State makes to an assistance recipient or an individual, under a 
Federal or State court order or a retroactive payment we make to a State 
under a Federal court order. Although

[[Page 612]]

we may accept these claims as timely, this provision does not mean that 
we necessarily agree to be bound by a State or Federal decision when we 
were not a party to the action.
    Federal financial participation means the Federal government's share 
of an expenditure made by a State agency under any of the programs 
listed in Sec.  95.1.
    State means the 50 States, the District of Columbia, Guam, Puerto 
Rico, the Virgin Islands, the Commonwealth of the Northern Mariana 
Islands, American Samoa and the Trust Territories of the Pacific.
    State agency for the purposes of expenditures for financial 
assistance under title IV-A and for support enforcement services under 
title IV-D means any agency or organization of the State or local 
government which is authorized to incur matchable expenses; for purposes 
of expenditures under titles XIX and XXI, means any agency of the State, 
including the State Medicaid agency or State Child Health Agency, its 
fiscal agents, a State health agency, or any other State or local 
organization which incurs matchable expenses; for purposes of 
expenditures under all other titles, see the definitions in the 
appropriate program's regulations.
    The Act means the Social Security Act, as amended.
    We, our, and us refer to the HHS Centers for Medicare & Medicaid 
Services (CMS), and Administration for Children and Families (ACF), 
depending on the program involved.

[46 FR 3529, Jan. 15, 1981, as amended at 65 FR 33632, May 24, 2000; 75 
FR 66336, Oct. 28, 2010]



Sec.  95.7  Time limit for claiming payment for expenditures made 
after September 30, 1979.

    Under the programs listed in Sec.  95.1, we will pay a State for a 
State agency expenditure made after September 30, 1979, only if the 
State files a claim with us for that expenditure within 2 years after 
the calendar quarter in which the State agency made the expenditure. 
Section 95.19 lists the exceptions to this rule.



Sec.  95.10  Time limit for claiming payment for expenditures made 
before October 1, 1979.

    Under the programs listed in Sec.  95.1, we will pay a State for a 
State agency expenditure made before October 1, 1979, only if the State 
filed or files a claim with us for that expenditure before January 1, 
1981. Section 95.19 lists the exceptions to this rule.



Sec.  95.11  Payment of claims subject to appropriations restrictions.

    Notwithstanding any other provision of this Subpart, we will pay 
States' otherwise allowable claims for Federal financial participation 
under the programs covered by this subpart, subject to the availability 
of funds (as provided in Acts appropriating funds to the Department in 
effect at the time in which such claims are being considered for 
payment), and subject to conditions or restrictions applicable to 
payments out of such funds, including provisions of the first and second 
continuing resolutions for FY 1981 (Pub. L. 96-369 and Pub. L. 96-536) 
and the Supplemental Appropriations and Rescission Act, 1981 (Pub. L. 
97-12) that make funds under those Acts available to pay for a State 
agency expenditure made before September 30, 1978, only if the State had 
filed a claim for that expenditure with us within one year of the 
expenditure.

(Pub. L. 96-369, 94 Stat. 1351; Pub. L. 96-536, 94 Stat. 3166; and Pub. 
L. 97-12, 95 Stat. 14)

[46 FR 46136, Sept. 17, 1981]



Sec.  95.13  In which quarter we consider an expenditure made.

    In this subpart--
    (a) We consider a State agency's expenditure for assistance payments 
under title I, IV-A, IV-E, X, XIV, or XVI (AABD) to have been made in 
the quarter in which a payment was made to the assistance recipient, his 
or her protective payee, or a vendor payee, even if the payment was for 
a month in a previous quarter.
    (b) We consider a State agency's expenditure for services under 
title I, IV-A, IV-B, IV-D, IV-E, X, XIV, XVI (AABD) , XIX, or XXI to 
have been made in the quarter in which any State agency made a payment 
to the service provider.

[[Page 613]]

    (c) For purposes of title XX, the date of expenditure is governed by 
45 CFR 1396.52(d).
    (d) We consider a State agency's expenditure for administration or 
training under titles I, IV-A, IV-B, IV-D, IV-E, X, XIV, XVI (AABD), 
XIX, or XXI to have been made in the quarter payment was made by a State 
agency to a private agency or individual; or in the quarter to which the 
costs were allocated in accordance with the regulations for each 
program. We consider a State agency's expenditure under these titles for 
non-cash expenditures such as depreciation to have been made in the 
quarter the expenditure was recorded in the accounting records of any 
State agency in accordance with generally accepted accounting 
principles.

[46 FR 3529, Jan. 15, 1981, as amended at 65 FR 33632, May 24, 2000]



Sec.  95.19  Exceptions to time limits.

    The time limits in Sec. Sec.  95.7 and 95.10 do not apply to any of 
the following--
    (a) Any claim for an adjustment to prior year costs.
    (b) Any claim resulting from an audit exception.
    (c) Any claim resulting from a court-ordered retroactive payment.
    (d) Any claim for which the Secretary decides there was good cause 
for the State's not filing it within the time limit.



Sec.  95.22  Meaning of good cause.

    (a) Good cause for the late filing of a claim is lateness due to 
circumstances beyond the State's control.
    (b) Examples of circumstances beyond the State's control include:
    (1) Acts of God;
    (2) Documented action or inaction of the Federal government.
    (c) Circumstances beyond the State's control do not include neglect 
or administrative inadequacy on the part of the State, State agencies, 
the State legislature or any of their offices, officers, or employees.



Sec.  95.25  When to request a waiver for good cause.

    The State should request a waiver in writing as soon as the State 
recognizes that it will be unable to submit a claim within the 
appropriate time limit.



Sec.  95.28  What a waiver request for good cause must include.

    The State's request for waiver must include a specific explanation, 
justification or documentation of why the claim is or will be late. This 
request must establish that the lateness in filing the claim is for good 
cause as defined in Sec.  95.22 and not due to neglect or administrative 
inadequacy. If the claim has not been filed, the State must also tell us 
when the claim will be filed.



Sec.  95.31  Where to send a waiver request for good cause.

    (a) A request which affects the program(s) of only one HHS agency, 
CMS or ACF and does not affect the programs of any other agency or 
Federal Department should be sent to the appropriate HHS agency.
    (b) A request which affects programs of more than one HHS agency or 
Federal Department should be sent to the Director, Division of Cost 
Allocation in the appropriate HHS Regional Office.

[46 FR 3529, Jan. 15, 1981, as amended at 75 FR 66336, Oct. 28, 2010]



Sec.  95.34  The decision to waive the time limit for good cause.

    The Secretary will make a decision after reviewing the State's 
request for waiver. If the Secretary decides that good cause exists, the 
State will be notified of the extended due date. If the Secretary 
decides that good cause does not exist or that the request for waiver 
does not provide enough information to make a decision, the State will 
be so advised.

Subparts B-D [Reserved]



                     Subpart E_Cost Allocation Plans

    Source: 47 FR 17509, Apr. 23, 1982, unless otherwise noted.



Sec.  95.501  Purpose.

    This subpart establishes requirements for:
    (a) Preparation, submission, and approval of State agency cost 
allocation plans for public assistance programs; and

[[Page 614]]

    (b) Adherence to approved cost allocation plans in computing claims 
for Federal financial participation.



Sec.  95.503  Scope.

    This subpart applies to all State agency costs applicable to awards 
made under titles I, IV-A, IV-B, IV-C, IV-D, IV-E, X, XIV, XVI (AABD), 
XIX, and XXI, of the Social Security Act, and under the Refugee Act of 
1980, title IV, Chapter 2 of the Immigration and Nationality Act (8 
U.S.C. 1521 et seq.), and under title V of Pub. L. 96-422, the Refugee 
Education Assistance Act of 1980.

[65 FR 33633, May 24, 2000]



Sec.  95.505  Definitions.

    As used in this subpart:
    State agency costs include all costs incurred by or allocable to the 
State agency except expenditures for financial assistance, medical 
vendor payments, and payments for services and goods provided directly 
to program recipients such as day care services, family planning 
services or household items as provided for under the approved State 
program plan.
    Cost allocation plan means a narrative description of the procedures 
that the State agency will use in identifying, measuring, and allocating 
all State agency costs incurred in support of all programs administered 
or supervised by the State agency.
    FFP or Federal financial participation means the Federal 
Government's share of expenditures made by a State agency under any of 
the programs cited in Sec.  95.503.
    Operating Divisions means the Department of Health and Human 
Services (HHS) organizational components responsible for administering 
public assistance programs. These components are the Administration for 
Children and Families (ACF) and the Centers for Medicare & Medicaid 
Services (CMS).
    Public assistance programs means the programs cited in Sec.  95.503.
    State means the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, the Northern Mariana 
Islands, and Guam.
    State agency means the State agency administering or supervising the 
administration of the State plan for any program cited in Sec.  95.503. 
A State agency may be an organizational part of a larger State 
department that also contains other components and agencies. Where that 
occurs, the expression State agency refers to the specific component or 
agency within the State department that is directly responsible for the 
administration of, or supervising the administration of, one or more 
programs identified in Sec.  95.503.
    State Plan means a comprehensive written commitment by the State 
agency to administer or supervise the administration of any of the 
public assistance programs cited in Sec.  95.503 in accordance with all 
Federal requirements.

[47 FR 17509, Apr. 23, 1982, as amended at 75 FR 66336, Oct. 28, 2010]



Sec.  95.507  Plan requirements.

    (a) The State shall submit a cost allocation plan for the State 
agency as required below to the Director, Division of Cost Allocation 
(DCA), in the approporiate HHS Regional Office. The plan shall:
    (1) Describe the procedures used to identify, measure, and allocate 
all costs to each of the programs operated by the State agency;
    (2) Conform to the accounting principles and standards prescribed in 
Office of Management and Budget Circular A-87, and other pertinent 
Department regulations and instructions;
    (3) Be compatible with the State plan for public assistance programs 
described in 45 CFR Chapter II, III and XIII, and 42 CFR Chapter IV 
Subchapters C and D; and
    (4) Contain sufficient information in such detail to permit the 
Director, Division of Cost Allocation, after consulting with the 
Operating Divisions, to make an informed judgment on the correctness and 
fairness of the State's procedures for identifying, measuring, and 
allocating all costs to each of the programs operated by the State 
agency.
    (b) The cost allocation plan shall contain the following 
information:
    (1) An organizational chart showing the placement of each unit whose 
costs are charged to the programs operated by the State agency.

[[Page 615]]

    (2) A listing of all Federal and all non-Federal programs performed, 
administered, or serviced by these organizational units.
    (3) A description of the activities performed by each organizational 
unit and, where not self-explanatory an explanation of the benefits 
provided to Federal programs.
    (4) The procedures used to identify, measure, and allocate all costs 
to each benefiting program and activity (including activities subject to 
different rates of FFP).
    (5) The estimated cost impact resulting from the proposed changes to 
a previously approved plan. These estimated costs are required solely to 
permit an evaluation of the procedures used for identifying, measuring, 
and allocating costs. Therefore, approval of the cost allocation plan 
shall not constitute approval of these estimated costs for use in 
calculating claims for FFP. Where it is impractical to obtain this data, 
an alternative approach should then be negotiated with the Director, 
DCA, prior to submission of the cost allocation plan.
    (6) A statement stipulating that wherever costs are claimed for 
services provided by a governmental agency outside the State agency, 
that they will be supported by a written agreement that includes, at a 
minimum (i) the specific service(s) being purchased, (ii) the basis upon 
which the billing will be made by the provider agency (e.g. time 
reports, number of homes inspected, etc.) and (iii) a stipulation that 
the billing will be based on the actual cost incurred. This statement 
would not be required if the costs involved are specifically addressed 
in a State-wide cost allocation plan, local-wide cost allocation plan, 
or an umbrella/department cost allocation plan.
    (7) If the public assistance programs are administered by local 
government agencies under a State supervised system, the overall State 
agency cost allocation plan shall also include a cost allocation plan 
for the local agencies. It shall be developed in accordance with the 
requirements set forth above. More than one local agency plan shall be 
submitted if the accounting systems or other conditions at the local 
agencies preclude an equitable allocation of costs by the submission of 
a single plan for all local agencies. Prior to submitting multiple plans 
for local agencies, the State should consult with the Director, DCA. 
Where more than one local agency plan is submitted, the State shall 
identify the specific local agencies covered by each plan.
    (8) A certification by a duly authorized official of the State 
stating:
    (i) That the information contained in the proposed cost allocation 
plan was prepared in conformance with Office of Management and Budget 
Circular A-87.
    (ii) That the costs are accorded consistent treatment through the 
application of generally accepted accounting principles appropriate to 
the circumstances.
    (iii) That an adequate accounting and statistical system exists to 
support claims that will be made under the cost allocation plan; and
    (iv) That the information provided in support of the proposed cost 
allocation plan is accurate.
    (9) Other information as is necessary to establish the validity of 
the procedures used to identify, measure, and allocate costs to all 
programs being operated by the State agency.

[47 FR 17509, Apr. 23, 1982, as amended at 65 FR 33633, May 24, 2000]



Sec.  95.509  Cost allocation plan amendments and certifications.

    (a) The State shall promptly amend the cost allocation plan and 
submit the amended plan to the Director, DCA if any of the following 
events occur:
    (1) The procedures shown in the existing cost allocation plan become 
outdated because of organizational changes, changes in Federal law or 
regulations, or significant changes in program levels, affecting the 
validity of the approved cost allocation procedures.
    (2) A material defect is discovered in the cost allocation plan by 
the Director, DCA or the State.
    (3) The State plan for public assistance programs is amended so as 
to affect the allocation of costs.
    (4) Other changes occur which make the allocation basis or 
procedures in the approval cost allocation plan invalid.

[[Page 616]]

    (b) If a State has not submitted a plan or plan amendment during a 
given State fiscal year, an annual statement shall be submitted to the 
Director, DCA certifying that its approved cost allocation plan is not 
outdated. This statement shall be submitted within 60 days after the end 
of that fiscal year.



Sec.  95.511  Approval of the cost allocation plan or plan amendment.

    (a) The Director, DCA, after consulting with the affected Operating 
Divisions, shall notify the State in writing of his/her findings. This 
notification will be made within 60 days after receipt of the proposed 
plan or amendment and shall either: (1) Advise the State that the plan 
or plan amendment is approved or disapproved, (2) advise the State of 
the changes required to make the plan or amendment acceptable, or (3) 
request the State to provide additional information needed to evaluate 
the proposed plan or amendment. If the DCA cannot make a determination 
within the 60-day period, it shall so advise the State.
    (b) For purpose of this subpart, State agency cost allocation plans 
which have been approved by an authorized official of the Department of 
HHS prior to the effective date of this regulation are considered 
approved until such time as a new plan or plan amendment is required by 
Sec.  95.509(a).



Sec.  95.515  Effective date of a cost allocation plan amendment.

    As a general rule, the effective date of a cost allocation plan 
amendment shall be the first day of the calendar quarter following the 
date of the event that required the amendment (See Sec.  95.509). 
However, the effective date of the amendment may be earlier or later 
under the following conditions:
    (a) An earlier date is needed to avoid a significant inequity to 
either the State or the Federal Government.
    (b) The information provided by the State which was used to approve 
a previous plan or plan amendment is later found to be materially 
incomplete or inaccurate, or the previously approved plan is later found 
to violate a Federal statute or regulation. In either situation, the 
effective date of any required modification to the plan will be the same 
as the effective date of the plan or plan amendment that contained the 
defect.
    (c) It is impractical for the State to implement the amendment on 
the first day of the next calendar quarter. In these instances, a later 
date may be established by agreement between the State and the DCA.



Sec.  95.517  Claims for Federal financial participation.

    (a) A State must claim FFP for costs associated with a program only 
in accordance with its approved cost allocation plan. However, if a 
State has submitted a plan or plan amendment for a State agency, it may, 
at its option claim FFP based on the proposed plan or plan amendment, 
unless otherwise advised by the DCA. However, where a State has claimed 
costs based on a proposed plan or plan amendment the State, if 
necessary, shall retroactively adjust its claims in accordance with the 
plan or amendment as subsequently approved by the Director, DCA. The 
State may also continue to claim FFP under its existing approved cost 
allocation plan for all costs not affected by the proposed amendment.



Sec.  95.519  Cost disallowance.

    If costs under a Public Assistance program are not claimed in 
accordance with the approved cost allocation plan (except as otherwise 
provided in Sec.  95.517), or if the State failed to submit an amended 
cost allocation plan as required by Sec.  95.509, the costs improperly 
claimed will be disallowed.
    (a)(1) If the issue affects the program(s) of only one Operating 
Division and does not affect the programs of other Operating Divisions 
or Federal departments, that Operating Division will determine the 
amount of the disallowance and will also inform the State of its 
opportunity for reconsideration of the determination in accordance with 
the Operating Division's procedures. Prior to issuing the notification, 
however, the Operating Division shall consult with the DCA to ensure 
that the issue does not affect the programs of other Operating Divisions 
or Federal departments.

[[Page 617]]

    (2) If the State wishes to request a reconsideration of the 
Operating Division's determination, it must submit the request in 
accordance with the Operating Division's procedures.
    (b) If the issue affects the programs of more than one Operating 
Division, or Federal department or the State, the Director, DCA, after 
consulting with the Operating Divisions, shall determine the amount 
inappropriately claimed under each program. The Director, DCA will 
notify the State of this determination, of the dollar affect of the 
determination on the claims made under each program, and will inform the 
State of its opportunity for appeal of the determination under 45 CFR 
part 16. The State will subsequently be notified by the appropriate 
Operating Division as to the disposition of the funds in question.

[47 FR 17509, Apr. 23, 1982, as amended at 62 FR 38218, July 17, 1997]



 Subpart F_Automatic Data Processing Equipment and Services_Conditions 
                for Federal Financial Participation (FFP)

    Source: 51 FR 45326, Dec. 18, 1986, unless otherwise noted.

                                 General



Sec.  95.601  Scope and applicability.

    This subpart prescribes part of the conditions under which the 
Department of Health and Human Services will approve the Federal 
Financial Participation (FFP) at the applicable rates for the costs of 
automated data processing incurred under an approved State plan for 
titles IV-B, IV-D, IV-E, XIX or XXI of the Social Security Act. The 
conditions of approval of this subpart add to the statutory and 
regulatory requirements for acquisition of Automated Data Processing 
(ADP) equipment and services under the specified titles of the Social 
Security Act.

[75 FR 66336, Oct. 28, 2010]



Sec.  95.605  Definitions.

    As used in this part, the term:
    Acceptance documents means a record of satisfactory completion of an 
approved phase of work or contract, and acceptance thereof by the State 
agency.
    Acquisition means acquiring ADP equipment or services from 
commercial sources or from State or local government resources.
    Acquisition Checklist means the standard Department checklist that 
States can submit to meet prior written approval requirements instead of 
submitting the actual Request for Proposal (RFP), contracts or contract 
amendments. The Acquisition Checklist allows States to self-certify that 
their acquisition documents, which include RFPs, contracts, contract 
amendments or similar documents, meet State and Federal procurement 
requirements, contain appropriate language about software ownership and 
licensing rights in compliance with Sec.  95.617, and provide access to 
documentation in compliance with Sec.  95.615.
    Advance Planning Document (APD), Initial advance automated data 
processing planning or Initial APD means a recorded plan of action to 
request funding approval for a project which will require the use of ADP 
service or equipment. The term APD refers to a Planning APD, or to a 
planning and/or development and implementation action document, i.e., 
Implementation APD, or to an Advance Planning Document Update. 
Requirements are detailed in Sec.  95.610, paragraphs (a), (b), and (c).
    Advance Planning Document Update (APDU) is a document or record 
submitted annually (Annual APDU) to report project status and/or post 
implementation cost-savings, or, on an as-needed (As-Needed APDU) basis, 
to request funding approval for project continuation when significant 
project changes are anticipated; for incremental funding authority and 
project continuation when approval is being granted by phase; or to 
provide detailed information on project and/or budget activities as 
specified in Sec.  95.610(c).
    Alternative approach to APD requirements means that the State has 
developed an APD that does not meet all conditions for APD approval in 
Sec.  95.610, resulting in the need for a waiver under Sec.  95.627(a).

[[Page 618]]

    Automated data processing or ADP means data processing performed by 
a system of electronic or electrical machines so interconnected and 
interacting as to minimize the need for human assistance or 
intervention.
    Automated data processing equipment or ADP equipment or Hardware 
means automatic equipment that accepts and stores data, performs 
calculations and other processing steps, and produces information. This 
includes:
    (a) Electronic digital computers;
    (b) Peripheral or auxiliary equipment used in support of electronic 
computers;
    (c) Data transmission or communications equipment, and
    (d) Data input equipment.
    Automatic Data Processing Services or ADP Services means:
    (a) Services to operate ADP equipment, either by agency, or by State 
or local organizations other than the State agency; and/or
    (b) Services provided by private sources or by employees of the 
State agency or by State and local organizations other than the State 
agency to perform such tasks as feasibility studies, system studies, 
system design efforts, development of system specifications, system 
analysis, programming, system conversion and system implementation and 
include, for example, the following:
    (1) Systems Training,
    (2) Systems Development,
    (3) Site Preparation,
    (4) Data Entry, and
    (5) Personal services related to automated systems development and 
operations that are specifically identified as part of a Planning ADP or 
Implementation ADP. As an example, a personal service would be the 
service of an expert individual to provide advice on the use of ADP 
software or hardware in developing a State automated management 
information system.
    Base contract means the initial contractual activity, including all 
option years, allowed during a defined unit of time, for example, 2 
years. The base contract includes option years but does not include 
amendments.
    Commercial-off-the-shelf (COTS) software means proprietary software 
products that are ready-made and available for sale to the general 
public at established catalog or market prices.
    Data processing means the preparation of source media containing 
data or basic elements of information and the use of such source media 
according to precise rules or procedures to accomplish such operations 
as classifying, sorting, calculating, summarizing, recording and 
transmitting.
    Department means the Department of Health and Human Service.
    Design or system design means a combination of narrative and 
diagrams describing the structure of a new or more efficient automatic 
data processing system. This includes the use of hardware to the extent 
necessary for the design phase.
    Development means the definition of system requirements, detailing 
of system and program specifications, programming and testing. This 
includes the use of hardware to the extent necessary for the development 
phase.
    Emergency situation is defined as a situation where:
    (a) A State can demonstrate to the Department an immediate need to 
acquire ADP equipment or services in order to continue the operation of 
one or more of the Social Security Act programs covered by Subpart F, 
and
    (b) The State can clearly document that the need could not have been 
anticipated or planned for and the State was prevented from following 
the prior approval requirements of Sec.  95.611.
    Enhanced matching rate means the higher than regular rate of FFP 
authorized by Title IV-D, IV-E, and XIX of the Social Security Act for 
acquisition of services and equipment that conform to specific 
requirements designed to improve administration of the Child Support 
Enforcement, Foster Care and Adoption Assistance, and Medicaid programs.
    Enhancement means modifications which change the functions of 
software and hardware beyond their original purposes, not just to 
correct errors or deficiencies which may have been present in the 
software or hardware, or to improve the operational performance of the 
software or hardware.

[[Page 619]]

    Feasibility study means a preliminary study to determine whether it 
is sufficiently probable that effective and efficient use of ADP 
equipment or systems can be made to warrant a substantial investment of 
staff, time, and money being requested and whether the plan is capable 
of being accomplished successfully.
    Federal program office means the Federal program office within the 
Department that is authorized to approve requests for the acquisition of 
ADP equipment or ADP services. The Federal program offices within the 
Administration for Children and Families (ACF) are the Children's Bureau 
for titles IV-B (child welfare services) and IV-E (foster care and 
adoption assistance), the Office of Child Support Enforcement for title 
IV-D (child support enforcement), and the Centers for Medicare & 
Medicaid Services (CMS) for titles XIX (Medicaid) and XXI (the 
Children's Health Insurance Program) of the Social Security Act.
    FFP means Federal financial participation.
    Functional Requirements Specification is defined as an initial 
definition of the proposed system, which documents the goals, 
objectives, user or programmatic requirements, management requirements, 
the operating environment, and the proposed design methodology, e.g., 
centralized or distributed. This document details what the new system 
and or hardware should do, not how it is to do it. The Specifications 
document shall be based upon a clear and accurate description of the 
functional requirements for the project, and shall not, in competitive 
procurements, lead to requirements which unduly restrict competition. 
The Specification document is the user's definition of the requirements 
the system must meet.
    General Systems Design means a combination of narrative and graphic 
description of the generic architecture of a system as opposed to the 
detailed architecture of the system. A general systems design would 
include a systems diagram and narrative identifying overall logic flow 
and systems functions; a description of equipment needed (including 
processing data transmission and storage requirements); a description of 
other resource requirements which will be necessary to operate the 
system; a description of system performance requirements; and a 
description of the physical and organizational environment in which the 
system will operate including how the system will function within that 
environment (e.g. how workers will interface with the system).
    Grantee means an organization receiving financial assistance 
directly from an HHS awarding agency to carry out a project or program.
    Independent Verification and Validation--(IV&V) means a well-defined 
standard process for examining the organizational, management, and 
technical aspects of a project to determine the effort's adherence to 
industry standards and best practices, to identify risks, and make 
recommendations for remediation, where appropriate.
    Implementation APD means a recorded plan of action to request 
Federal Financial Participation (FFP) in the costs of designing, 
developing, and implementing the system.
    Independent Verification and Validation--(IV&V) means a well-defined 
standard process for examining the organizational, management, and 
technical aspects of a project to determine the effort's adherence to 
industry standards and best practices, to identify risks, and make 
recommendations for remediation, where appropriate.
    Installation means the integrated testing of programs and 
subsystems, system conversion, and turnover to operation status. This 
includes the use of hardware to the extent necessary for the 
installation phase.
    Medicaid Management Information System (MMIS) is a commonly accepted 
term for Mechanized Claim Processing and Information Retrieval System as 
provided by Section 1903(a)(3) and 1903(r) of the Social Security Act 
and at 42 CFR 433.110 et seq.
    Noncompetitive means solicitation of a proposal from only one 
source, or after solicitation of a number of sources, negotiation with 
selected sources based on a finding that competition is inadequate.
    Operational APD--An operational APD is a record of no more than two 
pages to be submitted annually by State programs whose system is not in

[[Page 620]]

development. The Operational APD provides a short summary of the 
activities, method of acquisition, and annual budget for operations and 
software maintenance.
    Operation means the automated processing of data used in the 
administration of State plans for titles I, IV-A, IV-B, IV-D, IV-E, X, 
XIV, XVI(AABD), XIX, and XXI of the Social Security Act. Operation 
includes the use of supplies, software, hardware, and personnel directly 
associated with the functioning of the mechanized system. See 45 CFR 
205.38 and 307.10 for specific requirements for titles IV-A and IV-D, 
and 42 CFR 433.112 and 42 CFR 433.113 for specific requirements for 
title XIX.
    Project means a defined set of information technology related tasks, 
undertaken by the State to improve the efficiency, economy and 
effectiveness of administration and/or operation of one or more of its 
human services programs. For example, a State may undertake a 
comprehensive, integrated initiative in support of its Child Support, 
Child Welfare and Medicaid program's intake, eligibility and case 
management functions. A project may also be a less comprehensive 
activity such as office automation, enhancements to an existing system 
or an upgrade of computer hardware.
    Regular matching rate means the normal rate of FFP authorized by 
titles IV-A, IV-B, IV-D, IV-E, X, XIV, XVI(AABD), XIX, and XXI of the 
Social Security Act for State and local agency administration of 
programs authorized by those titles.
    Requirements Analysis means determining and documenting the 
information needs and the functional and technical requirements the 
proposed computerized system must meet.
    Service agreement means the document signed by the State or local 
agency and the State or local Central Data Processing facility whenever 
the latter provides data processing services to the former and:
    (a) Identifies those ADP services the Central Data Processing 
facility will provide;
    (b) Includes, preferably as an amendable attachment, a schedule of 
charges for each identified ADP service, and a certification that these 
charges apply equally to all users;
    (c) Includes a description of the method(s) of accounting for the 
services rendered under the agreement and computing services charges;
    (d) Includes assurances that services provided will be timely and 
satisfactory; preferably through a service level agreement;
    (e) Includes assurances that information in the computer system as 
well as access, use and disposal of ADP data will be safeguarded in 
accordance with provisions of all applicable federal statutes and 
regulations, including Sec. Sec.  205.50 and 307.13;
    (f) Requires the provider to obtain prior approval pursuant to Sec.  
95.611(a) from the Department for ADP equipment and ADP services that 
are acquired from commercial sources primarily to support the titles 
covered by this subpart and requires the provider to comply with Sec.  
95.613 for procurements related to the service agreement. ADP equipment 
and services are considered to be primarily acquired to support the 
titles covered by this subpart when the human service programs may 
reasonably be expected to either: be billed for more than 50 percent of 
the total charges made to all users of the ADP equipment and services 
during the time period covered by the service agreement, or directly 
charged for the total cost of the purchase or lease of ADP equipment or 
services;
    (g) Includes the beginning and ending dates of the period of time 
covered by the service agreement; and
    (h) Includes a schedule of expected total charges to the title 
covered by this subpart for the period of the service agreement.
    Service Oriented Architecture (SOA), also referred to as Service 
Component Based Architecture, describes a means of organizing and 
developing Information Technology capabilities as collaborating services 
that interact with each other based on open standards. Agency SOA 
artifacts may include models, approach documents, inventories of 
services or other descriptive documents.
    Software means a set of computer programs, procedures, and 
associated documentation used to operate the hardware.

[[Page 621]]

    Software maintenance means routine support activities that normally 
include corrective, adaptive, and perfective changes, without 
introducing additional functional capabilities. Corrective changes are 
tasks to correct minor errors or deficiencies in software. Adaptive 
changes are minor revisions to existing software to meet changing 
requirements. Perfective changes are minor improvements to application 
software so it will perform in a more efficient, economical, and/or 
effective manner. Software maintenance can include activities such as 
revising/creating new reports, making limited data element/data base 
changes, and making minor alterations to data input and display screen 
designs.
    State agency means the State agency administering or supervising the 
administration of the State plan under titles I, IV, X, XIV, XVI(AABD), 
XIX or XXI of the Social Security Act.
    System specifications means information about the new ADP system--
such as workload descriptions, input data, information to be maintained 
and processed, data processing techniques, and output data--which is 
required to determine the ADP equipment and software necessary to 
implement the system design.
    System study means the examination of existing information flow and 
operational procedures within an organization. The study essentially 
consists of three basic phases: Data gathering investigation of the 
present system and new information requirements; analysis of the data 
gathered in the investigation; and synthesis, or refitting of the parts 
and relationships uncovered through the analysis into an efficient 
system.
    Total Acquisition Cost means all anticipated expenditures (including 
State staff costs) for planning and implementation for the project. For 
purposes of this regulation total acquisition cost and project cost are 
synonymous.

[51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4375, Feb. 7, 1990, 59 
FR 30708, June 15, 1994; 65 FR 33633, May 24, 2000; 75 FR 66336, Oct. 
28, 2010]

                       Specific Conditions for FFP



Sec.  95.610  Submission of advance planning documents.

    Advance Planning Document (APD) refers to an Initial advance 
automated data processing planning document or Initial APD, providing a 
recorded plan of action to request funding approval for a project which 
will require the use of ADP services or equipment, including the use of 
shared or purchased services in lieu of State acquired stand-alone 
resources. Requirements are detailed in paragraph (a), (b) and (c) of 
this section.
    (a) Planning APD. (1) A separate planning effort and Planning APD is 
optional, but highly recommended, and generally applies to large 
statewide system developments and/or major hardware acquisitions. States 
with large, independent counties requesting funding at the regular match 
rate for county systems are strongly encouraged to engage in planning 
activities commensurate with the complexity of the projected ADP project 
and to submit a Planning APD to allow for time and to provide funding 
for its planning activities. Therefore, States must consider the scope 
and complexity of a project to determine whether to submit a Planning 
APD as a separate document to HHS or whether to combine the two phases 
of planning and implementation into one APD covering both the Planning 
APD and the Implementation APD requirements.
    (2) The Planning APD is a relatively brief document, usually not 
more than 6-10 pages, which must contain:
    (i) A statement of the problem/need that the existing capabilities 
can not resolve, new or changed program requirements or opportunities 
for improved economies and efficiencies and effectiveness of program and 
administration and operations;
    (ii) A project management plan that addresses the planning project 
organization, planning activities/deliverables, State and contractor 
resource needs, planning project procurement activities and schedule;
    (iii) A specific budget for the planning phase of the project;
    (iv) An estimated total project cost and a prospective State and 
Federal

[[Page 622]]

cost allocation/distribution, including planning and implementation;
    (v) A commitment to conduct/prepare the problem(s) needs assessment, 
feasibility study, alternatives analysis, cost benefit analysis, and to 
develop a Functional Requirements Specification and/or a General Systems 
Design (GSD);
    (vi) A commitment to define the State's functional requirements, 
based on the State's business needs which may be used for the purpose of 
evaluating the transfer of an existing system, including the transfer of 
another State's General System Design that the State may adapt to meet 
State specific requirements;
    (vii) Additional Planning APD content requirements, for enhanced 
funding projects as contained in Sec.  307.15 and Sec. Sec.  1355.50 
through 1355.57; and
    (viii) An acquisition summary for the upcoming year or development 
phase that provides the following information on proposed acquisitions:
    (A) Type and scope of contract
    (B) Procurement strategy
    (C) Estimated cost or not to exceed amount
    (D) Timeframe of contract
    (E) A statement or certification that the proposed acquisition will 
comply with all State and Federal requirements including the retention 
of software ownership rights specified in Sec.  95.617.
    (b) Implementation APD. The Implementation APD shall include:
    (1) The results of the activities conducted under a Planning APD, if 
any;
    (2) A statement of problems/needs and outcomes/objectives;
    (3) A requirements analysis, feasibility study and a statement of 
alternative considerations including, where appropriate, the use of 
service-orientated architecture and a transfer of an existing system and 
an explanation of why such a transfer is not feasible if another 
alternative is identified;
    (4) A cost benefit analysis;
    (5) A personnel resource statement indicating availability of 
qualified and adequate numbers of staff, including a project director to 
accomplish the project objectives;
    (6) A detailed description of the nature and scope of the activities 
to be undertaken and the methods to be used to accomplish the project;
    (7) The proposed activity schedule for the project;
    (8) A proposed budget (including an accounting of all possible 
Implementation APD activity costs, e.g., system conversion, vendor and 
state personnel, computer capacity planning, supplies, training, 
hardware, software and miscellaneous ADP expenses) for the project;
    (9) A statement indicating the duration the State expects to use the 
equipment and/or system;
    (10) An estimate of the prospective cost allocation/distribution to 
the various State and Federal funding sources and the proposed 
procedures for distributing costs;
    (11) A statement setting forth the security and interface 
requirements to be employed and the system failure and disaster 
recovery/business continuity procedures available or to be implemented; 
and
    (12) Additional requirements, for acquisitions for which the State 
is requesting enhanced funding, as contained at Sec.  307.15 and 42 CFR 
subchapter C, part 433 or funding for title IV-E agencies as contained 
at Sec.  1355.52(i) of this title.
    (c) Advance Planning Document Update (APDU). (1) The Annual APDU, 
which is due 60 days prior to the expiration of the FFP approval, 
includes:
    (i) A reference to the approved APD and all approved changes;
    (ii) A project activity report which includes the status of the past 
year's major project tasks and milestones, addressing the degree of 
completion and tasks/milestones remaining to be completed, and discusses 
past and anticipated problems or delays in meeting target dates in the 
approved APD and approved changes to it and provides a risk management 
plan that assesses project risk and identifies risk mitigation 
strategies;
    (iii) A report of all project deliverables completed in the past 
year and degree of completion for unfinished products and tasks;
    (iv) An updated project activity schedule for the remainder of the 
project;

[[Page 623]]

    (v) A revised budget for the entirety of the project's life-cycle, 
including operational and development cost categories;
    (vi) A project expenditures report that consists of a detailed 
accounting of all expenditures for project development over the past 
year and an explanation of the differences between projected expenses in 
the approved APD and actual expenditures for the past year;
    (vii) A report of any approved or anticipated changes to the 
allocation basis in the APD's approved cost allocation methodology; and
    (viii) An acquisition summary for the upcoming year or development 
phase that provides the following information on proposed acquisitions:
    (A) Type and scope of contract
    (B) Procurement strategy
    (C) Estimated cost or not to exceed amount
    (D) Timeframe of contract
    (E) A statement or certification that the proposed acquisition will 
comply with all State and Federal requirements including the retention 
of software ownership rights specified in Sec.  95.617.
    (2) The As-Needed APDU is a document that requests approval for 
additional funding and/or authority for project continuation when 
significant changes are anticipated, when the project is being funded on 
a phased implementation basis, or to clarify project information 
requested as an approval condition of the Planning APD, Annual APDU, or 
Implementation APD. The As-Needed APDU may be submitted any time as a 
stand-alone funding or project continuation request, or may be submitted 
as part of the Annual APDU. The As-Needed APDU is submitted:
    (i) When the State anticipates incremental project expenditures 
(exceeding specified thresholds);
    (ii) When the State anticipates a schedule extension of more than 60 
days for major milestones;
    (iii) When the State anticipates major changes in the scope of its 
project, e.g., a change in its procurement plan, procurement activities, 
system concept or development approach;
    (iv) When the State anticipates significant changes to its cost 
distribution methodology or distribution of costs among Federal 
programs; and/or,
    (v) When the State anticipates significant changes to its cost 
benefit projections. The As-Needed APDU shall provide supporting 
documentation to justify the need for a change to the approved budget.
    (vi) Changes to the acquisition summary in the following areas:
    (A) Type and scope of contract
    (B) Procurement strategy
    (C) Estimated cost or not to exceed amount
    (D) Timeframe of contract
    (E) A statement or certification that the proposed acquisition will 
comply with all State and Federal requirements including the retention 
of software ownership rights specified in Sec.  95.617.
    (F) New acquisitions not summarized in the Annual APDU.
    (3) The Operational Advance Planning Document Update (OAPDU) is an 
annual submission of no more than two pages, including:
    (i) Summary of activities;
    (ii) Acquisitions; and,
    (iii) Annual budget by project/system receiving funding through the 
programs covered under this part.

[75 FR 66337, Oct. 28, 2010, as amended at 81 FR 35479, June 2, 2016]



Sec.  95.611  Prior approval conditions.

    (a) General acquisition requirements. (1) A State shall obtain prior 
approval from the Department which is reflected in a record, as 
specified in paragraph (b) of this section, when the State plans to 
acquire ADP equipment or services with proposed FFP at the regular 
matching rate that it anticipates will have total acquisition costs of 
$5,000,000 or more in Federal and State funds. States will be required 
to submit an Operational APDU only if they exceed the threshold 
requiring Federal approval, and only upon the receipt of a submission 
request, which is reflected in a record, from the Department. See 
definition of software maintenance under Sec.  95.605.
    (2) A State must obtain prior approval from the Department which is 
reflected in a record, as specified in

[[Page 624]]

paragraph (b) of this section, when the State plans to acquire ADP 
equipment or services with proposed FFP at the enhanced matching rate 
subject to one of the following:
    (i) If authorized by Sec.  205.35 of this title and part 307 of this 
title, regardless of the acquisition cost.
    (ii) If authorized by 42 CFR part 433, subpart C, if the contract is 
anticipated to or will exceed $500,000.
    (3) A State shall obtain prior approval from the Department, which 
is reflected in a record, for a sole source/non-competitive acquisition, 
of ADP equipment or services with a total State and Federal acquisition 
cost of $1,000,000 or more.
    (4) Except as provided for in paragraph (a)(5) of this section, the 
State shall submit multi-program requests for Department approval, 
signed by the appropriate State official, to the Department's Secretary 
or his/her designee. For each HHS agency that has federal funding 
participation in the project, an additional copy must be provided to the 
applicable Federal program office and respective Regional Offices.
    (5) States shall submit requests for approval which affect only one 
approving component of HHS (CMS, OCSE, or Children's Bureau), to the 
applicable Federal program office and Regional Administrator.
    (6) The Department will not approve any Planning or Implementation 
APD that does not include all information required in Sec.  95.610.
    (b) Specific prior approval requirements. The State agency shall 
obtain written approval of the Department prior to the initiation of 
project activity.
    (1) For regular FFP requests.
    (i) For the Planning APD subject to the dollar thresholds specified 
in paragraph (a) of this section.
    (ii) For the Implementation APD subject to the dollar thresholds 
specified in paragraph (a) of this section.
    (iii) For acquisition documents, an exemption from prior Federal 
prior approval shall be assumed in the approval of the Planning, Annual 
or As-Needed APDU provided that:
    (A) The acquisition summary provides sufficient detail to base an 
exemption request;
    (B) The acquisition does not deviate from the terms of the 
exemption; and
    (C) The acquisition is not the initial acquisition for a high risk 
activity, such as software application development. Acquisitions, 
whether exempted from prior Federal approval or not, must comply with 
the Federal provisions contained in Sec.  95.610(c)(1)(viii) or 
(c)(2)(vi) or submit an Acquisition Checklist.
    (iv) For noncompetitive acquisitions, including contract amendments, 
when the resulting contract is anticipated to exceed $1,000,000, States 
will be required to submit a sole source justification in addition to 
the acquisition document. The sole source justification can be provided 
as part of the Planning, Annual or As-Needed APDU.
    (v) If the State does not opt for an exemption or submittal of an 
Acquisition Checklist for the contract, prior to the execution, the 
State will be required to submit the contract when it is anticipated to 
exceed the following thresholds, unless specifically exempted by the 
Department:
    (A) Software application development--$6,000,000 or more 
(competitive) and $1,000,000 or more (noncompetitive);
    (B) Hardware and Commercial Off-the-Shelf (COTS) software--
$20,000,000 or more (competitive) and $1,000,000 or more 
(noncompetitive);
    (C) Operations and Software Maintenance acquisitions combined with 
hardware, COTS or software application development--the thresholds 
stated in Sec.  95.611(b)(1)(v)(A) and (B) apply.
    (vi) For contract amendments within the scope of the base contract, 
unless specifically exempted by the Department, prior to execution of 
the contract amendment involving contract cost increases which 
cumulatively exceed 20 percent of the base contract cost.
    (2) For enhanced FFP requests.
    (i) For the Planning APD.
    (ii) For the Implementation APD.
    (iii) For the acquisition solicitation documents and contract, 
unless specifically exempted by the Department, prior to release of the 
acquisition solicitation documents or prior to execution of the contract 
when the contract is anticipated to or will exceed $500,000.

[[Page 625]]

    (iv) For contract amendments, unless specifically exempted by the 
Department, prior to execution of the contract amendment, involving 
contract cost increases exceeding $500,000 or contract time extensions 
of more than 60 days.
    (3) Failure to submit any of the above to the satisfaction of the 
Department may result in disapproval or suspension of project funding.
    (c) Specific approval requirements. The State agency shall obtain 
written approval from the Department:
    (1) For regular FFP requests.
    (i) For an annual APDU for projects with a total cost of more than 
$5,000,000, and projects with a total estimated cost of less than 
$5,000,000 only if requested by the Department.
    (ii) For an ``As Needed APDU'' when changes cause any of the 
following:
    (A) A projected cost increase of $1,000,000 or more.
    (B) A schedule extension of more than 60 days for major milestones;
    (C) A significant change in procurement approach, and/or scope of 
procurement activities beyond that approved in the APD;
    (D) A change in system concept, or a change to the scope of the 
project;
    (E) A change to the approved cost allocation methodology.

The State shall submit the ``As Needed APDU'' to the Department, no 
later than 60 days after the occurrence of the project changes to be 
reported in the ``As Needed APDU''.
    (2) For enhanced FFP requests.
    (i) For an Annual APDU.
    (ii) For an ``As needed'' APDU when changes cause any of the 
following:
    (A) A projected cost increase of $300,000 or 10 percent of the 
project cost, whichever is less;
    (B) A schedule extension of more than 60 days for major milestones. 
For Aid to Families with Dependent Children (AFDC) Family Assistance 
Management Information System (FAMIS)-type projects, in accordance with 
section 402(e)(2)(C) of the Social Security Act, any schedule change 
which affects the State's implementation date as specified in the 
approved APD requires that the Department recover 40 percent of the 
amount expended. The Secretary may extend the implementation date, if 
the implementation date is not met because of circumstances beyond the 
State's control. Examples of circumstances beyond the State's control 
are:
    (1) Equipment failure due to physical damage or destruction; or,
    (2) Change imposed by Federal judicial decisions, or by Federal 
legislation or regulations;
    (C) A significant change in procurement approach, and/or a scope of 
procurement activities beyond that approved in the APD;
    (D) A change in system concept or scope of the project;
    (E) A change to the approved cost methodology;
    (F) A change of more than 10% of estimated cost benefits.

The State shall submit the ``As Needed APDU'' to the Department, no 
later than 60 days after the occurrence of the project changes to be 
reported in the ``As Needed APDU''.

    (3) Failure to submit any of the above to the satisfaction of the 
Department may result in disapproval or suspension of project funding.
    (d) Prompt action on requests for prior approval. The Department 
will promptly send to the approving Federal program offices the items 
specified in paragraph (b) of this section. If the Department has not 
provided approval, disapproval, or a request for information which is 
reflected in a record, within 60 days of the date of the Departmental 
letter acknowledging receipt of a State's request, the Department will 
consider the request to have provisionally met the prior approval 
conditions of paragraph (b) of this section.
    (e) Acquisitions not subject to prior approval. If the Department 
has not specifically requested in a record, the submittal of additional 
acquisition documentation for those acquisitions summarized in the APD, 
the approval of the Planning, Annual or As-Needed APDU will constitute 
an exemption of the acquisition documents from prior Federal approval. 
States will be required to submit acquisition documents, contracts and 
contract amendments under the threshold amounts on

[[Page 626]]

an exception basis if requested to do so in a record by the Department.

[51 FR 45326, Dec. 18, 1986, as amended at 55 FR 4377, Feb. 7, 1990; 56 
FR 12356, Mar. 25, 1991; 59 FR 30708, June 15, 1994; 61 FR 39897, July 
31, 1996; 75 FR 66338, Oct. 28, 2010; 80 FR 75843, Dec. 4, 2015]



Sec.  95.612  Disallowance of Federal Financial Participation (FFP).

    If the Department finds that any ADP acquisition approved or 
modified under the provisions of Sec.  95.611 fails to comply with the 
criteria, requirements, and other activities described in the approved 
APD to the detriment of the proper, efficient, economical and effective 
operation of the affected program, payment of FFP may be disallowed. In 
the case of a suspension of the approval of a Child Support APD for 
enhanced funding, see Sec.  307.40(a). In the case of a suspension of 
the approval of an APD for a Comprehensive Child Welfare Information 
System (CCWIS) project and, if applicable the transitional project that 
preceded it, see Sec.  1355.58 of this title.

[75 FR 66339, Oct. 28, 2010, as amended at 81 FR 35479, June 2, 2016]



Sec.  95.613  Procurement standards.

    (a) General. Procurements of ADP equipment and services are subject 
to the procurement standards prescribed by part 75 regardless of any 
conditions for prior approval. The Department retains the authority to 
provide greater oversight including requiring a State to comply with 
Sec.  75.328 if the Department determines that the State procurement 
process is an impediment to competition that could substantially impact 
project cost or risk of failure.
    (b) Those standards, as well as the requirement for prior approval, 
apply to ADP services and equipment acquired by a State or local agency, 
and the ADP services and equipment acquired by a State or local Central 
Data Processing facility primarily to support the Social Security Act 
programs covered by this subpart. Service agreements are exempt from 
these procurement standards.

[51 FR 45326, Dec. 18, 1986, as amended at 75 FR 66339, Oct. 28, 2010; 
81 FR 3020, Jan. 20, 2016]



Sec.  95.615  Access to systems and records.

    The State agency must allow the Department access to the system in 
all of its aspects, including pertinent state staff, design 
developments, operation, and cost records of contractors and 
subcontractors at such intervals as are deemed necessary by the 
Department to determine whether the conditions for approval are being 
met and to determine the efficiency, economy and effectiveness of the 
system.

[75 FR 66340, Oct. 28, 2010]



Sec.  95.617  Software and ownership rights.

    (a) General. The State or local government must include a clause in 
all procurement instruments that provides that the State or local 
government will have all ownership rights in software or modifications 
thereof and associated documentation designed, developed or installed 
with Federal financial participation under this subpart.
    (b) Federal license. The Department reserves a royalty-free, 
nonexclusive, and irrevocable license to reproduce, publish, or 
otherwise use and to authorize others to use for Federal Government 
purposes, such software, modifications, and documentation.
    (c) Proprietary software. Proprietary operating/vendor software 
packages which are provided at established catalog or market prices and 
sold or leased to the general public shall not be subject to the 
ownership provisions in paragraphs (a) and (b) of this section. FFP is 
not available for proprietary applications software developed 
specifically for the public assistance programs covered under this 
subpart.

[51 FR 45326, Dec. 18, 1986, as amended at 75 FR 66340, Oct. 28, 2010]



Sec.  95.619  Use of ADP systems.

    ADP systems designed, developed, or installed with FFP shall be used 
for a period of time specified in the advance planning document, unless 
the Department determines that a shorter period is justified.



Sec.  95.621  ADP reviews.

    The Department will conduct periodic onsite surveys and reviews of 
State and local agency ADP methods

[[Page 627]]

and practices to determine the adequacy of such methods and practices 
and to assure that ADP equipment and services are utilized for the 
purposes consistent with proper and efficient administration under the 
Act. Where practical, the Department will develop a mutually acceptable 
schedule between the Department and State or local agencies prior to 
conducting such surveys or reviews, which may include but are not 
limited to:
    (a) Pre-installation readiness. A pre-installation survey including 
an onsite evaluation of the physical site and the agency's readiness to 
productively use the proposed ADP services, equipment or system when 
installed and operational.
    (b) Post-installation. A review conducted after installation of ADP 
equipment or systems to assure that the objectives for which FFP was 
approved are being accomplished.
    (c) Utilization. A continuing review of ADP facilities to determine 
whether or not the ADP equipment or services are being efficiently 
utilized in support of approved programs or projects.
    (d) Acquisitions not subject to prior approval. Reviews will be 
conducted on an audit basis to assure that system and equipment 
acquisitions costing less than $200,000 or acquisitions exempted from 
prior approval were made in accordance with part 75 and the conditions 
of this subpart and to determine the efficiency, economy and 
effectiveness of the equipment or service.
    (e) State Agency Maintenance of Service Agreements. The State agency 
will maintain a copy of each service agreement in its files for Federal 
review.
    (f) ADP System Security Requirements and Review Process--(1) ADP 
System Security Requirement. State agencies are responsible for the 
security of all ADP projects under development, and operational systems 
involved in the administration of HHS programs. State agencies shall 
determine the appropriate ADP security requirements based on recognized 
industry standards or standards governing security of Federal ADP 
systems and information processing.
    (2) ADP Security Program. State ADP Security requirements shall 
include the following components:
    (i) Determination and implementation of appropriate security 
requirements as specified in paragraph (f)(1) of this section.
    (ii) Establishment of a security plan and, as appropriate, policies 
and procedures to address the following area of ADP security:
    (A) Physical security of ADP resources;
    (B) Equipment security to protect equipment from theft and 
unauthorized use;
    (C) Software and data security;
    (D) Telecommunications security;
    (E) Personnel security;
    (F) Contingency plans to meet critical processing needs in the event 
of short or long-term interruption of service;
    (G) Emergency preparedness; and,
    (H) Designation of an Agency ADP Security Manager.
    (iii) Periodic risk analyses. State agencies must establish and 
maintain a program for conducting periodic risk analyses to ensure that 
appropriate, cost effective safeguards are incorporated into new and 
existing systems. State agencies must perform risk analyses whenever 
significant system changes occur.
    (3) ADP System Security Reviews. State agencies shall review the ADP 
system security of installations involved in the administration of HHS 
programs on a biennial basis. At a minimum, the reviews shall include an 
evaluation of physical and data security operating procedures, and 
personnel practices.
    (4) Costs incurred in complying with provisions of paragraphs 
(f)(1)-(3) of this section are considered regular administrative costs 
which are funded at the regular match rate.
    (5) The security requirements of this section apply to all ADP 
systems used by State and local governments to administer programs 
covered under 45 CFR part 95, subpart F.
    (6) The State agency shall maintain reports of their biennial ADP 
system

[[Page 628]]

security reviews, together with pertinent supporting documentation, for 
HHS on-site review.

[43 FR 44853, Sept. 29, 1978, as amended at 51 FR 45329, Dec. 18, 1986; 
53 FR 27, Jan. 4, 1988; 55 FR 4378, Feb. 7, 1990; 61 FR 39898, July 31, 
1996; 75 FR 66340, Oct. 28, 2010; 81 FR 3020, Jan. 20, 2016]



Sec.  95.623  Reconsideration of denied FFP for failure to obtain 
prior approval.

    For ADP equipment and services acquired by a State without prior 
approval, which is reflected in a record, the State may request 
reconsideration of the disallowance of FFP by written request to the 
head of the Federal program office within 30 days of the initial written 
disallowance determination. In such a reconsideration, the agency may 
take into account overall federal interests. The Department may grant a 
request for reconsideration if:
    (a) The State submitted to the Department all information required 
under Sec.  95.611, satisfactorily responded to all concerns raised by 
the Department and received a final letter of approval from the 
Department; or,
    (b) The State requests reconsideration of a denial by submitting in 
a record information that addresses the following requirements:
    (1) The acquisition must be reasonable, useful and necessary;
    (2) The State's failure to obtain prior approval, which is reflected 
in a record, must have been inadvertent (i.e., the State did not 
knowingly avoid the prior approval requirements);
    (3) The request was not previously denied by HHS;
    (4) The acquisition must otherwise meet all other applicable Federal 
and State requirements, and would have been approved under part 95, 
subpart F had the State requested in a record, prior approval;
    (5) The State must not have a record of recurrent failures, under 
any of the programs covered by the prior approval regulations, to comply 
with the requirement to obtain prior approval in a record, of its 
automatic data processing acquisitions (i.e., submissions under these 
procedures, from States that have failed in the past to acquire prior 
approval which is reflected in a record, in accordance with part 95, 
subpart F, may be denied);

[51 FR 3339, Jan. 27, 1986, as amended at 55 FR 4378, Feb. 7, 1990; 75 
FR 66340, Oct. 28, 2010]



Sec.  95.624  Consideration for FFP in emergency situations.

    For ADP equipment and services acquired by a State after December 1, 
1985 to meet emergency situations, which preclude the State from 
following the requirements of Sec.  95.611, the Department will consider 
providing FFP upon receipt of a request from the State which is 
reflected in a record. In order for the Department to consider providing 
FFP in emergency situations, the following conditions must be met:
    (a) The State must submit a request to the Department, prior to the 
acquisition of any ADP equipment or services. The request must be 
reflected in a record, and include:
    (1) A brief description of the ADP equipment and/or services to be 
acquired and an estimate of their costs;
    (2) A brief description of the circumstances which result in the 
State's need to proceed prior to obtaining approval from the Department; 
and
    (3) A description of the harm which will be caused if the State does 
not acquire immediately the ADP equipment and services.
    (b) Upon receipt of the information, the Department will within 14 
days take one of the following actions:
    (1) Inform the State in writing that the request has been 
disapproved and the reason for disapproval; or
    (2) Inform the State in a communication reflected in a record, that 
the Department recognizes that an emergency exists and that within 90 
days from the date of the State's initial request, the State must submit 
a formal request for approval which includes the information specified 
at Sec.  95.611 in order for the ADP equipment or services acquisition 
to be considered for the Department's approval.
    (c) If the Department approves the request submitted under paragraph 
(b) of this section, FFP will be available

[[Page 629]]

from the date the State acquires the ADP equipment and services.

[51 FR 3339, Jan. 27, 1986, as amended at 55 FR 4378, Feb. 7, 1990; 75 
FR 66340, Oct. 28, 2010]



Sec.  95.625  Increased FFP for certain ADP systems.

    (a) General. FFP is available at enhanced matching rates for the 
development of individual or integrated systems and the associated 
computer equipment that support the administration of state plans for 
titles IV-D and/or XIX provided the systems meet the specifically 
applicable provisions referenced in paragraph (b) of the section.
    (b) Specific reference to other regulations. The applicable 
regulations for the Title IV-D program are contained in 45 CFR part 307. 
The applicable regulations for the Title IV-E program are contained in 
45 CFR 1355.55. The applicable regulations for the title IV-D program 
are contained in 45 CFR part 307. The applicable regulations for the 
title XIX program are contained in 42 CFR part 433, subpart C.

[59 FR 30708, June 15, 1994, as amended at 81 FR 35479, June 2, 2016]



Sec.  95.626  Independent Verification and Validation.

    (a) An assessment for independent verification and validation (IV&V) 
analysis of a State's system development effort may be required in the 
case of APD projects that meet any of the following criteria:
    (1) Are at risk of missing statutory or regulatory deadlines for 
automation that is intended to meet program requirements;
    (2) Are at risk of failing to meet a critical milestone;
    (3) Indicate the need for a new project or total system redesign;
    (4) Are developing systems under waivers pursuant to sections 
452(d)(3) or 627 of the Social Security Act;
    (5) Are at risk of failure, major delay, or cost overrun in their 
systems development efforts;
    (6) Fail to timely and completely submit APD updates or other 
required systems documentation.
    (7) State's procurement policies put the project at risk, including 
a pattern of failing to pursue competition to the maximum extent 
feasible.
    (8) State's failure to adequately involve the State program offices 
in the development and implementation of the project.
    (b) Independent Verification and Validation efforts must be 
conducted by an entity that is independent from the State (unless the 
State receives an exception from the Department) and the entity selected 
must:
    (1) Develop a project workplan. The plan must be provided directly 
to the Department at the same time it is given to the State.
    (2) Review and make recommendations on both the management of the 
project, both State and vendor, and the technical aspects of the 
project. The IV&V provider must give the results of its analysis 
directly to the federal agencies that required the IV&V at the same time 
it reports to the State.
    (3) Consult with all stakeholders and assess the user involvement 
and buy-in regarding system functionality and the system's ability to 
support program business needs.
    (4) Conduct an analysis of past project performance sufficient to 
identify and make recommendations for improvement.
    (5) Provide risk management assessment and capacity planning 
services.
    (6) Develop performance metrics which allow tracking project 
completion against milestones set by the State.
    (c) The acquisition document and contract for selecting the IV&V 
provider (or similar documents if IV&V services are provided by other 
State agencies) must include requirements regarding the experience and 
skills of the key personnel proposed for the IV&V analysis. The contract 
(or similar document if the IV&V services are provided by other State 
agencies) must specify by name the key personnel who actually will work 
on the project. The acquisition documents and contract for required IV&V 
services must be submitted to the Department for prior written approval.

[75 FR 66340, Oct. 28, 2010]

[[Page 630]]



Sec.  95.627  Waivers.

    (a) Application for a waiver. A State may apply for a waiver of any 
requirement in subpart F by presenting an alternative approach. Waiver 
requests must be submitted and approved as part of the State's APD or 
APD Update.
    (b) Waiver approvals. The Secretary, or his or her designee, may 
grant a State a waiver if the State demonstrates that it has an 
alternative approach to a requirement in this chapter that will 
safeguard the State and Federal Governments' interest and that enables 
the State to be in substantial compliance with the other requirements of 
this chapter.
    (c) Contents of waiver request. The State's request for approval of 
an alternative approach or waiver of a requirement in this chapter must 
demonstrate why meeting the condition is unnecessary, diminishes the 
State's ability to meet program requirements, or that the alternative 
approach leads to a more efficient, economical, and effective 
administration of the programs for which federal financial participation 
is provided, benefiting both the State and Federal Governments.
    (d) Review of waiver requests. The Secretary, or his or her 
designee, will review waiver requests to assure that all necessary 
information is provided, that all processes provide for effective 
economical and effective program operation, and that the conditions for 
waiver in this section are met.
    (e) Agency's response to a waiver request. When a waiver is approved 
by an agency, it becomes part of the State's approved APD and is 
applicable to the approving agency. A waiver is subject to the APD 
suspension provisions in Sec.  95.611(c)(3). When a waiver is 
disapproved, the entire APD will be disapproved. The APD disapproval is 
a final administrative decision and is not subject to administrative 
appeal.

[75 FR 66340, Oct. 28, 2010]

      Federal Financial Participation in Costs of ADP Acquisitions



Sec.  95.631  Cost identification for purpose of FFP claims.

    The conditions of this subpart apply notwithstanding the existence 
of an approved cost allocation plan. State agencies shall assign and 
claim the costs incurred under an approved APD in accordance with the 
following criteria:
    (a) Development costs. (1) Using its normal departmental accounting 
system, the State agency shall specifically identify what items of costs 
constitute development costs, assign these costs to specific project 
cost centers, and distribute these costs to funding sources based on the 
specific identification, assignment and distribution outlined in the 
approved APD; (2) the methods for distributing costs set forth in the 
APD should provide for assigning identifiable costs, to the extent 
practicable, directly to program/functions. The State agency shall amend 
the cost allocation plan required by subpart E of this part to include 
the approved APD methodology for the identification, assignment and 
distribution of the development costs.
    (b) Operational costs. Costs incurred for the operation of an ADP 
system shall be identified and assigned by the State agency to funding 
sources in accordance with the approved cost allocation plan required by 
Subpart E of this part.
    (c) Service agreement costs. States that operate a central data 
processing facility shall use their approved central service cost 
allocation plan required by OMB Circular A-87 to identify and assign 
costs incurred under service agreements with the State agency. The State 
agency will then distribute these costs to funding sources in accordance 
with paragraphs (a) and (b) of this section.



Sec.  95.633  Nondiscrimination requirements.

    State agencies that acquire ADP equipment and services are subject 
to the nondiscrimination requirements in parts 80, 84, and 90.

[45 FR 10794, Feb. 19, 1980]

[[Page 631]]



Sec.  95.635  Disallowance of Federal financial participation 
for automated systems that fail to comply substantially with requirements.

    (a) Federal financial participation at the applicable matching rate 
is available for automated data processing system expenditures that meet 
the requirements specified under the approved APD including the approved 
cost allocation plan.
    (b) All or part of any costs for system projects that have a major 
failure to comply with an APD approved under applicable regulation at 
Sec.  95.611, or for the Title IV-D program contained in part 307, the 
applicable regulations for the Title IV-E and Title IV-B programs 
contained in Chapter 13, subchapter G, Sec.  1355.55, or the applicable 
regulations for the Title XIX program contained in 42 CFR chapter 4 
subchapter C, part 433, are subject to disallowance by the Department.

[75 FR 66340, Oct. 28, 2010]

                               Exemptions



Sec.  95.641  Applicability of rules for charging equipment 
in subpart G of this part.

    ADP equipment, as well as other equipment acquired under public 
assistance programs, is subject to subpart G of this part. Among other 
things, subpart G provides that a State may charge only depreciation or 
use allowances for equipment with unit acquisition cost of over $25,000. 
However, for ADP equipment HHS will consider requests for waivers of 
that restriction. If the acquisition of the equipment is part of an APD 
that is subject to the prior approval requirements of subpart F, the 
State may submit the request for a waiver as part of the APD.



      Subpart G_Equipment Acquired Under Public Assistance Programs

    Source: 47 FR 41576, Sept. 21, 1982, unless otherwise noted.



Sec.  95.701  Purpose and scope of subpart.

    (a) This subpart prescribes requirements concerning the computation 
of claims for Federal financial participation in the cost of equipment 
under public assistance programs. This subpart also prescribes 
requirements for the management and disposition of equipment whose costs 
are claimed for Federal financial participation under these programs.
    (b) This subpart applies to equipment purchased by State agencies 
(as defined in Sec.  95.703) and to equipment purchased under service 
agreements with other State agencies and under cost-type contracts.



Sec.  95.703  Definitions.

    As used in this subpart:
    Acquisition cost of an item of purchased equipment means the net 
invoice price of the equipment, including the cost of modifications, 
attachments, accessories, or auxiliary apparatus necessary to make the 
equipment usable for the purpose for which it was acquired. Other 
charges such as the cost of installation, transportation, taxes, duty or 
protective intransit insurance shall be included in or excluded from the 
unit acquisition cost in accordance with the regular accounting 
practices of the organization purchasing the equipment. If the item is 
acquired by trading in another item and paying an additional amount, 
acquisition cost means the amount received for trade-in plus the 
additional outlay.
    Equipment means an article of tangible personal property that has a 
useful life of more than two years and an acquisition cost of $500 or 
more. Any recipient may use its own definition of equipment, if its 
definition would at least include all items of equipment as defined 
here.
    Public Assistance Programs means programs authorized by titles I, 
IV-A, IV-B, IV-C, IV-D, IV-E, X, XIV, XVI (AABD), XIX and XXI of the 
Social Security Act, and programs authorized by the Immigration and 
Nationality Act as amended by the Refugee Act of 1980 (Pub. L. 96-212).
    State means the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, the Northern Mariana 
Islands and Guam.
    State Agency means the State agency administering a public 
assistance program(s). This term includes local government public 
assistance agencies

[[Page 632]]

which administer public assistance programs under a State supervised 
system and the State agencies which supervise the local agencies.

[47 FR 41576, Sept. 21, 1982, as amended at 65 FR 33633, May 24, 2000]



Sec.  95.705  Equipment costs--Federal financial participation.

    (a) General rule. In computing claims for Federal financial 
participation, equipment having a unit acquisition cost of $25,000 or 
less may be claimed in the period acquired or depreciated, at the option 
of the State agency. Equipment having a unit acquisition cost of more 
than $25,000 shall be depreciated. For purposes of this section, the 
term depreciate also includes use allowances computed in accordance with 
the cost principles prescribed in part 75.
    (b) Exceptions. (1) Equipment purchased under service agreements 
with other State agencies and under cost-type contracts shall be 
depreciated. However, equipment having a unit acquisition cost of 
$25,000 or less may be claimed in the period acquired if (a) the State 
agency approved the specific purchase and the claiming of the cost of 
the item, and (b) the contract or service agreement requires that the 
equipment or its residual value be transferred to the State agency when 
the equipment is no longer needed to carry out the work under the 
contract or service agreement.
    (2) Reimbursement for ADP equipment having an acquisition cost in 
excess of $25,000 and subject to subpart F of this part must be 
depreciated over its useful life unless otherwise specifically provided 
for by the Department. ADP equipment not subject to subpart F is subject 
to the requirements of this subpart.

[47 FR 41576, Sept. 21, 1982, as amended at 75 FR 66341, Oct. 28, 2010; 
81 FR 3020, Jan. 20, 2016]



Sec.  95.707  Equipment management and disposition.

    (a) Once equipment, whose costs are claimed for Federal financial 
participation (i.e., equipment that is capitalized and depreciated or is 
claimed in the period acquired), has reached the end of its useful life 
(as defined in an approved APD), the equipment shall be subject to the 
property disposal rules in Sec.  75.320.
    (b) The State agency is responsible for adequately managing the 
equipment, maintaining records on the equipment, and taking periodic 
physical inventories. Physical inventories may be made on the basis of 
statistical sampling. The following requirements apply to the 
disposition of this equipment:
    (1) If the cost of the equipment was claimed in the period acquired 
and the equipment is later sold, the proceeds of the sale shall be 
credited to current expenditures in approximate proportion to the 
distribution of the equipment's cost.
    (2) If the cost of the equipment was claimed in the period acquired 
and the equipment is later transferred to an activity which is not 
involved in the performance of programs currently or previously funded 
by the Federal Government, an amount equal to the fair market value of 
the equipment on the date of the transfer shall be credited to current 
expenditures in approximate proportion to the distribution of the 
equipment's costs.
    (3) If the cost of the equipment was claimed in the period acquired 
and the equipment is later traded in on other equipment claims for 
Federal financial participation in the costs of replacement equipment 
shall be limited to the additional outlay.
    (4) If the equipment was depreciated, any gain or loss on the 
disposition of the equipment shall be treated as a decrease or an 
increase to the depreciation expense of the period in which the 
disposition takes place. This provision does not apply to equipment 
whose costs were claimed for Federal financial participation through use 
allowances.

[47 FR 41576, Sept. 21, 1982, as amended at 75 FR 66341, Oct. 28, 2010; 
81 FR 3020, Jan. 20, 2016]



PART 96_BLOCK GRANTS--Table of Contents



                         Subpart A_Introduction

Sec.
96.1 Scope.
96.2 Definitions.
96.3 Information collection approval numbers.

[[Page 633]]

                      Subpart B_General Procedures

96.10 Prerequisites to obtain block grant funds.
96.11 Basis of award to the States.
96.12 Grant payment.
96.13 Reallotments.
96.14 Time period for obligation and expenditure of grant funds.
96.15 Waivers.
96.16 Applicability of title XVII of the Reconciliation Act (31 U.S.C. 
          7301-7305).
96.17 Annual reporting requirements.
96.18 Participation by faith-based organizations.

                     Subpart C_Financial Management

96.30 Fiscal and administrative requirements.
96.31 Audits.
96.32 Financial settlement.
96.33 Referral of cases to the Inspector General.

   Subpart D_Direct Funding of Indian Tribes and Tribal Organizations

96.40 Scope.
96.41 General determination.
96.42 General procedures and requirements.
96.43 Procedures during FY 1982.
96.44 Community services.
96.45 Preventive health and health services.
96.46 Substance abuse prevention and treatment services.
96.47 Primary care.
96.48 Low-income home energy assistance.
96.49 Due date for receipt of all information required for completion of 
          trival applications for the low-income home energy assistance 
          block grants.

                          Subpart E_Enforcement

96.50 Complaints.
96.51 Hearings.
96.52 Appeals.
96.53 Length of withholding.

                       Subpart F_Hearing Procedure

96.60 Scope.
96.61 Initiation of hearing.
96.62 Presiding officer.
96.63 Communications to presiding officer.
96.64 Intervention.
96.65 Discovery.
96.66 Hearing procedure.
96.67 Right to counsel.
96.68 Administrative record of a hearing.

                 Subpart G_Social Services Block Grants

96.70 Scope.
96.71 Definitions.
96.72 Transferability of funds.
96.73 Sterilization.
96.74 Annual reporting requirements.

           Subpart H_Low-Income Home Energy Assistance Program

96.80 Scope.
96.81 Carryover and reallotment.
96.82 Required report on households assisted.
96.83 Increase in maximum amount that may be used for weatherization and 
          other energy-related home repair.
96.84 Miscellaneous.
96.85 Income eligibility.
96.86 Exemption from requirement for additional outreach and intake 
          services.
96.87 Leveraging incentive program.
96.88 Administrative costs.
96.89 Exemptions from standards for providing energy crisis intervention 
          assistance.

                Subpart I_Community Services Block Grants

96.90 Scope.
96.91 Audit requirement.
96.92 Termination of funding.

                   Subpart J_Primary Care Block Grants

96.100 Scope.
96.101 Review of a State decision to discontinue funding of a community 
          health center.
96.102 Carryover of unobligated funds.

                     Subpart K_Transition Provisions

96.110 Scope.
96.111 Continuation of pre-existing regulations.
96.112 Community services block grant.

     Subpart L_Substance Abuse Prevention and Treatment Block Grant

96.120 Scope.
96.121 Definitions.
96.122 Application content and procedures.
96.123 Assurances.
96.124 Certain allocations.
96.125 Primary prevention.
96.126 Capacity of treatment for intravenous substance abusers.
96.127 Requirements regarding tuberculosis.
96.128 Requirements regarding human immunodeficiency virus.
96.129 Revolving funds for establishment of homes in which recovering 
          substance abusers may reside.
96.130 State law regarding sale of tobacco products to individuals under 
          age of 18.
96.131 Treatment services for pregnant women.
96.132 Additional agreements.
96.133 Submission to Secretary of Statewide assessment of needs.

[[Page 634]]

96.134 Maintenance of effort regarding State expenditures.
96.135 Restrictions on expenditure of grant.
96.136 Independent peer review.
96.137 Payment schedule.

Appendix A to Part 96--Uniform Definitions of Services
Appendix B to Part 96--SSBG Reporting Form and Instructions

    Authority: 31 U.S.C. 1243 note, 7501-7507; 42 U.S.C. 300w et seq., 
Sec.  300x et seq., Sec.  300y et seq., Sec.  701 et seq., Sec.  8621 et 
seq., Sec.  9901 et seq., Sec.  1397 et seq., 5 U.S.C. Sec.  301.

    Source: 47 FR 29486, July 6, 1982, unless otherwise noted.



                         Subpart A_Introduction



Sec.  96.1  Scope.

    This part applies to the following block grant programs:
    (a) Community services (Pub. L. 97-35, sections 671-683) (42 U.S.C. 
9901-9912).
    (b) Preventive health and health services (Pub. L. 97-35, section 
901) (42 U.S.C. 300w-300w-8).
    (c) Community mental health services (Public Health Service Act, 
sections 1911-1920 and sections 1941-1954) (42 U.S.C. 300x-1-300x-9 and 
300x-51-300x-64).
    (d) Substance abuse prevention and treatment (Public Health Service 
Act, sections 1921-1935 and sections 1941-1954) (42 U.S.C. 300x-21-300x-
35 and 300x-51-300x-64).
    (e) Maternal and child health services (Social Security Act, Title 
V) (42 U.S.C. 701-709).
    (f) Social services, empowerment zones and enterprise communities 
(Pub. L. 97-35, sections 2351-55; Pub. L. 103-66, section 1371) (42 
U.S.C. 1397-1397f).
    (g) Low-income home energy assistance (Pub. L. 97-35, sections 2601-
11) (42 U.S.C. 8621-8629).

[47 FR 29486, July 6, 1982, as amended at 58 FR 60128, Nov. 15, 1993; 64 
FR 55856, Oct. 15, 1999]



Sec.  96.2  Definitions.

    (a) Secretary means the Secretary of Health and Human Services or 
his designee.
    (b) Department means the Department of Health and Human Services.
    (c) Reconciliation Act means the Omnibus Budget Reconciliation Act 
of 1981 (Pub. L. 97-35).
    (d) State includes the fifty States, the District of Columbia, and 
as appropriate with respect to each block grant, the Commonwealth of 
Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the 
Commonwealth of the Northern Mariana Islands, and for purposes of the 
block grants administered by agencies of the Public Health Service, the 
Federated States of Micronesia, the Republic of the Marshall Islands, 
and the Republic of Palau.

[47 FR 29486, July 6, 1982, as amended at 52 FR 37965, Oct. 13, 1987; 64 
FR 55856, Oct. 15, 1999]



Sec.  96.3  Information collection approval numbers.

    Information collection requirements pertaining to the block grant 
programs have been approved by the Office of Management and Budget under 
the provisions of the Paperwork Reduction Act, Pub. L. 96-511 (44 U.S.C. 
Chapter 35) and have been assigned OMB numbers:

0930-0080 Alcohol and Drug Abuse and Mental Health Services Block Grant 
Reporting Requirements
0920-0106 Preventive Health and Health Services Block Grant Reporting 
Requirements
0915-0023 Primary Care Block Grant Reporting Requirements
0915-0024 Maternal and Child Health Services Block Grant Reporting 
Requirements
0980-0125 Social Services Block Grant Reporting Requirements
0980-0126 Community Services Block Grant Reporting Requirements
0960-0261 Low-Income Home Energy Assistance Block Grant Reporting 
Requirements.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982]



                      Subpart B_General Procedures



Sec.  96.10  Prerequisites to obtain block grant funds.

    (a) Except where prescribed elsewhere in this rule or in authorizing 
legislation, no particular form is required for a State's application or 
the related submission required by the statute. For the maternal and 
child health block grant, the application shall be in

[[Page 635]]

the form specified by the Secretary, as provided by section 505(a) of 
the Social Security Act (42 U.S.C. 705(a)).
    (b) The certifications required by the community services, primary 
care, preventive health and health services, alcohol and drug abuse and 
mental health services, and low-income home energy assistance block 
grant statutes to be made by the State's chief executive officer must be 
made by that individual personally, or by an individual authorized to 
make such certifications on behalf of the chief executive officer.
    (c) Effective beginning in fiscal year 2001, submission dates for 
applications under the social service and low-income home energy 
assistance block grant programs are:
    (1) for the social services block grant, States and territories 
which operate on a Federal fiscal year basis, and make requests for 
funding from the Department, must insure that their applications (pre-
expenditure reports) for funding are submitted by September 1 of the 
preceding fiscal year unless the Department agrees to a later date. 
States and territories which operate their social services block grant 
on a July 1-June 30 basis, must insure that their applications are 
submitted by June 1 of the preceding funding period unless the 
Department agrees to a later date.
    (2) for the low-income home energy assistance program, States and 
territories which make requests for funding from the Department must 
insure that their applications for a fiscal year are submitted by 
September 1 of the preceding fiscal year unless the Department agrees to 
a later date.
    (d) Effective beginning in fiscal year 2001, for the low-income home 
energy assistance program, States and territories which make requests 
for funding from the Department must insure that all information 
necessary to complete their applications is received by December 15 of 
the fiscal year for which they are requesting funds unless the 
Department agrees to a later date.

[47 FR 29486, July 6, 1982, as amended at 64 FR 55856, Oct. 15, 1999]



Sec.  96.11  Basis of award to the States.

    The Secretary will award the block grant funds allotted to the State 
in accordance with the apportionment of funds from the Office of 
Management and Budget. Such awards will reflect amounts reserved for 
Indian Tribes and Tribal Organizations and, in FY 1982, any amounts 
awarded by the Department under transition authorities. The grant award 
constitutes the authority to carry out the program and to draw and 
expend funds.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982]



Sec.  96.12  Grant payment.

    The Secretary will make payments at such times and in such amounts 
to each State from its awards in advance or by way of reimbursement in 
accordance with section 203 of the Intergovernmental Cooperation Act (42 
U.S.C. 4213) and Treasury Circular No. 1075 (31 CFR part 205). When 
matching funds are involved, the Secretary shall take into account the 
ratio that such payment bears to such State's total expenditures under 
its awards.



Sec.  96.13  Reallotments.

    The Secretary will re-allot to eligible States those funds available 
as of September 1 of each fiscal year under the reallotment provisions 
pertaining to the alcohol and drug abuse and mental health services, 
maternal and child health services, and preventive health and health 
services block grants. The reallotment procedure for the low-income home 
energy assistance block grant is specified in section 2607 of the 
Reconciliation Act (42 U.S.C. 8626) and Sec.  96.81 of this part.



Sec.  96.14  Time period for obligation and expenditure of grant funds.

    (a) Obligations. Amounts unobligated by the State at the end of the 
fiscal year in which they were first allotted shall remain available for 
obligation during the succeeding fiscal year for all block grants 
except:
    (1) Primary care. Amounts are available only if the Secretary 
determines that the State acted in accordance with section 1926(a)(1) of 
the Public Health Service Act (42 U.S.C. 300y-5(a)(1)) and there is good 
cause for funds remaining unobligated.

[[Page 636]]

    (2) Low-income home energy assistance. Regular LIHEAP block grant 
funds authorized under section 2602(b) of Public Law 97-35 (42 U.S.C. 
8621(b)) are available only in accordance with section 2607(b)(2)(B) of 
Public Law 97-35 (42 U.S.C. 8626(b)(2)(B)), as follows. From allotments 
for fiscal year 1982 through fiscal year 1984, a maximum of 25 percent 
may be held available for the next fiscal year. From allotments for 
fiscal year 1985 through fiscal year 1990, a maximum of 15 percent of 
the amount payable to a grantee and not transferred to another block 
grant according to section 2604(f) of Public Law 97-35 (42 U.S.C. 
8623(f)) may be held available for the next fiscal year. From allotments 
for fiscal year 1991 through fiscal year 1993, a maximum of 10 percent 
of the amount payable to a grantee and not transferred to another block 
grant according to section 2604(f) of Public Law 97-35 (42 U.S.C. 
8623(f)) may be held available for the next fiscal year. Beginning with 
allotments for fiscal year 1994, a maximum of 10 percent of the amount 
payable to a grantee may be held available for the next fiscal year. No 
funds may be obligated after the end of the fiscal year following the 
fiscal year for which they were allotted.
    (b) Expenditure. No limitations exist on the time for expenditure of 
block grant funds, except those imposed by statute with respect to the 
community services, maternal and child health services, and social 
services block grants.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982, as amended at 
52 FR 37965, Oct. 13, 1987; 60 FR 21357, May 1, 1995]



Sec.  96.15  Waivers.

    Applications for waivers that are permitted by statute for the block 
grants should be submitted to the Director, Centers for Disease Control 
and Prevention in the case of the preventive health and health services 
block grant; to the Administrator, Substance Abuse and Mental Health 
Services Administration in the case of the community mental health 
services block grant and the substance abuse prevention and treatment 
block grant; to the Director, Maternal and Child Health Bureau in the 
case of the maternal and child health services block grant; and to the 
Director, Office of Community Services in the case of the community 
services block grant, the low-income home energy assistance program and 
the social services block grant. Beginning with fiscal year 1986, the 
Secretary's authority to waive the provisions of section 2605(b) of 
Public Law 97-35 (42 U.S.C. 8624(b)) under the low-income home energy 
assistance program is repealed.

[64 FR 55856, Oct. 15, 1999]



Sec.  96.16  Applicability of title XVII of the Reconciliation Act 
(31 U.S.C. 7301-7305).

    This section interprets the applicability of the general provisions 
governing block grants set forth in title XVII of the Reconciliation Act 
(31 U.S.C. 7301-7305):
    (a) Except as otherwise provided in this section or unless 
inconsistent with provisions in the individual block grant statutes, 31 
U.S.C. 7301-7305 apply to the community services, preventive health and 
health services, and alcohol and drug abuse and mental health services 
block grants.
    (b) The requirement in 31 U.S.C. 7303(b) relating to public hearings 
does not apply to any of the block grants governed by this part. 
Instead, the provisions in the individual block grant statutes apply.
    (c) The maternal and child health services block grant is not 
subject to any requirements of 31 U.S.C. 7301-7305.
    (d) The social services and low-income home energy assistance 
programs are subject only to 31 U.S.C. 7304.
    (e) The audit provisions of 31 U.S.C. 7305 have, in most cases, been 
overridden by the Single Audit Act. Pub. L. 98-502, 31 U.S.C. 75, et 
seq., and do not apply to the block grants. Pursuant to Sec.  
96.31(b)(2), certain entities may, however, elect to conduct audits 
under the block grant audit provisions. For entities making this 
election, the provisions of 31 U.S.C. 7305 apply to the community 
services block grant.
    (f) The applicability of 31 U.S.C. 7303(a) relating to the contents 
of a report on proposed uses of funds is specified in Sec.  96.10.

[52 FR 37966, Oct. 13, 1987]

[[Page 637]]



Sec.  96.17  Annual reporting requirements.

    (a) Except for the low-income home energy assistance program 
activity reports, a state must make public and submit to the Department 
each annual report required by statute:
    (1) Within six months of the end of the period covered by the 
report; or
    (2) At the time the state submits its application for funding for 
the federal or state fiscal year, as appropriate, which begins 
subsequent to the expiration of that six-month period.
    (b) These reports are required annually for preventive health and 
health services (42 U.S.C. 300w-5(a)(1)), community mental health 
services (42 U.S.C. 300x et. seq.), the prevention and treatment of 
substance abuse block grant (42 U.S.C. 300x-21 et. seq.), maternal and 
child health services (42 U.S.C. 706(a)(1)), and the social services 
block grant (42 U.S.C. 1397e(a)). See Sec.  96.82 for requirements 
governing the submission of activity reports for the low-income home 
energy assistance program.

[58 FR 60128, Nov. 15, 1993]



Sec.  96.18  Participation by faith-based organizations.

    The funds provided under this part shall be administered in 
compliance with the standards set forth in part 87 (Equal Treatment for 
Faith-based Organizations) of this chapter.

[69 FR 42592, July 16, 2004]



                     Subpart C_Financial Management



Sec.  96.30  Fiscal and administrative requirements.

    (a) Fiscal control and accounting procedures. Except where otherwise 
required by Federal law or regulation, a State shall obligate and expend 
block grant funds in accordance with the laws and procedures applicable 
to the obligation and expenditure of its own funds. Fiscal control and 
accounting procedures must be sufficient to (a) permit preparation of 
reports required by the statute authorizing the block grant and (b) 
permit the tracing of funds to a level of expenditure adequate to 
establish that such funds have not been used in violation of the 
restrictions and prohibitions of the statute authorizing the block 
grant.
    (b) Financial summary of obligation and expenditure of block grant 
funds--(1) Block grants containing time limits on both the obligation 
and the expenditure of funds. After the close of each statutory period 
for the obligation of block grant funds and after the close of each 
statutory period for the expenditure of block grant funds, each grantee 
shall report to the Department:
    (i) Total funds obligated and total funds expended by the grantee 
during the applicable statutory periods; and
    (ii) The date of the last obligation and the date of the last 
expenditure.
    (2) Block grants containing time limits only on obligation of funds. 
After the close of each statutory period for the obligation of block 
grant funds, each grantee shall report to the Department:
    (i) Total funds obligated by the grantee during the applicable 
statutory period; and
    (ii) The date of the last obligation.
    (3) Block grants containing time limits only on expenditure of 
funds. After the close of each statutory period for the expenditure of 
block grant funds, each grantee shall report to the Department:
    (i) Total funds expended by the grantee during the statutory period; 
and
    (ii) The date of the last expenditure.
    (4) Submission of information. Grantees shall submit the information 
required by paragraph (b)(1), (2), and (3) of this section on OMB 
Standard Form 269A, Financial Status Report (short form). Grantees are 
to provide the requested information within 90 days of the close of the 
applicable statutory grant periods.

[47 FR 29486, July 6, 1982, as amended at 52 FR 37966, Oct. 13, 1987; 53 
FR 11656, Apr. 8, 1988; 64 FR 55857, Oct. 15, 1999]



Sec.  96.31  Audits.

    (a) Basic rule. Grantees and subgrantees are responsible for 
obtaining audits in accordance with the Single Audit Act Amendments of 
1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, ``Audits of 
State, Local Governments, and Non-Profit Organizations.'' The audits 
shall be made by

[[Page 638]]

an independent auditor in accordance with generally accepted Government 
auditing standards covering financial audits.
    (b) Subgrantees. State or local governments, as those terms are 
defined for purposes of the Single Audit Act Amendments of 1996, that 
provide Federal awards to a subgrantee, expending $300,000 or more (or 
other amount as specified by OMB) in Federal awards in a fiscal year, 
shall:
    (1) Determine whether subgrantees have met the audit requirements of 
the Act. Commercial contractors (private for-profit and private and 
governmental organizations) providing goods and services to State and 
local governments are not required to have a single audit performed. 
State and local governments should use their own procedures to ensure 
that the contractor has complied with laws and regulations affecting the 
expenditure of Federal funds;
    (2) Determine whether the subgrantee spent Federal assistance funds 
provided in accordance with applicable laws and regulations. This may be 
accomplished by reviewing an audit of the subgrantee made in accordance 
with the Act or through other means (e.g., program reviews) if the 
subgrantee has not had such an audit;
    (3) Ensure that appropriate corrective action is taken within six 
months after receipt of the audit report in instances of noncompliance 
with Federal laws and regulations;
    (4) Consider whether subgrantee audits necessitate adjustment of the 
grantee's own records; and
    (5) Require each subgrantee to permit independent auditors to have 
access to the records and financial statements.

[62 FR 45963, Aug. 29, 1997]



Sec.  96.32  Financial settlement.

    The State must repay to the Department amounts found after audit 
resolution to have been expended improperly. In the event that repayment 
is not made voluntarily, the Department will undertake recovery.

[52 FR 37966, Oct. 13, 1987]



Sec.  96.33  Referral of cases to the Inspector General.

    State or tribal officials who have information indicating the 
commission or potential commission of fraud or other offenses against 
the United States involving block grant funds should promptly provide 
the information to the appropriate Regional Office of Investigations of 
the Department's Office of the Inspector General.

[52 FR 37966, Oct. 13, 1987]



   Subpart D_Direct Funding of Indian Tribes and Tribal Organizations



Sec.  96.40  Scope.

    This subpart applies to the community services, alcohol and drug 
abuse and mental health services, preventive health and health services, 
primary care, and low-income home energy assistance block grants.



Sec.  96.41  General determination.

    (a) The Department has determined that, with the exception of the 
circumstances addressed in paragraph (c) of this section, Indian tribes 
and tribal organizations would be better served by means of grants 
provided directly by the Department to such tribes and organizations out 
of their State's allotment of block grant funds than if the State were 
awarded its entire allotment. Accordingly, with the exception of 
situations described in paragraph (c) of this section, the Department 
will, upon request of an eligible Indian tribe or tribal organization 
and where provided for by statute, reserve a portion of the allotment of 
the State(s) in which the tribe is located, and, upon receipt of a 
complete application and related submission meeting statutory and 
regulatory requirements, grant it directly to the tribe or organization.
    (b) An Indian tribe or tribal organization may request direct 
funding under a block grant program included in this subpart regardless 
of whether the State in which it is located is receiving funds under the 
block grant program.
    (c) The Department has determined that Indian tribal members 
eligible for the funds or services provided through the block grants 
would be better served

[[Page 639]]

by the State(s) in which the tribe is located rather than by the tribe, 
where:
    (1) The tribe has not used its block grant allotment substantially 
in accordance with the provisions of the relevant statute(s); and
    (2) Following the procedures of 45 CFR 96.51, the Department has 
withheld tribal funds because of those deficiencies; and
    (3) The tribe has not provided sufficient evidence that it has 
removed or corrected the reason(s) for withholding. In these cases, 
block grant funds reserved or set aside for a direct grant to the Indian 
tribe will be awarded to the State(s), and the State(s) will provide 
block grant services to the service population of the tribe. Before 
awarding these funds to the State(s), the Department will allow as much 
time as it determines to be reasonable for the tribe to correct the 
conditions that led to withholding, consistent with provision of timely 
and meaningful services to the tribe's service population during the 
fiscal year. If a State(s) is awarded funds under this paragraph, the 
State(s) will receive all remaining funds set aside for the tribe for 
the Federal fiscal year for which the award is made. Where the 
Department has withheld funds from a tribe and the tribe has not taken 
satisfactory corrective action by the first day of the following fiscal 
year, all of the funds to serve the tribe's service population for the 
following fiscal year will be awarded to the State(s). The State(s) is 
responsible for providing services to the service population of the 
tribe in these cases. This paragraph also applies when funds are 
withheld from a tribal organization.

[47 FR 29486, July 6, 1982, as amended at 64 FR 55857, Oct. 15, 1999]



Sec.  96.42  General procedures and requirements.

    (a) An Indian tribe or tribal organization applying for or receiving 
direct funding from the Secretary under a block grant program shall be 
subject to all statutory and regulatory requirements applicable to a 
State applying for or receiving block grant funds to the extent that 
such requirements are relevant to an Indian tribe or tribal organization 
except where otherwise provided by statute or in this part.
    (b) A tribal organization representing more than one Indian tribe 
will be eligible to receive block grant funds on behalf of a particular 
tribe only if the tribe has by resolution authorized the organization's 
action.
    (c) If an Indian tribe or tribal organization whose service 
population resides in more than one State applies for block grant funds 
that, by statute, are apportioned on the basis of population, the 
allotment awarded to the tribe or organization shall be taken from the 
allotments of the various States in which the service population resides 
in proportion to the number of eligible members or households to be 
served in each State. If block grant funds are required to be 
apportioned on the basis of grants during a base year, the allotment to 
the Indian tribe or tribal organization shall be taken from the 
allotment of the State whose base year grants included the relevant 
grants to the tribe or organization.
    (d) The audit required under the block grant programs shall be 
conducted by an entity that is independent of the Indian tribe or tribal 
organization receiving grant funds from the Secretary.
    (e) Beginning with fiscal year 1983, any request by an Indian tribe 
or tribal organization for direct funding by the Secretary must be 
submitted to the Secretary, together with the required application and 
related materials, by September 1 preceding the Federal fiscal year for 
which funds are sought. A separate application is required for each 
block grant. After the September 1 deadline, tribal applications will be 
accepted only with the concurrence of the State (or States) in which the 
tribe or tribal organization is located.
    (f) A State receiving block grant funds is not required to use those 
funds to provide tangible benefits (e.g., cash or goods) to Indians who 
are within the service population of an Indian tribe or tribal 
organization that received direct funding from the Department under the 
same block grant program for the same fiscal year. A State, however, may 
not deny Indians access to intangible services funded by block grant

[[Page 640]]

programs (e.g., treatment at a community health center) even if the 
Indians are members of a tribe receiving direct funding for a similar 
service. A tribe receiving direct block grant funding is not required to 
use those funds to provide tangible benefits to non-Indians living 
within the tribe's service area unless the tribe and the State(s) in 
which the tribe is located agree in writing that the tribe will do so.

[47 FR 29486, July 6, 1982, as amended at 52 FR 37966, Oct. 13, 1987; 64 
FR 55857, Oct. 15, 1999]



Sec.  96.43  Procedures during FY 1982.

    (a) This section applies to the fiscal year beginning October 1, 
1981.
    (b) A request for direct funding must be received by the Secretary 
before the Secretary has awarded all of the allotment to the State 
involved. The application and related submission may be submitted later 
but must be submitted within 75 days after the beginning of the quarter 
in which the State qualified for block grant funds, (or by August 20, 
1982 in the case of an Indian tribe located in a State that has not 
qualified for block grant funds in FY 1982) except that the application 
and related submission for the low-income home energy assistance program 
must be submitted by December 15, 1981. A separate request and 
application are required for each block grant.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982]



Sec.  96.44  Community services.

    (a) This section applies to direct funding of Indian tribes and 
tribal organizations under the community services block grant.
    (b) The terms Indian tribe and tribal organization as used in the 
Reconciliation Act have the same meaning given such terms in section 
4(b) and 4(c) of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450b). The terms also include organized groups of Indians 
that the State in which they reside has determined are Indian tribes. An 
organized group of Indians is eligible for direct funding based on State 
recognition if the State has expressly determined that the group is an 
Indian tribe. In addition, the statement of the State's chief executive 
officer verifying that a tribe is recognized by that State will also be 
sufficient to verify State recognition for the purpose of direct 
funding.
    (c) For purposes of section 674(c)(2) of the Act (42 U.S.C. 
9903(c)(2)) an eligible Indian means a member of an Indian tribe whose 
income is at or below the poverty line defined in section 673(2) of the 
Act (42 U.S.C. 9902(2)). An eligible individual under section 674(c)(2) 
of the Reconciliation Act (42 U.S.C. 9903(c)(2)) means a resident of the 
State whose income is at or below the poverty line.
    (d) An Indian tribe or tribal organization will meet the 
requirements of section 675(c)(1) (42 U.S.C. 9904(c)(1)) if it certifies 
that it agrees to use the funds to provide at least one of the services 
or activities listed in that section.
    (e) An Indian tribe or tribal organization is not required to comply 
with section 675(b) (42 U.S.C. 9904(b)) or to provide the certifications 
required by the following other provisions of the Reconciliation Act.
    (1) Section 675(c)(2)(A) (42 U.S.C. 9904(c)(2)(A));
    (2) Section 675(c)(3) (42 U.S.C. 9904(c)(3)); and
    (3) Section 675(c)(4) (42 U.S.C. 9904(c)(4)).
    (4) Section 675(c)(11) (42 U.S.C. 9904(c)(11)).
    (f) In each fiscal year, Indian tribes and tribal organizations may 
expend for administrative expenses--comparable to the administrative 
expenses incurred by State at the State level--an amount not to exceed 
the greater of the amounts determined by:
    (1) Multiplying their allotment under section 674 of the 
Reconciliation Act (42 U.S.C. 9903) by five percent; or
    (2) Multiplying the allotment by the percentage represented by the 
ratio of $55,000 to the smallest State allotment (excluding territorial 
allotments) for that fiscal year.

[47 FR 29486, July 6, 1982, as amended at 52 FR 37967, Oct. 13, 1987]



Sec.  96.45  Preventive health and health services.

    (a) This section applies to direct funding of Indian tribes and 
tribal organizations under the preventive health and health services 
block grant.

[[Page 641]]

    (b) For the purposes of determining eligible applicants under 
section 1902(d) of the Public Health Service Act, a grantee that 
received a grant directly from the Secretary in FY 1981 under any of the 
programs replaced by the preventive health and health services block 
grant that was specifically targeted toward serving a particular Indian 
tribe or tribal organization will be considered eligible if the grantee 
is an Indian tribe or tribal organization at the time it requests funds 
under this part. Grantees that received funds under formula or Statewide 
grants, and subgrantees that received funds from any program replaced by 
the preventive health and health services block grant, are not eligible.



Sec.  96.46  Substance abuse prevention and treatment services.

    (a) This section applies to direct funding of Indian tribes and 
tribal organizations under the substance abuse prevention and treatment 
Block Grant.
    (b) For the purpose of determining eligible applicants under section 
1933(d) of the Public Health Service Act (42 U.S.C. 300x-33(d)) an 
Indian tribe or tribal organization (as defined in subsections (b) and 
(c) of section 4 of the Indian Self-Determination and Education 
Assistance Act) that received a direct grant under subpart I of part B 
of title XIX of the PHS Act (as such existed prior to October 1, 1992) 
in fiscal year 1991 will be considered eligible for a grant under 
subpart 2 of part B of title XIX of the PHS Act.
    (c) For purposes of the substance abuse prevention and treatment 
Block Grant, an Indian tribe or tribal organization is not required to 
comply with the following statutory provisions of the Public Health 
Service Act: 1923 (42 U.S.C. 300x-23), 1925 (42 U.S.C. 300x-25), 1926 
(42 U.S.C. 300x-26), 1928 (42 U.S.C. 300x-28), 1929 (42 U.S.C. 300x-29), 
and 1943(a)(1) (42 U.S.C. 300x-53(a)(1)). An Indian tribe or tribal 
organization is to comply with all other statutes and regulations 
applicable to the Substance Abuse Prevention and Treatment Block Grant. 
In each case in which an Indian Tribe receives a direct grant, the State 
is also responsible for providing services to Native Americans under the 
State's Block Grant program.

[58 FR 17070, Mar. 31, 1993]



Sec.  96.47  Primary care.

    Applications for direct funding of Indian tribes and tribal 
organizations under the primary care block grant must comply with 42 CFR 
part 51c (Grants for Community Health Services).



Sec.  96.48  Low-income home energy assistance.

    (a) This section applies to direct funding of Indian tribes under 
the low-income home energy assistance program.
    (b) The terms Indian tribe and tribal organization as used in the 
Reconciliation Act have the same meaning given such terms in section 
4(b) and 4(c) of the Indian Self-Determination and Education Assistance 
Act (25 U.S.C. 450b) except that the terms shall also include organized 
groups of Indians that the State in which they reside has expressly 
determined are Indian tribes or tribal organizations in accordance with 
State procedures for making such determinations.
    (c) For purposes of section 2604(d) of the Act (42 U.S.C. 8623(d)), 
an organized group of Indians is eligible for direct funding based on 
State recognition if the State has expressly determined that the group 
is an Indian tribe. A statement by the State's chief executive officer 
verifying that a tribe is recognized by that State will also be 
sufficient to verify State recognition for the purpose of direct 
funding.
    (d) The plan required by section 2604(d)(4) of the Reconciliation 
Act (42 U.S.C. 8623(d)(4)) shall contain the certification and 
information required for States under section 2605 (b) and (c) of that 
Act (42 U.S.C. 8624 (b) and (c)). An Indian tribe or tribal organization 
is not required to comply with section 2605(a)(2) of the Act (42 U.S.C. 
8624(a)(2)).
    (e) Where a tribe requests that the Secretary fund another entity to 
provide energy assistance for tribal members, as provided by section 
2604(d)(3) of

[[Page 642]]

the Act (42 U.S.C. 8623(d)(3)), the Secretary shall consider the 
following factors in selecting the grantee: the ability of the other 
entity to provide low-income home energy assistance, existing tribal-
State agreements as to the size and location of the service population, 
and the history of State services to the Indian people to be served by 
the other entity.



Sec.  96.49  Due date for receipt of all information required for completion 
of tribal applications for the low-income home energy assistance block grants.

    Effective beginning in FY 2001, for the low-income home energy 
assistance program, Indian tribes and tribal organizations that make 
requests for direct funding from the Department must insure that all 
information necessary to complete their application is received by 
December 15 of the fiscal year for which funds are requested, unless the 
State(s) in which the tribe is located agrees to a later date. After 
December 15, funds will revert to the State(s) in which the tribe is 
located, unless the State(s) agrees to a later date. If funds revert to 
a State, the State is responsible for providing low-income home energy 
assistance program services to the service population of the tribe.

[64 FR 55857, Oct. 15, 1999]



                          Subpart E_Enforcement



Sec.  96.50  Complaints.

    (a) This section applies to any complaint (other than a complaint 
alleging violation of the nondiscrimination provisions) that a State has 
failed to use its allotment under a block grant in accordance with the 
terms of the act establishing the block grant or the certifications and 
assurances made by the State pursuant to that act. The Secretary is not 
required to consider a complaint unless it is submitted as required by 
this section.
    (b) Complaints with respect to the health block grants must be 
submitted in writing to either the Assistant Secretary for Health or: 
For the preventive health and health services block grant, the Director, 
Centers for Disease Control; for the alcohol and drug abuse and mental 
health services block grant, the Administrator, Alcohol, Drug Abuse, and 
Mental Health Administration; for the maternal and child health services 
block grant, the Administrator, Health Resources and Services 
Administration. Complaints with respect to the social services block 
grant must be submitted in writing to the Assistant Secretary for Human 
Development Services. Complaints with respect to the low-income home 
energy assistance program and the community services block grant must be 
submitted in writing to the Director, Office of Community Services. (The 
address for the Director, Center for Disease Control is 1600 Clifton 
Road, NE., Atlanta, Georgia 30333. For each of the other officials cited 
above the address is 200 Independence Avenue SW., Washington, DC 20201.) 
The complaint must identify the provision of the act, assurance, or 
certification that was allegedly violated; must specify the basis for 
the violations it charges; and must include all relevant information 
known to the person submitting it.
    (c) The Department shall promptly furnish a copy of any complaint to 
the affected State. Any comments received from the State within 60 days 
(or such longer period as may be agreed upon between the State and the 
Department) shall be considered by the Department in responding to the 
complaint. The Department will conduct an investigation of complaints 
where appropriate.
    (d) The Department will provide a written response to complaints 
within 180 days after receipt. If a final resolution cannot be provided 
at that time, the response will state the reasons why additional time is 
necessary. Under the low-income home energy assistance program, within 
60 days after receipt of complaints, the Department will provide a 
written response to the complainant, stating the actions that it has 
taken to date and, if the complaint has not yet been fully resolved, the 
timetable for final resolution of the complaint.
    (e) The Department recognizes that under the block grant programs 
the States are primarily responsible for interpreting the governing 
statutory provisions. As a result, various States may reach different 
interpretations of

[[Page 643]]

the same statutory provisions. This circumstance is consistent with the 
intent of and statutory authority for the block grant programs. In 
resolving any issue raised by a complaint or a Federal audit the 
Department will defer to a State's interpretation of its assurances and 
of the provisions of the block grant statutes unless the interpretation 
is clearly erroneous. In any event, the Department will provide copies 
of complaints to the independent entity responsible for auditing the 
State's activities under the block grant program involved. Any 
determination by the Department that a State's interpretation is not 
clearly erroneous shall not preclude or otherwise prejudice the State 
auditors' consideration of the question.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982, as amended at 
52 FR 37967, Oct. 13, 1987; 57 FR 1977, Jan. 16, 1992; 60 FR 21358, May 
1, 1995]



Sec.  96.51  Hearings.

    (a) The Department will order a State to repay amounts found not to 
have been expended in accordance with law of the certifications provided 
by the State only after the Department has provided the State notice of 
the order and an opportunity for a hearing. Opportunity for a hearing 
will not be provided, however, when the State, in resolving audit 
findings or at another time, has agreed that the amounts were not 
expended in accordance with law or the certifications. The hearing will 
be governed by subpart F of this part and will be held in the State if 
required by statute.
    (b) If a State refuses to repay amounts after a final decision that 
is not subject to further review in the Department, the amounts may be 
offset against payments to the State. If a statute requires an 
opportunity for a hearing before such an offset may be made, the hearing 
will be governed by subpart F of this part and will be held in the State 
if required by statute.
    (c) The Department will withhold funds from a State only if the 
Department has provided the State an opportunity for a hearing. The 
hearing will be governed by subpart F of this part and will be held in 
the State if required by statute.

[47 FR 29486, July 6, 1982, as amended at 52 FR 37967, Oct. 13, 1987]



Sec.  96.52  Appeals.

    (a) Decisions resulting from repayment hearings held pursuant to 
Sec.  96.51(a) of this part may be appealed by either the State or the 
Department to the Grant Appeals Board.
    (b) Decisions resulting from offset hearings held pursuant to Sec.  
96.51(b) of this part may not be appealed.
    (c) Decisions resulting from withholding hearings held pursuant to 
Sec.  96.51(c) of this part may be appealed to the Secretary by the 
State or the Department as follows:
    (1) An application for appeal must be received by the Secretary no 
later than 60 days after the appealing party receives a copy of the 
presiding officer's decision. The application shall clearly identify the 
questions for which review is sought and shall explain fully the party's 
position with respect to those questions. A copy shall be furnished to 
the other party.
    (2) The Secretary may permit the filing of opposing briefs, hold 
informal conferences, or take whatever other steps the Secretary finds 
appropriate to decide the appeal.
    (3) The Secretary may refer an application for appeal to the Grant 
Appeals Board. Notwithstanding part 16 of this title, in the event of 
such a referral, the Board shall issue a recommended decision that will 
not become final until affirmed, reversed, or modified by the Secretary.
    (d) Any appeal to the Grant Appeals Board under this section shall 
be governed by part 16 of this title except that the Board shall not 
hold a hearing. The Board shall accept any findings with respect to 
credibility of witnesses made by the presiding officer. The Board may 
otherwise review and supplement the record as provided for in part 16 of 
this title and decide the issues raised.



Sec.  96.53  Length of withholding.

    Under the low-income home energy assistance program and community 
services block grant, the Department

[[Page 644]]

may withhold funds until the Department finds that the reason for the 
withholding has been removed.

[64 FR 55857, Oct. 15, 1999]



                       Subpart F_Hearing Procedure



Sec.  96.60  Scope.

    The procedures in this subpart apply when opportunity for a hearing 
is provided for by Sec.  96.51 of this part.



Sec.  96.61  Initiation of hearing.

    (a) A hearing is initiated by a notice of opportunity for hearing 
from the Department. The notice will:
    (1) Be sent by mail, telegram, telex, personal delivery, or any 
other mode of written communication;
    (2) Specify the facts and the action that are the subject of the 
opportunity for a hearing;
    (3) State that the notice of opportunity for hearing and the hearing 
are governed by these rules; and
    (4) State the time within which a hearing may be requested, and 
state the name, address, and telephone number of the Department employee 
to whom any request for hearing is to be addressed.
    (b) A State offered an opportunity for a hearing has the amount of 
time specified in the notice, which may not be less than 10 days after 
receipt of the notice, within which to request a hearing. The request 
may be filed by mail, telegram, telex, personal delivery, or any other 
mode of written communication, addressed to the designated Department 
employee. If no response is filed within that time, the offer is deemed 
to have been refused and no hearing will be held.
    (c) If a hearing is requested, the Department will designate a 
presiding officer, and (subject to Sec.  96.51 of this part) the hearing 
will take place at a time and location agreed upon by the State 
requesting the hearing, the Department, and the presiding officer or, if 
agreement cannot be reached, at a reasonable time and location 
designated by the presiding officer.



Sec.  96.62  Presiding officer.

    (a) A Department employee to whom the Secretary delegates such 
authority, or any other agency employee designated by an employee to 
whom such authority is delegated, may serve as the presiding officer and 
conduct a hearing under this subpart.
    (b) The presiding officer is to be free from bias or prejudice and 
may not have participated in the investigation or action that is the 
subject of the hearing or be subordinate to a person, other than the 
Secretary, who has participated in such investigation or action.
    (c) The Secretary is not precluded by this section from prior 
participation in the investigation or action that is the subject of the 
hearing.
    (d) A different presiding officer may be substituted for the one 
originally designated under Sec.  96.61 of this part without notice to 
the parties.



Sec.  96.63  Communications to presiding officer.

    (a) Those persons who are directly involved in the investigation or 
presentation of the position of the Department or any party at a hearing 
that is subject to this subpart should avoid any off-the-record 
communication on the matter to the presiding officer or his advisers if 
the communication is inconsistent with the requirement of Sec.  96.68 of 
this part that the administrative record be the exclusive record for 
decision. If any communication of this type occurs, it is to be reduced 
to writing and made part of the record, and the other party provided an 
opportunity to respond.
    (b) A copy of any communications between a participant in the 
hearing and the presiding officer, e.g., a response by the presiding 
officer to a request for a change in the time of the hearing is to be 
sent to all parties by the person initiating the communication.



Sec.  96.64  Intervention.

    Participation as parties in the hearing by persons other than the 
State and the Department is not permitted.



Sec.  96.65  Discovery.

    The use of interrogatories, depositions, and other forms of 
discovery shall not be allowed.

[[Page 645]]



Sec.  96.66  Hearing procedure.

    (a) A hearing is public, except when the Secretary or the presiding 
officer determines that all or part of a hearing should be closed to 
prevent a clearly unwarranted invasion of personal privacy (such as 
disclosure of information in medical records that would identify 
patients), to prevent the disclosure of a trade secret or confidential 
commercial or financial information, or to protect investigatory records 
compiled for law enforcement purposes that are not available for public 
disclosure.
    (b) A hearing will be conducted by the presiding officer. Employees 
of the Department will first give a full and complete statement of the 
action which is the subject of the hearing, together with the 
information and reasons supporting it, and may present any oral or 
written information relevant to the hearing. The State may then present 
any oral or written information relevant to the hearing. Both parties 
may confront and conduct reasonable cross-examination of any person 
(except for the presiding officer and counsel for the parties) who makes 
any statement on the matter at the hearing.
    (c) The hearing is informal in nature, and the rules of evidence do 
not apply. No motions or objections relating to the admissibility of 
information and views will be made or considered, but either party may 
comment upon or rebut all such data, information, and views.
    (d) The presiding officer may order the hearing to be transcribed. 
The State may have the hearing transcribed, at the State's expense, in 
which case a copy of the transcript is to be furnished to the Department 
at the Department's expense.
    (e) The presiding officer may, if appropriate, allow for the 
submission of post-hearing briefs. The presiding officer shall prepare a 
written decision, which shall be based on a preponderance of the 
evidence, shall include a statement of reasons for the decision, and 
shall be final unless appealed pursuant to Sec.  96.52 of this part. If 
post-hearing briefs were not permitted, the parties to the hearing will 
be given the opportunity to review and comment on the presiding 
officer's decision prior to its being issued.
    (f) The presiding officer shall include as part of the decision a 
finding on the credibility of witnesses (other than expert witnesses) 
whenever credibility is a material issue.
    (g) The presiding officer shall furnish a copy of the decision to 
the parties.
    (h) The presiding officer has the power to take such actions and 
make such rulings as are necessary or appropriate to maintain order and 
to conduct a fair, expeditious, and impartial hearing, and to enforce 
the requirements of this subpart concerning the conduct of hearings. The 
presiding officer may direct that the hearing be conducted in any 
suitable manner permitted by law and these regulations.
    (i) The Secretary or the presiding officer has the power to suspend, 
modify, or waive any provision of this subpart.



Sec.  96.67  Right to counsel.

    Any party to a hearing under this part has the right at all times to 
be advised and accompanied by counsel.



Sec.  96.68  Administrative record of a hearing.

    (a) The exclusive administrative record of the hearing consists of 
the following:
    (1) The notice of opportunity for hearing and the response.
    (2) All written information and views submitted to the presiding 
officer at the hearing or after if specifically permitted by the 
presiding officer.
    (3) Any transcript of the hearing.
    (4) The presiding officer's decision and any briefs or comments on 
the decision under Sec.  96.66(e) of this part.
    (5) All letters or communications between participants and the 
presiding officer or the Secretary referred to in Sec.  96.63 of this 
part.
    (b) The record of the hearing is closed to the submission of 
information and views at the close of the hearing, unless the presiding 
officer specifically permits additional time for a further submission.

[[Page 646]]



                 Subpart G_Social Services Block Grants



Sec.  96.70  Scope.

    This subpart applies to the social services block grant.



Sec.  96.71  Definitions.

    (a) Section 2005 (a)(2) and (a)(5) (42 U.S.C. 1397d (a)(2) and 
(a)(5)) of the Social Security Act establishes prohibitions against the 
provision of room and board and medical care unless, among other 
reasons, they are an ``integral but subordinate'' part of a State-
authorized social service. ``Integral but subordinate'' means that the 
room and board provided for a short term or medical care is a minor but 
essential adjunct to the service of which it is a part and is necessary 
to achieve the objective of that service. Room and board provided for a 
short term shall not be considered an integral but subordinate part of a 
social service when it is provided to an individual in a foster family 
home or other facility the primary purpose of which is to provide food, 
shelter, and care or supervision, except for temporary emergency shelter 
provided as a protective service.
    (b) As used in section 2005(a)(5) of the Social Security Act (42 
U.S.C. 1397d (a)(5)) with respect to the limitations governing the 
provision of services by employees of certain institutions, employees 
includes staff, contractors, or other individuals whose activities are 
under the professional direction or direct supervision of the 
institution.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982]



Sec.  96.72  Transferability of funds.

    Under section 2002(d) of the Social Security Act (42 U.S.C. 
1397a(d)), funds may be transferred in accordance with the provisions of 
that section to the preventive health and health services, alcohol and 
drug abuse and mental health services, primary care, maternal and child 
health services, and low-income home energy assistance block grants. In 
addition, funds may be transferred to other Federal block grants for 
support of health services, health promotion and disease prevention 
activities, or low-income home energy assistance (or any combination of 
those activities).



Sec.  96.73  Sterilization.

    If a State authorizes sterilization as a family planning service, it 
must comply with the provisions of 42 CFR part 441, subpart F, except 
that the State plan requirement under 42 CFR 441.252 does not apply.

[47 FR 33702, Aug. 4, 1982]



Sec.  96.74  Annual reporting requirements.

    (a) Annual report. In accordance with 42 U.S.C. 1397e, each state 
must submit an annual report to the Secretary by the due dates specified 
in Sec.  96.17 of this part. The annual report must cover the most 
recently completed fiscal year and, except for the data in paragraphs 
(a) (1) through (4) of this section, may be submitted in the format of 
the state's choice. The annual report must address the requirements in 
section 2006(a) of the Act, include the specific data required by 
section 2006(c), and include other information as follows:
    (1) The number of individuals who receive services paid for in whole 
or in part with federal funds under the Social Services Block Grant, 
showing separately the number of children and the number of adults who 
received such services (section 2006(c)(1));
    (2) The amount of Social Services Block Grant funds spent in 
providing each service, showing separately for each service the average 
amount spent per child recipient and per adult recipient (section 
2006(c)(2));
    (3) The total amount of federal, state and local funds spent in 
providing each service, including Social Services Block Grant funds;
    (4) The method(s) by which each service is provided, showing 
separately the services provided by public agencies, private agencies, 
or both (section 2006(c)(4)); and
    (5) The criteria applied in determining eligibility for each service 
such as income eligibility guidelines, sliding fee scales, the effect of 
public assistance benefits, and any requirements for enrollment in 
school or training programs (section 2006(c)(3)).
    (b) Reporting requirement. (1) Each state must use the uniform 
definitions of services in appendix A of this part,

[[Page 647]]

categories 1-28, in submitting the data required in paragraph (a) of 
this section. Where a state cannot use the uniform definitions, it 
should report the data under category 29, ``Other Services.'' The 
state's definitions of each of the services listed in category 29 must 
be included in the annual report.
    (2) Each state must use the reporting form issued by the Department 
to report the data required in paragraphs (a) (1) through (4) of this 
section.
    (3) In reporting recipient and expenditure data, each state must 
report actual numbers of recipients and actual expenditures when this 
information is available. For purposes of this report, each state 
should, if possible, count only a single recipient for each service. 
States should also consider a service provided to a recipient for the 
length of the reporting period (one year) or any fraction thereof as a 
single service. Data based on sampling and/or estimates will be accepted 
when actual figures are unavailable. Each state must indicate for each 
service whether the data are based on actual figures, sampling, or 
estimates and must describe the sampling and/or estimation process(es) 
it used to obtain these data in the annual report. Each state must also 
indicate, in reporting recipient data, whether the data reflects an 
unduplicated count of recipients.
    (4) Each state must use category 30, ``Other Expenditures,'' to 
report non-service expenditures. Only total dollar amounts in this 
category are required, i.e., they need not be reported by recipient 
count or cost per adult/child. This will include carry over balances, 
carry forward balances, funds transferred to or from the SSBG program, 
and administrative costs as defined by the state.
    (5) Each state must use its own definition of the terms ``child'' 
and ``adult'' in reporting the data required in paragraphs (a) (1) 
through (5) of this section.
    (6) Each state's definition of ``child'' and ``adult'' must be 
reported as a part of the eligibility criteria for each service required 
in paragraph (a)(5) of this section. The data on eligibility criteria 
may be submitted in whatever format the state chooses as a part of its 
annual report.
    (c) Transfer of computer data. In addition to making the annual 
report available to the public and to the Department, a state may submit 
the information specified in paragraphs (a) (1) through (4) of this 
section using electronic equipment. A full description of procedures for 
electronic transmission of data, and of the availability of computer 
diskettes, is included in appendix B to this part.

[58 FR 60129, Nov. 15, 1993]



           Subpart H_Low-income Home Energy Assistance Program



Sec.  96.80  Scope.

    This subpart applies to the low-income home energy assistance 
program.



Sec.  96.81  Carryover and reallotment.

    (a) Scope. Pursuant to section 2607(b) of Public Law 97-35 (42 
U.S.C. 8626(b)), this section concerns procedures relating to carryover 
and reallotment of regular LIHEAP block grant funds authorized under 
section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)).
    (b) Required carryover and reallotment report. Each grantee must 
submit a report to the Department by August 1 of each year, containing 
the information in paragraphs (b)(1) through (b)(4) of this section. The 
Department shall make no payment to a grantee for a fiscal year unless 
the grantee has complied with this paragraph with respect to the prior 
fiscal year.
    (1) The amount of funds that the grantee requests to hold available 
for obligation in the next (following) fiscal year, not to exceed 10 
percent of the funds payable to the grantee;
    (2) A statement of the reasons that this amount to remain available 
will not be used in the fiscal year for which it was allotted;
    (3) A description of the types of assistance to be provided with the 
amount held available; and
    (4) The amount of funds, if any, to be subject to reallotment.
    (c) Conditions for reallotment. If the total amount available for 
reallotment for a fiscal year is less than $25,000, the Department will 
not reallot such amount. If the total amount available for reallotment 
for a fiscal year is

[[Page 648]]

$25,000 or more, the Department will reallot such amount, except that 
the Department will not award less than $25 in reallotted funds to a 
grantee.

[64 FR 55858, Oct. 15, 1999]



Sec.  96.82  Required report on households assisted.

    (a) Each grantee which is a State or an insular area which receives 
an annual allotment of at least $200,000 shall submit to the Department, 
as part of its LIHEAP grant application, the data required by section 
2605(c)(1)(G) of Public Law 97-35 (42 U.S.C. 8624(c)(1)(G)) for the 12-
month period corresponding to the Federal fiscal year (October 1-
September 30) preceding the fiscal year for which funds are requested. 
The data shall be reported separately for LIHEAP heating, cooling, 
crisis, and weatherization assistance.
    (b) Each grantee which is an insular area which receives an annual 
allotment of less than $200,000 or which is an Indian tribe or tribal 
organization which receives direct funding from the Department shall 
submit to the Department, as part of its LIHEAP grant application, data 
on the number of households receiving LIHEAP assistance during the 12-
month period corresponding to the Federal fiscal year (October 1-
September 30) preceding the fiscal year for which funds are requested. 
The data shall be reported separately for LIHEAP heating, cooling, 
crisis, and weatherization assistance.
    (c) Grantees will not receive their LIHEAP grant allotment for the 
fiscal year until the Department has received the report required under 
paragraph (a) or (b) of this section.

[64 FR 55858, Oct. 15, 1999]



Sec.  96.83  Increase in maximum amount that may be used for weatherization and other energy-related home repair.

    (a) Scope. This section concerns requests for waivers increasing 
from 15 percent to up to 25 percent of LIHEAP funds allotted or 
available to a grantee for a fiscal year, the maximum amount that 
grantees may use for low-cost residential weatherization and other 
energy-related home repair for low-income households (hereafter referred 
to as ``weatherization''), pursuant to section 2605(k) of Public Law 97-
35 (42 U.S.C. 8624(k)).
    (b) Public inspection and comment. Before submitting waiver requests 
to the Department, grantees must make proposed waiver requests available 
for public inspection within their jurisdictions in a manner that will 
facilitate timely and meaningful review of, and comment upon, these 
requests. Written public comments on proposed waiver requests must be 
made available for public inspection upon their receipt by grantees, as 
must any summaries prepared of written comments, and transcripts and/or 
summaries of verbal comments made on proposed requests at public 
meetings or hearings. Proposed waiver requests, and any preliminary 
waiver requests, must be made available for public inspection and 
comment until at least March 15 of the fiscal year for which the waiver 
is to be requested. Copies of actual waiver requests must be made 
available for public inspection upon submission of the requests to the 
Department.
    (c) Waiver request. After March 31 of each fiscal year, the chief 
executive officer (or his or her designee) may request a waiver of the 
weatherization obligation limit for this fiscal year, if the grantee 
meets criteria in paragraphs (c)(2)(i), (c)(2)(ii), and (c)(2)(iii) of 
this section, or can show ``good cause'' for obtaining a waiver despite 
a failure to meet one or more of these criteria. (If the request is made 
by the chief executive officer's designee and the Department does not 
have on file written evidence of the designation, the request also must 
include evidence of the appropriate delegation of authority.) Waiver 
requests must be in writing and must include the information specified 
in paragraphs (c)(1) through (c)(6) of this section. The grantee may 
submit a preliminary waiver request for a fiscal year, between February 
1 and March 31 of the fiscal year for which the waiver is requested. If 
a grantee chooses to submit a preliminary waiver request, the 
preliminary request must include the information specified in paragraphs 
(c)(1) through (c)(6) of this section; in addition, after March 31 the 
chief executive officer (or his or her designee) must submit the 
information specified in

[[Page 649]]

paragraphs (c)(7) through (c)(10) of this section, to complete the 
preliminary waiver request.
    (1) A statement of the total percent of its LIHEAP funds allotted or 
available in the fiscal year for which the waiver is requested, that the 
grantee desires to use for weatherization.
    (2) A statement of whether the grantee has met each of the following 
three criteria:
    (i) In the fiscal year for which the waiver is requested, the 
combined total (aggregate) number of households in the grantee's service 
population that will receive LIHEAP heating, cooling, and crisis 
assistance benefits that are provided from Federal LIHEAP allotments 
from regular and supplemental appropriations will not be fewer than the 
combined total (aggregate) number that received such benefits in the 
preceding fiscal year;
    (ii) In the fiscal year for which the waiver is requested, the 
combined total (aggregate) amount, in dollars, of LIHEAP heating, 
cooling, and crisis assistance benefits received by the grantee's 
service population that are provided from Federal LIHEAP allotments from 
regular and supplemental appropriations will not be less than the 
combined total (aggregate) amount received in the preceding fiscal year; 
and
    (iii) All LIHEAP weatherization activities to be carried out by the 
grantee in the fiscal year for which the wavier is requested have been 
shown to produce measurable savings in energy expenditures.
    (3) With regard to criterion in paragraph (c)(2)(i) of this section, 
a statement of the grantee's best estimate of the appropriate household 
totals for the fiscal year for which the wavier is requested and for the 
preceding fiscal year.
    (4) With regard to criterion in paragraph (c)(2)(ii) of this 
section, a statement of the grantee's best estimate of the appropriate 
benefit totals, in dollars, for the fiscal year for which the waiver is 
requested and for the preceding fiscal year.
    (5) With regard to criterion in paragraph (c)(2)(iii) of this 
section, a description of the weatherization activities to be carried 
out by the grantee in the fiscal year for which the wavier is requested 
(with all LIHEAP funds proposed to be used for weatherization, not just 
with the amount over 15 percent), and an explanation of the specific 
criteria under which the grantee has determined whether these activities 
have been shown to produce measurable savings in energy expenditures.
    (6) A description of how and when the proposed wavier request was 
made available for timely and meaningful public review and comment, 
copies and/or summaries of public comments received on the request 
(including transcripts and/or summaries of any comments made on the 
request at public meetings or hearings), a statement of the method for 
reviewing public comments, and a statement of the changes, if any, that 
were made in response to these comments.
    (7) To complete a preliminary waiver request: Official confirmation 
that the grantee wishes approval of the waiver request.
    (8) To complete a preliminary waiver request: A statement of whether 
any public comments were received after preparation of the preliminary 
waiver request and, if so, copies and/or summaries of these comments 
(including transcripts and/or summaries of any comments made on the 
request at public meetings or hearings), and a statement of the changes, 
if any, that were made in response to these comments.
    (9) To complete a preliminary waiver request: A statement of whether 
any material/substantive changes of fact have occurred in information 
included in the preliminary waiver request since its submission, and, if 
so, a description of the change(s).
    (10) To complete a preliminary waiver request: A description of any 
other changes to the preliminary request.
    (d) ``Standard'' waiver. If the Department determines that a grantee 
has meet the three criteria in paragraph (c)(2) of this section, has 
provided all information required by paragraph (c) of this section, has 
shown adequate concern for timely and meaningful public review and 
comment, and has proposed weatherization that meets all relevant 
requirements of title XXVI of Public Law 97-35 (42 U.S.C. 8621 et seq.) 
and 45 CFR part 96, the Department will approve a ``standard'' waiver.

[[Page 650]]

    (e) ``Good cause'' waiver. (1) If a grantee does not meet one or 
more of the three criteria in paragraph (c)(2) of this section, then the 
grantee may submit documentation that demonstrates good cause why a 
waiver should be granted despite the grantee's failure to meet this 
criterion or these criteria. ``Good cause'' waiver requests must include 
the following information, in addition to the information specified in 
paragraph (c) of this section:
    (i) For each criterion under paragraph (c)(2) of this section that 
the grantee does not meet, an explanation of the specific reasons 
demonstrating good cause why the grantee does not meet the criterion and 
yet proposes to use additional funds for weatherization, citing 
measurable, quantified data, and stating the source(s) of the data used;
    (ii) A statement of the grantee's LIHEAP heating, cooling, and 
crisis assistance eligibility standards (eligibility criteria) and 
benefits levels for the fiscal year for which the waiver is requested 
and for the preceding fiscal year; and, if eligibility standards were 
less restrictive and/or benefit levels were higher in the preceding 
fiscal year for one or more of these program components, an explanation 
of the reasons demonstrating good cause why a waiver should be granted 
in spite of this fact;
    (iii) A statement of the grantee's opening and closing dates for 
applications for LIHEAP heating, cooling, and crisis assistance in the 
fiscal year for which the waiver is requested and in the preceding 
fiscal year, and a description of the grantee's outreach efforts for 
heating, cooling, and crisis assistance in the fiscal year for which the 
waiver is requested and in the preceding fiscal year, and, if the 
grantee's application period was longer and/or outreach efforts were 
greater in the preceding fiscal year for one or more of these program 
components, an explanation of the reasons demonstrating good cause why a 
waiver should be granted in spite of this fact; and
    (iv) If the grantee took, or will take, other actions that led, or 
will lead, to a reduction in the number of applications for LIHEAP 
heating, cooling, and/or crisis assistance, from the preceding fiscal 
year to the fiscal year for which the waiver is requested, a description 
of these actions and an explanation demonstrating good cause why a 
waiver should be granted in spite of these actions.
    (2) If the Department determines that a grantee requesting a ``good 
cause'' waiver has demonstrated good cause why a waiver should be 
granted, has provided all information required by paragraphs (c) and 
(e)(1) of this section, has shown adequate concern for timely and 
meaningful public review and comment, and has proposed weatherization 
that meets all relevant requirements of title XXVI of Public Law 97-35 
(42 U.S.C. 8621 et seq.) and 45 CFR part 96, the Department will approve 
a ``good cause'' waiver.
    (f) Approvals and disapprovals. After receiving the grantee's 
complete waiver request, the Department will respond in writing within 
45 days, informing the grantee whether the request is approved on either 
a ``standard'' or ``good cause'' basis. The Department may request 
additional information and/or clarification from the grantee. If 
additional information and/or clarification is requested, the 45-day 
period for the Department's response will start when the additional 
information and/or clarification is received. No waiver will be granted 
for a previous fiscal year.
    (g) Effective period. Waivers will be effective from the date of the 
Department's written approval until the funds for which the waiver is 
granted are obligated in accordance with title XXVI of Public Law 97-35 
(42 U.S.C. 8621 et seq.) and 45 CFR part 96. Funds for which a 
weatherization waiver was granted that are carried over to the following 
fiscal year and used for weatherization shall not be considered ``funds 
allotted'' or ``funds available'' for the purposes of calculating the 
maximum amount that may be used for weatherization in the succeeding 
fiscal year.

[60 FR 21358, May 1, 1995; 60 FR 33260, June 27, 1995]



Sec.  96.84  Miscellaneous.

    (a) Rights and responsibilities of territories. Except as otherwise 
provided, a territory eligible for funds shall have

[[Page 651]]

the same rights and responsibilities as a State.
    (b) Applicability of assurances. The assurances in section 2605(b) 
of Public Law 97-35 (42 U.S.C. 8624(b)), as amended, pertain to all 
forms of assistance provided by the grantee, with the exception of 
assurance 15, which applies to heating, cooling, and energy crisis 
intervention assistance.
    (c) Prevention of waste, fraud, and abuse. Grantees must establish 
appropriate systems and procedures to prevent, detect, and correct 
waste, fraud, and abuse in activities funded under the low-income home 
energy assistance program. The systems and procedures are to address 
possible waste, fraud, and abuse by clients, vendors, and administering 
agencies.
    (d) End of transfer authority. Beginning with funds appropriated for 
FY 1994, grantees may not transfer any funds pursuant to section 2604(f) 
of Public Law 97-35 (42 U.S.C. 8623(f)) that are payable to them under 
the LIHEAP program to the block grant programs specified in section 
2604(f).

[57 FR 1978, Jan. 16, 1992, as amended at 64 FR 55858, Oct. 15, 1999]



Sec.  96.85  Income eligibility.

    (a) Application of poverty income guidelines and State median income 
estimates. In implementing the income eligibility standards in section 
2605(b)(2) of Public Law 97-35 (42 U.S.C. 8624(b)(2)), grantees using 
the Federal government's official poverty income guidelines and State 
median income estimates for households as a basis for determining 
eligibility for assistance shall, by October 1 of each year, or by the 
beginning of the State fiscal year, whichever is later, adjust their 
income eligibility criteria so that they are in accord with the most 
recently published update of the guidelines or estimates. Grantees may 
adjust their income eligibility criteria to accord with the most 
recently published revision to the poverty income guidelines or State 
median income estimates for households at any time between the 
publication of the revision and the following October 1, or the 
beginning of the State fiscal year, whichever is later.
    (b) Adjustment of annual median income for household size. In order 
to determine the State median income for households that have other than 
four individuals, grantees shall adjust the State median income figures 
(published annually by the Secretary), by the following percentages:
    (1) One-person household, 52 percent;
    (2) Two-person household, 68 percent;
    (3) Three-person household, 84 percent;
    (4) Four-person household, 100 percent;
    (5) Five-person household, 116 percent;
    (6) Six-person household, 132 percent; and
    (7) For each additional household member above six persons, add 
three percentage points to the percentage adjustment for a six-person 
household.

[53 FR 6827, Mar. 3, 1988, as amended at 64 FR 55858, Oct. 15, 1999]



Sec.  96.86  Exemption from requirement for additional outreach 
and intake services.

    The requirement in section 2605(b)(15) of Public Law 97-35 (42 
U.S.C. 8624(b)(15)), as amended by section 704(a)(4) of the Augustus F. 
Hawkins Human Services Reauthorization Act of 1990 (Pub. L. 101-501)--
concerning additional outreach and intake services--does not apply to:
    (a) Indian tribes and tribal organizations; and
    (b) Territories whose annual LIHEAP allotments under section 2602(b) 
of Public Law 97-35 (42 U.S.C. 8621(b)) are $200,000 or less.

[57 FR 1978, Jan. 16, 1992]



Sec.  96.87  Leveraging incentive program.

    (a) Scope and eligible grantees. (1) This section concerns the 
leveraging incentive program authorized by section 2607A of Public Law 
97-35 (42 U.S.C. 8626a).
    (2)(i) The only entities eligible to receive leveraging incentive 
funds from the Department are States (including the District of 
Columbia), Indian tribes, tribal organizations, and territories that 
received direct Federal LIHEAP funding under section 2602(b) of Public 
Law 97-35 (42 U.S.C. 8621(b)) in both the base period for which 
leveraged resources are reported, and the

[[Page 652]]

award period for which leveraging incentive funds are sought; and tribes 
and tribal organizations described in paragraphs (a)(2)(ii) and 
(a)(2)(iii) of this section.
    (ii) Indian tribes that received LIHEAP services under section 
2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)) through a directly-
funded tribal organization in the base period for which leveraged 
resources are reported, and receive direct Federal LIHEAP funding under 
section 2602(b) in the award period, will receive leveraging incentive 
funds allocable to them if they submit leveraging reports meeting all 
applicable requirements. If the tribal organization continues to receive 
direct funding under section 2602(b) in the award period, the tribal 
organization also will receive incentive funds allocable to it if it 
submits a leveraging report meeting all applicable requirements. In such 
cases, incentive funds will be allocated among the involved entities 
that submit leveraging reports, as agreed by these entities. If they 
cannot agree, HHS will allocate incentive funds based on the comparative 
role of each entity in obtaining and/or administering the leveraged 
resources, and/or their relative number of LIHEAP-eligible households.
    (iii) If a tribe received direct Federal LIHEAP funding under 
section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)) in the base 
period for which resources leveraged by the tribe are reported, and the 
tribe receives LIHEAP services under section 2602(b) through a directly-
funded tribal organization in the award period, the tribal organization 
will receive leveraging incentive funds on behalf of the tribe for the 
resources if the tribal organization submits a leveraging report meeting 
all applicable requirements.
    (b) Definitions--(1) Award period means the fiscal year during which 
leveraging incentive funds are distributed to grantees by the 
Department, based on the countable leveraging activities they reported 
to the Department for the preceding fiscal year (the base period).
    (2) Base period means the fiscal year for which a grantee's 
leveraging activities are reported to the Department; grantees' 
countable leveraging activities during the base period or base year are 
the basis for the distribution of leveraging incentive funds during the 
succeeding fiscal year (the award period or award year). Leveraged 
resources are counted in the base period during which their benefits are 
provided to low-income households.
    (3) Countable loan fund means revolving loan funds and similar loan 
instruments in which:
    (i) The sources of both the loaned and the repaid funds meet the 
requirements of this section, including the prohibitions of paragraphs 
(f)(1), (f)(2), and (f)(3) of this section;
    (ii) Neither the loaned nor the repaid funds are Federal funds or 
payments from low-income households, and the loans are not made to low-
income households; and
    (iii) The benefits provided by the loaned funds meet the 
requirements of this section for countable leveraged resources and 
benefits.
    (4) Countable petroleum violation escrow funds means petroleum 
violation escrow (oil overcharge) funds that were distributed to a State 
or territory by the Department of Energy (DOE) after October 1, 1990, 
and interest earned in accordance with DOE policies on petroleum 
violation escrow funds that were distributed to a State or territory by 
DOE after October 1, 1990, that:
    (i) Were used to assist low-income households to meet the costs of 
home energy through (that is, within and as a part of) a State or 
territory's LIHEAP program, another Federal program, or a non-Federal 
program, in accordance with a submission for use of these petroleum 
violation escrow funds that was approved by DOE;
    (ii) Were not previously required to be allocated to low-income 
households; and
    (iii) Meet the requirements of paragraph (d)(1) of this section, and 
of paragraph (d)(2)(ii) or (d)(2)(iii) or this section.
    (5) Home energy means a source of heating or cooling in residential 
dwellings.
    (6) Low-income households means federally eligible (federally 
qualified) households meeting the standards for LIHEAP income 
eligibility and/or LIHEAP categorical eligibility as set

[[Page 653]]

by section 2605(b)(2) of Public Law 97-35 (42 U.S.C. 8624(b)(2)).
    (7) Weatherization means low-cost residential weatherization and 
other energy-related home repair for low-income households. 
Weatherization must be directly related to home energy.
    (c) LIHEAP funds used to identify, develop, and demonstrate 
leveraging programs. (1) Each fiscal year, States (excluding Indian 
tribes, tribal organizations, and territories) may spend up to the 
greater of $35,000 or 0.08 percent of their net Federal LIHEAP 
allotments (funds payable) allocated under section 2602(b) of Public Law 
97-35 (42 U.S.C. 8621(b)) specifically to identify, develop, and 
demonstrate leveraging programs under section 2607A(c)(2) of Public Law 
97-35 (42 U.S.C. 8626a(c)(2)). Each fiscal year, Indian tribes, tribal 
organizations, and territories may spend up to the greater of two (2.0) 
percent or $100 of their Federal LIHEAP allotments allocated under 
section 2602(b) of Public law 97-35 (42 U.S.C. 8621(b)) specifically to 
identify, develop, and demonstrate leveraging programs under section 
2607A(c)(2) of Public Law 97-35 (42 U.S.C. 8626a(c)(2)). For the purpose 
of this paragraph, Federal LIHEAP allotments include funds from regular 
and supplemental appropriations, with the exception of leveraging 
incentive funds provided under section 2602(d) of Public Law 97-35 (42 
U.S.C. 8621(d)).
    (2) LIHEAP funds used under section 2607A(c)(2) of Public Law 97-35 
(42 U.S.C. 8626a(c)(2)) specifically to identify, develop, and 
demonstrate leveraging programs are not subject to the limitation in 
section 2605(b)(9) of Public Law 97-35 (42 U.S.C. 8624(b)(9)) on the 
maximum percent of Federal funds that may be used for costs of planning 
and administration.
    (d) Basic requirements for leveraged resources and benefits. (1) In 
order to be counted under the leveraging incentive program, leveraged 
resources and benefits must meet all of the following five criteria:
    (i) They are from non-Federal sources.
    (ii) They are provided to the grantee's low-income home energy 
assistance program, or to federally qualified low-income households as 
described in section 2605(b)(2) of Public Law 97-35 (42 U.S.C. 
8624(b)(2)).
    (iii) They are measurable and quantifiable in dollars.
    (iv) They represent a net addition to the total home energy 
resources available to low-income households in excess of the amount of 
such resources that could be acquired by these households through the 
purchase of home energy, or the purchase of items that help these 
households meet the cost of home energy, at commonly available household 
rates or costs, or that could be obtained with regular LIHEAP allotments 
provided under section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)).
    (v) They meet the requirements for countable leveraged resources and 
benefits throughout this section and section 2607A of Public Law 97-35 
(42 U.S.C. 8626a).
    (2) Also, in order to be counted under the leveraging incentive 
program, leveraged resources and benefits must meet at least one of the 
following three criteria:
    (i) The grantee's LIHEAP program had an active, substantive role in 
developing and/or acquiring the resource/benefits from home energy 
vendor(s) through negotiation, regulation, and/or competitive bid. The 
actions or efforts of one or more staff of the grantee's LIHEAP 
program--at the central and/or local level--and/or one or more staff of 
LIHEAP program subrecipient(s) acting in that capacity, were substantial 
and significant in obtaining the resource/benefits from the vendor(s).
    (ii) The grantee appropriated or mandated the resource/benefits for 
distribution to low-income households through (that is, within and as a 
part of) its LIHEAP program. The resource/benefits are provided through 
the grantee's LIHEAP program to low-income households eligible under the 
grantee's LIHEAP standards, in accordance with the LIHEAP statute and 
regulations and consistent with the grantee's LIHEAP plan and program 
policies that were in effect during the base period, as if they were 
provided from the grantee's Federal LIHEAP allotment.
    (iii) The grantee appropriated or mandated the resource/benefits for 
distribution to low-income households as described in its LIHEAP plan 
(referred

[[Page 654]]

to in section 2605(c)(1)(A) of Public Law 97-35) (42 U.S.C. 
8624(c)(1)(A)). The resource/benefits are provided to low-income 
households as a supplement and/or alternative to the grantee's LIHEAP 
program, outside (that is, not through, within, or as a part of) the 
LIHEAP program. The resource/benefits are integrated and coordinated 
with the grantee's LIHEAP program. Before the end of the base period, 
the plan identifies and describes the resource/benefits, their 
source(s), and their integration/coordination with the LIHEAP program. 
The Department will determine resources/benefits to be integrated and 
coordinated with the LIHEAP program if they meet at least one of the 
following eight conditions. If a resource meets at least one of 
conditions A through F when the grantee's LIHEAP program is operating 
(and meets all other applicable requirements), the resource also is 
countable when the LIHEAP program is not operating.
    (A) For all households served by the resource, the assistance 
provided by the resource depends on and is determined by the assistance 
provided to these households by the grantee's LIHEAP program in the base 
period. The resource supplements LIHEAP assistance that was not 
sufficient to meet households' home energy needs, and the type and 
amount of assistance provided by the resource is directly affected by 
the LIHEAP assistance received by the households.
    (B) Receipt of LIHEAP assistance in the base period is necessary to 
receive assistance from the resource. The resource serves only 
households that received LIHEAP assistance in the base period.
    (C) Ineligibility for the grantee's LIHEAP program, or denial of 
LIHEAP assistance in the base period because of unavailability of LIHEAP 
funds, is necessary to receive assistance from the resource.
    (D) For discounts and waivers: eligibility for and/or receipt of 
assistance under the grantee's LIHEAP program in the base period, and/or 
eligibility under the Federal standards set by section 2605(b)(2) of 
Public Law 97-35 (42 U.S.C. 8624(b)(2)), is necessary to receive the 
discount or waiver.
    (E) During the period when the grantee's LIHEAP program is 
operating, staff of the grantee's LIHEAP program and/or staff assigned 
to the LIHEAP program by a local LIHEAP administering agency or 
agencies, and staff assigned to the resource communicate orally and/or 
in writing about how to meet the home energy needs of specific, 
individual households. For the duration of the LIHEAP program, this 
communication takes place before assistance is provided to each 
household to be served by the resource, unless the applicant for 
assistance from the resource presents documentation of LIHEAP 
eligibility and/or the amount of LIHEAP assistance received or to be 
received.
    (F) A written agreement between the grantee's LIHEAP program or 
local LIHEAP administering agency, and the agency administering the 
resource, specifies the following about the resource: eligibility 
criteria; benefit levels; period of operation; how the LIHEAP program 
and the resource are integrated/coordinated; and relationship between 
LIHEAP eligibility and/or benefit levels, and eligibility and/or benefit 
levels for the resource. The agreement provides for annual or more 
frequent reports to be provided to the LIHEAP program by the agency 
administering the resource.
    (G) The resource accepts referrals from the grantee's LIHEAP 
program, and as long as the resource has benefits available, it provides 
assistance to all households that are referred by the LIHEAP program and 
that meet the resource's eligibility requirements. Under this condition, 
only the benefits provided to households referred by the LIHEAP program 
are countable.
    (H) Before the grantee's LIHEAP heating, cooling, crisis, and/or 
weatherization assistance component(s) open and/or after the grantee's 
LIHEAP heating, cooling, crisis, and/or weatherization assistance 
component(s) close for the season or for the fiscal year, or before the 
entire LIHEAP program opens and/or after the entire LIHEAP program 
closes for the season or for the fiscal year, the resource is made 
available specifically to fill the gap caused by the absence of the 
LIHEAP component(s) or program. The resource is not

[[Page 655]]

available while the LIHEAP component(s) or program is operating.
    (e) Countable leveraged resources and benefits. Resources and 
benefits that are countable under the leveraging incentive program 
include but are not limited to the following, provided that they also 
meet all other applicable requirements:
    (1) Cash resources: State, tribal, territorial, and other public and 
private non-Federal funds, including countable loan funds and countable 
petroleum violation escrow funds as defined in paragraphs (b)(3) and 
(b)(4) of this section, that are used for:
    (i) Heating, cooling, and energy crisis assistance payments and cash 
benefits made in the base period to or on behalf of low-income 
households toward their home energy costs (including home energy bills, 
taxes on home energy sales/purchases and services, connection and 
reconnection fees, application fees, late payment charges, bulk fuel 
tank rental or purchase costs, and security deposits that are retained 
for six months or longer);
    (ii) Purchase of fuels that are provided to low-income households in 
the base period for home energy (such as fuel oil, liquefied petroleum 
gas, and wood);
    (iii) Purchase of weatherization materials that are installed in 
recipients' homes in the base period;
    (iv) Purchase of the following tangible items that are provided to 
low-income households and/or installed in recipients' homes in the base 
period: blankets, space heating devices, equipment, and systems; space 
cooling devices, equipment, and systems; and other tangible items that 
help low-income households meet the costs of home energy and are 
specifically approved by the Department as countable leveraged 
resources;
    (v) Installation, replacement, and repair of the following in the 
base period: weatherization materials; space heating devices, equipment, 
and systems; space cooling devices, equipment, and systems; and other 
tangible items that help low-income households meet the costs of home 
energy and are specifically approved by the Department;
    (vi) The following services, when they are an integral part of 
weatherization to help low-income households meet the costs of home 
energy in the base period: installation, replacement, and repair of 
windows, exterior doors, roofs, exterior walls, and exterior floors; 
pre-weatherization home energy audits of homes that were weatherized as 
a result of these audits; and post-weatherization inspection of homes; 
and
    (vii) The following services, when they are provided (carried out) 
in the base period: installation, replacement, and repair of smoke/fire 
alarms that are an integral part, and necessary for safe operation, of a 
home heating or cooling system installed or repaired as a weatherization 
activity; and asbestos removal and that is an integral part of, and 
necessary to carry out, weatherization to help low-income households 
meet the costs of home energy.
    (2) Home energy discounts and waivers that are provided in the base 
period to low-income households and pertain to generally applicable 
prices, rates, fees, charges, costs, and/or requirements, in the amount 
of the discount, reduction, waiver, or forgiveness, or that apply to 
certain tangible fuel and non-fuel items and to certain services, that 
are provided in the base period to low-income households and help these 
households meet the costs of home energy, in the amount of the discount 
or reduction:
    (i) Discounts or reductions in utility and bulk fuel prices, rates, 
or bills;
    (ii) Partial or full forgiveness of home energy bill arrearages;
    (iii) Partial or full waivers of utility and other home energy 
connection and reconnection fees, application fees, late payment 
charges, bulk fuel tank rental or purchase costs, and home energy 
security deposits that are retained for six months or longer;
    (iv) Reductions in and partial or full waivers of non-Federal taxes 
on home energy sales/purchases and services, and reductions in and 
partial or full waivers of other non-Federal taxes provided as tax 
``credits'' to low-income households to offset their home energy costs, 
except when Federal funds or Federal tax ``credits'' provide payment or 
reimbursement for these reductions/waivers;

[[Page 656]]

    (v) Discounts or reductions in the cost of the following tangible 
items that are provided to low-income households and/or installed in 
recipients' homes: weatherization materials; blankets; space heating 
devices, equipment, and systems; space cooling devices, equipment, and 
systems; and other tangible items that are specifically approved by the 
Department;
    (vi) Discounts or reductions in the cost of installation, 
replacement, and repair of the following: weatherization materials; 
space heating devices, equipment, and systems; space cooling devices, 
equipment, and systems; and other tangible items that help low-income 
households meet the costs of home energy and are specifically approved 
by the Department;
    (vii) Discounts or reductions in the cost of the following services, 
when the services are an integral part of weatherization to help low-
income households meet the costs of home energy: installation, 
replacement, and repair of windows, exterior doors, roofs, exterior 
walls, and exterior floors; pre-weatherization home energy audits of 
homes that were weatherized as a result of these audits; and post-
weatherization inspection of homes; and
    (viii) Discounts or reductions in the cost of installation, 
replacement, and repair of smoke/fire alarms that are an integral part, 
and necessary for safe operation, of a home heating or cooling system 
installed or repaired as a weatherization activity; and discounts or 
reductions in the cost of asbestos removal that is an integral part of, 
and necessary to carry out, weatherization to help low-income households 
meet the costs of home energy.
    (3) Certain third-party in-kind contributions that are provided in 
the base period to low-income households:
    (i) Donated fuels used by recipient households for home energy (such 
as fuel oil, liquefied petroleum gas, and wood);
    (ii) Donated weatherization materials that are installed in 
recipients' homes;
    (iii) Donated blankets; donated space heating devices, equipment, 
and systems; donated space cooling devices, equipment, and systems; and 
other donated tangible items that help low-income households meet the 
costs of home energy and are specifically approved by the Department as 
countable leveraged resources;
    (iv) Unpaid volunteers' services specifically to install, replace, 
and repair the following: weatherization materials; space heating 
devices, equipment, and systems; space cooling devices, equipment, and 
systems; and other items that help low-income households meet the costs 
of home energy and are specifically approved by the Department;
    (v) Unpaid volunteers' services specifically to provide (carry out) 
the following, when these services are an integral part of 
weatherization to help low-income households meet the costs of home 
energy: installation, replacement, and repair of windows, exterior 
doors, roofs, exterior walls, and exterior floors; pre-weatherization 
home energy audits of homes that were weatherized as a result of these 
audits; and post-weatherization inspection of homes;
    (vi) Unpaid volunteers' services specifically to: install, replace, 
and repair smoke/fire alarms as an integral part, and necessary for safe 
operation, of a home heating or cooling system installed or repaired as 
a weatherization activity; and remove asbestos as an integral part of, 
and necessary to carry out, weatherization to help low-income households 
meet the costs of home energy;
    (vii) Paid staff's services that are donated by the employer 
specifically to install, replace, and repair the following: 
weatherization materials; space heating devices, equipment, and systems; 
space cooling devices, equipment, and systems; and other items that help 
low-income households meet the costs of home energy and are specifically 
approved by the Department;
    (viii) Paid staff's services that are donated by the employer 
specifically to provide (carry out) the following, when these services 
are an integral part of weatherization to help low-income households 
meet the costs of home energy: installation, replacement, and repair of 
windows, exterior doors, roofs, exterior walls, and exterior floors; 
pre-weatherization home energy audits of

[[Page 657]]

homes that were weatherized as a result of these audits; and post-
weatherization inspection of homes; and
    (ix) Paid staff's services that are donated by the employer 
specifically to: install, replace, and repair smoke/fire alarms as an 
integral part, and necessary for safe operation, of a home heating or 
cooling system installed or repaired as a weatherization activity; and 
remove asbestos as an integral part of, and necessary to carry out, 
weatherization to help low-income households meet the costs of home 
energy.
    (f) Resources and benefits that cannot be counted. The following 
resources and benefits are not countable under the leveraging incentive 
program:
    (1) Resources (or portions of resources) obtained, arranged, 
provided, contributed, and/or paid for, by a low-income household for 
its own benefit, or which a low-income household is responsible for 
obtaining or required to provide for its own benefit or for the benefit 
of others, in order to receive a benefit of some type;
    (2) Resources (or portions of resources) provided, contributed, and/
or paid for by building owners, building managers, and/or home energy 
vendors, if the cost of rent, home energy, or other charge(s) to the 
recipient were or will be increased, or if other charge(s) to the 
recipient were or will be imposed, as a result;
    (3) Resources (or portions of resources) directly provided, 
contributed, and/or paid for by member(s) of the recipient household's 
family (parents, grandparents, great-grandparents, sons, daughters, 
grandchildren, great-grandchildren, brothers, sisters, aunts, uncles, 
first cousins, nieces, and nephews, and their spouses), regardless of 
whether the family member(s) lived with the household, unless the family 
member(s) also provided the same resource to other low-income households 
during the base period and did not limit the resource to members of 
their own family;
    (4) Deferred home energy obligations;
    (5) Projected future savings from weatherization;
    (6) Delivery, and discounts in the cost of delivery, of fuel, 
weatherization materials, and all other items;
    (7) Purchase, rental, donation, and loan, and discounts in the cost 
of purchase and rental, of: supplies and equipment used to deliver fuel, 
weatherization materials, and all other items; and supplies and 
equipment used to install and repair weatherization materials and all 
other items;
    (8) Petroleum violation escrow (oil overcharge) funds that do not 
meet the definition in paragraph (b)(4) of this section;
    (9) Interest earned/paid on petroleum violation escrow funds that 
were distributed to a State or territory by the Department of Energy on 
or before October 1, 1990;
    (10) Interest earned/paid on Federal funds;
    (11) Interest earned/paid on customers' security deposits, utility 
deposits, etc., except when forfeited by the customer and used to 
provide countable benefits;
    (12) Borrowed funds that do not meet the requirements in paragraph 
(b)(3) above (including loans made by and/or to low-income households), 
interest paid on borrowed funds, and reductions in interest paid on 
borrowed funds;
    (13) Resources (or portions of resources) for which Federal payment 
or reimbursement has been or will be provided/received;
    (14) Tax deductions and tax credits received from any unit(s) of 
government by donors/contributors of resources for these donations, and 
by vendors for providing rate reductions, discounts, waivers, credits, 
and/or arrearage forgiveness to or for low-income households, etc.;
    (15) Funds and other resources that have been or will be used as 
matching or cost sharing for any Federal program;
    (16) Leveraged resources counted under any other Federal leveraging 
incentive program;
    (17) Costs of planning and administration, space costs, and intake 
costs;
    (18) Outreach activities, budget counseling, case management, and 
energy conservation education;
    (19) Training;
    (20) Installation, replacement, and repair of lighting fixtures and 
light bulbs;

[[Page 658]]

    (21) Installation, replacement, and repair of smoke/fire alarms that 
are not an integral part, and necessary for safe operation, of a home 
heating or cooling system installed or repaired as a weatherization 
activity;
    (22) Asbestos removal that is not an integral part of, and necessary 
to carry out, weatherization to help low-income households meet the 
costs of home energy;
    (23) Paid services where payment is not made from countable 
leveraged resources, unless these services are donated as a countable 
in-kind contribution by the employer;
    (24) All in-kind contributions except those described in paragraph 
(e)(3) of this section; and
    (25) All other resources that do not meet the requirements of this 
section and of section 2607A of Public Law 97-35 (42 U.S.C. 8626a).
    (g) Valuation and documentation of leveraged resources and 
offsetting costs. (1) Leveraged cash resources will be valued at the 
fair market value of the benefits they provided to low-income 
households, as follows. Payments to or on behalf of low-income 
households for heating, cooling, and energy crisis assistance will be 
valued at their actual amount or value at the time they were provided. 
Purchased fuel, weatherization materials, and other countable tangible 
items will be valued at their fair market value (the commonly available 
household rate or cost in the local market area) at the time they were 
purchased. Installation, replacement, and repair of weatherization 
materials, and other countable services, will be valued at rates 
consistent with those ordinarily paid for similar work, by persons of 
similar skill in this work, in the grantee's or subrecipient's 
organization in the local area, at the time these services were 
provided. If the grantee or subrecipient does not have employees 
performing similar work, the rates will be consistent with those 
ordinarily paid by other employers for similar work, by persons of 
similar skill in this work, in the same labor market, at the time these 
services were provided. Fringe benefits and overhead costs will not be 
counted.
    (2) Home energy discounts, waivers, and credits will be valued at 
their actual amount or value.
    (3) Donated fuel, donated weatherization materials, and other 
countable donated tangible items will be valued at their fair market 
value (the commonly available household cost in the local market area) 
at the time of donation.
    (4) Donated unpaid services, and donated third-party paid services 
that are not in the employee's normal line of work, will be valued at 
rates consistent with those ordinarily paid for similar work, by persons 
of similar skill in this work, in the grantee's or subrecipient's 
organization in the local area, at the time these services were 
provided. If the grantee or subrecipient does not have employees 
performing similar work, the rates will be consistent with those 
ordinarily paid by other employers for similar work, by persons of 
similar skill in this work, in the same labor market, at the time these 
services were provided. Fringe benefits and overhead costs will not be 
counted. Donated third-party paid services of employees in their normal 
line of work will be valued at the employee's regular rate of pay, 
excluding fringe benefits and overhead costs.
    (5) Offsetting costs and charges will be valued at their actual 
amount or value.
    (i) Funds from grantees' regular LIHEAP allotments that are used 
specifically to identify, develop, and demonstrate leveraging programs 
under section 2607A(c)(2) of Public Law 97-35 (42 U.S.C. 8626a(c)(2)) 
will be deducted as offsetting costs in the base period in which these 
funds are obligated, whether or not there are any resulting leveraged 
benefits. Costs incurred from grantees' own funds to identify, develop, 
and demonstrate leveraging programs will be deducted in the first base 
period in which resulting leveraged benefits are provided to low-income 
households. If there is no resulting leveraged benefit from the 
expenditure of the grantee's own funds, the grantee's expenditure will 
not be counted or deducted.
    (ii) Any costs assessed or charged to low-income households on a 
continuing or on-going basis, year after year, specifically to 
participate in a counted

[[Page 659]]

leveraging program or to receive counted leveraged resources/benefits 
will be deducted in the base period these costs are paid. Any one-time 
costs or charges to low-income households specifically to participate in 
a counted leveraging program or to receive counted leveraged resources/
benefits will be deducted in the first base period the leveraging 
program or resource is counted. Such costs or charges will be subtracted 
from the gross value of a counted resource or benefit for low-income 
households whose benefits are counted, but not for any households whose 
benefits are not counted.
    (6) Only the amount of the net addition to recipient low-income 
households' home energy resources may be counted in the valuation of a 
leveraged resource.
    (7) Leveraged resources and benefits, and offsetting costs and 
charges, will be valued according to the best data available to the 
grantee.
    (8) Grantees must maintain, or have readily available, records 
sufficient to document leveraged resources and benefits, and offsetting 
costs and charges, and their valuation. These records must be retained 
for three years after the end of the base period whose leveraged 
resources and benefits they document.
    (h) Leveraging report. (1) In order to qualify for leveraging 
incentive funds, each grantee desiring such funds must submit to the 
Department a report on the leveraged resources provided to low-income 
households during the preceding base period. These reports must contain 
the following information in a format established by the Department.
    (i) For each separate leveraged resource, the report must:
    (A) Briefly describe the specific leveraged resource and the 
specific benefit(s) provided to low-income households by this resource, 
and state the source of the resource;
    (B) State whether the resource was acquired in cash, as a discount/
waiver, or as an in-kind contribution;
    (C) Indicate the geographical area in which the benefit(s) were 
provided to recipients;
    (D) State the month(s) and year(s) when the benefit(s) were provided 
to recipients;
    (E) State the gross dollar value of the countable benefits provided 
by the resource as determined in accordance with paragraph (g) of this 
section, indicate the source(s) of the data used, and describe how the 
grantee quantified the value and calculated the total amount;
    (F) State the number of low-income households to whom the benefit(s) 
were provided, and state the eligibility standard(s) for the low-income 
households to whom the benefit(s) were provided;
    (G) Indicate the agency or agencies that administered the resource/
benefit(s); and
    (H) Indicate the criterion or criteria for leveraged resources in 
paragraph (d)(2) of this section that the resource/benefits meet, and 
for criteria in paragraphs (d)(2)(i) and (d)(2)(iii) of this section, 
explain how resources/benefits valued at $5,000 or more meet the 
criterion or criteria.
    (ii) State the total gross dollar value of the countable leveraged 
resources and benefits provided to low-income households during the base 
period (the sum of the amounts listed pursuant to paragraph (h)(1)(i)(E) 
of this section).
    (iii) State in dollars any costs incurred by the grantee to leverage 
resources, and any costs and charges imposed on low-income households to 
participate in a counted leveraging program or to receive counted 
leveraged benefits, as determined in accordance with paragraph (g)(5) of 
this section. Also state the amount of the grantee's regular LIHEAP 
allotment that the grantee used during the base period specifically to 
identify, develop, and demonstrate leveraging programs under section 
2607A(c)(2) of Public Law 97-35 (42 U.S.C. 8626a(c)(2)).
    (iv) State the net dollar value of the countable leveraged resources 
and benefits for the base period. (Subtract the amounts in paragraph 
(h)(1)(iii) of this section from the amount in paragraph (h)(1)(ii) of 
this section.)
    (2) Leveraging reports must be postmarked or hand-delivered not 
later than November 30 of the fiscal year for which leveraging incentive 
funds are requested.

[[Page 660]]

    (3) The Department may require submission of additional 
documentation and/or clarification as it determines necessary to verify 
information in a grantee's leveraging report, to determine whether a 
leveraged resource is countable, and/or to determine the net valuation 
of a resource. In such cases, the Department will set a date by which it 
must receive information sufficient to document countability and/or 
valuation. In such cases, if the Department does not receive information 
that it considers sufficient to document countability and/or valuation 
by the date it has set, then the Department will not count the resource 
(or portion of resource) in question.
    (i) Determination of grantee shares of leveraging incentive funds. 
Allocation of leveraging incentive funds to grantees will be computed 
according to a formula using the following factors and weights:
    (1) Fifty (50) percent based on the final net value of countable 
leveraged resources provided to low-income households during the base 
period by a grantee relative to its net Federal allotment of funds 
allocated under section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)) 
during the base period, as a proportion of the final net value of the 
countable leveraged resources provided by all grantees during the base 
period relative to their net Federal allotment of funds allocated under 
that section during the base period; and
    (2) Fifty (50) percent based on the final net value of countable 
leveraged resources provided to low-income households during the base 
period by a grantee as a proportion of the total final net value of the 
countable leveraged resources provided by all grantees during the base 
period; except that: No grantee may receive more than twelve (12.0) 
percent of the total amount of leveraging incentive funds available for 
distribution to grantees in any award period; and no grantee may receive 
more than the smaller of its net Federal allotment of funds allocated 
under section 2602(b) of Public Law 97-35 (42 U.S.C. 8621(b)) during the 
base period, or two times (double) the final net value of its countable 
leveraged resources for the base period. The calculations will be based 
on data contained in the leveraging reports submitted by grantees under 
paragraph (h) of this section as approved by the Department, and 
allocation data developed by the Department.
    (j) Uses of leveraging incentive funds. (1) Funds awarded to 
grantees under the leveraging incentive program must be used to increase 
or maintain heating, cooling, energy crisis, and/or weatherization 
benefits through (that is, within and as a part of) the grantee's LIHEAP 
program. These funds can be used for weatherization without regard to 
the weatherization maximum in section 2605(k) of Public Law 97-35 (42 
U.S.C. 8624(k)). However, they cannot be counted in the base for 
calculation of the weatherization maximum for regular LIHEAP funds 
authorized under section 2602(b) of Public Law 97-35 (42 U.S.C. 
8621(b)). Leveraging incentive funds cannot be used for costs of 
planning and administration. However, in either the award period or the 
fiscal year following the award period, they can be counted in the base 
for calculation of maximum grantee planning and administrative costs 
under section 2605(b)(9) of Public Law 97-35 (42 U.S.C. 8624(b)(9)). 
They cannot be counted in the base for calculation of maximum carryover 
of regular LIHEAP funds authorized under section 2602(b) of Public Law 
97-35 (42 U.S.C. 8621(b)).
    (2) Grantees must include the uses of leveraging incentive funds in 
their LIHEAP plans (referred to in section 2605(c)(1)(A) of Public Law 
97-35) (42 U.S.C. 8624(c)(1)(A)) for the fiscal year in which the 
grantee obligates these funds. Grantees must document uses of leveraging 
incentive funds in the same way they document uses of regular LIHEAP 
funds authorized under section 2602(b) of Public Law 97-35 (42 U.S.C. 
8621(b)). Leveraging incentive funds are subject to the same audit 
requirements as regular LIHEAP funds.
    (k) Period of obligation for leveraging incentive funds. Leveraging 
incentive funds are available for obligation during both the award 
period and the fiscal year following the award period, without regard to 
limitations on carryover of funds in section 2607(b)(2)(B) of Public Law 
97-35 (42 U.S.C. 8626(b)(2)(B)). Any leveraging incentive

[[Page 661]]

funds not obligated for allowable purposes by the end of this period 
must be returned to the Department.

[60 FR 21359, May 1, 1995; 60 FR 36334, July 14, 1995]



Sec.  96.88  Administrative costs.

    (a) Costs of planning and administration. Any expenditure for 
governmental functions normally associated with administration of a 
public assistance program must be included in determining administrative 
costs subject to the statutory limitation on administrative costs, 
regardless of whether the expenditure is incurred by the State, a 
subrecipient, a grantee, or a contractor of the State.
    (b) Administrative costs for territories and Indian tribes. For 
Indian tribes, tribal organizations and territories with allotments of 
$20,000 or less, the limitation on the cost of planning and 
administering the low-income home energy assistance program shall be 20 
percent of funds payable and not transferred for use under another block 
grant. For tribes, tribal organizations and territories with allotments 
over $20,000, the limitation on the cost of planning and administration 
shall be $4,000 plus 10% of the amount of funds payable (and not 
transferred for use under another block grant) that exceeds $20,000.

[52 FR 37967, Oct. 13, 1987]



Sec.  96.89  Exemption from standards for providing energy crisis 
intervention assistance.

    The performance standards in section 2604(c) of Pub. L. 97-35 (42 
U.S.C. 8623), as amended by section 502(a) of the Human Services 
Reauthorization Act of 1986 (Pub. L. 99-425)--concerning provision of 
energy crisis assistance within specified time limits, acceptance of 
applications for energy crisis benefits at geographically accessible 
sites, and provision to physically infirm low-income persons of the 
means to apply for energy crisis benefits at their residences or to 
travel to application sites--shall not apply under the conditions 
described in this section.
    (a) These standards shall not apply to a program in a geographical 
area affected by (1) a major disaster or emergency designated by the 
President under the Disaster Relief Act of 1974, or (2) a natural 
disaster identified by the chief executive officer of a State, 
territory, or direct-grant Indian tribe or tribal organization, if the 
Secretary (or his or her designee) determines that the disaster or 
emergency makes compliance with the standards impracticable.
    (b) The Secretary's determination will be made after communication 
by the chief executive officer (or his or her designee) to the Secretary 
(or his or her designee) of the following:
    (1) Information substantiating the existence of a disaster or 
emergency;
    (2) Information substantiating the impracticability of compliance 
with the standards, including a description of the specific conditions 
caused by the disaster or emergency which make compliance impracticable; 
and
    (3) Information on the expected duration of the conditions that make 
compliance impracticable.

If the communication is made by the chief executive officer's designee 
and the Department does not have on file written evidence of the 
designation, the communication must also include:
    (4) Evidence of the appropriate delegation of authority.
    (c) The initial communication by the chief executive officer may be 
oral or written. If oral, it must be followed as soon as possible by 
written communication confirming the information provided orally. The 
Secretary's exemption initially may be oral. If so, the Secretary will 
provide written confirmation of the exemption as soon as possible after 
receipt of appropriate written communication from the chief executive 
officer.
    (d) Exemption from the standards shall apply from the moment of the 
Secretary's determination, only in the geographical area affected by the 
disaster or emergency, and only for so long as the Secretary determines 
that the disaster or emergency makes compliance with the standards 
impracticable.

[53 FR 6827, Mar. 3, 1988]

[[Page 662]]



                Subpart I_Community Services Block Grants



Sec.  96.90  Scope.

    This subpart applies to the community services block grant.



Sec.  96.91  Audit requirement.

    Pursuant to section 1745(b) of the Reconciliation Act (31 U.S.C. 
1243 note) an audit is required with respect to the 2-year period 
beginning on October 1, 1981, and with respect to each 2-year period 
thereafter. In its application for funds, a State may modify the 
assurance required by section 675(c)(9) of the Reconciliation Act (42 
U.S.C. 9904(c)(9)) to conform to the requirements of section 1745(b).



Sec.  96.92  Termination of funding.

    Where a State determines pursuant to section 675(c)(11) of the 
Community Services Block Grant Act that it will terminate present or 
future funding of any community action agency or migrant and seasonal 
farmworker organization which received funding in the previous fiscal 
year, the State must provide the organization with notice and an 
opportunity for hearing on the record prior to terminating funding. If a 
review by the Secretary of the State's final decision to terminate 
funding is requested pursuant to section 676A, the request must be made 
in writing, within 30 days of notification by the State of its final 
decision to terminate funding. The Department will confirm or reject the 
State's finding of cause, normally within 90 days. If a request for a 
review has been made, the State may not discontinue present or future 
funding until the Department confirms the State's finding of cause. If 
no request for a review is made within the 30-day limit, the State's 
decision will be effective at the expiration of that time.

[52 FR 37968, Oct. 13, 1987]



                   Subpart J_Primary Care Block Grants



Sec.  96.100  Scope.

    This subpart applies to the primary care block grant.



Sec.  96.101  Review of a State decision to discontinue funding 
of a community health center.

    Where a State determines for FY 1983, pursuant to section 1926(a)(2) 
of the Public Health Service Act (42 U.S.C. 300y-5(a)(2)), that a 
community health center does not meet the criteria for continued funding 
set forth in section 330 of the Public Health Service Act (42 U.S.C. 
254c), the State must advise the Department of the decision and the 
basis upon which it was made. The Department will permit the center 30 
days to respond to the State's determination. After evaluating the 
reasons advanced by the State and the center, the Department will 
determine within 30 days after the center's response is due whether the 
center meets the requirements for receiving a grant under the Public 
Health Service Act. The State may not discontinue funding the center 
until the Department has completed its review.

[47 FR 29486, July 6, 1982; 47 FR 43062, Sept. 30, 1982]



Sec.  96.102  Carryover of unobligated funds.

    In implementing section 1925(a)(2) of the Public Health Service Act 
(42 U.S.C. 300y-4(a)(2)), the Secretary will determine that there is 
good cause for funds remaining unobligated if planned obligations could 
not be carried out because of a bona fide reason or if the State has 
determined that program objectives would be better served by deferring 
obligation of the funds to the following year.



                     Subpart K_Transition Provisions



Sec.  96.110  Scope.

    Except as otherwise stated, this subpart applies to the community 
services, preventive health and health services, alcohol and drug abuse 
and mental health services, and maternal and child health services block 
grants for the fiscal year beginning October 1, 1981. The social 
services block grant and the low-income home energy assistance program 
are not subject to the provisions of this subpart.

[[Page 663]]



Sec.  96.111  Continuation of pre-existing regulations.

    The regulations previously issued by the Department and the 
Community Services Administration to govern administration of the 
programs replaced by the block grants specified in Sec.  96.1 of this 
part shall continue in effect until revised to govern administration of 
those programs by the Department in those circumstances in which States 
have not qualified for block grants.



Sec.  96.112  Community services block grant.

    (a) For the fiscal year beginning October 1, 1981, only, a State may 
choose to operate programs under the community services block grant or, 
instead, have the Secretary operate the programs replaced by the block 
grant. If a State does not notify the Secretary in accordance with the 
statutory deadlines each quarter, it will be deemed to have requested 
the Secretary to operate the programs for the following quarter.
    (b) A State or territory that does not have any eligible entity'' as 
that term is defined in section 673(1) of the Reconciliation Act (42 
U.S.C. 9902), as amended by section 17 of Pub. L. 97-115 (December 19, 
1981), or any other entity for which funding is allowed under section 
138 of Pub. L. 97-276, may distribute its allotment for the Fiscal Year 
beginning October 1, 1982 according to section 675(c)(2)(A)(ii) of the 
Reconciliation Act.
    (c) For any quarter in which the Secretary administers the programs, 
the Department's administration costs will be deducted from the State's 
allotment. The Department's total administration costs for making grants 
during fiscal year 1982 and for any monitoring of these grants in fiscal 
year 1983 will be deducted from each State's allotment in proportion to 
the total amount of grants awarded from the allotment during the period 
of administration by the Department (but not to exceed 5 percent of the 
State's fiscal year 1982 allotment).

[47 FR 29486, July 6, 1982, as amended at 48 FR 9271, Mar. 4, 1983]



     Subpart L_Substance Abuse Prevention and Treatment Block Grant

    Authority: 42 U.S.C. 300x-21 to 300x-35 and 300x-51 to 300x-64.

    Source: 58 FR 17070, Mar. 31, 1993, unless otherwise noted.



Sec.  96.120  Scope.

    This subpart applies to the Substance Abuse Prevention and Treatment 
Block Grant administered by the Substance Abuse and Mental Health 
Services Administration. 45 CFR part 96, subparts A through F, are 
applicable to this subpart to the extent that those subparts are 
consistent with subpart L. To the extent subparts A through F are 
inconsistent with subpart L, the provisions of subpart L are applicable.



Sec.  96.121  Definitions.

    Block Grant means the Substance Abuse Prevention and Treatment Block 
Grant, 42 U.S.C. 300x-21, et seq.
    Early Intervention Services Relating to HIV means:
    (1) appropriate pretest counseling for HIV and AIDS;
    (2) testing individuals with respect to such disease, including 
tests to confirm the presence of the disease, tests to diagnose the 
extent of the deficiency in the immune system, and tests to provide 
information on appropriate therapeutic measures for preventing and 
treating the deterioration of the immune system and for preventing and 
treating conditions arising from the disease;
    (3) appropriate post-test counseling; and
    (4) providing the therapeutic measures described in Paragraph (2) of 
this definition.
    Fiscal Year, unless provided otherwise, means the Federal fiscal 
year.
    Interim Services or Interim Substance Abuse Services means services 
that are provided until an individual is admitted to a substance abuse 
treatment program. The purposes of the services are to reduce the 
adverse health effects of such abuse, promote the health of the 
individual, and reduce the risk of

[[Page 664]]

transmission of disease. At a minimum, interim services include 
counseling and education about HIV and tuberculosis (TB), about the 
risks of needle-sharing, the risks of transmission to sexual partners 
and infants, and about steps that can be taken to ensure that HIV and TB 
transmission does not occur, as well as referral for HIV or TB treatment 
services if necessary. For pregnant women, interim services also include 
counseling on the effects of alcohol and drug use on the fetus, as well 
as referral for prenatal care.
    Primary Prevention Programs are those directed at individuals who 
have not been determined to require treatment for substance abuse. Such 
programs are aimed at educating and counseling individuals on such abuse 
and providing for activities to reduce the risk of such abuse.
    Principal Agency is the single State agency responsible for 
planning, carrying out and evaluating activities to prevent and treat 
substance abuse and related activities.
    Rural Area The definition of a rural area within a State shall be 
the latest definition of the Bureau of the Census, Department of 
Commerce.
    Secretary is the Secretary of the United States Department of Health 
and Human Services or the Secretary's designee.
    State, unless provided otherwise, includes the 50 States, the 
District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin 
Islands, Guam, America Samoa, the Commonwealth of the Northern Mariana 
Islands, Palau, Micronesia, and the Marshall Islands.
    State Medical Director for Substance Abuse Services is a licensed 
physician with the knowledge, skill and ability to address the multiple 
physical and psychological problems associated with substance abuse, and 
who provides the principle agency with clinical consultation and 
direction regarding effective substance abuse treatment, effective 
primary medical care, effective infection control and public health and 
quality assurance.
    Substance Abuse is defined to include the abuse or illicit use of 
alcohol or other drugs.
    Tuberculosis Services means:
    (1) Counseling the individual with respect to tuberculosis;
    (2) Testing to determine whether the individual has been infected 
with mycobacteria tuberculosis to determine the appropriate form of 
treatment for the individual; and
    (3) Providing for or referring the individuals infected by 
mycobacteria tuberculosis for appropriate medical evaluation and 
treatment.



Sec.  96.122  Application content and procedures.

    (a) For each fiscal year, beginning with fiscal year 1993, the State 
shall submit an application to such address as the Secretary determines 
is appropriate.
    (b) For fiscal year 1993, applicants must submit an application 
containing information which conforms to the assurances listed under 
Sec.  96.123, the report as provided in Sec.  96.122(f), and the State 
plan as provided in Sec.  96.122(g).
    (c) Beginning fiscal year 1994, applicants shall only use standard 
application forms prescribed by the granting agency with the approval of 
the Office of Management and Budget (OMB) under the Paperwork Reduction 
Act of 1980. Applicants must follow all applicable instructions that 
bear OMB clearance numbers. The application will require the State to 
submit the assurances listed under Sec.  96.123, the report as provided 
in Sec.  96.122(f), and the State Plan as provided in Sec.  96.122(g).
    (d) The State shall submit the application for a block grant by the 
date prescribed by law. The annual report required under Sec.  96.130(e) 
is not required to be submitted as part of the application, but must be 
submitted no later than December 31 of the fiscal year for which the 
State is seeking a grant. Grant awards will not be made without the 
report required under Sec.  96.130(e).
    (e) The funding agreements and assurances in the application shall 
be made through certification by the State's chief executive officer 
personally, or by an individual authorized to make such certification on 
behalf of the chief executive officer. When a delegation has occurred, a 
copy of the current delegation of authority must be submitted with the 
application.

[[Page 665]]

    (f) A report shall be submitted annually with the application and 
State Plan. Among other things, the report must contain information as 
determined by the Secretary to be necessary to determine the purposes 
and the activities of the State, for which the Block Grant was expended. 
The report shall include (but is not limited to) the following:
    (1) For the fiscal year three years prior to the fiscal year for 
which the State is applying for funds:
    (i) A statement of whether the State exercised its discretion under 
applicable law to transfer Block Grant funds from substance abuse 
services to mental health services or vice versa, and a description of 
the transfers which were made;
    (ii) A description of the progress made by the State in meeting the 
prevention and treatment goals, objectives and activities submitted in 
the application for the relevant year;
    (iii) A description of the amounts expended under the Block Grant by 
the State agency, by activity;
    (iv) A description of the amounts expended on primary prevention and 
early intervention activities (if reporting on fiscal years 1990, 1991, 
and 1992 only) and for primary prevention activities (if reporting on 
fiscal years 1993 and subsequent years);
    (v) A description of the amounts expended for activities relating to 
substance abuse such as planning, coordination, needs assessment, 
quality assurance, training of counselors, program development, research 
and development and the development of information systems;
    (vi) A description of the entities, their location, and the total 
amount the entity received from Block Grant funds with a description of 
the activities undertaken by the entity;
    (vii) A description of the use of the State's revolving funds for 
establishment of group homes for recovering substance abusers, as 
provided by Sec.  96.129, including the amount available in the fund 
throughout the fiscal year and the number and amount of loans made that 
fiscal year;
    (viii) A detailed description of the State's programs for women and, 
in particular for pregnant women and women with dependent children, if 
reporting on fiscal years 1990, 1991, or 1992; and pregnant women or 
women with dependent children for fiscal year 1993 and subsequent fiscal 
years;
    (ix) A detailed description of the State's programs for intravenous 
drug users; and
    (x) For applications for fiscal year 1996 and subsequent fiscal 
years, a description of the State's expenditures for tuberculosis 
services and, if a designated State, early intervention services for 
HIV.
    (2) For the most recent 12 month State expenditure period for which 
expenditure information is complete:
    (i) A description of the amounts expended by the principal agency 
for substance abuse prevention and treatment activities, by activity and 
source of funds;
    (ii) A description of substance abuse funding by other State 
agencies and offices, by activity and source of funds when available; 
and
    (iii) A description of the types and amounts of substance abuse 
services purchased by the principal agency.
    (3) For the fiscal year two years prior to the fiscal year for which 
the State is applying for funds:
    (i) A description of the amounts obligated under the Block Grant by 
the principal agency, by activity;
    (ii) A description of the amounts obligated for primary prevention 
and early intervention (if reporting on fiscal years 1990, 1991, and 
1992 activities only) and primary prevention activities (if reporting on 
fiscal years 1993 and subsequent year activities);
    (iii) A description of the entities to which Block Grant funds were 
obligated;
    (iv) A description of the State's policies, procedures and laws 
regarding substance abuse prevention, especially the use of alcohol and 
tobacco products by minors;
    (v) For applications for fiscal year 1995 and all subsequent fiscal 
years, a description of the State's procedures and activities undertaken 
to comply with the requirement to conduct independent peer review as 
provided by Sec.  96.136;
    (vi) For applications for fiscal year 1995 and all subsequent fiscal 
years, a

[[Page 666]]

description of the State's procedures and activities undertaken to 
comply with the requirement to develop capacity management and waiting 
list systems, as provided by Sec. Sec.  96.126 and 96.131, as well as an 
evaluation summary of these activities; and
    (vii) For applications for fiscal year 1995 and subsequent fiscal 
years, a description of the strategies used for monitoring program 
compliance with Sec. Sec.  96.126(f), 96.127(b), and 96.131(f), as well 
as a description of the problems identified and the corrective actions 
taken.
    (4) The aggregate State expenditures by the principle agency for 
authorized activities for the two State fiscal years preceding the 
fiscal year for which the State is applying for a grant, pursuant to 
Sec.  96.134(d).
    (5) For the previous fiscal year:
    (i) A description of the State's progress in meeting the goals, 
objectives and activities included in the previous year's application, 
and a brief description of the recipients of the Block Grant funds;
    (ii) A description of the methods used to calculate the following:
    (A) The base for services to pregnant women and women with dependent 
children as required by Sec.  96.124;
    (B) The base for tuberculosis services as required for Sec.  96.127; 
and
    (C) For designated States, the base for HIV early intervention 
services as required by Sec.  96.128;
    (iii) For applications for fiscal years 1994 and 1995 only, a 
description of the State's progress in the development of protocols for 
and the implementation of tuberculosis services, and, if a designated 
State, early intervention services for HIV; and
    (iv) For applications for fiscal year 1994 only, a description of 
the States progress in the development, implementation, and utilization 
of capacity management and waiting list systems.
    (v) A description of the activities the State has undertaken to 
comply with 42 CFR part 54.
    (6) For the first applicable fiscal year for which the State is 
applying for a grant, a copy of the statute enacting the law as 
described in Sec.  96.130(b) and, for subsequent fiscal years for which 
the State is applying for a grant, any amendment to the law described in 
Sec.  96.130(b).
    (7) In addition to the information above, any information that the 
Secretary may, from time to time, require, consistent with the Paperwork 
Reduction Act.
    (g) For each fiscal year, beginning fiscal year 1993, the State Plan 
shall be submitted to the Secretary and shall include the following:
    (1) For fiscal years 1993 and 1994, a statement on whether the 
Governor intends to exercise discretion under applicable law to transfer 
Block Grant funds from the Substance Abuse Prevention and Treatment 
Block Grant allotment under section 1921 of the PHS Act to the Community 
Mental Health Services Block Grant allotment under section 1911 of the 
PHS Act or vice versa and a description of the planned transfer;
    (2) A budget of expenditures which provides an estimate of the use 
and distribution of Block Grant and other funds to be spent by the 
agency administering the Block Grant during the period covered by the 
application, by activity and source of funds;
    (3) A description of how the State carries out planning, including 
how the State identifies substate areas with the greatest need, what 
process the State uses to facilitate public comment on the plan, and 
what criteria the State uses in deciding how to allocate Block Grant 
funds;
    (4) A detailed description of the State procedures to monitor 
programs that reach 90% capacity pursuant to Sec.  96.126(a);
    (5) A detailed description of the State procedures to implement the 
14/120 day requirement provided by Sec.  96.126(b) as well as the 
interim services to be provided and a description of the strategies to 
be used in monitoring program compliance in accordance with Sec.  
96.126(f);
    (6) A full description of the outreach efforts States will require 
entities which receive funds to provide pursuant to Sec.  96.126(e);
    (7) A detailed description of the State procedures implementing TB 
services pursuant to Sec.  96.127, and a description

[[Page 667]]

of the strategies to be used in monitoring program compliance in 
accordance with Sec.  96.127(b);
    (8) A detailed description of the State's procedures implementing 
HIV services pursuant to Sec.  96.128, if considered a designated State;
    (9) A description of estimates of non-Federal dollars to be spent 
for early intervention services relating to HIV, if a designated State, 
and tuberculosis services for the fiscal year covered by the 
application, as well as the amounts actually spent for such services for 
the two previous fiscal years;
    (10) For fiscal year 1993, a detailed description of the State's 
revolving fund for establishment of group homes for recovering substance 
abusers pursuant to Sec.  96.129 and, for subsequent years, any 
revisions to the program;
    (11) A detailed description of State procedures implementing Sec.  
96.131 relating to treatment services for pregnant women;
    (12) Unless waived, a description on how the State will improve the 
process for referrals for treatment, will ensure that continuing 
education is provided, and will coordinate various activities and 
services as provided by Sec.  96.132;
    (13) Statewide assessment of needs as provided in Sec.  96.133;
    (14) The aggregate State dollar projected expenditures by the 
principal agency of a State for authorized activities for the fiscal 
year for which the Block Grant is to be expended, as well as the 
aggregate obligations or expenditures, when available, for authorized 
activities for the two years prior to such fiscal year as required by 
Sec.  96.134;
    (15) Unless waived, a description of the services and activities to 
be provided by the State with Block Grant funds consistent with Sec.  
96.124 for allocations to be spent on services to pregnant women and 
women with dependent children, alcohol and other drug treatment and 
prevention, including primary prevention, and any other requirement;
    (16) A description of the State procedures to implement Sec.  
96.132(e) regarding inappropriate disclosure of patient records;
    (17) A description of the amounts to be spent for primary prevention 
in accordance with Sec.  96.125;
    (18) A description of the amounts to be spent on activities relating 
to substance abuse such as planning coordination, needs assessment, 
quality assurance, training of counselors, program development, research 
and development and the development of information systems;
    (19) A description of the State plans regarding purchasing substance 
abuse services;
    (20) A description of how the State intends to monitor and evaluate 
the performance of substance abuse service providers in accordance with 
Sec.  96.136;
    (21) A description of the State's overall goals for Block Grant 
expenditures, specific objectives under each goal, and the activities 
the State will carry out to achieve these objectives; and
    (22) Such other information as the Secretary may, from time to time, 
require, consistent with the Paperwork Reduction Act.
    (h) The Secretary will approve an application which includes the 
assurances, the State plan and the report that satisfies the 
requirements of this part and the relevant sections of the PHS Act. As 
indicated above, the State is required to provide descriptions of the 
State's procedures to implement the provisions of the Act and the 
regulations. Unless provided otherwise by these regulations, the 
Secretary will approve procedures which are provided as examples in the 
regulations, or the State may submit other procedures which the 
Secretary determines to reasonably implement the requirements of the 
Act.

[58 FR 17070, Mar. 31, 1993, as amended at 61 FR 1508, Jan. 19, 1996; 65 
FR 45305, July 21, 2000; 66 FR 46226, Sept. 4, 2001; 68 FR 56448, Sept. 
4, 2003]



Sec.  96.123  Assurances.

    (a) The application must include assurances that:
    (1) the State will expend the Block Grant in accordance with the 
percentage to be allocated to treatment, prevention, and other 
activities as prescribed by law and, also, for the purposes prescribed 
by law;
    (2) The activities relating to intravenous drug use pursuant to 
Sec.  96.126 will be carried out;

[[Page 668]]

    (3) The TB services and referral will be carried out pursuant to 
Sec.  96.127, as well as the early intervention services for HIV 
provided for in Sec.  96.128, if a designated State;
    (4) The revolving funds to establish group homes for recovering 
substance abusers is in place consistent with the provisions of Sec.  
96.129 and the loans will be made and used as provided for by law;
    (5) The State has a law in effect making it illegal to sell or 
distribute tobacco products to minors as provided in Sec.  96.130(b), 
will conduct annual, unannounced inspections as prescribed in Sec.  
96.130, will enforce such law in a manner that can reasonably be 
expected to reduce the extent to which tobacco products are available to 
individuals under the age of 18, and will submit an annual report as 
required under Sec. Sec.  96.122(d) and 96.130(e);
    (6) Pregnant women are provided preference in admission to treatment 
centers as provided by Sec.  96.131, and are provided interim services 
as necessary and as required by law;
    (7) The State will improve the process in the State for referrals of 
individuals to the treatment modality that is most appropriate for the 
individuals, will ensure that continuing education is provided to 
employees of any funded entity providing prevention activities or 
treatment services, and will coordinate prevention activities and 
treatment services with the provision of other appropriate services as 
provided by Sec.  96.132;
    (8) The State will submit an assessment of need as required by 
section 96.133;
    (9) The State will for such year maintain aggregate State 
expenditures by the principal agency of a State for authorized 
activities at a level that is not less than the average level of such 
expenditures maintained by the State for the 2-year period preceding the 
fiscal year for which the State is applying for the grant as provided by 
Sec.  96.134;
    (10) The Block Grant will not be used to supplant State funding of 
alcohol and other drug prevention and treatment programs;
    (11) For purposes of maintenance of effort pursuant to Sec. Sec.  
96.127(f), 96.128(f), and 96.134, the State will calculate the base 
using Generally Accepted Accounting Principles and the composition of 
the base will be applied consistently from year to year;
    (12) The State will for the fiscal year for which the grant is 
provided comply with the restrictions on the expenditure of Block Grant 
funds as provided by Sec.  96.135;
    (13) The State will make the State Plan public within the State in 
such manner as to facilitate comment from any person (including any 
Federal or other public agency) during the development of the State Plan 
and after the submission of the State Plan (including any revisions) to 
the Secretary as provided by Sec.  1941 of the PHS Act;
    (14) The State will for the fiscal year for which the grant is 
provided, provide for independent peer review to assess the quality, 
appropriateness, and efficacy of treatment services provided in the 
State to individuals under the program involved as required by Sec.  
96.136;
    (15) The State has in effect a system to protect from inappropriate 
disclosure patient records maintained by the State in connection with an 
entity which is receiving amounts from the grant;
    (16) The State will comply with chapter 75 of title 31, United 
States Code, pertaining to audits; and
    (17) The State will abide by all applicable Federal laws and 
regulations, including those relating to lobbying (45 CFR part 93), 
drug-free workplace (45 CFR 76.600), discrimination (PHS Act Sec. 1947), 
false statements or failure to disclose certain events (PHS Act Sec. 
1946), and, as to the State of Hawaii, services for Native Hawaiians 
(PHS Act Sec. 1953).
    (18) The State will comply with the requirements of 42 CFR part 54.

[58 FR 17070, Mar. 31, 1993, as amended at 61 FR 1508, Jan. 19, 1996; 66 
FR 46227, Sept. 4, 2001; 68 FR 56448, Sept. 30, 2003]



Sec.  96.124  Certain allocations.

    (a) States are required to expend the Block Grant on various 
activities in certain proportions. Specifically, as to treatment and 
prevention, the State shall expend the grant as follows:
    (1) not less than 35 percent for prevention and treatment activities 
regarding alcohol; and

[[Page 669]]

    (2) not less than 35 percent for prevention and treatment activities 
regarding other drugs.
    (b) The States are also to expend the Block Grant on primary 
prevention programs as follows:
    (1) Consistent with Sec.  96.125, the State shall expend not less 
than 20 percent for programs for individuals who do not require 
treatment for substance abuse, which programs--
    (i) educate and counsel the individuals on such abuse; and
    (ii) provide for activities to reduce the risk of such abuse by the 
individuals;
    (2) The State shall, in carrying out paragraph (b)(1) of this 
section--
    (i) give priority to programs for populations that are at risk of 
developing a pattern of such abuse; and
    (ii) ensure that programs receiving priority under paragraph 
(b)(2)(i) of this section develop community-based strategies for 
prevention of such abuse, including strategies to discourage the use of 
alcoholic beverages and tobacco products by individuals to whom it is 
unlawful to sell or distribute such beverages or products.
    (c) Subject to paragraph (d) of this section, a State is required to 
expend the Block Grant on women services as follows:
    (1) The State for fiscal year 1993 shall expend not less than five 
percent of the grant to increase (relative to fiscal year 1992) the 
availability of treatment services designed for pregnant women and women 
with dependent children (either by establishing new programs or 
expanding the capacity of existing programs). The base for fiscal year 
1993 shall be an amount equal to the fiscal year 1992 alcohol and drug 
services Block Grant expenditures and State expenditures for pregnant 
women and women with dependent children as described in paragraph (e) of 
this section, and to this base shall be added at least 5 percent of the 
1993 Block Grant allotment. The base shall be calculated using Generally 
Accepted Accounting Principles and the composition of the base shall be 
applied consistently from year to year. States shall report the methods 
used to calculate their base for fiscal year 1992 expenditures on 
treatment for pregnant women and women with dependent children.
    (2) For fiscal year 1994, the State shall, consistent with paragraph 
(c)(1) of this section, expend not less than five percent of the grant 
to increase (relative to fiscal year 1993) the availability of such 
services to pregnant women and women with dependent children.
    (3) For grants beyond fiscal year 1994, the States shall expend no 
less than an amount equal to the amount expended by the State for fiscal 
year 1994.
    (d) Upon the request of a State, the Secretary may waive all or part 
of the requirement in paragraph (c) of this section if the Secretary 
determines that the State is providing an adequate level of services for 
this population. In determining whether an adequate level of services is 
being provided the Secretary will review the extent to which such 
individuals are receiving services. This determination may be supported 
by a combination of criminal justice data, the National Drug and 
Treatment Units Survey, statewide needs assessment data, waiting list 
data, welfare department data, including medicaid expenditures, or other 
State statistical data that are systematically collected. The Secretary 
will also consider the extent to which the State offers the minimum 
services required under Sec.  96.124(e). The Secretary shall approve or 
deny a request for a waiver not later than 120 days after the date on 
which the request is made. Any waiver provided by the Secretary shall be 
applicable only to the fiscal year involved.
    (e) With respect to paragraph (c) of this section, the amount set 
aside for such services shall be expended on individuals who have no 
other financial means of obtaining such services as provided in Sec.  
96.137. All programs providing such services will treat the family as a 
unit and therefore will admit both women and their children into 
treatment services, if appropriate. The State shall ensure that, at a 
minimum, treatment programs receiving funding for such services also 
provide or arrange for the provision of the following services to 
pregnant women and women with dependent children, including women who 
are attempting to regain custody of their children:

[[Page 670]]

    (1) primary medical care for women, including referral for prenatal 
care and, while the women are receiving such services, child care;
    (2) primary pediatric care, including immunization, for their 
children;
    (3) gender specific substance abuse treatment and other therapeutic 
interventions for women which may address issues of relationships, 
sexual and physical abuse and parenting, and child care while the women 
are receiving these services;
    (4) therapeutic interventions for children in custody of women in 
treatment which may, among other things, address their developmental 
needs, their issues of sexual and physical abuse, and neglect; and
    (5) sufficient case management and transportation to ensure that 
women and their children have access to services provided by paragraphs 
(e) (1) through (4) of this section.
    (f) Procedures for the implementation of paragraphs (c) and (e) of 
this section will be developed in consultation with the State Medical 
Director for Substance Abuse Services.



Sec.  96.125  Primary prevention.

    (a) For purposes of Sec.  96.124, each State/Territory shall develop 
and implement a comprehensive prevention program which includes a broad 
array of prevention strategies directed at individuals not identified to 
be in need of treatment. The comprehensive program shall be provided 
either directly or through one or more public or nonprofit private 
entities. The comprehensive primary prevention program shall include 
activities and services provided in a variety of settings for both the 
general population, as well as targeting sub-groups who are at high risk 
for substance abuse.
    (b) In implementing the prevention program the State shall use a 
variety of strategies, as appropriate for each target group, including 
but not limited to the following:
    (1) Information Dissemination: This strategy provides awareness and 
knowledge of the nature and extent of alcohol, tobacco and drug use, 
abuse and addiction and their effects on individuals, families and 
communities. It also provides knowledge and awareness of available 
prevention programs and services. Information dissemination is 
characterized by one-way communication from the source to the audience, 
with limited contact between the two. Examples of activities conducted 
and methods used for this strategy include (but are not limited to) the 
following:
    (i) Clearinghouse/information resource center(s);
    (ii) Resource directories;
    (iii) Media campaigns;
    (iv) Brochures;
    (v) Radio/TV public service announcements;
    (vi) Speaking engagements;
    (vii) Health fairs/health promotion; and
    (viii) Information lines.
    (2) Education: This strategy involves two-way communication and is 
distinguished from the Information Dissemination strategy by the fact 
that interaction between the educator/facilitator and the participants 
is the basis of its activities. Activities under this strategy aim to 
affect critical life and social skills, including decision-making, 
refusal skills, critical analysis (e.g. of media messages) and 
systematic judgment abilities. Examples of activities conducted and 
methods used for this strategy include (but are not limited to) the 
following:
    (i) Classroom and/or small group sessions (all ages);
    (ii) Parenting and family management classes;
    (iii) Peer leader/helper programs;
    (iv) Education programs for youth groups; and
    (v) Children of substance abusers groups.
    (3) Alternatives: This strategy provides for the participation of 
target populations in activities that exclude alcohol, tobacco and other 
drug use. The assumption is that constructive and healthy activities 
offset the attraction to, or otherwise meet the needs usually filled by 
alcohol, tobacco and other drugs and would, therefore, minimize or 
obviate resort to the latter. Examples of activities conducted and 
methods used for this strategy include (but are not limited to) the 
following:
    (i) Drug free dances and parties;
    (ii) Youth/adult leadership activities;

[[Page 671]]

    (iii) Community drop-in centers; and
    (iv) Community service activities.
    (4) Problem Identification and Referral: This strategy aims at 
identification of those who have indulged in illegal/age-inappropriate 
use of tobacco or alcohol and those individuals who have indulged in the 
first use of illicit drugs in order to assess if their behavior can be 
reversed through education. It should be noted, however, that this 
strategy does not include any activity designed to determine if a person 
is in need of treatment. Examples of activities conducted and methods 
used for this strategy include (but are not limited to) the following:
    (i) Employee assistance programs;
    (ii) Student assistance programs; and
    (iii) Driving while under the influence/driving while intoxicated 
education programs.
    (5) Community-Based Process: This strategy aims to enhance the 
ability of the community to more effectively provide prevention and 
treatment services for alcohol, tobacco and drug abuse disorders. 
Activities in this strategy include organizing, planning, enhancing 
efficiency and effectiveness of services implementation, inter-agency 
collaboration, coalition building and networking. Examples of activities 
conducted and methods used for this strategy include (but are not 
limited to) the following:
    (i) Community and volunteer training, e.g., neighborhood action 
training, training of key people in the system, staff/officials 
training;
    (ii) Systematic planning;
    (iii) Multi-agency coordination and collaboration;
    (iv) Accessing services and funding; and
    (v) Community team-building.
    (6) Environmental: This strategy establishes or changes written and 
unwritten community standards, codes and attitudes, thereby influencing 
incidence and prevalence of the abuse of alcohol, tobacco and other 
drugs used in the general population. This strategy is divided into two 
subcategories to permit distinction between activities which center on 
legal and regulatory initiatives and those which relate to the service 
and action-oriented initiatives. Examples of activities conducted and 
methods used for this strategy shall include (but not be limited to) the 
following:
    (i) Promoting the establishment and review of alcohol, tobacco and 
drug use policies in schools;
    (ii) Technical assistance to communities to maximize local 
enforcement procedures governing availability and distribution of 
alcohol, tobacco and other drug use;
    (iii) Modifying alcohol and tobacco advertising practices; and
    (iv) Product pricing strategies.



Sec.  96.126  Capacity of treatment for intravenous substance abusers.

    (a) In order to obtain Block Grant funds, the State must require 
programs that receive funding under the grant and that treat individuals 
for intravenous substance abuse to provide to the State, upon reaching 
90 percent of its capacity to admit individuals to the program, a 
notification of that fact within seven days. In carrying out this 
section, the State shall establish a capacity management program which 
reasonably implements this section--that is, which enables any such 
program to readily report to the State when it reaches 90 percent of its 
capacity--and which ensures the maintenance of a continually updated 
record of all such reports and which makes excess capacity information 
available to such programs.
    (b) In order to obtain Block Grant funds, the State shall ensure 
that each individual who requests and is in need of treatment for 
intravenous drug abuse is admitted to a program of such treatment not 
later than--
    (1) 14 days after making the request for admission to such a 
program; or
    (2) 120 days after the date of such request, if no such program has 
the capacity to admit the individual on the date of such request and if 
interim services, including referral for prenatal care, are made 
available to the individual not later than 48 hours after such request.
    (c) In carrying out subsection (b), the State shall establish a 
waiting list management program which provides systematic reporting of 
treatment demand. The State shall require that any program receiving 
funding from the

[[Page 672]]

grant, for the purposes of treating injecting drug abusers, establish a 
waiting list that includes a unique patient identifier for each 
injecting drug abuser seeking treatment including those receiving 
interim services, while awaiting admission to such treatment. For 
individuals who cannot be placed in comprehensive treatment within 14 
days, the State shall ensure that the program provide such individuals 
interim services as defined in Sec.  96.121 and ensure that the programs 
develop a mechanism for maintaining contact with the individuals 
awaiting admission. The States shall also ensure that the programs 
consult the capacity management system as provided in paragraph (a) of 
this section so that patients on waiting lists are admitted at the 
earliest possible time to a program providing such treatment within 
reasonable geographic area.
    (d) In carrying out paragraph (b)(2) of this section the State shall 
ensure that all individuals who request treatment and who can not be 
placed in comprehensive treatment within 14 days, are enrolled in 
interim services and those who remain active on a waiting list in 
accordance with paragraph (c) of this section, are admitted to a 
treatment program within 120 days. If a person cannot be located for 
admission into treatment or, if a person refuses treatment, such persons 
may be taken off the waiting list and need not be provided treatment 
within 120 days. For example, if such persons request treatment later, 
and space is not available, they are to be provided interim services, 
placed on a waiting list and admitted to a treatment program within 120 
days from the latter request.
    (e) The State shall require that any entity that receives funding 
for treatment services for intravenous drug abuse carry out activities 
to encourage individuals in need of such treatment to undergo such 
treatment. The States shall require such entities to use outreach models 
that are scientifically sound, or if no such models are available which 
are applicable to the local situation, to use an approach which 
reasonably can be expected to be an effective outreach method. The model 
shall require that outreach efforts include the following:
    (1) Selecting, training and supervising outreach workers;
    (2) Contacting, communicating and following-up with high risk 
substance abusers, their associates, and neighborhood residents, within 
the constraints of Federal and State confidentiality requirements, 
including 42 CFR part 2;
    (3) Promoting awareness among injecting drug abusers about the 
relationship between injecting drug abuse and communicable diseases such 
as HIV;
    (4) Recommend steps that can be taken to ensure that HIV 
transmission does not occur; and
    (5) Encouraging entry into treatment.
    (f) The State shall develop effective strategies for monitoring 
programs compliance with this section. States shall report under the 
requirements of Sec.  96.122(g) on the specific strategies to be used to 
identify compliance problems and corrective actions to be taken to 
address those problems.



Sec.  96.127  Requirements regarding tuberculosis.

    (a) States shall require any entity receiving amounts from the grant 
for operating a program of treatment for substance abuse to follow 
procedures developed by the principal agency of a State for substance 
abuse, in consultation with the State Medical Director for Substance 
Abuse Services, and in cooperation with the State Department of Health/
Tuberculosis Control Officer, which address how the program--
    (1) Will, directly or through arrangements with other public or 
nonprofit private entities, routinely make available tuberculosis 
services as defined in Sec.  96.121 to each individual receiving 
treatment for such abuse;
    (2) In the case of an individual in need of such treatment who is 
denied admission to the program on the basis of the lack of the capacity 
of the program to admit the individual, will refer the individual to 
another provider of tuberculosis services; and
    (3) Will implement infection control procedures established by the 
principal agency of a State for substance abuse, in cooperation with the 
State Department of Health/Tuberculosis Control Officer, which are 
designed to prevent

[[Page 673]]

the transmission of tuberculosis, including the following:
    (i) Screening of patients;
    (ii) Identification of those individuals who are at high risk of 
becoming infected; and
    (iii) Meeting all State reporting requirements while adhering to 
Federal and State confidentiality requirements, including 42 CFR part 2; 
and
    (4) will conduct case management activities to ensure that 
individuals receive such services.
    (b) The State shall develop effective strategies for monitoring 
programs compliance with this section. States shall report under the 
requirements of Sec.  96.122(g) on the specific strategies to be used to 
identify compliance problems and corrective actions to be taken to 
address those problems. The principal agency, in cooperation with the 
State Department of Health/Tuberculosis Control Officer, shall also 
establish linkages with other health care providers to ensure that 
tuberculosis services are routinely made available. All individuals 
identified with active tuberculosis shall be reported to the appropriate 
State official as required by law and consistent with paragraph 
(a)(3)(iii) of this section.
    (c) With respect to services provided for by a State for purposes of 
compliance with this section, the State shall maintain Statewide 
expenditures of non-Federal amounts for such services at a level that is 
not less than an average level of such expenditures maintained by the 
State for the 2-year period preceding the first fiscal year for which 
the State receives such a grant. In making this determination, States 
shall establish a reasonable funding base for fiscal year 1993. The base 
shall be calculated using Generally Accepted Accounting Principles and 
the composition of the base shall be applied consistently from year to 
year.



Sec.  96.128  Requirements regarding human immunodeficiency virus.

    (a) In the case of a designated State as described in paragraph (b) 
of this section, the State shall do the following--
    (1) with respect to individuals undergoing treatment for substance 
abuse, the State shall, subject to paragraph (c) of this section, carry 
out one or more projects to make available to the individuals early 
intervention services for HIV disease as defined in Sec.  96.121 at the 
sites at which the individuals are undergoing such treatment;
    (2) for the purpose of providing such early intervention services 
through such projects, the State shall make available from the grant the 
amounts prescribed by section 1924 of the PHS Act;
    (3) the State shall, subject to paragraph (d) of this section, carry 
out such projects only in geographic areas of the State that have the 
greatest need for the projects;
    (4) the State shall require programs participating in the project to 
establish linkages with a comprehensive community resource network of 
related health and social services organizations to ensure a wide-based 
knowledge of the availability of these services; and
    (5) the State shall require any entity receiving amounts from the 
Block Grant for operating a substance abuse treatment program to follow 
procedures developed by the principal agency of a State for substance 
abuse, in consultation with the State Medical Director for Substance 
Abuse Services, and in cooperation with the State Department of Health/
Communicable Disease Officer.
    (b) For purposes of this section, a ``designated State'' is any 
State whose rate of cases of acquired immune deficiency syndrome is 10 
or more such cases per 100,000 individuals (as indicated by the number 
of such cases reported to and confirmed by the Director of the Centers 
for Disease Control for the most recent calendar year for which the data 
are available).
    (c) With respect to programs that provide treatment services for 
substance abuse, the State shall ensure that each such program 
participating in a project under paragraph (a) of this section will be a 
program that began operation prior to the fiscal year for which the 
State is applying to receive the grant. A program that so began 
operation may participate in a project under paragraph (a) of this 
section without regard to whether the program

[[Page 674]]

has been providing early intervention services for HIV disease.
    (d) If the State plans to carry out 2 or more projects under 
paragraph (a) of this section, the State shall carry out one such 
project in a rural area of the State, unless the requirement is waived. 
The Secretary shall waive the requirement if the State certifies to the 
Secretary that:
    (1) The rate of cases of acquired immune deficiency syndrome is less 
than or equal to two such cases per 100,000 individuals in any rural 
area of the State, or there are so few infected persons that 
establishing a project in the area is not reasonable; or
    (2) There are no rural areas in the State as defined in Sec.  
96.121.
    (e) With respect to the provision of early intervention services for 
HIV disease to an individual, the State shall ensure that the entities 
comply with Sec.  96.137 regarding payment and Sec.  96.135 regarding 
restrictions on expenditure of grant. The State shall also ensure that 
such services will be undertaken voluntarily by, and with the informed 
consent of, the individual, and undergoing such services will not be 
required as a condition of receiving treatment services for substance 
abuse or any other services.
    (f) With respect to services provided for a State for purposes of 
compliance with this section, the State shall maintain Statewide 
expenditures of non-Federal amounts for such services at a level that is 
not less than the average level of such expenditures maintained by the 
State for 2-year period preceding the first fiscal year for which the 
State receives such a grant. In making this determination, States shall 
establish a reasonable base for fiscal year 1993. The base shall be 
calculated using Generally Accepted Accounting Principles and the 
composition of the base shall be applied consistently from year to year.



Sec.  96.129  Revolving funds for establishment of homes in which 
recovering substance abusers may reside.

    (a) The State shall establish and provide for the ongoing operation 
of a revolving fund as follows:
    (1) The purpose of the fund is to make loans for the costs of 
establishing programs for the provision of housing in which individuals 
recovering from alcohol and drug abuse may reside in groups of not less 
than six individuals;
    (2) Not less than $100,000 will be available for the revolving fund;
    (3) Loans made from the revolving fund do not exceed $4,000 and that 
each such loan is repaid to the revolving fund not later than 2 years 
after the date on which the loan is made;
    (4) Each such loan is repaid by such residents through monthly 
installments by the date specified in the loan agreement involved;
    (5) Such loans are made only to nonprofit private entities agreeing 
that, in the operation of the program established pursuant to the loan--
    (i) The use of alcohol or any illegal drug in the housing provided 
by the program will be prohibited;
    (ii) Any resident of the housing who violates such prohibition will 
be expelled from the housing;
    (iii) The costs of the housing, including fees for rent and 
utilities, will be paid by the residents of the housing; and
    (iv) The residents of the housing will, through a majority vote of 
the residents, otherwise establish policies governing residence in the 
housing, including the manner in which applications for residence in the 
housing are approved;
    (6) States shall identify and clearly define legitimate purposes for 
which the funds will be spent, such as first month's rent, necessary 
furniture (e.g., beds), facility modifications (e.g., conversion of 
basement into a game room or extra bedrooms), and purchase of amenities 
which foster healthy group living (e.g., dishwasher);
    (7) In managing the revolving fund, the State and the financial 
entity managing the fund for the State shall abide by all Federal, State 
and local laws and regulations;
    (8) If the State decides to indirectly manage the fund using a 
private nonprofit entity as the fund management group, the State shall 
establish reasonable criteria for selecting the group, such as 
qualifications, expertise, experience, and capabilities of the group, 
and the State shall require that these

[[Page 675]]

entities abide by all Federal, State and local laws and regulations;
    (9) The State may seek assistance to approve or deny applications 
from entities that meet State-established criteria;
    (10) The State shall set reasonable criteria in determining the 
eligibility of prospective borrowers such as qualifications, expertise, 
capabilities, the acceptability of a proposed plan to use the funds and 
operate the house, and an assessment of the potential borrower's ability 
to pay back the funds;
    (11) The State shall establish a procedure and process for applying 
for a loan under the program which may include completion of the 
application, personal interviews and submission of evidence to support 
eligibility requirements, as well as establish a written procedure for 
repayment which will set forth reasonable penalties for late or missed 
payments and liability and recourse for default;
    (12) The State shall provide clearly defined written instructions to 
applicants which lays out timeliness, milestones, required 
documentation, notification of reasonable penalties for late or missed 
payments and recourse for default, notification on legitimate purposes 
for which the loan may be spent, and other procedures required by the 
State; and
    (13) The State shall keep a written record of the number of loans 
and amount of loans provided, the identities of borrowers and the 
repayment history of each borrower and retain it for three years.
    (b) The requirements established in paragraph (a) of this section 
shall not apply to any territory of the United States other than the 
Commonwealth of Puerto Rico.



Sec.  96.130  State law regarding sale of tobacco products to individuals 
under age of 18.

    (a) For purposes of this section, the term ``first applicable fiscal 
year'' means fiscal year 1994, except in the case of any State described 
in section 1926(a)(2) of the PHS Act, in which case ``first applicable 
fiscal year'' means fiscal year 1995. The term ``outlet'' is any 
location which sells at retail or otherwise distributes tobacco products 
to consumers including (but not limited to) locations that sell such 
products over-the-counter or through vending machines.
    (b) The Secretary may make a grant to a State only if the State, for 
the first applicable fiscal year and subsequent fiscal years, has in 
effect a law providing that it is unlawful for any manufacturer, 
retailer, or distributor of tobacco products to sell or distribute any 
such product to any individual under age 18 through any sales or 
distribution outlet, including over-the-counter and vending machine 
sales.
    (c) For the first and second applicable fiscal years, the State 
shall, at a minimum, conduct annually a reasonable number of random, 
unannounced inspections of outlets to ensure compliance with the law and 
plan and begin to implement any other actions which the State believes 
are necessary to enforce the law.
    (d) For the third and subsequent fiscal years, the States shall do 
the following:
    (1) The State shall conduct annual, random, unannounced inspections 
of both over-the-counter and vending machine outlets. The random 
inspections shall cover a range of outlets (not preselected on the basis 
of prior violations) to measure overall levels of compliance as well as 
to identify violations.
    (2) Random, unannounced inspections shall be conducted annually to 
ensure compliance with the law and shall be conducted in such a way as 
to provide a probability sample of outlets. The sample must reflect the 
distribution of the population under age 18 throughout the State and the 
distribution of the outlets throughout the State accessible to youth.
    (e) As provided by Sec.  96.122(d), the State shall annually submit 
to the Secretary a report which shall include the following:
    (1) a detailed description of the State's activities to enforce the 
law required in paragraph (b) of this section during the fiscal year 
preceding the fiscal year for which that State is seeking the grant;
    (2) a detailed description regarding the overall success the State 
has achieved during the previous fiscal

[[Page 676]]

year in reducing the availability of tobacco products to individuals 
under the age of 18, including the results of the unannounced 
inspections as provided by paragraph (d) of this section for which the 
results of over-the-counter and vending machine outlet inspections shall 
be reported separately;
    (3) a detailed description of how the unannounced inspections were 
conducted and the methods used to identify outlets;
    (4) the strategies to be utilized by the State for enforcing such 
law during the fiscal year for which the grant is sought; and
    (5) the identity of the agency or agencies designated by the 
Governor to be responsible for the implementation of the requirements of 
section 1926 of the PHS Act.
    (f) Beginning in the second applicable fiscal year, the annual 
report required under paragraph (e) of this section shall be made public 
within the State, along with the State plan as provided in section 1941 
of the PHS Act.
    (g) Beginning with applications for the fourth applicable fiscal 
year and all subsequent fiscal years, the Secretary will negotiate with 
the State, as part of the State's plan, the interim performance target 
the State will meet for that fiscal year and in subsequent years will 
seek evidence of progress toward achieving or surpassing a performance 
objective in which the inspection failure rate would be no more than 20% 
within several years.
    (h) Beginning with the second applicable fiscal year and all 
subsequent fiscal years, the Secretary shall make a determination, 
before making a Block Grant to a State for that fiscal year, whether the 
State reasonably enforced its law in the previous fiscal year pursuant 
to this section. In making this determination, the Secretary will 
consider the following factors:
    (1) During the first and second applicable fiscal years, the State 
must conduct the activities prescribed in paragraph (c) of this section.
    (2) During the third applicable fiscal year, the State must conduct 
random, unannounced inspections in accordance with paragraph (d) of this 
section.
    (3) During the fourth and all subsequent applicable fiscal years, 
the State must do the following:
    (i) conduct random, unannounced inspections in accordance with 
paragraph (d); and
    (ii) except as provided by paragraph (h)(4) of this section, the 
State must be in substantial compliance with the target negotiated with 
the Secretary under paragraph (g) of this section for that fiscal year.
    (4) If a State has not substantially complied with the target as 
prescribed under paragraph (h)(3)(ii) of this section for any fiscal 
year, the Secretary, in extraordinary circumstances, may consider a 
number of factors, including survey data showing that the State is 
making significant progress toward reducing use of tobacco products by 
children and youth, data showing that the State has progressively 
decreased the availability of tobacco products to minors, the 
composition of the outlets inspected as to whether they were over-the-
counter or vending machine outlets, and the State's plan for improving 
the enforcement of the law in the next fiscal year.
    (i) If, after notice to the State and an opportunity for a hearing, 
the Secretary determines under paragraph (h) of this section that the 
State has not maintained compliance, the Secretary will reduce the 
amount of the allotment in such amounts as is required by section 
1926(c) of the PHS Act.
    (j) States may not use the Block Grant to fund the enforcement of 
their statute, except that they may expend funds from the primary 
prevention setaside of their Block Grant allotment under 45 CFR 
96.124(b)(1) for carrying out the administrative aspects of the 
requirements such as the development of the sample design and the 
conducting of the inspections.

[61 FR 1508, Jan. 19, 1996, as amended at 66 FR 46227, Sept. 4, 2001]



Sec.  96.131  Treatment services for pregnant women.

    (a) The State is required to, in accordance with this section, 
ensure that each pregnant woman in the State who

[[Page 677]]

seeks or is referred for and would benefit from such services is given 
preference in admissions to treatment facilities receiving funds 
pursuant to the grant. In carrying out this section, the State shall 
require all entities that serve women and who receive such funds to 
provide preference to pregnant women. Programs which serve an injecting 
drug abuse population and who receive Block Grant funds shall give 
preference to treatment as follows:
    (1) Pregnant injecting drug users;
    (2) Pregnant substance abusers;
    (3) Injecting drug users; and
    (4) All others.
    (b) The State will, in carrying out this provision publicize the 
availability to such women of services from the facilities and the fact 
that pregnant women receive such preference. This may be done by means 
of street outreach programs, ongoing public service announcements 
(radio/television), regular advertisements in local/regional print 
media, posters placed in targeted areas, and frequent notification of 
availability of such treatment distributed to the network of community 
based organizations, health care providers, and social service agencies.
    (c) The State shall in carrying out paragraph (a) of this section 
require that, in the event that a treatment facility has insufficient 
capacity to provide treatment services to any such pregnant woman who 
seeks the services from the facility, the facility refer the woman to 
the State. This may be accomplished by establishing a capacity 
management program, utilizing a toll-free number, an automated reporting 
system and/or other mechanisms to ensure that pregnant women in need of 
such services are referred as appropriate. The State shall maintain a 
continually updated system to identify treatment capacity for any such 
pregnant women and will establish a mechanism for matching the women in 
need of such services with a treatment facility that has the capacity to 
treat the woman.
    (d) The State, in the case of each pregnant woman for whom a 
referral under paragraph (a) of this section is made to the State--
    (1) will refer the woman to a treatment facility that has the 
capacity to provide treatment services to the woman; or
    (2) will, if no treatment facility has the capacity to admit the 
woman, make available interim services, including a referral for 
prenatal care, available to the woman not later than 48 hours after the 
woman seeks the treatment services.
    (e) Procedures for the implementation of this section shall be 
developed in consultation with the State Medical Director for Substance 
Abuse Services.
    (f) The State shall develop effective strategies for monitoring 
programs compliance with this section. States shall report under the 
requirements of Sec.  96.122(g) on the specific strategies to be used to 
identify compliance problems and corrective actions to be taken to 
address those problems.



Sec.  96.132  Additional agreements.

    (a) With respect to individuals seeking treatment services, the 
State is required to improve (relative to fiscal year 1992) the process 
in the State for referring the individuals to treatment facilities that 
can provide to the individuals the treatment modality that is most 
appropriate for the individuals. Examples of how this may be 
accomplished include the development and implementation of a capacity 
management/waiting list management system; the utilization of a toll-
free number for programs to report available capacity and waiting list 
data; and the utilization of standardized assessment procedures that 
facilitate the referral process.
    (b) With respect to any facility for treatment services or 
prevention activities that is receiving amounts from a Block Grant, 
continuing education in such services or activities (or both, as the 
case may be) shall be made available to employees of the facility who 
provide the services or activities. The States will ensure that such 
programs include a provision for continuing education for employees of 
the facility in its funding agreement.
    (c) The State shall coordinate prevention and treatment activities 
with the provision of other appropriate services (including health, 
social, correctional and criminal justice, educational, vocational 
rehabilitation, and

[[Page 678]]

employment services). In evaluating compliance with this section, the 
Secretary will consider such factors as the existence of memoranda of 
understanding between various service providers/agencies and evidence 
that the State has included prevention and treatment services 
coordination in its grants and contracts.
    (d) Upon the request of a State, the Secretary may provide to a 
State a waiver of any or all of the requirements established in 
paragraphs (a), (b) and (c) of this section, if the Secretary determines 
that, with respect to services for the prevention and treatment of 
substance abuse, the requirement involved is unnecessary for maintaining 
quality in the provision of such services in the State. In evaluating 
whether to grant or deny a waiver, the Secretary will rely on 
information drawn from the independent peer review/quality assurance 
activities conducted by the State. For example, a State may be eligible 
for a waiver of the requirement of paragraph (a) of this section if a 
State already has a well developed process for referring individuals to 
treatment facilities that can provide to the individuals the treatment 
modality that is most appropriate for the individuals. The Secretary 
will approve or deny a request for a waiver not later than 120 days 
after the date on which the request is made. Any waiver provided by the 
Secretary for paragraphs (a), (b) and (c) of this section, will be 
applicable only to the fiscal year involved.
    (e) The State is also required to have in effect a system to protect 
from inappropriate disclosure patient records maintained by the State in 
connection with an activity funded under the program involved or by any 
entity which is receiving amounts from the grant and such system shall 
be in compliance with all applicable State and Federal laws and 
regulations, including 42 CFR part 2. This system shall include 
provisions for employee education on the confidentiality requirements 
and the fact that disciplinary action may occur upon inappropriate 
disclosures. This requirement cannot be waived.



Sec.  96.133  Submission to Secretary of Statewide assessment of needs.

    (a) The State is required to submit to the Secretary an assessment 
of the need in the State for authorized activities, both by locality and 
by the State in general. The State is to provide a broad range of 
information which includes the following:
    (1) The State is to submit data which shows the incidence and 
prevalence in the State of drug abuse and the incidence and prevalence 
in the State of alcohol abuse and alcoholism. For fiscal years 1993 
through 1996, the State shall submit its best available data on the 
incidence and prevalence of drug and alcohol abuse and alcoholism. The 
State shall also provide a summary describing the weakness and bias in 
the data and a description on how the State plans to strengthen the data 
in the future.
    (2) The State shall provide a description on current substance abuse 
prevention and treatment activities:
    (i) For fiscal year 1993, the State shall provide its best available 
data on current prevention and treatment activities in the State in such 
detail as it finds reasonably practicable given its own data collection 
activities and records.
    (ii) For fiscal year 1994 and subsequent years, the State shall 
provide a detailed description on current prevention and treatment 
activities in the State. This report shall include a detailed 
description of the intended use of the funds relating to prevention and 
treatment, as well as a description of treatment capacity. As to primary 
prevention activities, the activities must be broken down by strategies 
used, such as those provided in section 96.125, including the specific 
activities conducted. The State shall provide the following data if 
available: the specific risk factors being addressed by activity; the 
age, race/ethnicity and gender of the population being targeted by the 
prevention activity; and the community size and type where the activity 
is carried out. As to all treatment and prevention activities, including 
primary prevention, the State shall provide the identities of the 
entities that provide the services and describe the

[[Page 679]]

services provided. The State shall submit information on treatment 
utilization to describe the type of care and the utilization according 
to primary diagnosis of alcohol or drug abuse, or a dual diagnosis of 
drug and alcohol abuse.
    (3) The State may describe the need for technical assistance to 
carry out Block Grant activities, including activities relating to the 
collection of incidence and prevalence data identified in paragraph 
(a)(1) of this section.
    (4) The State shall establish goals and objectives for improving 
substance abuse treatment and prevention activities and shall report 
activities taken in support of these goals and objectives in its 
application.
    (5) The State shall submit a detailed description on the extent to 
which the availability of prevention and treatment activities is 
insufficient to meet the need for the activities, the interim services 
to be made available under sections 96.126 and 96.131, and the manner in 
which such services are to be so available. Special attention should be 
provided to the following groups:
    (i) Pregnant addicts;
    (ii) Women who are addicted and who have dependent children;
    (iii) Injecting drug addicts; and
    (iv) Substance abusers infected with HIV or who have tuberculosis.
    (6) Documentation describing the results of the State's management 
information system pertaining to capacity and waiting lists shall also 
be submitted, as well as a summary of such information for admissions 
and, when available, discharges. As to prevention activities, the report 
shall include a description of the populations at risk of becoming 
substance abusers.



Sec.  96.134  Maintenance of effort regarding State expenditures.

    (a) With respect to the principal agency of a State for carrying out 
authorized activities, the agency shall for each fiscal year maintain 
aggregate State expenditures by the principal agency for authorized 
activities at a level that is not less than the average level of such 
expenditures maintained by the State for the two year period preceding 
the fiscal year for which the State is applying for the grant. The Block 
Grant shall not be used to supplant State funding of alcohol and other 
drug prevention and treatment programs.
    (b) Upon the request of a State, the Secretary may waive all or part 
of the requirement established in paragraph (a) of this section if the 
Secretary determines that extraordinary economic conditions in the State 
justify the waiver. The State involved must submit information 
sufficient for the Secretary to make the determination, including the 
nature of the extraordinary economic circumstances, documented evidence 
and appropriate data to support the claim, and documentation on the year 
for which the State seeks the waiver. The Secretary will approve or deny 
a request for a waiver not later than 120 days after the date on which 
the request is made. Any waiver provided by the Secretary shall be 
applicable only to the fiscal year involved. ``Extraordinary economic 
conditions'' mean a financial crisis in which the total tax revenue 
declines at least one and one-half percent, and either unemployment 
increases by at least one percentage point, or employment declines by at 
least one and one-half percent.
    (c) In making a Block Grant to a State for a fiscal year, the 
Secretary shall make a determination of whether, for the previous fiscal 
year or years, the State maintained material compliance with any 
agreement made under paragraph (a) of this section. If the Secretary 
determines that a State has failed to maintain such compliance, the 
Secretary shall reduce the amount of the allotment for the State for the 
fiscal year for which the grant is being made by an amount equal to the 
amount constituting such failure for the previous fiscal year.
    (d) The Secretary may make a Block Grant for a fiscal year only if 
the State involved submits to the Secretary information sufficient for 
the Secretary to make the determination required in paragraph (a) of 
this section, which includes the dollar amount reflecting the aggregate 
State expenditures by the principal agency for authorized activities for 
the two State fiscal years preceding the fiscal year for which the State 
is applying for the grant. The

[[Page 680]]

base shall be calculated using Generally Accepted Accounting Principles 
and the composition of the base shall be applied consistently from year 
to year.



Sec.  96.135  Restrictions on expenditure of grant.

    (a) The State shall not expend the Block Grant on the following 
activities:
    (1) To provide inpatient hospital services, except as provided in 
paragraph (c) of this section;
    (2) To make cash payments to intended recipients of health services;
    (3) To purchase or improve land, purchase, construct, or permanently 
improve (other than minor remodeling) any building or other facility, or 
purchase major medical equipment;
    (4) To satisfy any requirement for the expenditure of non-Federal 
funds as a condition for the receipt of Federal funds;
    (5) To provide financial assistance to any entity other than a 
public or nonprofit private entity; or
    (6) To provide individuals with hypodermic needles or syringes so 
that such individuals may use illegal drugs, unless the Surgeon General 
of the Public Health Service determines that a demonstration needle 
exchange program would be effective in reducing drug abuse and the risk 
that the public will become infected with the etiologic agent for AIDS.
    (b) The State shall limit expenditures on the following:
    (1) The State involved will not expend more than 5 percent of the 
grant to pay the costs of administering the grant; and
    (2) The State will not, in expending the grant for the purpose of 
providing treatment services in penal or correctional institutions of 
the State, expend more than an amount prescribed by section 1931(a)(3) 
of the PHS Act.
    (c) Exception regarding inpatient hospital services.
    (1) With respect to compliance with the agreement made under 
paragraph (a) of this section, a State (acting through the Director of 
the principal agency) may expend a grant for inpatient hospital-based 
substance abuse programs subject to the limitations of paragraph (c)(2) 
of this section only when it has been determined by a physician that:
    (i) The primary diagnosis of the individual is substance abuse, and 
the physician certifies this fact;
    (ii) The individual cannot be safely treated in a community-based, 
nonhospital, residential treatment program;
    (iii) The Service can reasonably be expected to improve an 
individual's condition or level of functioning;
    (iv) The hospital-based substance abuse program follows national 
standards of substance abuse professional practice; and
    (2) In the case of an individual for whom a grant is expended to 
provide inpatient hospital services described above, the allowable 
expenditure shall conform to the following:
    (i) The daily rate of payment provided to the hospital for providing 
the services to the individual will not exceed the comparable daily rate 
provided for community-based, nonhospital, residential programs of 
treatment for substance abuse; and
    (ii) The grant may be expended for such services only to the extent 
that it is medically necessary, i.e., only for those days that the 
patient cannot be safely treated in a residential, community-based 
program.
    (d) The Secretary may approve a waiver for construction under 
paragraph (a)(3) of this section within 120 days after the date of a 
request only if:
    (1) The State demonstrates to the Secretary that adequate treatment 
cannot be provided through the use of existing facilities and that 
alternative facilities in existing suitable buildings are not available;
    (2) The State has carefully designed a plan that minimizes the costs 
of renovation or construction;
    (3) The State agrees, with respect to the costs to be incurred by 
the State in carrying out the purpose of the waiver, to make available 
non-Federal contributions in cash toward such costs in an amount equal 
to not less than $1 for each $1 of Federal funds provided under the 
Block Grant; and
    (4) The State submits the following to support paragraphs (b)(1), 
(2) and (3), of this section:

[[Page 681]]

    (i) Documentation to support paragraph (d)(1) of this section, such 
as local needs assessments, waiting lists, survey data and other related 
information;
    (ii) A brief description of the project to be funded, including the 
type(s) of services to be provided and the projected number of 
residential and/or outpatient clients to be served;
    (iii) The specific amount of Block Grant funds to be used for this 
project;
    (iv) The number of outpatient treatment slots planned or the number 
of residential beds planned, if applicable;
    (v) The estimate of the total cost of the construction or 
rehabilitation (and a description of how these estimates were 
determined), based on an independent estimate of said cost, using 
standardized measures as determined by an appropriate State construction 
certifying authority;
    (vi) An assurance by the State that all applicable National (e.g., 
National Fire Protection Association, Building Officials and Codes 
Administrators International), Federal (National Environmental Policy 
Act), State, and local standards for construction or rehabilitation of 
health care facilities will be complied with;
    (vii) Documentation of the State's commitment to obligate these 
funds by the end of the first year in which the funds are available, and 
that such funds must be expended by the end of the second year (section 
1914(a)(2) of the PHS Act);
    (viii) A certification that there is public support for a waiver, as 
well as a description of the procedure used (and the results therein) to 
ensure adequate comment from the general public and the appropriate 
State and local health planning organizations, local governmental 
entities and public and private-sector service providers that may be 
impacted by the waiver request;
    (ix) Evidence that a State is committed to using the proposed new or 
rehabilitated substance abuse facility for the purposes stated in the 
request for at least 20 years for new construction and at least 10 years 
for rehabilitated facilities;
    (x) An assurance that, if the facility ceases to be used for such 
services, or if the facility is sold or transferred for a purpose 
inconsistent with the State's waiver request, monies will be returned to 
the Federal Government in an amount proportionate to the Federal 
assistance provided, as it relates to the value of the facility at the 
time services cease or the facility sold or transferred;
    (xi) A description of the methods used to minimize the costs of the 
construction or rehabilitation, including documentation of the costs of 
the residential facilities in the local area or other appropriate 
equivalent sites in the State;
    (xii) An assurance that the State shall comply with the matching 
requirements of paragraph (d)(3) of this section; and
    (xiii) Any other information the Secretary may determine to be 
appropriate.



Sec.  96.136  Independent peer review.

    (a) The State shall for the fiscal year for which the grant is 
provided, provide for independent peer review to assess the quality, 
appropriateness, and efficacy of treatment services provided in the 
State to individuals under the program involved, and ensure that at 
least 5 percent of the entities providing services in the State under 
such program are reviewed. The programs reviewed shall be representative 
of the total population of such entities.
    (b) The purpose of independent peer review is to review the quality 
and appropriateness of treatment services. The review will focus on 
treatment programs and the substance abuse service system rather than on 
the individual practitioners. The intent of the independent peer review 
process is to continuously improve the treatment services to alcohol and 
drug abusers within the State system. ``Quality,'' for purposes of this 
section, is the provision of treatment services which, within the 
constraints of technology, resources, and patient/client circumstances, 
will meet accepted standards and practices which will improve patient/
client health and safety status in the context of recovery. 
``Appropriateness,'' for purposes of this section, means the provision 
of treatment

[[Page 682]]

services consistent with the individual's identified clinical needs and 
level of functioning.
    (c) The independent peer reviewers shall be individuals with 
expertise in the field of alcohol and drug abuse treatment. Because 
treatment services may be provided by multiple disciplines, States will 
make every effort to ensure that individual peer reviewers are 
representative of the various disciplines utilized by the program under 
review. Individual peer reviewers must also be knowledgeable about the 
modality being reviewed and its underlying theoretical approach to 
addictions treatment, and must be sensitive to the cultural and 
environmental issues that may influence the quality of the services 
provided.
    (d) As part of the independent peer review, the reviewers shall 
review a representative sample of patient/client records to determine 
quality and appropriateness of treatment services, while adhering to all 
Federal and State confidentiality requirements, including 42 CFR part 2. 
The reviewers shall examine the following:
    (1) Admission criteria/intake process;
    (2) Assessments;
    (3) Treatment planning, including appropriate referral, e.g., 
prenatal care and tuberculosis and HIV services;
    (4) Documentation of implementation of treatment services;
    (5) Discharge and continuing care planning; and
    (6) Indications of treatment outcomes.
    (e) The State shall ensure that the independent peer review will not 
involve practitioners/providers reviewing their own programs, or 
programs in which they have administrative oversight, and that there be 
a separation of peer review personnel from funding decisionmakers. In 
addition, the State shall ensure that independent peer review is not 
conducted as part of the licensing/certification process.
    (f) The States shall develop procedures for the implementation of 
this section and such procedures shall be developed in consultation with 
the State Medical Director for Substance Abuse Services.



Sec.  96.137  Payment schedule.

    (a) The Block Grant money that may be spent for Sec. Sec.  96.124(c) 
and (e), 96.127 and 96.128 is governed by this section which ensures 
that the grant will be the ``payment of last resort.'' The entities that 
receive funding under the Block Grant and provides services required by 
the above-referenced sections shall make every reasonable effort, 
including the establishment of systems for eligibility determination, 
billing, and collection, to:
    (1) Collect reimbursement for the costs of providing such services 
to persons who are entitled to insurance benefits under the Social 
Security Act, including programs under title XVIII and title XIX, any 
State compensation program, any other public assistance program for 
medical expenses, any grant program, any private health insurance, or 
any other benefit program; and
    (2) Secure from patients or clients payments for services in 
accordance with their ability to pay.





       Sec. Appendix A to Part 96--Uniform Definitions of Services

1. Adoption Services
2. Case Management Services
3. Congregate Meals
4. Counseling Services
5. Day Care Services--Adults
6. Day Care Services--Children
7. Education and Training Services
8. Employment Services
9. Family Planning Services
10. Foster Care Services for Adults
11. Foster Care Services for Children
12. Health Related and Home Health Services
13. Home Based Services
14. Home Delivered Meals
15. Housing Services
16. Independent and Transitional Living Services
17. Information and Referral Services
18. Legal Services
19. Pregnancy and Parenting Services for Young Parents
20. Prevention and Intervention Services
21. Protective Services for Adults
22. Protective Services for Children
23. Recreational Services
24. Residential Treatment Services
25. Special Services for Persons with Developmental or Physical 
Disabilities, or Persons with Visual or Auditory Impairments

[[Page 683]]

26. Special Services for Youth Involved in or At Risk of Involvement in 
Criminal Activity
27. Substance Abuse Services
28. Transportation Services
29. Other Services

                     Uniform Definitions of Services

                          1. Adoption Services

    Adoption services are those services or activities provided to 
assist in bringing about the adoption of a child. Component services and 
activities may include, but are not limited to, counseling the 
biological parent(s), recruitment of adoptive homes, and pre- and post-
placement training and/or counseling.

                       2. Case Management Services

    Case management services are services or activities for the 
arrangement, coordination, and monitoring of services to meet the needs 
of individuals and families. Component services and activities may 
include individual service plan development; counseling; monitoring, 
developing, securing, and coordinating services; monitoring and 
evaluating client progress; and assuring that clients' rights are 
protected.

                           3. Congregate Meals

    Congregate meals are those services or activities designed to 
prepare and serve one or more meals a day to individuals in central 
dining areas in order to prevent institutionalization, malnutrition, and 
feelings of isolation. Component services or activities may include the 
cost of personnel, equipment, and food; assessment of nutritional and 
dietary needs; nutritional education and counseling; socialization; and 
other services such as transportation and information and referral.

                         4. Counseling Services

    Counseling services are those services or activities that apply 
therapeutic processes to personal, family, situational, or occupational 
problems in order to bring about a positive resolution of the problem or 
improved individual or family functioning or circumstances. Problem 
areas may include family and marital relationships, parent-child 
problems, or drug abuse.

                      5. Day Care Services--Adults

    Day care services for adults are those services or activities 
provided to adults who require care and supervision in a protective 
setting for a portion of a 24-hour day. Component services or activities 
may include opportunity for social interaction, companionship and self-
education; health support or assistance in obtaining health services; 
counseling; recreation and general leisure time activities; meals; 
personal care services; plan development; and transportation.

                     6. Day Care Services--Children

    Day care services for children (including infants, pre-schoolers, 
and school age children) are services or activities provided in a 
setting that meets applicable standards of state and local law, in a 
center or in a home, for a portion of a 24-hour day. Component services 
or activities may include a comprehensive and coordinated set of 
appropriate developmental activities for children, recreation, meals and 
snacks, transportation, health support services, social service 
counseling for parents, plan development, and licensing and monitoring 
of child care homes and facilities.

                   7. Education and Training Services

    Education and training services are those services provided to 
improve knowledge or daily living skills and to enhance cultural 
opportunities. Services may include instruction or training in, but are 
not limited to, such issues as consumer education, health education, 
community protection and safety education, literacy education, English 
as a second language, and General Educational Development (G.E.D.). 
Component services or activities may include screening, assessment and 
testing; individual or group instruction; tutoring; provision of books, 
supplies and instructional material; counseling; transportation; and 
referral to community resources.

                         8. Employment Services

    Employment services are those services or activities provided to 
assist individuals in securing employment or acquiring or learning 
skills that promote opportunities for employment. Component services or 
activities may include employment screening, assessment, or testing; 
structured job skills and job seeking skills; specialized therapy 
(occupational, speech, physical); special training and tutoring, 
including literacy training and pre-vocational training; provision of 
books, supplies and instructional material; counseling, transportation; 
and referral to community resources.

                       9. Family Planning Services

    Family planning services are those educational, comprehensive 
medical or social services or activities which enable individuals, 
including minors, to determine freely the number and spacing of their 
children and to select the means by which this may be achieved. These 
services and activities include a broad range of acceptable and 
effective methods and services to limit or enhance fertility, including 
contraceptive methods (including natural family planning

[[Page 684]]

and abstinence), and the management of infertility (including referral 
to adoption). Specific component services and activities may include 
preconceptional counseling, education, and general reproductive health 
care, including diagnosis and treatment of infections which threaten 
reproductive capability. Family planning services do not include 
pregnancy care (including obstetric or prenatal care).

                   10. Foster Care Services for Adults

    Foster care services for adults are those services or activities 
that assess the need and arrange for the substitute care and alternate 
living situation of adults in a setting suitable to the individual's 
needs. Individuals may need such services because of social, physical or 
mental disabilities, or as a consequence of abuse or neglect. Care may 
be provided in a community-based setting, or such services may arrange 
for institutionalization when necessary. Component services or 
activities include assessment of the individual's needs; case planning 
and case management to assure that the individual receives proper care 
in the placement; counseling to help with personal problems and 
adjusting to new situations; assistance in obtaining other necessary 
supportive services; determining, through periodic reviews, the 
continued appropriateness of and need for placement; and recruitment and 
licensing of foster care homes and facilities.

                  11. Foster Care Services for Children

    Foster care services for children are those services or activities 
associated with the provision of an alternative family life experience 
for abused, neglected or dependent children, between birth and the age 
of majority, on the basis of a court commitment or a voluntary placement 
agreement signed by the parent or guardian. Services may be provided to 
children in foster family homes, foster homes of relatives, group homes, 
emergency shelters, residential facilities, child care institutions, 
pre-adoptive homes or supervised independent living situation. Component 
services or activities may include assessment of the child's needs; case 
planning and case management to assure that the child receives proper 
care in the placement; medical care as an integral but subordinate part 
of the service; counseling of the child, the child's parents, and the 
foster parents; referral and assistance in obtaining other necessary 
supportive services; periodical reviews to determine the continued 
appropriateness and need for placement; and recruitment and licensing of 
foster homes and child care institutions.

               12. Health Related and Home Health Services

    Health related and home health services are those in-home or out-of-
home services or activities designed to assist individuals and families 
to attain and maintain a favorable condition of health. Component 
services and activities may include providing an analysis or assessment 
of an individual's health problems and the development of a treatment 
plan; assisting individuals to identify and understand their health 
needs; assisting individuals to locate, provide or secure, and utilize 
appropriate medical treatment, preventive medical care, and health 
maintenance services, including in-home health services and emergency 
medical services; and providing follow-up services as needed.

                         13. Home Based Services

    Home based services are those in-home services or activities 
provided to individuals or families to assist with household or personal 
care activities that improve or maintain adequate family well-being. 
These services may be provided for reasons of illness, incapacity, 
frailty, absence of a caretaker relative, or to prevent abuse and 
neglect of a child or adult. Major service components include homemaker 
services, chore services, home maintenance services, and household 
management services. Component services or activities may include 
protective supervision of adults and/or children to help prevent abuse, 
temporary non-medical personal care, house-cleaning, essential shopping, 
simple household repairs, yard maintenance, teaching of homemaking 
skills, training in self-help and self-care skills, assistance with meal 
planning and preparation, sanitation, budgeting, and general household 
management.

                        14. Home Delivered Meals

    Home-delivered meals are those services or activities designed to 
prepare and deliver one or more meals a day to an individual's residence 
in order to prevent institutionalization, malnutrition, and feelings of 
isolation. Component services or activities may include the cost of 
personnel, equipment, and food; assessment of nutritional and dietary 
needs; nutritional education and counseling; socialization services; and 
information and referral.

                          15. Housing Services

    Housing services are those services or activities designed to assist 
individuals or families in locating, obtaining, or retaining suitable 
housing. Component services or activities may include tenant counseling; 
helping individuals and families to identify and correct substandard 
housing conditions on behalf of individuals and families who are unable 
to protect their own interests; and assisting individuals and families 
to understand leases, secure utilities, make moving arrangements and 
minor renovations.

[[Page 685]]

            16. Independent and Transitional Living Services

    Independent and transitional living services are those services and 
activities designed to help older youth in foster care or homeless youth 
make the transition to independent living, or to help adults make the 
transition from an institution, or from homelessness, to independent 
living. Component services or activities may include educational and 
employment assistance, training in daily living skills, and housing 
assistance. Specific component services and activities may include 
supervised practice living and post-foster care services.

                  17. Information and Referral Services

    Information and referral services are those services or activities 
designed to provide information about services provided by public and 
private service providers and a brief assessment of client needs (but 
not diagnosis and evaluation) to facilitate appropriate referral to 
these community resources.

                           18. Legal Services

    Legal services are those services or activities provided by a lawyer 
or other person(s) under the supervision of a lawyer to assist 
individuals in seeking or obtaining legal help in civil matters such as 
housing, divorce, child support, guardianship, paternity, and legal 
separation. Component services or activities may include receiving and 
preparing cases for trial, provision of legal advice, representation at 
hearings, and counseling.

         19. Pregnancy and Parenting Services for Young Parents

    Pregnancy and parenting services are those services or activities 
for married or unmarried adolescent parents and their families designed 
to assist young parents in coping with the social, emotional, and 
economic problems related to pregnancy and in planning for the future. 
Component services or activities may include securing necessary health 
care and living arrangements; obtaining legal services; and providing 
counseling, child care education, and training in and development of 
parenting skills.

                20. Prevention and Intervention Services

    Prevention and intervention services are those services or 
activities designed to provide early identification and/or timely 
intervention to support families and prevent or ameliorate the 
consequences of, abuse, neglect, or family violence, or to assist in 
making arrangement for alternate placements or living arrangements where 
necessary. Such services may also be provided to prevent the removal of 
a child or adult from the home. Component services and activities may 
include investigation; assessment and/or evaluation of the extent of the 
problem; counseling, including mental health counseling or therapy as 
needed; developmental and parenting skills training; respite care; and 
other services including supervision, case management, and 
transportation.

                   21. Protective Services for Adults

    Protective services for adults are those services or activities 
designed to prevent or remedy abuse, neglect or exploitation of adults 
who are unable to protect their own interests. Examples of situations 
that may require protective services are injury due to maltreatment or 
family violence; lack of adequate food, clothing or shelter; lack of 
essential medical treatment or rehabilitation services; and lack of 
necessary financial or other resources. Component services or activities 
may include investigation; immediate intervention; emergency medical 
services; emergency shelter; developing case plans; initiation of legal 
action (if needed); counseling for the individual and the family; 
assessment/evaluation of family circumstances; arranging alternative or 
improved living arrangements; preparing for foster placement, if needed; 
and case management and referral to service providers.

                  22. Protective Services for Children

    Protective services for children are those services or activities 
designed to prevent or remedy abuse, neglect, or exploitation of 
children who may be harmed through physical or mental injury, sexual 
abuse or exploitation, and negligent treatment or maltreatment, 
including failure to be provided with adequate food, clothing, shelter, 
or medical care. Component services or activities may include immediate 
investigation and intervention; emergency medical services; emergency 
shelter; developing case plans; initiation of legal action (if needed); 
counseling for the child and the family; assessment/evaluation of family 
circumstances; arranging alternative living arrangement; preparing for 
foster placement, if needed; and case management and referral to service 
providers.

                        23. Recreational Services

    Recreational services are those services or activities designed to 
provide, or assist individuals to take advantage of, individual or group 
activities directed towards promoting physical, cultural, and/or social 
development.

                   24. Residential Treatment Services

    Residential treatment services provide short-term residential care 
and comprehensive treatment and services for children or adults whose 
problems are so severe or are such that they cannot be cared for at home 
or in foster care and need the specialized

[[Page 686]]

services provided by specialized facilities. Component services and 
activities may include diagnosis and psychological evaluation; alcohol 
and drug detoxification services; individual, family, and group therapy 
and counseling; remedial education and GED preparation; vocational or 
pre-vocational training; training in activities of daily living; 
supervised recreational and social activities; case management; 
transportation; and referral to and utilization of other services.

    25. Special Services for Persons With Developmental or Physical 
      Disabilities, or Persons With Visual or Auditory Impairments

    Special services for persons with developmental or physical 
disabilities, or persons with visual or auditory impairments, are 
services or activities to maximize the potential of persons with 
disabilities, help alleviate the effects of physical, mental or 
emotional disabilities, and to enable these persons to live in the least 
restrictive environment possible. Component services or activities may 
include personal and family counseling; respite care; family support; 
recreation; transportation; aid to assist with independent functioning 
in the community; and training in mobility, communication skills, the 
use of special aids and appliances, and self-sufficiency skills. 
Residential and medical services may be included only as an integral, 
but subordinate, part of the services.

  26. Special Services for Youth Involved in or at Risk of Involvement 
                         With Criminal Activity

    Special services for youth involved in or at risk of involvement 
with criminal activity are those services or activities for youth who 
are, or who may become, involved with the juvenile justice system and 
their families. Components services or activities are designed to 
enhance family functioning and/or modify the youth's behavior with the 
goal of developing socially appropriate behavior and may include 
counseling, intervention therapy, and residential and medical services 
if included as an integral but subordinate part of the service.

                      27. Substance Abuse Services

    Substance abuse services are those services or activities that are 
primarily designed to deter, reduce, or eliminate substance abuse or 
chemical dependence. Except for initial detoxification services, medical 
and residential services may be included but only as an integral but 
subordinate part of the service. Component substance abuse services or 
activities may include a comprehensive range of personal and family 
counseling methods, methadone treatment for opiate abusers, or 
detoxification treatment for alcohol abusers. Services may be provided 
in alternative living arrangements such as institutional settings and 
community-based halfway houses.

                       28. Transportation Services

    Transportation services are those services or activities that 
provide or arrange for the travel, including travel costs, of 
individuals in order to access services, or obtain medical care or 
employment. Component services or activities may include special travel 
arrangements such as special modes of transportation and personnel to 
accompany or assist individuals or families to utilize transportation.

                           29. Other Services

    Other Services are services that do not fall within the definitions 
of the preceding 28 services. The definition used by the State for each 
of these services should appear elsewhere in the annual report.

[58 FR 60128, Nov. 15, 1993]



    Sec. Appendix B to Part 96--SSBG Reporting Form and Instructions

                              Instructions

    This form must be used by states as the reporting instrument to 
satisfy the requirements of 45 CFR 96.74(a) (1) through (4). Following 
are instructions on how to complete the form:

                                 General

    1. Enter the name of the state submitting the form.
    2. Enter the fiscal year for which the form is being submitted. 
Either the state or federal fiscal year may be used.
    3. Enter the month and year of the beginning and end of the fiscal 
year--e.g., 07/91 to 06/92.

                                Services

    4. The ``service'' column contains a list of services that are to be 
used for national reporting. This list in no way mandates how a state is 
to design its program of services under the SSBG, but rather is to be 
used only to obtain nationally comparable statistics. If the services 
that your state provides reasonably fit the uniform service definitions 
in appendix A, use them. In cases where no fit is possible between the 
state services and the services on the form, use item number 29--the 
other services category. Please list all services reported under item 
29, using a separate sheet if necessary. The state's definition of these 
services must appear in the state's annual report.

                             Recipient Data

    In reporting the following data:

[[Page 687]]

     Each state should use its own definitions of the 
terms ``adult'' and ``child.'' These definitions should be described 
elsewhere in the annual report. If the definitions of adult and child 
vary by services, all such definitions must be included.
     States should, if possible, consider as the 
``recipient'' of the service the individual to whom the service is 
provided. This means that the child would be considered the recipient of 
child day care services, even if such services are provided to allow the 
child's adult caretaker to pursue employment. Similarly, an adult who 
receives counseling services should be considered as the recipient of 
that service, even if the service is provided as part of a child's 
protective services plan. In cases where each member of a family, for 
example, receives an individual service such as counseling, each family 
member should be considered as a separate recipient.
     States should, if possible, consider as a 
service, i.e., a count of one, any service provided to a single 
recipient for the duration of the reporting period (one year), or any 
fraction thereof. In cases where an individual received a service during 
the reporting period, then discontinued the service, and then received 
the service again, the individual should only be counted once, if 
possible.
     The criteria applied in determining eligibility 
for each service--such as income eligibility guidelines, sliding fee 
scales, the effect of public assistance benefits, and any requirements 
for enrollment in school or training programs--should be described 
elsewhere in the annual report.
    5. Under ``Number of Recipients--Adults'' enter the number of adults 
who have received each service funded in whole or part under the SSBG.
    6. Under ``Number of Recipients--Children'' enter the number of 
children who have received each service funded in whole or part under 
the SSBG.
    7. Under ``Number of Recipients--Total'' enter the total number of 
recipients of each service. This should be the sum of the adults and 
children reported in the preceding ``adult'' and ``children'' columns.

                            Expenditure Data

    8. Under ``Expenditures--Total $'' enter all funds that the state 
expends on each service. This should include SSBG funds as well as funds 
from other federal sources, state funds, and local funds. A listing of 
the sources of these funds, and the amounts allocated, should appear 
elsewhere in the annual report.
    9. Under ``Expenditures--SSBG $'' enter the total SSBG funds 
expended for each service. This column should be totaled, and the sum 
placed at the bottom of the column in the ``Totals'' box.
    10. Under ``Expenditures--Per Adult'' enter the average amount of 
SSBG funds expended on each adult recipient of each service.
    11. Under ``Expenditures--Per Child'' enter the average amount of 
SSBG funds expended on each child recipient of each service.
    12. Item 30 in the ``Total SSBG $'' column should contain other 
expenditures and income as follows:
    a. ``Transfers In'' should contain funds transferred from other 
federal block grants to the SSBG program. A listing of the source(s) of 
block grant funds and their amounts should appear elsewhere in the 
annual report.
    b. ``Transfers Out'' should show funds transferred from the SSBG 
program to other federal block grants. A listing of the program(s) to 
which SSBG funds were transferred, and the amounts, should appear 
elsewhere in the annual report.
    c. ``Carry Forward'' should show funds the state intends to carry 
over from the reporting fiscal year to the following fiscal year. The 
SSBG statute permits states two years to expend SSBG funds.
    d. ``Carry Over'' should show funds carried from a previous fiscal 
year into the current reporting year.
    e. ``Administrative Costs'' should show all other non-service use of 
SSBG funds--e.g., funds expended for training, licensing activities, or 
overhead costs.
    f. This column should be totaled, and the sum placed at the bottom 
of the column in the ``Totals'' box.
    13. Under ``Provisions Method--Public/Private'' enter a check mark 
on ``X'' in the appropriate column(s) to indicate whether a service was 
provided by public agencies or private agencies. In some cases, a given 
service may have been provided by both methods, in which case both 
columns would be checked for that service.
    14. Enter the name, title, and telephone number of a contact person 
who can answer questions about the data.
    15. Code Column:
    Six of the columns on this form have a ``C'' column to the right of 
them. These are ``Code'' columns to permit a state to indicate, for 
expenditure data, whether each cell of data is A (actual), E 
(estimated), or S (sampled), and for recipient data, whether the data is 
based on an unduplicated (U) or duplicated (D) count of recipients. 
These codes will permit the Department to determine the relative degree 
of statistical validity of the data. Actual recipient counts and 
expenditure amounts must be used when available. If actual counts are 
not available, sampling and/or estimating may be used to derive the 
numbers in this report. A description of the sampling and/or estimation 
methods used to derive any data must appear elsewhere in the annual 
report.

[[Page 688]]

                  Report Submission Using PC Diskettes

    States with personal computer (PC) equipment may submit this data 
using PC diskettes in addition to the hardcopy form which will be 
included in the complete annual report. Diskettes may be either 5\1/
4\ or 3\1/2\; data may be submitted using Lotus 1-
2-3, Quattro Pro, DBase III or IV, Wordstar, Word Perfect, or ASCII 
formats. Use of Lotus 1-2-3 is preferred, but any of the other formats 
listed may be used. If a state wishes to use a format other than one 
listed here, please call Bryant Tudor on (202) 401-5535 or Frank Burns 
on (202) 401-5536, or write to the Office of Community Services, 
Administration for Children and Families, Fourth Floor--East Wing, 370 
L'Enfant Promenade, SW., Washington, DC 10447. Use of diskettes can 
greatly reduce transcription errors and also facilitate processing of 
the data once received. We anticipate that many states will want to 
avail themselves of this method of reporting.

[[Page 689]]

[GRAPHIC] [TIFF OMITTED] TC01JA91.006


[58 FR 60128, Nov. 15, 1993]

[[Page 690]]



PART 97_CONSOLIDATION OF GRANTS TO THE INSULAR AREAS--Table of Contents



Sec.
97.10 What is a consolidated grant?
97.11 Which jurisdictions may apply for a consolidated grant?
97.12 Which grants may be consolidated?
97.13 How does an insular area apply for a consolidated grant?
97.14 How will grant awards be made?
97.15 For what purposes can grant funds be used?
97.16 What fiscal, matching and administrative requirements apply to 
          grantees?

    Authority: Sec. 501, Pub. L. 95-134, as amended, 48 U.S.C. 1469a.

    Source: 47 FR 56468, Dec. 16, 1982, unless otherwise noted.



Sec.  97.10  What is a consolidated grant?

    As used in this part, a consolidated grant means a grant award to an 
insular area, the funds of which are derived from the allocations under 
two or more of the programs specified in Sec.  97.12.



Sec.  97.11  Which jurisdictions may apply for a consolidated grant?

    The following jurisdictions (insular areas), as appropriate with 
respect to each block and formula grant program, may apply for a 
consolidated grant under this part: the Virgin Islands; Guam; American 
Samoa, the Commonwealth of the Northern Mariana Islands; and the Trust 
Territory of the Pacific Islands (the Republic of Palau). In addition, 
the Federated States of Micronesia and the Republic of the Marshall 
Islands may apply for a consolidated grant for certain PHS programs as 
indicated in Sec.  97.12.

[56 FR 38346, Aug. 13, 1991]



Sec.  97.12  Which grants may be consolidated?

    (a) These regulations apply to the consolidation of grants under the 
programs listed in paragraphs (b) and (c) of this section and to any 
additional program(s) as determined by the Secretary. The list of 
programs will be periodically updated in the Code of Federal Regulations 
through publication in the Federal Register.
    (b) Block Grants.
    (1) Preventive Health and Health Services, 42 U.S.C. 300w-300w-10. 
\1\
---------------------------------------------------------------------------

    \1\ Certain Public Health Service programs for which the Federated 
States of Micronesia and the Republic of the Marshall Islands may apply 
for a consolidated grant.
---------------------------------------------------------------------------

    (2) Alcohol and Drug Abuse and Mental Health Services, 42 U.S.C. 
300x-300x-9. \2\
---------------------------------------------------------------------------

    \2\ See footnote 1 in Sec.  97.12(a)(1).
---------------------------------------------------------------------------

    (3) Maternal and Child Health Services, 42 U.S.C. 701-709. \3\
---------------------------------------------------------------------------

    \3\ See footnote 1 in Sec.  97.12(a)(1).
---------------------------------------------------------------------------

    (4) Social Services, 42 U.S.C. 1397-1397f.
    (5) Community Services, 42 U.S.C. 9901-9912.
    (6) Low-Income Home Energy Assistance, 42 U.S.C. 8621-8629.
    (7) Community Youth Activity, 42 U.S.C. 11841. \4\
---------------------------------------------------------------------------

    \4\ See footnote 1 in Sec.  97.12(a)(1).
---------------------------------------------------------------------------

    (c) Other Grants.
    (1) Child Welfare Services, 42 U.S.C. 620, et seq.
    (2) Developmental Disabilities, 42 U.S.C. 6021-6030.
    (3) Aging Supportive Services and Senior Centers, 42 U.S.C. 3030d.
    (4) Congregate Meals for the Elderly, 42 U.S.C. 3030e.
    (5) Home Delivered Meals for the Elderly, 42 U.S.C. 3030f.
    (6) Child Abuse and Neglect State Grants, 42 U.S.C. 5103(b).
    (7) Dependent Care Planning and Development State Grants, 42 U.S.C. 
9871, et. seq.
    (8) Family Violence Prevention and Services, 42 U.S.C. 10401, et 
seq.
    (9) Children's Justice Act, 42 U.S.C. 5101, et seq.
    (10) Child Development Associate Scholarship Assistance Act, 42 
U.S.C. 10901, et seq.
    (11) Emergency Community Services Homeless, 42 U.S.C. 11301.
    (12) Community Food and Nutrition, 42 U.S.C. 9910a.
    (13) Protection and Advocacy for Mentally Ill Individuals, 42 U.S.C. 
9501.
    (14) Projects for Assistance in Transition from Homelessness, 42 
U.S.C. 290 (cc-21) et seq.

[56 FR 38346, Aug. 13, 1991]

[[Page 691]]



Sec.  97.13  How does an insular area apply for a consolidated grant?

    (a) An insular area may apply for a consolidated grant in lieu of 
filing an individual application for any of the programs listed in Sec.  
97.12 for which the insular area is eligible.
    (b) The chief executive officer or his designee may submit a 
consolidated grant application at any time prior to expenditure of the 
funds proposed for consolidation. The application must specify the 
amount of funds proposed for consolidation, the titles of the programs 
that are the sources of funds that are to be consolidated and the titles 
of the programs under whose statutory authority the funds are to be 
expended.
    (c) The application must contain the assurances, certifications, and 
other information required by the statutes and regulations applicable to 
those programs under which funds will be expended. If any of the 
requirements for these latter programs are substantially the same, they 
may be met by a single assurance, certification, or narrative, as 
appropriate. The application need not meet the application or other 
requirements for programs which are sources of funds for the 
consolidated grant but under whose authority no funds will be expended.
    (d) If after receiving a consolidated grant, an insular area wishes 
to use funds for a purpose authorized by an eligible program that is not 
included in the consolidated grant, or by an eligible program that was 
included in the grant but was not intended as a program under which 
funds would be expended, the insular area must submit an amended 
application indicating the proposed change and containing the 
assurances, certifications and other information applicable to that 
program.



Sec.  97.14  How will grant awards be made?

    The Secretary, or his designee, will award a consolidated grant to 
each insular area that applies for a consolidated grant and meets the 
requirements of this part and of the statutes and regulations applicable 
to the programs under whose authority the consolidated grant funds will 
be expended. As long as the amount requested does not exceed the amount 
for which the insular area is eligible under the programs that are being 
consolidated, the amount of the award will equal the amount requested in 
the application.



Sec.  97.15  For what purposes can grant funds be used?

    Funds awarded under a consolidated grant must be used for purposes 
authorized by the statutes and regulations of the programs included in 
the consolidated grant. In its application for a consolidated grant the 
insular area is to indicate the amount of funds that will be allocated 
to the eligible programs.



Sec.  97.16  What fiscal, matching and administrative requirements 
apply to grantees?

    (a) An insular area receiving a consolidated grant must comply with 
the statutes and regulations applicable to the programs under which the 
funds are to be used, except as otherwise provided in this part.
    (b) In regard to programs included in a consolidated grant, an 
insular area need not comply with any of the statutory or regulatory 
provisions requiring recipients to match federal funds with their own or 
other funds.
    (c) A single report may be submitted in lieu of any individual 
reports that may be required under the programs included in a 
consolidated grant.



PART 98_CHILD CARE AND DEVELOPMENT FUND--Table of Contents



                Subpart A_Goals, Purposes and Definitions

Sec.
98.1 Purposes.
98.2 Definitions.
98.3 Effect on State law.

                Subpart B_General Application Procedures

98.10 Lead Agency responsibilities.
98.11 Administration under contracts and agreements.
98.12 Coordination and consultation.
98.13 Applying for Funds.
98.14 Plan process.
98.15 Assurances and certifications.
98.16 Plan provisions.
98.17 Period covered by Plan.

[[Page 692]]

98.18 Approval and disapproval of Plans and Plan amendments.
98.19 Requests for temporary relief from requirements.

                   Subpart C_Eligibility for Services

98.20 A child's eligibility for child care services.
98.21 Eligibility determination processes.

 Subpart D_Program Operations (Child Care Services)_Parental Rights and 
                            Responsibilities

98.30 Parental choice.
98.31 Parental access.
98.32 Parental complaints.
98.33 Consumer and provider education.
98.34 Parental rights and responsibilities.

   Subpart E_Program Operations (Child Care Services)_Lead Agency and 
                          Provider Requirements

98.40 Compliance with applicable State and local regulatory 
          requirements.
98.41 Health and safety requirements.
98.42 Enforcement of licensing and health and safety requirements.
98.43 Criminal background checks.
98.44 Training and professional development.
98.45 Equal access.
98.46 Priority for child care services.
98.47 List of providers.
98.48 Nondiscrimination in admissions on the basis of religion.
98.49 Nondiscrimination in employment on the basis of religion.

            Subpart F_Use of Child Care and Development Funds

98.50 Child care services.
98.51 Services for children experiencing homelessness.
98.52 Child care resource and referral system.
98.53 Activities to improve the quality of child care.
98.54 Administrative costs.
98.55 Matching fund requirements.
98.56 Restrictions on the use of funds.
98.57 Cost allocation.

                     Subpart G_Financial Management

98.60 Availability of funds.
98.61 Allotments from the Discretionary Fund.
98.62 Allotments from the Mandatory Fund.
98.63 Allotments from the Matching Fund.
98.64 Reallotment and redistribution of funds.
98.65 Audits and financial reporting.
98.66 Disallowance procedures.
98.67 Fiscal requirements.
98.68 Program integrity.

                Subpart H_Program Reporting Requirements

98.70 Reporting requirements.
98.71 Content of report.

                         Subpart I_Indian Tribes

98.80 General procedures and requirements.
98.81 Application and Plan procedures.
98.82 Coordination.
98.83 Requirements for tribal programs.
98.84 Construction and renovation of child care facilities.

           Subpart J_Monitoring, Non-Compliance and Complaints

98.90 Monitoring.
98.91 Non-compliance.
98.92 Penalties and sanctions.
98.93 Complaints.

                     Subpart K_Error Rate Reporting

98.100 Error Rate Report.
98.101 Case Review Methodology.
98.102 Content of Error Rate Reports.

    Authority: 42 U.S.C. 618, 9858.

    Source: 63 FR 39981, July 24, 1998, unless otherwise noted.



                Subpart A_Goals, Purposes and Definitions



Sec.  98.1  Purposes.

    (a) The purposes of the CCDF are:
    (1) To allow each State maximum flexibility in developing child care 
programs and policies that best suit the needs of children and parents 
within that State;
    (2) To promote parental choice to empower working parents to make 
their own decisions regarding the child care services that best suits 
their family's needs;
    (3) To encourage States to provide consumer education information to 
help parents make informed choices about child care services and to 
promote involvement by parents and family members in the development of 
their children in child care settings;
    (4) To assist States in delivering high-quality, coordinated early 
childhood care and education services to maximize parents' options and 
support

[[Page 693]]

parents trying to achieve independence from public assistance;
    (5) To assist States in improving the overall quality of child care 
services and programs by implementing the health, safety, licensing, 
training, and oversight standards established in this subchapter and in 
State law (including State regulations);
    (6) To improve child care and development of participating children; 
and
    (7) To increase the number and percentage of low-income children in 
high-quality child care settings.
    (b) The purpose of this part is to provide the basis for 
administration of the Fund. These regulations provide that State, 
Territorial, and Tribal Lead Agencies:
    (1) Maximize parental choice of safe, healthy and nurturing child 
care settings through the use of certificates and through grants and 
contracts, and by providing parents with information about child care 
programs;
    (2) Include in their programs a broad range of child care providers, 
including center-based care, family child care, in home care, care 
provided by relatives and sectarian child care providers;
    (3) Improve the quality and supply of child care and before- and 
after-school care services that meet applicable requirements and promote 
healthy child development and learning and family economic stability;
    (4) Coordinate planning and delivery of services at all levels, 
including Federal, State, Tribal, and local;
    (5) Design flexible programs that provide for the changing needs of 
recipient families and engage families in their children's development 
and learning;
    (6) Administer the CCDF responsibly to ensure that statutory 
requirements are met and that adequate information regarding the use of 
public funds is provided;
    (7) Design programs that provide uninterrupted service to families 
and providers, to the extent allowed under the statute, to support 
parental education, training, and employment and continuity of care that 
minimizes disruptions to children's learning and development;
    (8) Provide a progression of training and professional development 
opportunities for caregivers, teachers, and directors to increase their 
effectiveness in supporting children's development and learning and 
strengthen and retain (including through financial incentives and 
compensation improvements) the child care workforce.

[81 FR 67573, Sept. 30, 2016]



Sec.  98.2  Definitions.

    For the purpose of this part and part 99:
    The Act refers to the Child Care and Development Block Grant Act of 
1990, section 5082 of the Omnibus Budget Reconciliation Act of 1990, 
Pub. L. 101-508, as amended and codified at 42 U.S.C. 9858 et seq.
    ACF means the Administration for Children and Families;
    Application is a request for funding that includes the information 
required at Sec.  98.13;
    Assistant Secretary means the Assistant Secretary for Children and 
Families, Department of Health and Human Services;
    Caregiver means an individual who provides child care services 
directly to an eligible child on a person-to-person basis;
    Categories of care means center-based child care, family child care, 
and in home care;
    Center-based child care provider means a provider licensed or 
otherwise authorized to provide child care services for fewer than 24 
hours per day per child in a non-residential setting, unless care in 
excess of 24 hours is due to the nature of the parent(s)' work;
    Child care certificate means a certificate (that may be a check, or 
other disbursement) that is issued by a grantee directly to a parent who 
may use such certificate only as payment for child care services or as a 
deposit for child care services if such a deposit is required of other 
children being cared for by the provider, pursuant to Sec.  98.30. 
Nothing in this part shall preclude the use of such certificate for 
sectarian child care services if freely chosen by the parent. For the 
purposes of this part, a child care certificate is assistance to the 
parent, not assistance to the provider;
    Child Care and Development Fund (CCDF) means the child care programs 
conducted under the provisions of the

[[Page 694]]

Child Care and Development Block Grant Act, as amended. The Fund 
consists of Discretionary Funds authorized under section 658B of the 
amended Act, and Mandatory and Matching Funds appropriated under section 
418 of the Social Security Act;
    Child care provider that receives assistance means a child care 
provider that receives Federal funds under the CCDF pursuant to grants, 
contracts, or loans, but does not include a child care provider to whom 
Federal funds under the CCDF are directed only through the operation of 
a certificate program;
    Child care services, for the purposes of Sec.  98.50, means the care 
given to an eligible child by an eligible child care provider;
    Child experiencing homelessness means a child who is homeless as 
defined in section 725 of SubtitleVII-B of the McKinney-Vento Act (42 
U.S.C. 11434a);
    Child with a disability means:
    (1) A child with a disability, as defined in section 602 of the 
Individuals with Disabilities Education Act (20 U.S.C. 1401);
    (2) A child who is eligible for early intervention services under 
part C of the Individuals with Disabilities Education Act (20 U.S.C. 
1431 et seq.);
    (3) A child who is less than 13 years of age and who is eligible for 
services under section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 
794); and
    (4) A child with a disability, as defined by the State, Territory or 
Tribe involved;
    Construction means the erection of a facility that does not 
currently exist;
    The Department means the Department of Health and Human Services;
    Director means a person who has primary responsibility for the daily 
operations and management for a child care provider, which may include a 
family child care provider, and which may serve children from birth to 
kindergarten entry and children in school-age child care;
    Discretionary funds means the funds authorized under section 658B of 
the Child Care and Development Block Grant Act. The Discretionary funds 
were formerly referred to as the Child Care and Development Block Grant;
    Eligible child means an individual who meets the requirements of 
Sec.  98.20;
    Eligible child care provider means:
    (1) A center-based child care provider, a family child care 
provider, an in-home child care provider, or other provider of child 
care services for compensation that--
    (i) Is licensed, regulated, or registered under applicable State or 
local law as described in Sec.  98.40; and
    (ii) Satisfies State and local requirements, including those 
referred to in Sec.  98.41 applicable to the child care services it 
provides; or
    (2) A child care provider who is 18 years of age or older who 
provides child care services only to eligible children who are, by 
marriage, blood relationship, or court decree, the grandchild, great 
grandchild, siblings (if such provider lives in separate residence), 
niece, or nephew of such provider, and complies with any applicable 
requirements that govern child care provided by the relative involved;
    English learner means an individual who is an English learner, as 
defined in section 8101 of the Elementary and Secondary Education Act of 
1965 or who is limited English proficient, as defined in section 637 of 
the Head Start Act (42 U.S.C. 9832);
    Facility means real property or modular unit appropriate for use by 
a grantee to carry out a child care program;
    Family child care provider means one or more individual(s) who 
provide child care services for fewer than 24 hours per day per child, 
in a private residence other than the child's residence, unless care in 
excess of 24 hours is due to the nature of the parent(s)' work;
    Indian Tribe means any Indian Tribe, band, nation, or other 
organized group or community, including any Alaska Native village or 
regional or village corporation as defined in or established pursuant to 
the Alaska Native Claims Settlement Act (43 U.S.C. Sec.  1601 et seq.) 
that is recognized as eligible for the special programs and services 
provided by the United States to Indians because of their status as 
Indians;
    In-home child care provider means an individual who provides child 
care services in the child's own home;
    Lead Agency means the State, territorial or tribal entity, or joint 
interagency office, designated or established

[[Page 695]]

under Sec. Sec.  98.10 and 98.16(a) to which a grant is awarded and that 
is accountable for the use of the funds provided. The Lead Agency is the 
entire legal entity even if only a particular component of the entity is 
designated in the grant award document;
    Licensing or regulatory requirements means requirements necessary 
for a provider to legally provide child care services in a State or 
locality, including registration requirements established under State, 
local or tribal law;
    Liquidation period means the applicable time period during which a 
fiscal year's grant shall be liquidated pursuant to the requirements at 
Sec.  98.60.;
    Major renovation means: (1) structural changes to the foundation, 
roof, floor, exterior or load-bearing walls of a facility, or the 
extension of a facility to increase its floor area; or (2) extensive 
alteration of a facility such as to significantly change its function 
and purpose, even if such renovation does not include any structural 
change;
    Mandatory funds means the general entitlement child care funds 
described at section 418(a)(1) of the Social Security Act;
    Matching funds means the remainder of the general entitlement child 
care funds that are described at section 418(a)(2) of the Social 
Security Act;
    Modular unit means a portable structure made at another location and 
moved to a site for use by a grantee to carry out a child care program;
    Obligation period means the applicable time period during which a 
fiscal year's grant shall be obligated pursuant to Sec.  98.60;
    Parent means a parent by blood, marriage or adoption and also means 
a legal guardian, or other person standing in loco parentis;
    The Plan means the Plan for the implementation of programs under the 
CCDF;
    Program period means the time period for using a fiscal year's grant 
and does not extend beyond the last day to liquidate funds;
    Programs refers generically to all activities under the CCDF, 
including child care services and other activities pursuant to Sec.  
98.50 as well as quality activities pursuant to Sec.  98.53;
    Provider means the entity providing child care services;
    The regulation refers to the actual regulatory text contained in 
parts 98 and 99 of this chapter;
    Real property means land, including land improvements, structures 
and appurtenances thereto, excluding movable machinery and equipment;
    Secretary means the Secretary of the Department of Health and Human 
Services;
    Sectarian organization or sectarian child care provider means 
religious organizations or religious providers generally. The terms 
embrace any organization or provider that engages in religious conduct 
or activity or that seeks to maintain a religious identity in some or 
all of its functions. There is no requirement that a sectarian 
organization or provider be managed by clergy or have any particular 
degree of religious management, control, or content;
    Sectarian purposes and activities means any religious purpose or 
activity, including but not limited to religious worship or instruction;
    Services for which assistance is provided means all child care 
services funded under the CCDF, either as assistance directly to child 
care providers through grants, contracts, or loans, or indirectly as 
assistance to parents through child care certificates;
    Sliding fee scale means a system of cost-sharing by a family based 
on income and size of the family, in accordance with Sec.  98.45(k);
    State means any of the States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands of the United States, 
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, 
and includes Tribes unless otherwise specified;
    Teacher means a lead teacher, teacher, teacher assistant, or teacher 
aide who is employed by a child care provider for compensation on a 
regular basis, or a family child care provider, and whose 
responsibilities and activities are to organize, guide, and implement 
activities in a group or individual basis, or to assist a teacher or 
lead teacher in such activities, to further the cognitive, social, 
emotional, and physical development of children from

[[Page 696]]

birth to kindergarten entry and children in school-age child care;
    Tribal mandatory funds means the child care funds set aside at 
section 418(a)(4) of the Social Security Act. The funds consist of 
between one and two percent of the aggregate Mandatory and Matching 
child care funds reserved by the Secretary in each fiscal year for 
payments to Indian Tribes and tribal organizations;
    Tribal organization means the recognized governing body of any 
Indian Tribe, or any legally established organization of Indians, 
including a consortium, which is controlled, sanctioned, or chartered by 
such governing body or which is democratically elected by the adult 
members of the Indian community to be served by such organization and 
which includes the maximum participation of Indians in all phases of its 
activities: Provided, that in any case where a contract is let or grant 
is made to an organization to perform services benefiting more than one 
Indian Tribe, the approval of each such Indian Tribe shall be a 
prerequisite to the letting or making of such contract or grant; and
    Types of providers means the different classes of providers under 
each category of care. For the purposes of the CCDF, types of providers 
include non-profit providers, for-profit providers, sectarian providers 
and relatives who provide care.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67573, Sept. 30, 2016]



Sec.  98.3  Effect on State law.

    (a) Nothing in the Act or this part shall be construed to supersede 
or modify any provision of a State constitution or State law that 
prohibits the expenditure of public funds in or by sectarian 
organizations, except that no provision of a State constitution or State 
law shall be construed to prohibit the expenditure in or by sectarian 
institutions of any Federal funds provided under this part.
    (b) If a State law or constitution would prevent CCDF funds from 
being expended for the purposes provided in the Act, without limitation, 
then States shall segregate State and Federal funds.



                Subpart B_General Application Procedures



Sec.  98.10  Lead Agency responsibilities.

    The Lead Agency (which may be an appropriate collaborative agency), 
or a joint interagency office, as designated or established by the 
Governor of the State (or by the appropriate Tribal leader or 
applicant), shall:
    (a) Administer the CCDF program, directly or through other 
governmental or non-governmental agencies, in accordance with Sec.  
98.11;
    (b) Apply for funding under this part, pursuant to Sec.  98.13;
    (c) Consult with appropriate representatives of local government in 
developing a Plan to be submitted to the Secretary pursuant to Sec.  
98.14(b);
    (d) Hold at least one public hearing in accordance with Sec.  
98.14(c);
    (e) Coordinate CCDF services pursuant to Sec.  98.12; and
    (f) Consult, collaborate, and coordinate in the development of the 
State Plan in a timely manner with Indian Tribes or tribal organizations 
in the State (at the option of the Tribe or tribal organization).

[63 FR 39981, July 24, 1998, as amended at 81 FR 67574, Sept. 30, 2016]



Sec.  98.11  Administration under contracts and agreements.

    (a) The Lead Agency has broad authority to administer the program 
through other governmental or non-governmental agencies. In addition, 
the Lead Agency can use other public or private local agencies to 
implement the program; however:
    (1) The Lead Agency shall retain overall responsibility for the 
administration of the program, as defined in paragraph (b) of this 
section;
    (2) The Lead Agency shall serve as the single point of contact for 
issues involving the administration of the grantee's CCDF program; and
    (3) Administrative and implementation responsibilities undertaken by 
agencies other than the Lead Agency shall be governed by written 
agreements that specify the mutual roles and responsibilities of the 
Lead Agency and the other agencies in meeting the requirements of this 
part. The contents of the written agreement may vary

[[Page 697]]

based on the role the agency is asked to assume or the type of project 
undertaken, but must include, at a minimum, tasks to be performed, a 
schedule for completing tasks, a budget which itemizes categorical 
expenditures consistent with CCDF requirements at Sec.  98.65(h), and 
indicators or measures to assess performance.
    (b) In retaining overall responsibility for the administration of 
the program, the Lead Agency shall:
    (1) Determine the basic usage and priorities for the expenditure of 
CCDF funds;
    (2) Promulgate all rules and regulations governing overall 
administration of the Plan;
    (3) Submit all reports required by the Secretary;
    (4) Ensure that the program complies with the approved Plan and all 
Federal requirements;
    (5) Oversee the expenditure of funds by subrecipients and 
contractors, in accordance with 75 CFR parts 351 to 353;
    (6) Monitor programs and services;
    (7) Fulfill the responsibilities of any subgrantee in any: 
disallowance under subpart G; complaint or compliance action under 
subpart J; or hearing or appeal action under part 99 of this chapter; 
and
    (8) Ensure that all State and local or non-governmental agencies 
through which the State administers the program, including agencies and 
contractors that determine individual eligibility, operate according to 
the rules established for the program.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67574, Sept. 30, 2016]



Sec.  98.12  Coordination and consultation.

    The Lead Agency shall:
    (a) Coordinate the provision of services for which assistance is 
provided under this part with the agencies listed in Sec.  98.14(a).
    (b) Consult, in accordance with Sec.  98.14(b), with representatives 
of general purpose local government during the development of the Plan; 
and
    (c) Coordinate, to the maximum extent feasible, per Sec.  98.10(f) 
with any Indian Tribes in the State receiving CCDF funds in accordance 
with subpart I of this part.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67574, Sept. 30, 2016]



Sec.  98.13  Applying for Funds.

    The Lead Agency of a State or Territory shall apply for Child Care 
and Development funds by providing the following:
    (a) The amount of funds requested at such time and in such manner as 
prescribed by the Secretary.
    (b) The following assurances or certifications:
    (1) An assurance that the Lead Agency will comply with the 
requirements of the Act and this part;
    (2) A lobbying certification that assures that the funds will not be 
used for the purpose of influencing pursuant to 45 CFR part 93, and, if 
necessary, a Standard Form LLL (SF-LLL) that discloses lobbying 
payments;
    (3) An assurance that the Lead Agency provides a drug-free workplace 
pursuant to 45 CFR 76.600, or a statement that such an assurance has 
already been submitted for all HHS grants;
    (4) A certification that no principals have been debarred pursuant 
to 45 CFR 76.500;
    (5) Assurances that the Lead Agency will comply with the applicable 
provisions regarding nondiscrimination at 45 CFR part 80 (implementing 
title VI of the Civil Rights Act of 1964, as amended), 45 CFR part 84 
(implementing section 504 of the Rehabilitation Act of 1973, as 
amended), 45 CFR part 86 (implementing title IX of the Education 
Amendments of 1972, as amended) and 45 CFR part 91 (implementing the Age 
Discrimination Act of 1975, as amended), and;
    (6) Assurances that the Lead Agency will comply with the applicable 
provisions of Public Law 103-277, Part C--Environmental Tobacco Smoke, 
also known as the Pro-Children Act of 1994, regarding prohibitions on 
smoking.
    (c) The Child Care and Development Fund Plan, at times and in such 
manner as required in Sec.  98.17; and
    (d) Such other information as specified by the Secretary.

[[Page 698]]



Sec.  98.14  Plan process.

    In the development of each Plan, as required pursuant to Sec.  
98.17, the Lead Agency shall:
    (a)(1) Coordinate the provision of child care services funded under 
this part with other Federal, State, and local child care and early 
childhood development programs (including such programs for the benefit 
of Indian children, infants and toddlers, children with disabilities, 
children experiencing homelessness, and children in foster care) to 
expand accessibility and continuity of care as well as full-day 
services. The Lead Agency shall also coordinate the provision of 
services with the State, and if applicable, tribal agencies responsible 
for:
    (i) Public health, including the agency responsible for 
immunizations;
    (ii) Employment services/workforce development;
    (iii) Public education (including agencies responsible for 
prekindergarten services, if applicable, and early intervention and 
preschool services provided under Part B and C of the Individuals with 
Disabilities Education Act (20 U.S.C. 1400));
    (iv) Providing Temporary Assistance for Needy Families;
    (v) Child care licensing;
    (vi) Head Start collaboration, as authorized by the Head Start Act 
(42 U.S.C. 9831 et seq.);
    (vii) State Advisory Council on Early Childhood Education and Care 
(designated or established pursuant to the Head Start Act (42 U.S.C. 
9831 et seq.)) or similar coordinating body;
    (viii) Statewide after-school network or other coordinating entity 
for out-of-school time care (if applicable);
    (ix) Emergency management and response;
    (x) Child and Adult Care Food Program (CACFP) authorized by the 
National School Lunch Act (42 U.S.C. 1766) and other relevant nutrition 
programs;
    (xi) Services for children experiencing homelessness, including 
State Coordinators of Education for Homeless Children and Youth (EHCY 
State Coordinators) and, to the extent practicable, local liaisons 
designated by Local Educational Agencies (LEAs) in the State as required 
by the McKinney-Vento Act (42 U.S.C. 11432) and Continuum of Care 
grantees;
    (xii) Medicaid and the State children's health insurance programs 
(42 U.S.C. 1396 et seq., 1397aa et seq.);
    (xiii) Mental health services; and
    (xiv) Child care resources and referral agencies, child care 
consumer education organizations, and providers of early childhood 
education training and professional development.
    (2) Provide a description of the results of the coordination with 
each of these agencies in the CCDF Plan.
    (3) If the Lead Agency elects to combine funding for CCDF services 
with any other early childhood program, provide a description in the 
CCDF Plan of how the Lead Agency will combine and use the funding.
    (4) Demonstrate in the CCDF Plan how the State, Territory, or Tribe 
encourages partnerships among its agencies, other public agencies, 
Indian Tribes and Tribal organizations, and private entities, including 
faith-based and community-based organizations, to leverage existing 
service delivery systems for child care and development services and to 
increase the supply and quality of child care and development services 
and to increase the supply and quality of child care services for 
children who are less than 13 years of age, such as by implementing 
voluntary shared service alliance models.
    (b) Consult with appropriate representatives of local governments;
    (c)(1) Hold at least one hearing in the State, after at least 20 
days of statewide public notice, to provide to the public an opportunity 
to comment on the provision of child care services under the Plan.
    (2) The hearing required by paragraph (c)(1) shall be held before 
the Plan is submitted to ACF, but no earlier than nine months before the 
Plan becomes effective.
    (3) In advance of the hearing required by this section, the Lead 
Agency shall make available to the public the content of the Plan as 
described in Sec.  98.16 that it proposes to submit to the Secretary, 
which shall include posting the Plan content on a Web site.
    (d) Make the submitted and final Plan, any Plan amendments, and any 
approved requests for temporary relief

[[Page 699]]

(in accordance with Sec.  98.19) publicly available on a Web site.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67574, Sept. 30, 2016]



Sec.  98.15  Assurances and certifications.

    (a) The Lead Agency shall include the following assurances in its 
CCDF Plan:
    (1) Upon approval, it will have in effect a program that complies 
with the provisions of the CCDF Plan, and that is administered in 
accordance with the Child Care and Development Block Grant Act of 1990, 
as amended, section 418 of the Social Security Act, and all other 
applicable Federal laws and regulations;
    (2) The parent(s) of each eligible child within the area served by 
the Lead Agency who receives or is offered child care services for which 
financial assistance is provided is given the option either:
    (i) To enroll such child with a child care provider that has a grant 
or contract for the provision of the service; or
    (ii) To receive a child care certificate as defined in Sec.  98.2;
    (3) In cases in which the parent(s), pursuant to Sec.  98.30, elects 
to enroll their child with a provider that has a grant or contract with 
the Lead Agency, the child will be enrolled with the eligible provider 
selected by the parent to the maximum extent practicable;
    (4) In accordance with Sec.  98.30, the child care certificate 
offered to parents shall be of a value commensurate with the subsidy 
value of child care services provided under a grant or contract;
    (5) With respect to State and local regulatory requirements (or 
tribal regulatory requirements), health and safety requirements, payment 
rates, and registration requirements, State or local (or tribal) rules, 
procedures or other requirements promulgated for the purpose of the CCDF 
will not significantly restrict parental choice from among categories of 
care or types of providers, pursuant to Sec.  98.30(f).
    (6) That if expenditures for pre-Kindergarten services are used to 
meet the maintenance-of-effort requirement, the State has not reduced 
its level of effort in full-day/full-year child care services, pursuant 
to Sec.  98.55(h)(1).
    (7) Training and professional development requirements comply with 
Sec.  98.44 and are applicable to caregivers, teaching staff, and 
directors working for child care providers of services for which 
assistance is provided under the CCDF.
    (8) To the extent practicable, enrollment and eligibility policies 
support the fixed costs of providing child care services by delinking 
provider payment rates from an eligible child's occasional absences in 
accordance with Sec.  98.45(l).
    (9) The State will maintain or implement early learning and 
developmental guidelines that are developmentally appropriate for all 
children from birth to kindergarten entry, describing what such children 
should know and be able to do, and covering the essential domains of 
early childhood development (cognition, including language arts and 
mathematics; social, emotional and physical development; and approaches 
toward learning) for use statewide by child care providers and 
caregivers. Such guidelines shall--
    (i) Be research-based and developmentally, culturally, and 
linguistically appropriate, building in a forward progression, and 
aligned with entry to kindergarten;
    (ii) Be implemented in consultation with the State educational 
agency and the State Advisory Council on Early Childhood Education and 
Care (designated or established pursuant to section 642B(b)(I)(A)(i) of 
the Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating 
body, and in consultation with child development and content experts; 
and
    (iii) Be updated as determined by the State.
    (10) Funds received by the State to carry out this subchapter will 
not be used to develop or implement an assessment for children that--
    (i) Will be the primary or sole basis for a child care provider 
being determined to be ineligible to participate in the program carried 
out under this subchapter;
    (ii) Will be used as the primary or sole basis to provide a reward 
or sanction for an individual provider;

[[Page 700]]

    (iii) Will be used as the primary or sole method for assessing 
program effectiveness; or
    (iv) Will be used to deny children eligibility to participate in the 
program carried out under this subchapter.
    (11) To the extent practicable and appropriate, any code or software 
for child care information systems or information technology that a Lead 
Agency or other agency expends CCDF funds to develop must be made 
available upon request to other public agencies, including public 
agencies in other States, for their use in administering child care or 
related programs.
    (b) The Lead Agency shall include the following certifications in 
its CCDF Plan:
    (1) The State has developed the CCDF Plan in consultation with the 
State Advisory Council on Early Childhood Education and Care (designated 
or established pursuant to section 642B(b)(I)(A)(i) of the Head Start 
Act (42 U.S.C. 9837b(b)(1)(A)(i))) or similar coordinating body, 
pursuant to Sec.  98.14(a)(1)(vii);
    (2) In accordance with Sec.  98.31, the Lead Agency has procedures 
in place to ensure that providers of child care services for which 
assistance is provided under the CCDF, afford parents unlimited access 
to their children and to the providers caring for their children, during 
the normal hours of operations and whenever such children are in the 
care of such providers;
    (3) As required by Sec.  98.32, the State maintains a record of 
substantiated parental complaints and makes information regarding such 
complaints available to the public on request;
    (4) It will collect and disseminate to parents of eligible children, 
the general public and, where applicable, child care providers, consumer 
education information that will promote informed child care choices, 
information on access to other programs for which families may be 
eligible, and information on developmental screenings, as required by 
Sec.  98.33;
    (5) In accordance with Sec.  98.33(a), that the State makes public, 
through a consumer-friendly and easily accessible Web site, the results 
of monitoring and inspection reports, as well as the number of deaths, 
serious injuries, and instances of substantiated child abuse that 
occurred in child care settings;
    (6) There are in effect licensing requirements applicable to child 
care services provided within the State, pursuant to Sec.  98.40;
    (7) There are in effect within the State (or other area served by 
the Lead Agency), under State or local (or tribal) law, requirements 
designed to protect the health and safety of children that are 
applicable to child care providers that provide services for which 
assistance is made available under the CCDF, pursuant to Sec.  98.41;
    (8) In accordance with Sec.  98.42(a), procedures are in effect to 
ensure that child care providers of services for which assistance is 
provided under the CCDF comply with all applicable State or local (or 
tribal) health and safety requirements;
    (9) Caregivers, teachers, and directors of child care providers 
comply with the State's, Territory's, or Tribe's procedures for 
reporting child abuse and neglect as required by section 106(b)(2)(B)(i) 
of the Child Abuse Prevention and Treatment Act (42 U.S.C. 
5106a(b)(2)(B)(i)), if applicable, or other child abuse reporting 
procedures and laws in the service area, as required by Sec.  98.41(e);
    (10) There are in effect monitoring policies and practices pursuant 
to Sec.  98.42;
    (11) Payment rates for the provision of child care services, in 
accordance with Sec.  98.45, are sufficient to ensure equal access for 
eligible children to comparable child care services in the State or sub-
State area that are provided to children whose parents are not eligible 
to receive assistance under this program or under any other Federal or 
State child care assistance programs;
    (12) Payment practices of child care providers of services for which 
assistance is provided under the CCDF reflect generally-accepted payment 
practices of child care providers that serve children who do not receive 
CCDF assistance, pursuant to Sec.  98.45(l); and
    (13) There are in effect policies to govern the use and disclosure 
of confidential and personally identifiable information about children 
and families

[[Page 701]]

receiving CCDF assistance and child care providers receiving CCDF funds.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67575, Sept. 30, 2016]



Sec.  98.16  Plan provisions.

    A CCDF Plan shall contain the following:
    (a) Specification of the Lead Agency whose duties and 
responsibilities are delineated in Sec.  98.10;
    (b) A description of processes the Lead Agency will use to monitor 
administrative and implementation responsibilities undertaken by 
agencies other than the Lead Agency including descriptions of written 
agreements, monitoring and auditing procedures, and indicators or 
measures to assess performance pursuant to Sec.  98.11(a)(3);
    (c) The assurances and certifications listed under Sec.  98.15;
    (d)(1) A description of how the CCDF program will be administered 
and implemented, if the Lead Agency does not directly administer and 
implement the program;
    (2) Identification of the public or private entities designated to 
receive private donated funds and the purposes for which such funds will 
be expended, pursuant to Sec.  98.55(f);
    (e) A description of the coordination and consultation processes 
involved in the development of the Plan and the provision of services, 
including a description of public-private partnership activities that 
promote business involvement in meeting child care needs pursuant to 
Sec.  98.14;
    (f) A description of the public hearing process, pursuant to Sec.  
98.14(c);
    (g) Definitions of the following terms for purposes of determining 
eligibility, pursuant to Sec. Sec.  98.20(a) and 98.46:
    (1) Special needs child;
    (2) Physical or mental incapacity (if applicable);
    (3) Attending (a job training or educational program);
    (4) Job training and educational program;
    (5) Residing with;
    (6) Working;
    (7) Protective services (if applicable), including whether children 
in foster care are considered in protective services for purposes of 
child care eligibility; and whether respite care is provided to 
custodial parents of children in protective services.
    (8) Very low income; and
    (9) In loco parentis;
    (h) A description and demonstration of eligibility determination and 
redetermination processes to promote continuity of care for children and 
stability for families receiving CCDF services, including:
    (1) An eligibility redetermination period of no less than 12 months 
in accordance with Sec.  98.21(a);
    (2) A graduated phase-out for families whose income exceeds the Lead 
Agency's threshold to initially qualify for CCDF assistance, but does 
not exceed 85 percent of State median income, pursuant to Sec.  
98.21(b);
    (3) Processes that take into account irregular fluctuation in 
earnings, pursuant to Sec.  98.21(c);
    (4) Procedures and policies to ensure that parents are not required 
to unduly disrupt their education, training, or employment to complete 
eligibility redetermination, pursuant to Sec.  98.21(d);
    (5) Limiting any requirements to report changes in circumstances in 
accordance with Sec.  98.21(e);
    (6) Policies that take into account children's development and 
learning when authorizing child care services pursuant to Sec.  
98.21(f); and
    (7) Other policies and practices such as timely eligibility 
determination and processing of applications;
    (i) For child care services pursuant to Sec.  98.50:
    (1) A description of such services and activities;
    (2) Any limits established for the provision of in-home care and the 
reasons for such limits pursuant to Sec.  98.30(e)(1)(iii);
    (3) A list of political subdivisions in which such services and 
activities are offered, if such services and activities are not 
available throughout the entire service area;
    (4) A description of how the Lead Agency will meet the needs of 
certain families specified at Sec.  98.50(e);
    (5) Any eligibility criteria, priority rules, and definitions 
established pursuant to Sec. Sec.  98.20 and 98.46;
    (j) A description of the activities to provide comprehensive 
consumer and

[[Page 702]]

provider education, including the posting of monitoring and inspection 
reports, pursuant to Sec.  98.33, to increase parental choice, and to 
improve the quality of child care, pursuant to Sec.  98.53;
    (k) A description of the sliding fee scale(s) (including any factors 
other than income and family size used in establishing the fee scale(s)) 
that provide(s) for cost-sharing by the families that receive child care 
services for which assistance is provided under the CCDF and how co-
payments are affordable for families, pursuant to Sec.  98.45(k). This 
shall include a description of the criteria established by the Lead 
Agency, if any, for waiving contributions for families;
    (l) A description of the health and safety requirements, applicable 
to all providers of child care services for which assistance is provided 
under the CCDF, in effect pursuant to Sec.  98.41, and any exemptions to 
those requirements for relative providers made in accordance with Sec.  
98.42(c);
    (m) A description of child care standards for child care providers 
of services for which assistance is provided under the CCDF, in 
accordance with Sec.  98.41(d), that includes group size limits, child-
staff ratios, and required qualifications for caregivers, teachers, and 
directors;
    (n) A description of monitoring and other enforcement procedures in 
effect to ensure that child care providers comply with applicable health 
and safety requirements pursuant to Sec.  98.42;
    (o) A description of criminal background check requirements, 
policies, and procedures in accordance with Sec.  98.43, including a 
description of the requirements, policies, and procedures in place to 
respond to other States', Territories', and Tribes' requests for 
background check results in order to accommodate the 45 day timeframe;
    (p) A description of training and professional development 
requirements for caregivers, teaching staff, and directors of providers 
of services for which assistance is provided in accordance with Sec.  
98.44;
    (q) A description of the child care certificate payment system(s), 
including the form or forms of the child care certificate, pursuant to 
Sec.  98.30(c);
    (r) Payment rates and a summary of the facts, including a local 
market rate survey or alternative methodology relied upon to determine 
that the rates provided are sufficient to ensure equal access pursuant 
to Sec.  98.45;
    (s) A detailed description of the State's hotline for complaints, 
its process for substantiating and responding to complaints, whether or 
not the State uses monitoring as part of its process for responding to 
complaints for both CCDF and non-CCDF providers, how the State maintains 
a record of substantiated parental complaints, and how it makes 
information regarding those complaints available to the public on 
request, pursuant to Sec.  98.32;
    (t) A detailed description of the procedures in effect for affording 
parents unlimited access to their children whenever their children are 
in the care of the provider, pursuant to Sec.  98.31;
    (u) A detailed description of the licensing requirements applicable 
to child care services provided, any exemption to licensing requirements 
that is applicable to child care providers of services for which 
assistance is provided under the CCDF and a demonstration of why such 
exemption does not endanger the health, safety, or development of 
children, and a description of how such licensing requirements are 
effectively enforced, pursuant to Sec.  98.40;
    (v) Pursuant to Sec.  98.33(f), the definitions or criteria used to 
implement the exception, provided in section 407(e)(2) of the Social 
Security Act (42 U.S.C. 607(e)(2)), to individual penalties in the TANF 
work requirement applicable to a single custodial parent caring for a 
child under age six;
    (w)(1) When any Matching funds under Sec.  98.55(b) are claimed, a 
description of the efforts to ensure that pre-Kindergarten programs meet 
the needs of working parents;
    (2) When State pre-Kindergarten expenditures are used to meet more 
than 10% of the amount required at Sec.  98.55(c)(1), or for more than 
10% of the funds available at Sec.  98.55(b), or both, a description of 
how the State will coordinate its pre-Kindergarten and child care 
services to expand the availability of child care;

[[Page 703]]

    (x) A description of the Lead Agency's strategies (which may include 
alternative payment rates to child care providers, the provision of 
direct grants or contracts, offering child care certificates, or other 
means) to increase the supply and improve the quality of child care 
services for children in underserved areas, infants and toddlers, 
children with disabilities as defined by the Lead Agency, and children 
who receive care during nontraditional hours, including whether the Lead 
Agency plans to use grants and contracts in building supply and how 
supply-building mechanisms will address the needs identified. The 
description must identify shortages in the supply of high-quality child 
care providers, list the data sources used to identify shortages, and 
describe the method of tracking progress to support equal access and 
parental choice. If the Lead Agency employs grants and contracts to meet 
the purposes of this section, the Lead Agency must provide CCDF families 
the option to choose a certificate for the purposes of acquiring care;
    (y) A description of how the Lead Agency prioritizes increasing 
access to high-quality child care and development services for children 
of families in areas that have significant concentrations of poverty and 
unemployment and that do not have sufficient numbers of such programs, 
pursuant to Sec.  98.46;
    (z) A description of how the Lead Agency develops and implements 
strategies to strengthen the business practices of child care providers 
to expand the supply, and improve the quality of, child care services;
    (aa) A demonstration of how the State, Territory or Tribe will 
address the needs of children, including the need for safe child care, 
before, during and after a state of emergency declared by the Governor 
or a major disaster or emergency (as defined by section 102 of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 
U.S.C. 5122) through a Statewide Disaster Plan (or Disaster Plan for a 
Tribe's service area) that:
    (1) For a State, is developed in collaboration with the State human 
services agency, the State emergency management agency, the State 
licensing agency, the State health department or public health 
department, local and State child care resource and referral agencies, 
and the State Advisory Council on Early Childhood Education and Care 
(designated or established pursuant to section 642B(b)(I)(A)(i) of the 
Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i))) or similar coordinating 
body; and
    (2) Includes the following components:
    (i) Guidelines for continuation of child care subsidies and child 
care services, which may include the provision of emergency and 
temporary child care services during a disaster, and temporary operating 
standards for child care after a disaster;
    (ii) Coordination of post-disaster recovery of child care services; 
and
    (iii) Requirements that child care providers of services for which 
assistance is provided under the CCDF, as well as other child care 
providers as determined appropriate by the State, Territory or Tribe, 
have in place:
    (A) Procedures for evacuation, relocation, shelter-in-place, lock-
down, communication and reunification with families, continuity of 
operations, accommodations of infants and toddlers, children with 
disabilities, and children with chronic medical conditions; and
    (B) Procedures for staff and volunteer emergency preparedness 
training and practice drills, including training requirements for child 
care providers of services for which assistance is provided under CCDF 
at Sec.  98.41(a)(1)(vii);
    (bb) A description of payment practices applicable to providers of 
child care services for which assistance is provided under this part, 
pursuant to Sec.  98.45(l), including practices to ensure timely payment 
for services, to delink provider payments from children's occasional 
absences to the extent practicable, and to reflect generally-accepted 
payment practices;
    (cc) A description of internal controls to ensure integrity and 
accountability, processes in place to investigate and recover fraudulent 
payments and to impose sanctions on clients or providers in response to 
fraud, and procedures in place to document and verity eligibility, 
pursuant to Sec.  98.68;

[[Page 704]]

    (dd) A description of how the Lead Agency will provide outreach and 
services to eligible families with limited English proficiency and 
persons with disabilities and facilitate participation of child care 
providers with limited English proficiency and disabilities in the 
subsidy system;
    (ee) A description of policies to prevent suspension, expulsion, and 
denial of services due to behavior of children birth to age five in 
child care and other early childhood programs receiving assistance under 
this part, which must be disseminated as part of consumer and provider 
education efforts in accordance with Sec.  98.33(b)(1)(v);
    (ff) Designation of a State, territorial, or tribal entity to which 
child care providers must submit reports of any serious injuries or 
deaths of children occurring in child care, in accordance with Sec.  
98.42(b)(4);
    (gg) A description of how the Lead Agency will support child care 
providers in the successful engagement of families in children's 
learning and development;
    (hh) A description of how the Lead Agency will respond to complaints 
submitted through the national hotline and Web site, required in section 
658L(b) of the CCDBG Act of 2014 (42 U.S.C. 9858j(b)), including the 
designee responsible for receiving and responding to such complaints 
regarding both licensed and license-exempt child care providers;
    (ii) Such other information as specified by the Secretary.

[81 FR 67576, Sept. 30, 2016]



Sec.  98.17  Period covered by Plan.

    (a) For States, Territories, and Indian Tribes the Plan shall cover 
a period of three years.
    (b) The Lead Agency shall submit a new Plan prior to the expiration 
of the time period specified in paragraph (a) of this section, at such 
time as required by the Secretary in written instructions.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67578, Sept. 30, 2016]



Sec.  98.18  Approval and disapproval of Plans and Plan amendments.

    (a) Plan approval. The Assistant Secretary will approve a Plan that 
satisfies the requirements of the Act and this part. Plans will be 
approved not later than the 90th day following the date on which the 
Plan submittal is received, unless a written agreement to extend that 
period has been secured.
    (b) Plan amendments. (1) Approved Plans shall be amended whenever a 
substantial change in the program occurs. A Plan amendment shall be 
submitted within 60 days of the effective date of the change. Plan 
amendments will be approved or denied not later than the 90th day 
following the date on which the amendment is received, unless a written 
agreement to extend that period has been secured.
    (2) Lead Agencies must ensure advanced written notice is provided to 
affected parties (i.e., parents and child care providers) of substantial 
changes in the program that adversely affect eligibility, payment rates, 
and/or sliding fee scales.
    (c) Appeal of disapproval of a Plan or Plan amendment. (1) An 
applicant or Lead Agency dissatisfied with a determination of the 
Assistant Secretary pursuant to paragraphs (a) or (b) of this section 
with respect to any Plan or amendment may, within 60 days after the date 
of receipt of notification of such determination, file a petition with 
the Assistant Secretary asking for reconsideration of the issue of 
whether such Plan or amendment conforms to the requirements for approval 
under the Act and pertinent Federal regulations.
    (2) Within 30 days after receipt of such petition, the Assistant 
Secretary shall notify the applicant or Lead Agency of the time and 
place at which the hearing for the purpose of reconsidering such issue 
will be held.
    (3) Such hearing shall be held not less than 30 days, nor more than 
90 days, after the notification is furnished to the applicant or Lead 
Agency, unless the Assistant Secretary and the applicant or Lead Agency 
agree in writing on another time.
    (4) Action pursuant to an initial determination by the Assistant 
Secretary described in paragraphs (a) and (b) of

[[Page 705]]

this section that a Plan or amendment is not approvable shall not be 
stayed pending the reconsideration, but in the event that the Assistant 
Secretary subsequently determines that the original decision was 
incorrect, the Assistant Secretary shall certify restitution forthwith 
in a lump sum of any funds incorrectly withheld or otherwise denied. The 
hearing procedures are described in part 99 of this chapter.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67578, Sept. 30, 2016]



Sec.  98.19  Requests for temporary relief from requirements.

    (a) Requests for relief. The Secretary may temporarily waive one or 
more of the requirements contained in the Act or this part, with the 
exception of State Match and Maintenance of Effort requirements for a 
State, consistent with the conditions described in section 658I(c)(1) of 
the Act (42 U.S.C. 9858g(c)(1)), provided that the waiver request:
    (1) Describes circumstances that prevent the State, Territory, or 
Tribe from complying with any statutory or regulatory requirements of 
this part;
    (2) By itself, contributes to or enhances the State's, Territory's, 
or Tribe's ability to carry out the purposes of the Act and this part;
    (3) Will not contribute to inconsistency with the purposes of the 
Act or this part, and;
    (4) Meets the requirements set forth in paragraphs (b) through (g) 
of this section.
    (b) Types. Types of waivers include:
    (1) Transitional and legislative waivers. Lead Agencies may apply 
for temporary waivers meeting the requirements described in paragraph 
(a) of this section that would provide transitional relief from 
conflicting or duplicative requirements preventing implementation, or an 
extended period of time in order for a State, territorial, or tribal 
legislature to enact legislation to implement the provisions of this 
subchapter. Such waivers are:
    (i) Limited to a one-year initial period;
    (ii) May be extended, in accordance with paragraph (f) of this 
section, for at most one additional year from the date of approval of 
the extension,
    (iii) Are designed to provide States, Territories and Tribes at most 
one full legislative session to enact legislation to implement the 
provisions of the Act or this part, and;
    (iv) Are conditional, dependent on progress towards implementation, 
and may be terminated by the Secretary at any time in accordance with 
paragraph (e) of this section.
    (2) Waivers for extraordinary circumstances. States, Territories and 
Tribes may apply for waivers meeting the requirements described in 
paragraph (a) of this section, in cases of extraordinary circumstances, 
which are defined as temporary circumstances or situations, such as a 
natural disaster or financial crisis. Such waivers are:
    (i) Limited to an initial period of no more than 2 years from the 
date of approval;
    (ii) May be extended, in accordance with paragraph (f) of this 
section, for at most one additional year from the date of approval of 
the extension, and;
    (iii) May be terminated by the Secretary at any time in accordance 
with paragraph (e) of this section.
    (c) Contents. Waiver requests must be submitted to the Secretary in 
writing and:
    (1) Indicate which type of waiver, as detailed in paragraph (b) of 
this section, the State, Territory or Tribe is requesting;
    (2) Detail each sanction or provision of the Act or regulations that 
the State, Territory or Tribe seeks relief from;
    (3) Describe how a waiver from that sanction or provision will, by 
itself, improve delivery of child care services for children; and
    (4) Certify and describe how the health, safety, and well-being of 
children served through assistance received under this part will not be 
compromised as a result of the waiver.
    (d) Notification. Within 90 days after receipt of the waiver request 
or, if additional follow up information has been requested, the receipt 
of such information, the Secretary will notify the Lead Agency of the 
approval or disapproval of the request.
    (e) Termination. The Secretary shall terminate approval of a request 
for a waiver authorized under the Act or this

[[Page 706]]

section if the Secretary determines, after notice and opportunity for a 
hearing based on the rules of procedure in part 99 of this chapter, that 
the performance of a State, Territory or Tribe granted relief under this 
section has been inadequate, or if such relief is no longer necessary to 
achieve its original purposes.
    (f) Renewal. The Secretary may approve or disapprove a request from 
a State, Territory or Tribe for renewal of an existing waiver under the 
Act or this section for a period no longer than one year. A State, 
Territory or Tribe seeking to renew their waiver approval must inform 
the Secretary of this intent no later than 30 days prior to the 
expiration date of the waiver. The State, Territory or Tribe shall re-
certify in its extension request the provisions in paragraph (a) of this 
section, and shall also explain the need for additional time of relief 
from such sanction(s) or provisions.
    (g) Restrictions. The Secretary may not:
    (1) Permit Lead Agencies to alter the federal eligibility 
requirements for eligible children, including work requirements, job 
training, or educational program participation, that apply to the 
parents of eligible children under this part;
    (2) Waive anything related to the Secretary's authority under this 
part; or
    (3) Require or impose any new or additional requirements in exchange 
for receipt of a waiver if such requirements are not specified in the 
Act.

[81 FR 67578, Sept. 30, 2016]



                   Subpart C_Eligibility for Services



Sec.  98.20  A child's eligibility for child care services.

    (a) To be eligible for services under Sec.  98.50, a child shall, at 
the time of eligibility determination or redetermination:
    (1)(i) Be under 13 years of age; or,
    (ii) At the option of the Lead Agency, be under age 19 and 
physically or mentally incapable of caring for himself or herself, or 
under court supervision;
    (2)(i) Reside with a family whose income does not exceed 85 percent 
of the State's median income (SMI), which must be based on the most 
recent SMI data that is published by the Bureau of the Census, for a 
family of the same size; and
    (ii) Whose family assets do not exceed $1,000,000 (as certified by 
such family member); and
    (3)(i) Reside with a parent or parents who are working or attending 
a job training or educational program; or
    (ii) Receive, or need to receive, protective services, which may 
include specific populations of vulnerable children as identified by the 
Lead Agency, and reside with a parent or parents other than the 
parent(s) described in paragraph (a)(3)(i) of this section.
    (A) At grantee option, the requirements in paragraph (a)(2) of this 
section may be waived for families eligible for child care pursuant to 
this paragraph, if determined to be necessary on a case-by-case basis.
    (B) At grantee option, the waiver provisions in paragraph 
(a)(3)(ii)(A) of this section apply to children in foster care when 
defined in the Plan, pursuant to Sec.  98.16(g)(7).
    (b) A grantee or other administering agency may establish 
eligibility conditions or priority rules in addition to those specified 
in this section and Sec.  98.46, which shall be described in the Plan 
pursuant to Sec.  98.16(i)(5), so long as they do not:
    (1) Discriminate against children on the basis of race, national 
origin, ethnic background, sex, religious affiliation, or disability;
    (2) Limit parental rights provided under subpart D of this part;
    (3) Violate the provisions of this section, Sec.  98.46, or the 
Plan. In particular, such conditions or priority rules may not be based 
on a parent's preference for a category of care or type of provider. In 
addition, such additional conditions or rules may not be based on a 
parent's choice of a child care certificate; or
    (4) Impact eligibility other than at the time of eligibility 
determination or redetermination.
    (c) For purposes of implementing the citizenship eligibility 
verification requirements mandated by title IV of the Personal 
Responsibility and Work Opportunity Reconciliation Act, 8 U.S.C.

[[Page 707]]

1601 et seq., only the citizenship and immigration status of the child, 
who is the primary beneficiary of the CCDF benefit, is relevant. 
Therefore, a Lead Agency or other administering agency may not condition 
a child's eligibility for services under Sec.  98.50 based upon the 
citizenship or immigration status of their parent or the provision of 
any information about the citizenship or immigration status of their 
parent.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67579, Sept. 30, 2016]



Sec.  98.21  Eligibility determination processes.

    (a) A Lead Agency shall re-determine a child's eligibility for child 
care services no sooner than 12 months following the initial 
determination or most recent redetermination, subject to the following:
    (1) During the period of time between determinations or 
redeterminations, if the child met all of the requirements in Sec.  
98.20(a) on the date of the most recent eligibility determination or 
redetermination, the child shall be considered eligible and will receive 
services at least at the same level, regardless of:
    (i) A change in family income, if that family income does not exceed 
85 percent of SMI for a family of the same size; or
    (ii) A temporary change in the ongoing status of the child's parent 
as working or attending a job training or educational program. A 
temporary change shall include, at a minimum:
    (A) Any time-limited absence from work for an employed parent due to 
reasons such as need to care for a family member or an illness;;
    (B) Any interruption in work for a seasonal worker who is not 
working between regular industry work seasons;
    (C) Any student holiday or break for a parent participating in 
training or education;
    (D) Any reduction in work, training or education hours, as long as 
the parent is still working or attending training or education;
    (E) Any other cessation of work or attendance at a training or 
education program that does not exceed three months or a longer period 
of time established by the Lead Agency;
    (F) Any change in age, including turning 13 years old during the 
eligibility period; and
    (G) Any change in residency within the State, Territory, or Tribal 
service area.
    (2)(i) Lead Agencies have the option, but are not required, to 
discontinue assistance due to a parent's loss of work or cessation of 
attendance at a job training or educational program that does not 
constitute a temporary change in accordance with paragraph (a)(1)(ii) of 
this section. However, if the Lead Agency exercises this option, it must 
continue assistance at least at the same level for a period of not less 
than three months after each such loss or cessation in order for the 
parent to engage in job search and resume work, or resume attendance at 
a job training or educational activity.
    (ii) At the end of the minimum three-month period of continued 
assistance, if the parent is engaged in a qualifying work, education, or 
training activity with income below 85% of SMI, assistance cannot be 
terminated and the child must continue receiving assistance until the 
next scheduled re-determination, or at Lead Agency option, for an 
additional minimum 12--month eligibility period.
    (iii) If a Lead Agency chooses to initially qualify a family for 
CCDF assistance based a parent's status of seeking employment or 
engaging in job search, the Lead Agency has the option to end assistance 
after a minimum of three months if the parent has still not found 
employment, although assistance must continue if the parent becomes 
employed during the job search period.
    (3) Lead Agencies cannot increase family co-payment amounts, 
established in accordance with Sec.  98.45(k), within the minimum 12-
month eligibility period except as described in paragraph (b)(3) of this 
section.
    (4) Because a child meeting eligibility requirements at the most 
recent eligibility determination or redetermination is considered 
eligible between redeterminations as described in paragraph (a)(1) of 
this section, any payment for such a child shall not be considered an 
error or improper payment under subpart K of this part due to a change 
in the family's circumstances.

[[Page 708]]

    (5) Notwithstanding paragraph (a)(1), the Lead Agency may 
discontinue assistance prior to the next re-determination in limited 
circumstances where there have been:
    (i) Excessive unexplained absences despite multiple attempts by the 
Lead Agency or designated entity to contact the family and provider, 
including prior notification of possible discontinuation of assistance;
    (A) If the Lead Agency chooses this option, it shall define the 
number of unexplained absences that shall be considered excessive;
    (B) [Reserved]
    (ii) A change in residency outside of the State, Territory, or 
Tribal service area; or
    (iii) Substantiated fraud or intentional program violations that 
invalidate prior determinations of eligibility.
    (b)(1) Lead Agencies that establish family income eligibility at a 
level less than 85 percent of SMI for a family of the same size (in 
order for a child to initially qualify for assistance) must provide a 
graduated phase-out by implementing two-tiered eligibility thresholds, 
with the second tier of eligibility (used at the time of eligibility re-
determination) set at:
    (i) 85 percent of SMI for a family of the same size; or
    (ii) An amount lower than 85 percent of SMI for a family of the same 
size, but above the Lead Agency's initial eligibility threshold, that:
    (A) Takes into account the typical household budget of a low income 
family; and
    (B) Provides justification that the second eligibility threshold is:
    (1) Sufficient to accommodate increases in family income over time 
that are typical for low-income workers and that promote and support 
family economic stability; and
    (2) Reasonably allows a family to continue accessing child care 
services without unnecessary disruption.
    (2) At re-determination, a child shall be considered eligible 
(pursuant to paragraph (a) of this section) if their parents, at the 
time of redetermination, are working or attending a job training or 
educational program even if their income exceeds the Lead Agency's 
income limit to initially quality for assistance, as long as their 
income does not exceed the second tier of the eligibility described in 
(b)(1);
    (3) A family meeting the conditions described in (b)(2) shall be 
eligible for services pursuant to the conditions described in Sec.  
98.20 and all other paragraphs of Sec.  98.21, with the exception of the 
co-payment restrictions at Sec.  98.21(a)(3). To help families 
transition off of child care assistance, Lead Agencies may gradually 
adjust co-pay amounts for families whose children are determined 
eligible under the graduate phase-out conditions described in paragraph 
(b)(2) and may require additional reporting on changes in family income 
as described in paragraph (e)(3) of this section, provided such 
requirements do not constitute an undue burden, pursuant to conditions 
described in (e)(2)(ii) and (iii) of this section.
    (c) The Lead Agency shall establish processes for initial 
determination and redetermination of eligibility that take into account 
irregular fluctuation in earnings, including policies that ensure 
temporary increases in income, including temporary increases that result 
in monthly income exceeding 85 percent of SMI (calculated on a monthly 
basis), do not affect eligibility or family co-payments.
    (d) The Lead Agency shall establish procedures and policies to 
ensure parents, especially parents receiving assistance through the 
Temporary Assistance for Needy Families (TANF) program, are not required 
to unduly disrupt their education, training, or employment in order to 
complete the eligibility redetermination process.
    (e) The Lead Agency shall specify in the Plan any requirements for 
parents to notify the Lead Agency of changes in circumstances during the 
minimum 12-month eligibility period, and describe efforts to ensure such 
requirements do not place an undue burden on eligible families that 
could impact continued eligibility between redeterminations.
    (1) The Lead Agency must require families to report a change at any 
point during the minimum 12-month period, limited to:

[[Page 709]]

    (i) If the family's income exceeds 85% of SMI, taking into account 
irregular income fluctuations; or
    (ii) At the option of the Lead Agency, the family has experienced a 
non-temporary cessation of work, training, or education.
    (2) Any additional requirements the Lead Agency chooses, at its 
option, to impose on parents to provide notification of changes in 
circumstances to the Lead Agency or entities designated to perform 
eligibility functions shall not constitute an undue burden on families. 
Any such requirements shall:
    (i) Limit notification requirements to items that impact a family's 
eligibility (e.g., only if income exceeds 85 percent of SMI, or there is 
a non-temporary change in the status of the child's parent as working or 
attending a job training or educational program) or those that enable 
the Lead Agency to contact the family or pay providers;
    (ii) Not require an office visit in order to fulfill notification 
requirements; and
    (iii) Offer a range of notification options (e.g., phone, email, 
online forms, extended submission hours) to accommodate the needs of 
parents;
    (3) During a period of graduated phase-out, the Lead Agency may 
require additional reporting on changes in family income in order to 
gradually adjust family co-payments, if desired, as described in 
paragraph (b)(3) of this section.
    (4) Lead Agencies must allow families the option to voluntarily 
report changes on an ongoing basis.
    (i) Lead Agencies are required to act on this information provided 
by the family if it would reduce the family's co-payment or increase the 
family's subsidy.
    (ii) Lead Agencies are prohibited from acting on information that 
would reduce the family's subsidy unless the information provided 
indicates the family's income exceeds 85 percent of SMI for a family of 
the same size, taking into account irregular income fluctuations, or, at 
the option of the Lead Agency, the family has experienced a non-
temporary change in the work, training, or educational status.
    (f) Lead Agencies must take into consideration children's 
development and learning and promote continuity of care when authorizing 
child care services.
    (g) Lead Agencies are not required to limit authorized child care 
services strictly based on the work, training, or educational schedule 
of the parent(s) or the number of hours the parent(s) spend in work, 
training, or educational activities.

[81 FR 67579, Sept. 30, 2016]



 Subpart D_Program Operations (Child Care Services)_Parental Rights and 
                            Responsibilities



Sec.  98.30  Parental choice.

    (a) The parent or parents of an eligible child who receives or is 
offered child care services shall be offered a choice:
    (1) To enroll the child with an eligible child care provider that 
has a grant or contract for the provision of such services, if such 
services are available; or
    (2) To receive a child care certificate as defined in Sec.  98.2. 
Such choice shall be offered any time that child care services are made 
available to a parent.
    (b) When a parent elects to enroll the child with a provider that 
has a grant or contract for the provision of child care services, the 
child will be enrolled with the provider selected by the parent to the 
maximum extent practicable.
    (c) In cases in which a parent elects to use a child care 
certificate, such certificate:
    (1) Will be issued directly to the parent;
    (2) Shall be of a value commensurate with the subsidy value of the 
child care services provided under paragraph (a)(1) of this section;
    (3) May be used as a deposit for child care services if such a 
deposit is required of other children being cared for by the provider;
    (4) May be used for child care services provided by a sectarian 
organization or agency, including those that engage in religious 
activities, if those services are chosen by the parent;
    (5) May be expended by providers for any sectarian purpose or 
activity that

[[Page 710]]

is part of the child care services, including sectarian worship or 
instruction;
    (6) Shall not be considered a grant or contract to a provider but 
shall be considered assistance to the parent.
    (d) Child care certificates shall be made available to any parents 
offered child care services.
    (e)(1) For child care services, certificates under paragraph (a)(2) 
of this section shall permit parents to choose from a variety of child 
care categories, including:
    (i) Center-based child care;
    (ii) Family child care; and
    (iii) In-home child care, with limitations, if any, imposed by the 
Lead Agency and described in its Plan at Sec.  98.16(i)(2). Under each 
of the above categories, care by a sectarian provider may not be limited 
or excluded.
    (2) Lead Agencies shall provide information regarding the range of 
provider options under paragraph (e)(1) of this section, including care 
by sectarian providers and relatives, to families offered child care 
services.
    (f) With respect to State and local regulatory requirements under 
Sec.  98.40, health and safety requirements under Sec.  98.41, and 
payment rates under Sec.  98.45, CCDF funds will not be available to a 
Lead Agency if State or local rules, procedures or other requirements 
promulgated for purposes of the CCDF significantly restrict parental 
choice by:
    (1) Expressly or effectively excluding:
    (i) Any category of care or type of provider, as defined in Sec.  
98.2; or
    (ii) Any type of provider within a category of care; or
    (2) Having the effect of limiting parental access to or choice from 
among such categories of care or types of providers, as defined in Sec.  
98.2, with the exception of in-home care; or
    (3) Excluding a significant number of providers in any category of 
care or of any type as defined in Sec.  98.2.
    (g) As long as provisions at paragraph (f) of this section are met, 
parental choice provisions shall not be construed as prohibiting a Lead 
Agency from establishing policies that require providers of child care 
services for which assistance is provided under this part to meet higher 
standards of quality, such as those identified in a quality rating and 
improvement system or other transparent system of quality indicators.
    (h) Parental choice provisions shall not be construed as prohibiting 
a Lead Agency from providing parents with information and incentives 
that encourage the selection of high-quality child care.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67580, Sept. 30, 2016]



Sec.  98.31  Parental access.

    The Lead Agency shall have in effect procedures to ensure that 
providers of child care services for which assistance is provided afford 
parents unlimited access to their children, and to the providers caring 
for their children, during normal hours of provider operation and 
whenever the children are in the care of the provider. The Lead Agency 
shall provide a detailed description in the Plan of such procedures.

[81 FR 67581, Sept. 30, 2016]



Sec.  98.32  Parental complaints.

    The State shall:
    (a) Establish or designate a hotline or similar reporting process 
for parents to submit complaints about child care providers;
    (b) Maintain a record of substantiated parent complains;
    (c) Make information regarding such parental complaints available to 
the public on request; and
    (d) The Lead Agency shall provide a detailed description in the Plan 
of how:
    (1) Complaints are substantiated and responded to, including whether 
or not the State uses monitoring as part of its process for responding 
to complaints for both CCDF and non-CCDF providers; and,
    (2) A record of substantiated complaints is maintained and is made 
available.

[81 FR 67581, Sept. 30, 2016]



Sec.  98.33  Consumer and provider education.

    The Lead Agency shall:
    (a) Certify that it will collect and disseminate consumer education 
information to parents of eligible children, the general public, and 
providers through a consumer-friendly and easily

[[Page 711]]

accessible Web site that ensures the widest possible access to services 
for families who speak languages other than English and persons with 
disabilities, including:
    (1) Lead Agency processes, including:
    (i) The process for licensing child care providers pursuant to Sec.  
98.40;
    (ii) The process for conducting monitoring and inspections of child 
care providers pursuant to Sec.  98.42;
    (iii) Policies and procedures related to criminal background checks 
for child care providers pursuant to Sec.  98.43; and
    (iv) The offenses that prevent individuals from serving as child 
care providers.
    (2) A localized list of all licensed child care providers, and, at 
the discretion of the Lead Agency, all eligible child care providers 
(other than an individual who is related to all children for whom child 
care services are provided), differentiating between licensed and 
license-exempt providers, searchable by zip code;
    (3) The quality of a provider as determined by the Lead Agency 
through a quality rating and improvement system or other transparent 
system of quality indicators, if such information is available for the 
provider;
    (4) Results of monitoring and inspection reports for all eligible 
and licensed child care providers (other than an individual who is 
related to all children for whom child care services are provided), 
including those required at Sec.  98.42 and those due to major 
substantiated complaints about failure to comply with provisions at 
Sec.  98.41 and Lead Agency child care policies. Lead Agencies shall 
post in a timely manner full monitoring and inspection reports, either 
in plain language or with a plain language summary, for parents and 
child care providers to understand, and shall establish a process for 
correcting inaccuracies in the reports. Such results shall include:
    (i) Information on the date of such inspection;
    (ii) Information on corrective action taken by the State and child 
care provider, where applicable;
    (iii) Any health and safety violations, including any fatalities and 
serious injuries occurring at the provider, prominently displayed on the 
report or summary; and
    (iv) A minimum of 3 years of results where available.
    (5) Aggregate number of deaths and serious injuries (for each 
provider category and licensing status) and instances of substantiated 
child abuse that occurred in child care settings each year, for eligible 
providers.
    (6) Referrals to local child care resource and referral 
organizations.
    (7) Directions on how parents can contact the Lead Agency or its 
designee and other programs to help them understand information included 
on the Web site.
    (b) Certify that it will collect and disseminate, through resource 
and referral organizations or other means as determined by the State, 
including, but not limited to, through the Web site described in 
paragraph (a) of this section, to parents of eligible children and the 
general public, and where applicable providers, information about:
    (1) The availability of the full diversity of child care services to 
promote informed parental choice, including information about:
    (i) The availability of child care services under this part and 
other programs for which families may be eligible, as well as the 
availability of financial assistance to obtain child care services;
    (ii) Other programs for which families that receive assistance under 
this part may be eligible, including:
    (A) Temporary Assistance for Needy Families (TANF) (42 U.S.C. 601 et 
seq.);
    (B) Head Start and Early Head Start (42 U.S.C. 9831 et seq.);
    (C) Low-Income Home Energy Assistance Program (LIHEAP) (42 U.S.C. 
8621 et seq.);
    (D) Supplemental Nutrition Assistance Program (SNAP) (7 U.S.C. 2011 
et seq.);
    (E) Special supplemental nutrition program for women, infants, and 
children (42 U.S.C. 1786);
    (F) Child and Adult Care Food Program (CACFP) (42 U.S.C. 1766);
    (G) Medicaid and the State children's health insurance programs (42 
U.S.C. 1396 et seq., 1397aa et seq.);
    (iii) Programs carried out under section 619 and part C of the 
Individuals

[[Page 712]]

with Disabilities Education Act (IDEA) (20 U.S.C. 1419, 1431 et seq.);
    (iv) Research and best practices concerning children's development, 
meaningful parent and family engagement, and physical health and 
development, particularly healthy eating and physical activity; and
    (v) State policies regarding social emotional behavioral health of 
children which may include positive behavioral health intervention and 
support models for birth to school-age or age-appropriate, and policies 
to prevent suspension and expulsion of children birth to age five in 
child care and other early childhood programs, as described in the Plan 
pursuant to Sec.  98.16(ee), receiving assistance under this part.
    (c) Provide information on developmental screenings to parents as 
part of the intake process for families receiving assistance under this 
part, and to providers through training and education, including:
    (1) Information on existing resources and services the State can 
make available in conducting developmental screenings and providing 
referrals to services when appropriate for children who receive 
assistance under this part, including the coordinated use of the Early 
and Periodic Screening, Diagnosis, and Treatment program (42 U.S.C. 1396 
et seq.) and developmental screening services available under section 
619 and part C of the Individuals with Disabilities Education Act (20 
U.S.C. 1419, 1431 et seq.); and
    (2) A description of how a family or eligible child care provider 
may utilize the resources and services described in paragraph (c)(1) of 
this section to obtain developmental screenings for children who receive 
assistance under this part who may be at risk for cognitive or other 
developmental delays, which may include social, emotional, physical, or 
linguistic delays.
    (d) For families that receive assistance under this part, provide 
specific information about the child care provider selected by the 
parent, including health and safety requirements met by the provider 
pursuant to Sec.  98.41, any licensing or regulatory requirements met by 
the provider, date the provider was last inspected, any history of 
violations of these requirements, and any voluntary quality standards 
met by the provider. Information must also describe how CCDF subsidies 
are designed to promote equal access in accordance with Sec.  98.45, how 
to submit a complaint through the hotline at Sec.  98.32(a), and how to 
contact local resource and referral agencies or other community-based 
supports that assist parents in finding and enrolling in quality child 
care.
    (e) Provide linkages to databases related to paragraph (a) to HHS 
for implementing a national Web site and other uses as determined by the 
Secretary.
    (f) Inform parents who receive TANF benefits about the requirement 
at section 407(e)(2) of the Social Security Act (42 U.S.C. 607(e)(2)) 
that the TANF agency make an exception to the individual penalties 
associated with the work requirement for any single custodial parent who 
has a demonstrated inability to obtain needed child care for a child 
under six years of age. The information may be provided directly by the 
Lead Agency, or, pursuant to Sec.  98.11, other entities, and shall 
include:
    (1) The procedures the TANF agency uses to determine if the parent 
has a demonstrated inability to obtain needed child care;
    (2) The criteria or definitions applied by the TANF agency to 
determine whether the parent has a demonstrated inability to obtain 
needed child care, including:
    (i) ``Appropriate child care'';
    (ii) ``Reasonable distance'';
    (iii) ``Unsuitability of informal child care'';
    (iv) ``Affordable child care arrangements'';
    (3) The clarification that assistance received during the time an 
eligible parent receives the exception referred to in paragraph (f) of 
this section will count toward the time limit on Federal benefits 
required at section 408(a)(7) of the Social Security Act (42 U.S.C. 
608(a)(7)).
    (g) Include in the triennial Plan the definitions or criteria the 
TANF agency uses in implementing the exception to the work requirement 
specified in paragraph (f) of this section.

[81 FR 67581, Sept. 30, 2016]

[[Page 713]]



Sec.  98.34  Parental rights and responsibilities.

    Nothing under this part shall be construed or applied in any manner 
to infringe on or usurp the moral and legal rights and responsibilities 
of parents or legal guardians.



   Subpart E_Program Operations (Child Care Services)_Lead Agency and 
                          Provider Requirements



Sec.  98.40  Compliance with applicable State and local 
regulatory requirements.

    (a) Lead Agencies shall:
    (1) Certify that they have in effect licensing requirements 
applicable to child care services provided within the area served by the 
Lead Agency;
    (2) Describe in the Plan exemption(s) to licensing requirements, if 
any, for child care services for which assistance is provided, and a 
demonstration for how such exemption(s) do not endanger the health, 
safety, or development of children who receive services from such 
providers. Lead Agencies must provide the required description and 
demonstration for any exemptions based on:
    (i) Provider category, type, or setting;
    (ii) Length of day;
    (iii) Providers not subject to licensing because the number of 
children served falls below a State-defined threshold; and
    (iv) Any other exemption to licensing requirements; and
    (3) Provide a detailed description in the Plan of the requirements 
under paragraph (a)(1) of this section and of how they are effectively 
enforced.
    (b)(1) This section does not prohibit a Lead Agency from imposing 
more stringent standards and licensing or regulatory requirements on 
child care providers of services for which assistance is provided under 
the CCDF than the standards or requirements imposed on other child care 
providers.
    (2) Any such additional requirements shall be consistent with the 
safeguards for parental choice in Sec.  98.30(f).

[63 FR 39981, July 24, 1998, as amended at 81 FR 67582, Sept. 30, 2016]



Sec.  98.41  Health and safety requirements.

    (a) Each Lead Agency shall certify that there are in effect, within 
the State (or other area served by the Lead Agency), under State, local 
or tribal law, requirements (appropriate to provider setting and age of 
children served) that are designed, implemented, and enforced to protect 
the health and safety of children. Such requirements must be applicable 
to child care providers of services for which assistance is provided 
under this part. Such requirements, which are subject to monitoring 
pursuant to Sec.  98.42, shall:
    (1) Include health and safety topics consisting of, at a minimum:
    (i) The prevention and control of infectious diseases (including 
immunizations); with respect to immunizations, the following provisions 
apply:
    (A) As part of their health and safety provisions in this area, Lead 
Agencies shall assure that children receiving services under the CCDF 
are age-appropriately immunized. Those health and safety provisions 
shall incorporate (by reference or otherwise) the latest recommendation 
for childhood immunizations of the respective State, territorial, or 
tribal public health agency.
    (B) Notwithstanding this paragraph (a)(1)(i), Lead Agencies may 
exempt:
    (1) Children who are cared for by relatives (defined as 
grandparents, great grandparents, siblings (if living in a separate 
residence), aunts, and uncles), provided there are no other unrelated 
children who are cared for in the same setting.
    (2) Children who receive care in their own homes, provided there are 
no other unrelated children who are cared for in the home.
    (3) Children whose parents object to immunization on religious 
grounds.
    (4) Children whose medical condition contraindicates immunization.
    (C) Lead Agencies shall establish a grace period that allows 
children experiencing homelessness and children in foster care to 
receive services under this part while providing their families 
(including foster families) a reasonable time to take any necessary 
action to comply with immunization and other health and safety 
requirements.

[[Page 714]]

    (1) The length of such grace period shall be established in 
consultation with the State, Territorial or Tribal health agency.
    (2) Any payment for such child during the grace period shall not be 
considered an error or improper payment under subpart K of this part.
    (3) The Lead Agency may also, at its option, establish grace periods 
for other children who are not experiencing homelessness or in foster 
care.
    (4) Lead Agencies must coordinate with licensing agencies and other 
relevant State, Territorial, Tribal, and local agencies to provide 
referrals and support to help families of children receiving services 
during a grace period comply with immunization and other health and 
safety requirements;
    (ii) Prevention of sudden infant death syndrome and use of safe 
sleeping practices;
    (iii) Administration of medication, consistent with standards for 
parental consent;
    (iv) Prevention and response to emergencies due to food and allergic 
reactions;
    (v) Building and physical premises safety, including identification 
of and protection from hazards, bodies of water, and vehicular traffic;
    (vi) Prevention of shaken baby syndrome, abusive head trauma, and 
child maltreatment;
    (vii) Emergency preparedness and response planning for emergencies 
resulting from a natural disaster, or a man-caused event (such as 
violence at a child care facility), within the meaning of those terms 
under section 602(a)(1) of the Robert T. Stafford Disaster Relief and 
Emergency Assistance Act (42 U.S.C. 5195a(a)(1)) that shall include 
procedures for evacuation, relocation, shelter-in-place and lock down, 
staff and volunteer emergency preparedness training and practice drills, 
communication and reunification with families, continuity of operations, 
and accommodation of infants and toddlers, children with disabilities, 
and children with chronic medical conditions;
    (viii) Handling and storage of hazardous materials and the 
appropriate disposal of biocontaminants;
    (ix) Appropriate precautions in transporting children, if 
applicable;
    (x) Pediatric first aid and cardiopulmonary resuscitation;
    (xi) Recognition and reporting of child abuse and neglect, in 
accordance with the requirement in paragraph (e) of this section; and
    (xii) May include requirements relating to:
    (A) Nutrition (including age-appropriate feeding);
    (B) Access to physical activity;
    (C) Caring for children with special needs; or
    (D) Any other subject area determined by the Lead Agency to be 
necessary to promote child development or to protect children's health 
and safety.
    (2) Include minimum health and safety training on the topics above, 
as described in Sec.  98.44.
    (b) Lead Agencies may not set health and safety standards and 
requirements other than those required in paragraph (a) of this section 
that are inconsistent with the parental choice safeguards in Sec.  
98.30(f).
    (c) The requirements in paragraph (a) of this section shall apply to 
all providers of child care services for which assistance is provided 
under this part, within the area served by the Lead Agency, except the 
relatives specified at Sec.  98.42(c).
    (d) Lead Agencies shall describe in the Plan standards for child 
care services for which assistance is provided under this part, 
appropriate to strengthening the adult and child relationship in the 
type of child care setting involved, to provide for the safety and 
developmental needs of the children served, that address:
    (1) Group size limits for specific age populations;
    (2) The appropriate ratio between the number of children and the 
number of caregivers, in terms of age of children in child care; and
    (3) Required qualifications for caregivers in child care settings as 
described at Sec.  98.44(a)(4).
    (e) Lead Agencies shall certify that caregivers, teachers, and 
directors of child care providers within the State or service area will 
comply with the State's, Territory's, or Tribe's child abuse reporting 
requirements as required by section 106(b)(2)(B)(i) of the

[[Page 715]]

Child Abuse and Prevention and Treatment Act (42 U.S.C. 
5106a(b)(2)(B)(i)) or other child abuse reporting procedures and laws in 
the service area.

[81 FR 67582, Sept. 30, 2016]



Sec.  98.42  Enforcement of licensing and health and safety requirements.

    (a) Each Lead Agency shall certify in the Plan that procedures are 
in effect to ensure that child care providers of services for which 
assistance is made available in accordance with this part, within the 
area served by the Lead Agency, comply with all applicable State, local, 
or tribal health and safety requirements, including those described in 
Sec.  98.41.
    (b) Each Lead Agency shall certify in the Plan it has monitoring 
policies and practices applicable to all child care providers and 
facilities eligible to deliver services for which assistance is provided 
under this part. The Lead Agency shall:
    (1) Ensure individuals who are hired as licensing inspectors are 
qualified to inspect those child care providers and facilities and have 
received training in related health and safety requirements appropriate 
to provider setting and age of children served. Training shall include, 
but is not limited to, those requirements described in Sec.  98.41, and 
all aspects of the State, Territory, or Tribe's licensure requirements;
    (2) Require inspections of child care providers and facilities, 
performed by licensing inspectors (or qualified inspectors designated by 
the Lead Agency), as specified below:
    (i) For licensed child care providers and facilities,
    (A) Not less than one pre-licensure inspection for compliance with 
health, safety, and fire standards, and
    (B) Not less than annually, an unannounced inspection for compliance 
with all child care licensing standards, which shall include an 
inspection for compliance with health and safety, (including, but not 
limited to, those requirements described in Sec.  98.41) and fire 
standards (inspectors may inspect for compliance with all three 
standards at the same time); and
    (ii) For license-exempt child care providers and facilities that are 
eligible to provide services for which assistance is made available in 
accordance with this part, an annual inspection for compliance with 
health and safety (including, but not limited to, those requirements 
described in Sec.  98.41), and fire standards;
    (iii) Coordinate, to the extent practicable, monitoring efforts with 
other Federal, State, and local agencies that conduct similar 
inspections.
    (iv) The Lead Agency may, at its option:
    (A) Use differential monitoring or a risk-based approach to design 
annual inspections, provided that the contents covered during each 
monitoring visit is representative of the full complement of health and 
safety requirements;
    (B) Develop alternate monitoring requirements for care provided in 
the child's home that are appropriate to the setting; and
    (3) Ensure the ratio of licensing inspectors to such child care 
providers and facilities is maintained at a level sufficient to enable 
the State, Territory, or Tribe to conduct effective inspections on a 
timely basis in accordance with the applicable Federal, State, 
Territory, Tribal, and local law;
    (4) Require child care providers to report to a designated State, 
Territorial, or Tribal entity any serious injuries or deaths of children 
occurring in child care.
    (c) For the purposes of this section and Sec.  98.41, Lead Agencies 
may exclude grandparents, great grandparents, siblings (if such 
providers live in a separate residence), aunts, or uncles, from the term 
``child care providers.'' If the Lead Agency chooses to exclude these 
providers, the Lead Agency shall provide a description and justification 
in the CCDF Plan, pursuant to Sec.  98.16(l), of requirements, if any, 
that apply to these providers.

[81 FR 67583, Sept. 30, 2016]



Sec.  98.43  Criminal background checks.

    (a)(1) States, Territories, and Tribes, through coordination of the 
Lead agency with other State, territorial, and tribal agencies, shall 
have in effect:
    (i) Requirements, policies, and procedures to require and conduct 
criminal background checks for child care staff members (including 
prospective child

[[Page 716]]

care staff members) of all licensed, regulated, or registered child care 
providers and all child care providers eligible to deliver services for 
which assistance is provided under this part as described in paragraph 
(a)(2) of this section;
    (ii) Licensing, regulation, and registration requirements, as 
applicable, that prohibit the employment of child care staff members as 
described in paragraph (c) of this section; and
    (iii) Requirements, policies, and procedures in place to respond as 
expeditiously as possible to other States', Territories', and Tribes' 
requests for background check results in order to accommodate the 45 day 
timeframe required in paragraph (e)(1) of this section.
    (2) In this section:
    (i) Child care provider means a center based child care provider, a 
family child care provider, or another provider of child care services 
for compensation and on a regular basis that:
    (A) Is not an individual who is related to all children for whom 
child care services are provided; and
    (B) Is licensed, regulated, or registered under State law or 
eligible to receive assistance provided under this subchapter; and
    (ii) Child care staff member means an individual (other than an 
individual who is related to all children for whom child care services 
are provided):
    (A) Who is employed by a child care provider for compensation, 
including contract employees or self-employed individuals;
    (B) Whose activities involve the care or supervision of children for 
a child care provider or unsupervised access to children who are cared 
for or supervised by a child care provider; or
    (C) Any individual residing in a family child care home who is age 
18 and older.
    (b) A criminal background check for a child care staff member under 
paragraph (a) of this section shall include:
    (1) A Federal Bureau of Investigation fingerprint check using Next 
Generation Identification;
    (2) A search of the National Crime Information Center's National Sex 
Offender Registry; and
    (3) A search of the following registries, repositories, or databases 
in the State where the child care staff member resides and each State 
where such staff member resided during the preceding five years:
    (i) State criminal registry or repository, with the use of 
fingerprints being:
    (A) Required in the State where the staff member resides;
    (B) Optional in other States;
    (ii) State sex offender registry or repository; and
    (iii) State-based child abuse and neglect registry and database.
    (c)(1) A child care staff member shall be ineligible for employment 
by child care providers of services for which assistance is made 
available in accordance with this part, if such individual:
    (i) Refuses to consent to the criminal background check described in 
paragraph (b) of this section;
    (ii) Knowingly makes a materially false statement in connection with 
such criminal background check;
    (iii) Is registered, or is required to be registered, on a State sex 
offender registry or repository or the National Sex Offender Registry; 
or
    (iv) Has been convicted of a felony consisting of:
    (A) Murder, as described in section 1111 of title 18, United States 
Code;
    (B) Child abuse or neglect;
    (C) A crime against children, including child pornography;
    (D) Spousal abuse;
    (E) A crime involving rape or sexual assault;
    (F) Kidnapping;
    (G) Arson;
    (H) Physical assault or battery; or
    (I) Subject to paragraph (e)(4) of this section, a drug-related 
offense committed during the preceding 5 years; or
    (v) Has been convicted of a violent misdemeanor committed as an 
adult against a child, including the following crimes: Child abuse, 
child endangerment, sexual assault, or of a misdemeanor involving child 
pornography.
    (2) A child care provider described in paragraph (a)(2)(i) of this 
section shall be ineligible for assistance provided in accordance with 
this subchapter if the provider employs a staff member who

[[Page 717]]

is ineligible for employment under paragraph (c)(1) of this section.
    (d)(1) A child care provider covered by paragraph (a)(2)(i) of this 
section shall submit a request, to the appropriate State, Territorial, 
or Tribal agency, defined clearly on the State or Territory Web site 
described in paragraph (g) of this section, for a criminal background 
check described in paragraph (b) of this section, for each child care 
staff member (including prospective child care staff members) of the 
provider.
    (2) Subject to paragraph (d)(3) of this section, the provider shall 
submit such a request:
    (i) Prior to the date an individual becomes a child care staff 
member of the provider; and
    (ii) Not less than once during each 5-year period for any existing 
staff member.
    (3) A child care provider shall not be required to submit a request 
under paragraph (d)(2) of this section for a child care staff member if:
    (i) The staff member received a background check described in 
paragraph (b) of this section:
    (A) Within 5 years before the latest date on which such a submission 
may be made; and
    (B) While employed by or seeking employment by another child care 
provider within the State;
    (ii) The State provided to the first provider a qualifying 
background check result, consistent with this subchapter, for the staff 
member; and
    (iii) The staff member is employed by a child care provider within 
the State, or has been separated from employment from a child care 
provider within the State for a period of not more than 180 consecutive 
days.
    (4) A prospective staff member may begin work for a child care 
provider described in paragraph (a)(2)(i) of this section after 
completing either the check described at paragraph (b)(1) or (b)(3)(i) 
of this section in the State where the prospective staff member resides. 
Pending completion of all background check components in paragraph (b) 
of this section, the staff member must be supervised at all times by an 
individual who received a qualifying result on a background check 
described in paragraph (b) of this section within the past five years.
    (e) Background check results. (1) The State, Territory, or Tribe 
shall carry out the request of a child care provider for a criminal 
background check as expeditiously as possible, but not to exceed 45 days 
after the date on which the provider submitted the request, and shall 
provide the results of the criminal background check to such provider 
and to the current or prospective staff member.
    (2) States, Territories, and Tribes shall ensure the privacy of 
background check results by:
    (i) Providing the results of the criminal background check to the 
provider in a statement that indicates whether a child care staff member 
(including a prospective child care staff member) is eligible or 
ineligible for employment described in paragraph (c)(1) of this section, 
without revealing any disqualifying crime or other related information 
regarding the individual.
    (ii) If the child care staff member is ineligible for such 
employment due to the background check, the State, Territory, or Tribe 
will, when providing the results of the background check, include 
information related to each disqualifying crime, in a report to the 
staff member or prospective staff member, along with information on the 
opportunity to appeal, described in paragraph (e)(3) of this section.
    (iii) No State, Territory, or Tribe shall publicly release or share 
the results of individual background checks, except States and Tribes 
may release aggregated data by crime as listed under paragraph 
(c)(1)(iv) of this section from background check results, as long as 
such data is not personally identifiable information.
    (3) States, Territories, and Tribes shall provide for a process by 
which a child care staff member (including a prospective child care 
staff member) may appeal the results of a criminal background check 
conducted under this section to challenge the accuracy or completeness 
of the information contained in such member's criminal background 
report. The State, Territory, and Tribe shall ensure that:

[[Page 718]]

    (i) Each child care staff member is given notice of the opportunity 
to appeal;
    (ii) A child care staff member will receive clear instructions about 
how to complete the appeals process if the child care staff member 
wishes to challenge the accuracy or completeness of the information 
contained in such member's criminal background report;
    (iii) If the staff member files an appeal, the State, Territory, or 
Tribe will attempt to verify the accuracy of the information challenged 
by the child care staff member, including making an effort to locate any 
missing disposition information related to the disqualifying crime;
    (iv) The appeals process is completed in a timely manner for each 
child care staff member; and
    (v) Each child care staff member shall receive written notice of the 
decision. In the case of a negative determination, the decision should 
indicate the State's efforts to verify the accuracy of information 
challenged by the child care staff member, as well as any additional 
appeals rights available to the child care staff member.
    (4) States, Territories, and Tribes may allow for a review process 
through which the State, Territory, or Tribe may determine that a child 
care staff member (including a prospective child care staff member) 
disqualified for a crime specified in paragraph (c)(1)(iv)(I) of this 
section is eligible for employment described in paragraph (c)(1) of this 
section, notwithstanding paragraph (c)(2) of this section. The review 
process shall be consistent with title VII of the Civil Rights Act of 
1964 (42 U.S.C. 2000e et seq.);
    (5) Nothing in this section shall be construed to create a private 
right of action if a provider has acted in accordance with this section.
    (f) Fees for background checks. Fees that a State, Territory, or 
Tribe may charge for the costs of processing applications and 
administering a criminal background check as required by this section 
shall not exceed the actual costs for the processing and administration.
    (g) Transparency. The State or Territory must ensure that its 
policies and procedures under this section, including the process by 
which a child care provider or other State or Territory may submit a 
background check request, are published in the Web site of the State or 
Territory as described in Sec.  98.33(a) and the Web site of local lead 
agencies.
    (h) Disqualification for other crimes. (1) Nothing in this section 
shall be construed to prevent a State, Territory, or Tribe from 
disqualifying individuals as child care staff members based on their 
conviction for crimes not specifically listed in paragraph (c)(1) of 
this section that bear upon the fitness of an individual to provide care 
for and have responsibility for the safety and well-being of children.
    (2) Nothing in this section shall be construed to alter or otherwise 
affect the rights and remedies provided for child care staff members or 
prospective staff members residing in a State that disqualifies 
individuals as child care staff members for crimes not specifically 
provided for under this section.

[81 FR 67584, Sept. 30, 2016]



Sec.  98.44  Training and professional development.

    (a) The Lead Agency must describe in the Plan the State or Territory 
framework for training, professional development, and postsecondary 
education for caregivers, teachers, and directors, including those 
working in school-age care, that:
    (1) Is developed in consultation with the State Advisory Council on 
Early Childhood Education and Care (designated or established pursuant 
to section 642B(b)(1)(A)(i) of the Head Start Act (42 U.S.C. 
9837b(b)(1)(A)(i))) or similar coordinating body;
    (2) May engage training and professional development providers, 
including higher education in aligning training and education 
opportunities with the State's framework;
    (3) Addresses professional standards and competencies, career 
pathways, advisory structure, articulation, and workforce information 
and financing;
    (4) Establishes qualifications in accordance with Sec.  98.41(d)(3) 
designed to enable child care and school-age care providers that provide 
services for

[[Page 719]]

which assistance is provided in accordance with this part to promote the 
social, emotional, physical, and cognitive development of children and 
improve the knowledge and skills of caregivers, teachers and directors 
in working with children and their families;
    (5) Includes professional development conducted on an ongoing basis, 
providing a progression of professional development (which may include 
encouraging the pursuit of postsecondary education);
    (6) Reflects current research and best practices relating to the 
skills necessary for caregivers, teachers, and directors to meet the 
developmental needs of participating children and engage families, 
including culturally and linguistically appropriate practices; and
    (7) Improves the quality, diversity, stability, and retention 
(including financial incentives and compensation improvements) of 
caregivers, teachers, and directors.
    (b) The Lead Agency must describe in the Plan its established 
requirements for pre-service or orientation (to be completed within 
three months) and ongoing professional development for caregivers, 
teachers, and directors of child care providers of services for which 
assistance is provided under the CCDF that, to the extent practicable, 
align with the State framework:
    (1) Accessible pre-service or orientation training in health and 
safety standards appropriate to the setting and age of children served 
that addresses:
    (i) Each of the requirements relating to matters described in Sec.  
98.41(a)(1)(i) through (xi) and specifying critical health and safety 
training that must be completed before caregivers, teachers, and 
directors are allowed to care for children unsupervised;
    (ii) At the Lead Agency option, matters described in Sec.  
98.41(a)(1)(xii); and
    (iii) Child development, including the major domains (cognitive, 
social, emotional, physical development and approaches to learning);
    (2) Ongoing, accessible professional development, aligned to a 
progression of professional development, including the minimum annual 
requirement for hours of training and professional development for 
eligible caregivers, teachers and directors, appropriate to the setting 
and age of children served, that:
    (i) Maintains and updates health and safety training standards 
described in Sec.  98.41(a)(1)(i) through (xi), and at the Lead Agency 
option, in Sec.  98.41(a)(1)(xii);
    (ii) Incorporates knowledge and application of the State's early 
learning and developmental guidelines for children birth to kindergarten 
(where applicable);
    (iii) Incorporates social-emotional behavior intervention models for 
children birth through school-age, which may include positive behavior 
intervention and support models including preventing and reducing 
expulsions and suspensions of preschool-aged and school-aged children;
    (iv) To the extent practicable, are appropriate for a population of 
children that includes:
    (A) Different age groups;
    (B) English learners;
    (C) Children with developmental delays and disabilities; and
    (D) Native Americans, including Indians, as the term is defined in 
section 4 of the Indian Self-Determination and Education Assistance Act 
(25 U.S.C. 450b) (including Alaska Natives within the meaning of that 
term), and Native Hawaiians (as defined in section 6207 of the 
Elementary and Secondary Education Act of 1965);
    (v) To the extent practicable, awards continuing education units or 
is credit-bearing; and
    (vi) Shall be accessible to caregivers, teachers, and directors 
supported through Indian tribes or tribal organizations that receive 
assistance under this subchapter.

[81 FR 67585, Sept. 30, 2016]



Sec.  98.45  Equal access.

    (a) The Lead Agency shall certify that the payment rates for the 
provision of child care services under this part are sufficient to 
ensure equal access, for eligible families in the area served by the 
Lead Agency, to child care services comparable to those provided to 
families not eligible to receive CCDF assistance or child care 
assistance under any other Federal, State, or tribal programs.

[[Page 720]]

    (b) The Lead Agency shall provide in the Plan a summary of the data 
and facts relied on to determine that its payment rates ensure equal 
access. At a minimum, the summary shall include facts showing:
    (1) How a choice of the full range of providers is made available, 
and the extent to which child care providers participate in the CCDF 
subsidy system and any barriers to participation including barriers 
related to payment rates and practices, based on information obtained in 
accordance with paragraph (d)(2) of this section;
    (2) How payment rates are adequate and have been established based 
on the most recent market rate survey or alternative methodology 
conducted in accordance with paragraph (c) of this section;
    (3) How base payment rates enable providers to meet health, safety, 
quality, and staffing requirements in accordance with paragraphs 
(f)(1)(ii)(A) and (f)(2)(ii) of this section;
    (4) How the Lead Agency took the cost of higher quality into account 
in accordance with paragraph (f)(2)(iii) of this section, including how 
payment rates for higher-quality care, as defined by the Lead Agency 
using a quality rating and improvement system or other system of quality 
indicators, relate to the estimated cost of care at each level of 
quality;
    (5) How co-payments based on a sliding fee scale are affordable, as 
stipulated at paragraph (k) of this section; if applicable, a rationale 
for the Lead Agency's policy on whether child care providers may charge 
additional amounts to families above the required family co-payment, 
including a demonstration that the policy promotes affordability and 
access; analysis of the interaction between any such additional amounts 
with the required family co-payments, and of the ability of subsidy 
payment rates to provide access to care without additional fees; and 
data on the extent to which CCDF providers charge such additional 
amounts to families (based on information obtained in accordance with 
paragraph (d)(2) of this section);
    (6) How the Lead Agency's payment practices support equal access to 
a range of providers by providing stability of funding and encouraging 
more child care providers to serve children receiving CCDF subsidies, in 
accordance with paragraph (l) of this section;
    (7) How and on what factors the Lead Agency differentiates payment 
rates; and
    (8) Any additional facts the Lead Agency considered in determining 
that its payment rates ensure equal access.
    (c) The Lead Agency shall demonstrate in the Plan that it has 
developed and conducted, not earlier than two years before the date of 
the submission of the Plan, either:
    (1) A statistically valid and reliable survey of the market rates 
for child care services; or
    (2) An alternative methodology, such as a cost estimation model, 
that has been:
    (i) Proposed by the Lead Agency; and
    (ii) Approved in advance by ACF.
    (d) The Lead Agency must:
    (1) Ensure that the market rate survey or alternative methodology 
reflects variations by geographic location, category of provider, and 
age of child;
    (2) Track through the market rate survey or alternative methodology, 
or through a separate source, information on the extent to which:
    (i) Child care providers are participating in the CCDF subsidy 
program and any barriers to participation, including barriers related to 
payment rates and practices; and
    (ii) CCDF child care providers charge amounts to families more than 
the required family co-payment (under paragraph (k) of this section) in 
instances where the provider's price exceeds the subsidy payment, 
including data on the size and frequency of any such amounts.
    (e) Prior to conducting the market rate survey or alternative 
methodology, the Lead Agency must consult with:
    (1) The State Advisory Council on Early Childhood Education and Care 
(designated or established pursuant to section 642B(b)(1)(A)(i) of the 
Head Start Act (42 U.S.C. 9837b(b)(1)(A)(i)) or similar coordinating 
body, local child care program administrators, local

[[Page 721]]

child care resource and referral agencies, and other appropriate 
entities; and
    (2) Organizations representing child care caregivers, teachers, and 
directors.
    (f) After conducting the market rate survey or alternative 
methodology, the Lead Agency must:
    (1) Prepare a detailed report containing the results, and make the 
report widely available, including by posting it on the Internet, not 
later than 30 days after the completion of the report. The report must 
include:
    (i) The results of the market rate survey or alternative 
methodology;
    (ii) The estimated cost of care necessary (including any relevant 
variation by geographic location, category of provider, or age of child) 
to support:
    (A) Child care providers' implementation of the health, safety, 
quality, and staffing requirements at Sec. Sec.  98.41 through 98.44; 
and
    (B) Higher-quality care, as defined by the Lead Agency using a 
quality rating and improvement system or other system of quality 
indicators, at each level of quality; and
    (iii) The Lead Agency's response to stakeholder views and comments.
    (2) Set payment rates for CCDF assistance:
    (i) In accordance with the results of the most recent market rate 
survey or alternative methodology conducted pursuant to paragraph (c) of 
this section;
    (ii) With base payment rates established at least at a level 
sufficient for child care providers to meet health, safety quality, and 
staffing requirements in accordance with paragraph (f)(1)(ii)(A) of this 
section;
    (iii) Taking into consideration the cost of providing higher-quality 
child care services, including consideration of the information at each 
level of higher quality required by paragraph (f)(1)(ii)(B) of this 
section;
    (iv) Taking into consideration the views and comments of the public 
obtained in accordance with paragraph (e) and through other processes 
determined by the Lead Agency; and
    (v) Without, to the extent practicable, reducing the number of 
families receiving CCDF assistance.
    (g) A Lead Agency may not establish different payment rates based on 
a family's eligibility status, such as TANF status.
    (h) Payment rates under paragraph (a) of this section shall be 
consistent with the parental requirements in Sec.  98.30
    (i) Nothing in this section shall be construed to create a private 
right of action if the Lead Agency acts in accordance with the Act and 
this part.
    (j) Nothing in this part shall be construed to prevent a Lead Agency 
from differentiating payment rates on the basis of such factors as:
    (1) Geographic location of child care providers (such as location in 
an urban or rural area);
    (2) Age or particular needs of children (such as the needs of 
children with disabilities, children served by child protective 
services, and children experiencing homelessness);
    (3) Whether child care providers provide services during the weekend 
or other non-traditional hours; or
    (4) The Lead Agency's determination that such differential payment 
rates may enable a parent to choose high-quality child care that best 
fits the parents' needs.
    (k) Lead Agencies shall establish, and periodically revise, by rule, 
a sliding fee scale(s) for families that receive CCDF child care 
services that:
    (1) Helps families afford child care and enables choice of a range 
of child care options;
    (2) Is based on income and the size of the family and may be based 
on other factors as appropriate, but may not be based on the cost of 
care or amount of subsidy payment;
    (3) Provides for affordable family co-payments that are not a 
barrier to families receiving assistance under this part; and
    (4) At Lead Agency discretion, allows for co-payments to be waived 
for families whose incomes are at or below the poverty level for a 
family of the same size, that have children who receive or need to 
receive protective services, or that meet other criteria established by 
the Lead Agency.

[[Page 722]]

    (l) The Lead Agency shall demonstrate in the Plan that it has 
established payment practices applicable to all CCDF child care 
providers that:
    (1) Ensure timeliness of payment by either:
    (i) Paying prospectively prior to the delivery of services; or
    (ii) Paying within no more than 21 calendar days of the receipt of a 
complete invoice for services.
    (2) To the extent practicable, support the fixed costs of providing 
child care services by delinking provider payments from a child's 
occasional absences by:
    (i) Paying based on a child's enrollment rather than attendance;
    (ii) Providing full payment if a child attends at least 85 percent 
of the authorized time;
    (iii) Providing full payment if a child is absent for five or fewer 
days in a month; or
    (iv) An alternative approach for which the Lead Agency provides a 
justification in its Plan.
    (3) Reflect generally-accepted payment practices of child care 
providers that serve children who do not receive CCDF subsidies, which 
must include (unless the Lead Agency provides evidence in the Plan that 
such practices are not generally-accepted in the State or service area):
    (i) Paying on a part-time or full-time basis (rather than paying for 
hours of service or smaller increments of time); and
    (ii) Paying for reasonable mandatory registration fees that the 
provider charges to private-paying parents:
    (4) Ensure child care providers receive payment for any services in 
accordance with a written payment agreement or authorization for 
services that includes, at a minimum, information regarding provider 
payment policies, including rates, schedules, any fees charged to 
providers, and the dispute resolution process required by paragraph 
(l)(6);
    (5) Ensure child care providers receive prompt notice of changes to 
a family's eligibility status that may impact payment, and that such 
notice is sent to providers no later than the day the Lead Agency 
becomes aware that such a change will occur;
    (6) Include timely appeal and resolution processes for any payment 
inaccuracies and disputes.

[81 FR 67586, Sept. 30, 2016]



Sec.  98.46  Priority for child care services.

    (a) Lead Agencies shall give priority for services provided under 
Sec.  98.50(a) to:
    (1) Children of families with very low family income (considering 
family size);
    (2) Children with special needs, which may include any vulnerable 
populations as defined by the Lead Agency; and
    (3) Children experiencing homelessness.
    (b) Lead Agencies shall prioritize increasing access to high-quality 
child care and development services for children of families in areas 
that have significant concentrations of poverty and unemployment and 
that do not have a sufficient number of such programs.

[81 FR 67587, Sept. 30, 2016]



Sec.  98.47  List of providers.

    If a Lead Agency does not have a registration process for child care 
providers who are unlicensed or unregulated under State, local, or 
tribal law, it is required to maintain a list of the names and addresses 
of unlicensed or unregulated providers of child care services for which 
assistance is provided under this part.

[63 FR 39981, July 24, 1998. Redesignated at 81 FR 67584, Sept. 30, 
2016]



Sec.  98.48  Nondiscrimination in admissions on the basis of religion.

    (a) Child care providers (other than family child care providers, as 
defined in Sec.  98.2) that receive assistance through grants and 
contracts under the CCDF shall not discriminate in admissions against 
any child on the basis of religion.
    (b) Paragraph (a) of this section does not prohibit a child care 
provider from selecting children for child care slots that are not 
funded directly (i.e., through grants or contracts to providers) with 
assistance provided under the CCDF because such children or their family 
members participate on a regular basis in other activities of the

[[Page 723]]

organization that owns or operates such provider.
    (c) Notwithstanding paragraph (b) of this section, if 80 percent or 
more of the operating budget of a child care provider comes from Federal 
or State funds, including direct or indirect assistance under the CCDF, 
the Lead Agency shall assure that before any further CCDF assistance is 
given to the provider,
    (1) The grant or contract relating to the assistance, or
    (2) The admission policies of the provider specifically provide that 
no person with responsibilities in the operation of the child care 
program, project, or activity will discriminate, on the basis of 
religion, in the admission of any child.

[63 FR 39981, July 24, 1998. Redesignated at 81 FR 67584, Sept. 30, 
2016]



Sec.  98.49  Nondiscrimination in employment on the basis of religion.

    (a) In general, except as provided in paragraph (b) of this section, 
nothing in this part modifies or affects the provision of any other 
applicable Federal law and regulation relating to discrimination in 
employment on the basis of religion.
    (1) Child care providers that receive assistance through grants or 
contracts under the CCDF shall not discriminate, on the basis of 
religion, in the employment of caregivers as defined in Sec.  98.2.
    (2) If two or more prospective employees are qualified for any 
position with a child care provider, this section shall not prohibit the 
provider from employing a prospective employee who is already 
participating on a regular basis in other activities of the organization 
that owns or operates the provider.
    (3) Paragraphs (a)(1) and (2) of this section shall not apply to 
employees of child care providers if such employees were employed with 
the provider on November 5, 1990.
    (b) Notwithstanding paragraph (a) of this section, a sectarian 
organization may require that employees adhere to the religious tenets 
and teachings of such organization and to rules forbidding the use of 
drugs or alcohol.
    (c) Notwithstanding paragraph (b) of this section, if 80 percent or 
more of the operating budget of a child care provider comes from Federal 
and State funds, including direct and indirect assistance under the 
CCDF, the Lead Agency shall assure that, before any further CCDF 
assistance is given to the provider,
    (1) The grant or contract relating to the assistance, or
    (2) The employment policies of the provider specifically provide 
that no person with responsibilities in the operation of the child care 
program will discriminate, on the basis of religion, in the employment 
of any individual as a caregiver, as defined in Sec.  98.2.

[63 FR 39981, July 24, 1998. Redesignated at 81 FR 67584, Sept. 30, 
2016]



            Subpart F_Use of Child Care and Development Funds



Sec.  98.50  Child care services.

    (a) Direct child care services shall be provided:
    (1) To eligible children, as described in Sec.  98.20;
    (2) Using a sliding fee scale, as described in Sec.  98.45(k);
    (3) Using funding methods provided for in Sec.  98.30; and
    (4) Based on the priorities in Sec.  98.46.
    (b) Of the aggregate amount of funds expended by a State or 
Territory (i.e., Discretionary, Mandatory, and Federal and State share 
of Matching funds):
    (1) No less than seven percent in fiscal years 2016 and 2017, eight 
percent in fiscal years 2018 and 2019, and nine percent in fiscal year 
2020 and each succeeding fiscal year shall be used for activities 
designed to improve the quality of child care services and increase 
parental options for, and access to, high-quality child care as 
described at Sec.  98.53; and
    (2) No less than three percent in fiscal year 2017 and each 
succeeding fiscal year shall be used to carry out activities at Sec.  
98.53(a)(4) as such activities relate to the quality of care for infants 
and toddlers.
    (3) Nothing in this section shall preclude the State or Territory 
from reserving a larger percentage of funds to carry out activities 
described in paragraphs (b)(1) and (2) of this section.
    (c) Funds expended from each fiscal year's allotment on quality 
activities

[[Page 724]]

pursuant to paragraph (b) of this section:
    (1) Must be in alignment with an assessment of the Lead Agency's 
need to carry out such services and care as required at Sec.  98.53(a);
    (2) Must include measurable indicators of progress in accordance 
with Sec.  98.53(f); and
    (3) May be provided directly by the Lead Agency or through grants or 
contracts with local child care resource and referral organizations or 
other appropriate entities.
    (d) Of the aggregate amount of funds expended (i.e., Discretionary, 
Mandatory, and Federal and State share of Matching Funds), no more than 
five percent may be used for administrative activities as described at 
Sec.  98.54.
    (e) Not less than 70 percent of the Mandatory and Federal and State 
share of Matching Funds shall be used to meet the child care needs of 
families who:
    (1) Are receiving assistance under a State program under Part A of 
title IV of the Social Security Act;
    (2) Are attempting through work activities to transition off such 
assistance program; and
    (3) Are at risk of becoming dependent on such assistance program.
    (f) From Discretionary amounts provided for a fiscal year, the Lead 
Agency shall:
    (1) Reserve the minimum amount required under paragraph (b) of this 
section for quality activities, and the funds for administrative costs 
described at paragraph (d) of this section; and
    (2) From the remainder, use not less than 70 percent to fund direct 
services (provided by the Lead Agency).
    (g) Of the funds remaining after applying the provisions of 
paragraphs (a) through (f) of this section, the Lead Agency shall spend 
a substantial portion of funds to provide direct child care services to 
low-income families who are working or attending training or education.
    (h) Pursuant to Sec.  98.16(i)(4), the Plan shall specify how the 
State will meet the child care needs of families described in paragraph 
(e) of this section.

[81 FR 67587, Sept. 30, 2016]



Sec.  98.51  Services for children experiencing homelessness.

    Lead Agencies shall expend funds on activities that improve access 
to quality child care services for children experiencing homelessness, 
including:
    (a) The use of procedures to permit enrollment (after an initial 
eligibility determination) of children experiencing homelessness while 
required documentation is obtained;
    (1) If, after full documentation is provided, a family experiencing 
homelessness is found ineligible,
    (i) The Lead Agency shall pay any amount owed to a child care 
provider for services provided as a result of the initial eligibility 
determination; and
    (ii) Any CCDF payment made prior to the final eligibility 
determination shall not be considered an error or improper payment under 
subpart K of this part;
    (2) [Reserved]
    (b) Training and technical assistance for providers and appropriate 
Lead Agency (or designated entity) staff on identifying and serving 
children experiencing homelessness and their families; and
    (c) Specific outreach to families experiencing homelessness.

[81 FR 67588, Sept. 30, 2016]



Sec.  98.52  Child care resource and referral system.

    (a) A Lead Agency may expend funds to establish or support a system 
of local or regional child care resource and referral organizations that 
is coordinated, to the extent determined appropriate by the Lead Agency, 
by a statewide public or private nonprofit, community-based or 
regionally based, lead child care resource and referral organization.
    (b) If a Lead Agency uses funds as described in paragraph (a) of 
this section, the local or regional child care resource and referral 
organizations supported shall, at the direction of the Lead Agency:
    (1) Provide parents in the State with consumer education information 
referred to in Sec.  98.33 (except as otherwise provided in that 
paragraph), concerning the full range of child care options (including 
faith-based and community-based child care providers),

[[Page 725]]

analyzed by provider, including child care provided during 
nontraditional hours and through emergency child care centers, in their 
political subdivisions or regions;
    (2) To the extent practicable, work directly with families who 
receive assistance under this subchapter to offer the families support 
and assistance, using information described in paragraph (b)(1) of this 
section, to make an informed decision about which child care providers 
they will use, in an effort to ensure that the families are enrolling 
their children in the most appropriate child care setting to suit their 
needs and one that is of high quality (as determined by the Lead 
Agency);
    (3) Collect data and provide information on the coordination of 
services and supports, including services under section 619 and part C 
of the Individuals with Disabilities Education Act (20 U.S.C. 1431, et 
seq.), for children with disabilities (as defined in section 602 of such 
Act (20 U.S.C. 1401));
    (4) Collect data and provide information on the supply of and demand 
for child care services in political subdivisions or regions within the 
State and submit such information to the State;
    (5) Work to establish partnerships with public agencies and private 
entities, including faith-based and community-based child care 
providers, to increase the supply and quality of child care services in 
the State; and
    (6) As appropriate, coordinate their activities with the activities 
of the State Lead Agency and local agencies that administer funds made 
available in accordance with this part.

[81 FR 67588, Sept. 30, 2016]



Sec.  98.53  Activities to improve the quality of child care.

    (a) The Lead Agency must expend funds from each fiscal year's 
allotment on quality activities pursuant to Sec. Sec.  98.50(b) and 
98.83(g) in accordance with an assessment of need by the Lead Agency. 
Such funds must be used to carry out at least one of the following 
quality activities to improve the quality of child care services for all 
children, regardless of CCDF receipt, in accordance with paragraph (d) 
of this section:
    (1) Supporting the training, professional development, and 
postsecondary education of the child care workforce as part of a 
progression of professional development through activities such as those 
included at Sec.  98.44, in addition to:
    (i) Offering training, professional development, and postsecondary 
education opportunities for child care caregivers, teachers and 
directors that:
    (A) Relate to the use of scientifically based, developmentally-
appropriate, culturally-appropriate, and age-appropriate strategies to 
promote the social, emotional, physical, and cognitive development of 
children, including those related to nutrition and physical activity; 
and
    (B) Offer specialized training, professional development, and 
postsecondary education for caregivers, teachers and directors caring 
for those populations prioritized at Sec.  98.44(b)(2)(iv), and children 
with disabilities;
    (ii) Incorporating the effective use of data to guide program 
improvement and improve opportunities for caregivers, teachers and 
directors to advance on their progression of training, professional 
development, and postsecondary education;
    (iii) Including effective, age-appropriate behavior management 
strategies and training, including positive behavior interventions and 
support models for birth to school-age, that promote positive social and 
emotional development and reduce challenging behaviors, including 
reducing suspensions and expulsions of children under age five for such 
behaviors;
    (iv) Providing training and outreach on engaging parents and 
families in culturally and linguistically appropriate ways to expand 
their knowledge, skills, and capacity to become meaningful partners in 
supporting their children's positive development;
    (v) Providing training corresponding to the nutritional and physical 
activity needs of children to promote healthy development;
    (vi) Providing training or professional development for caregivers, 
teachers and directors regarding the early neurological development of 
children; and
    (vii) Connecting child care caregivers, teachers, and directors with

[[Page 726]]

available Federal and State financial aid that would assist these 
individuals in pursuing relevant postsecondary education, or delivering 
financial resources directly through programs that provide scholarships 
and compensation improvements for education attainment and retention.
    (2) Improving upon the development or implementation of the early 
learning and development guidelines at Sec.  98.15(a)(9) by providing 
technical assistance to eligible child care providers in order to 
enhance the cognitive, physical, social, and emotional development and 
overall well-being of participating children.
    (3) Developing, implementing, or enhancing a tiered quality rating 
and improvement system for child care providers and services to meet 
consumer education requirements at Sec.  98.33, which may:
    (i) Support and assess the quality of child care providers in the 
State, Territory, or Tribe;
    (ii) Build on licensing standards and other regulatory standards for 
such providers;
    (iii) Be designed to improve the quality of different types of child 
care providers and services;
    (iv) Describe the safety of child care facilities;
    (v) Build the capacity of early childhood programs and communities 
to promote parents' and families' understanding of the early childhood 
system and the rating of the program in which the child is enrolled;
    (vi) Provide, to the maximum extent practicable, financial 
incentives and other supports designed to expand the full diversity of 
child care options and help child care providers improve the quality of 
services; and
    (vii) Accommodate a variety of distinctive approaches to early 
childhood education and care, including but not limited to, those 
practiced in faith-based settings, community-based settings, child 
centered settings, or similar settings that offer a distinctive approach 
to early childhood development.
    (4) Improving the supply and quality of child care programs and 
services for infants and toddlers through activities, which may include:
    (i) Establishing or expanding high-quality community or neighborhood 
based family and child development centers, which may serve as resources 
to child care providers in order to improve the quality of early 
childhood services provided to infants and toddlers from low-income 
families and to help eligible child care providers improve their 
capacity to offer high-quality, age-appropriate care to infants and 
toddlers from low-income families;
    (ii) Establishing or expanding the operation of community or 
neighborhood-based family child care networks;
    (iii) Promoting and expanding child care providers' ability to 
provide developmentally appropriate services for infants and toddlers 
through, but not limited to:
    (A) Training and professional development for caregivers, teachers 
and directors, including coaching and technical assistance on this age 
group's unique needs from statewide networks of qualified infant-toddler 
specialists; and
    (B) Improved coordination with early intervention specialists who 
provide services for infants and toddlers with disabilities under part C 
of the Individuals with Disabilities Education Act (20 U.S.C. 1431. et 
seq.);
    (iv) If applicable, developing infant and toddler components within 
the Lead Agency's quality rating and improvement system described in 
paragraph (a)(3) of this section for child care providers for infants 
and toddlers, or the development of infant and toddler components in the 
child care licensing regulations or early learning and development 
guidelines;
    (v) Improving the ability of parents to access transparent and easy 
to understand consumer information about high-quality infant and toddler 
care as described at Sec.  98.33; and
    (vi) Carrying out other activities determined by the Lead Agency to 
improve the quality of infant and toddler care provided, and for which 
there is evidence that the activities will lead to improved infant and 
toddler health and safety, infant and toddler cognitive and physical 
development, or infant and toddler well-being, including providing 
health and safety training (including training in safe sleep practices, 
first

[[Page 727]]

aid, and cardiopulmonary resuscitation for providers and caregivers.
    (5) Establishing or expanding a statewide system of child care 
resource and referral services.
    (6) Facilitating compliance with Lead Agency requirements for 
inspection, monitoring, training, and health and safety, and with 
licensing standards.
    (7) Evaluating and assessing the quality and effectiveness of child 
care programs and services offered, including evaluating how such 
programs positively impact children.
    (8) Supporting child care providers in the voluntary pursuit of 
accreditation by a national accrediting body with demonstrated, valid, 
and reliable program standards of high-quality.
    (9) Supporting Lead Agency or local efforts to develop or adopt 
high-quality program standards relating to health, mental health, 
nutrition, physical activity, and physical development.
    (10) Carrying out other activities, including implementing consumer 
education provisions at Sec.  98.33, determined by the Lead Agency to 
improve the quality of child care services provided, and for which 
measurement of outcomes relating to improvement of provider 
preparedness, child safety, child well-being, or entry to kindergarten 
is possible.
    (b) Pursuant to Sec.  98.16(j), the Lead Agency shall describe in 
its Plan the activities it will fund under this section.
    (c) Non-Federal expenditures required by Sec.  98.55(c) (i.e., the 
maintenance-of effort amount) are not subject to the requirement at 
paragraph (a) of this section.
    (d) Activities to improve the quality of child care services are not 
restricted to activities affecting children meeting eligibility 
requirements under Sec.  98.20 or to child care providers of services 
for which assistance is provided under this part.
    (e) Unless expressly authorized by law, targeted funds for quality 
improvement and other set asides that may be included in appropriations 
law may not be used towards meeting the quality expenditure minimum 
requirement at Sec.  98.50(b).
    (f) States shall annually prepare and submit reports, including a 
quality progress report and expenditure report, to the Secretary, which 
must be made publicly available and shall include:
    (1) An assurance that the State was in compliance with requirements 
at Sec.  98.50(b) in the preceding fiscal year and information about the 
amount of funds reserved for that purpose;
    (2) A description of the activities carried out under this section 
to comply with Sec.  98.50(b);
    (3) The measures the State will use to evaluate its progress in 
improving the quality of child care programs and services in the State, 
and data on the extent to which the State had met these measures;
    (4) A report describing any changes to State regulations, 
enforcement mechanisms, or other State policies addressing health and 
safety based on an annual review and assessment of serious child 
injuries and any deaths occurring in child care programs serving 
children receiving assistance under this part, and in other regulated 
and unregulated child care centers and family child care homes, to the 
extent possible; and
    (5) A description of how the Lead Agency responded to complaints 
submitted through the national hotline and Web site, required in section 
658L(b) of the CCDBG Act (42 U.S.C. 9858j(b)).

[81 FR 67588, Sept. 30, 2016]



Sec.  98.54  Administrative costs.

    (a) Not more than five percent of the aggregate funds expended by 
the Lead Agency from each fiscal year's allotment, including the amounts 
expended in the State pursuant to Sec.  98.55(b), shall be expended for 
administrative activities. These activities may include but are not 
limited to:
    (1) Salaries and related costs of the staff of the Lead Agency or 
other agencies engaged in the administration and implementation of the 
program pursuant to Sec.  98.11. Program administration and 
implementation include the following types of activities:
    (i) Planning, developing, and designing the Child Care and 
Development Fund program;

[[Page 728]]

    (ii) Providing local officials and the public with information about 
the program, including the conduct of public hearings;
    (iii) Preparing the application and Plan;
    (iv) Developing agreements with administering agencies in order to 
carry out program activities;
    (v) Monitoring program activities for compliance with program 
requirements;
    (vi) Preparing reports and other documents related to the program 
for submission to the Secretary;
    (vii) Maintaining substantiated complaint files in accordance with 
the requirements of Sec.  98.32;
    (viii) Coordinating the provision of Child Care and Development Fund 
services with other Federal, State, and local child care, early 
childhood development programs, and before-and after-school care 
programs;
    (ix) Coordinating the resolution of audit and monitoring findings;
    (x) Evaluating program results; and
    (xi) Managing or supervising persons with responsibilities described 
in paragraphs (a)(1)(i) through (x) of this section;
    (2) Travel costs incurred for official business in carrying out the 
program;
    (3) Administrative services, including such services as accounting 
services, performed by grantees or subgrantees or under agreements with 
third parties;
    (4) Audit services as required at Sec.  98.65;
    (5) Other costs for goods and services required for the 
administration of the program, including rental or purchase of 
equipment, utilities, and office supplies; and
    (6) Indirect costs as determined by an indirect cost agreement or 
cost allocation plan pursuant to Sec.  98.57.
    (b) The following activities do not count towards the five percent 
limitation on administrative expenditures in paragraph (a) of this 
section:
    (1) Establishment and maintenance of computerized child care 
information systems;
    (2) Establishing and operating a certificate program;
    (3) Eligibility determination and redetermination;
    (4) Preparation/participation in judicial hearings;
    (5) Child care placement;
    (6) Recruitment, licensing, inspection of child care providers;
    (7) Training for Lead Agency or sub recipient staff on billing and 
claims processes associated with the subsidy program;
    (8) Reviews and supervision of child care placements;
    (9) Activities associated with payment rate setting;
    (10) Resource and referral services; and
    (11) Training for child care staff.
    (c) The five percent limitation at paragraph (a) of this section 
applies only to the States and Territories. The amount of the limitation 
at paragraph (a) of this section does not apply to Tribes or tribal 
organizations.
    (d) Non-Federal expenditures required by Sec.  98.55(c) (i.e., the 
maintenance-of-effort amount) are not subject to the five percent 
limitation at paragraph (a) of this section.
    (e) If a Lead Agency enters into agreements with sub-recipients for 
operation of the CCDF program, the amount of the contract or grant 
attributable to administrative activities as described in this section 
shall be counted towards the five percent limit.

[63 FR 39981, July 24, 1998. Redesignated and amended at 81 FR 67588, 
67590, Sept. 30, 2016]



Sec.  98.55  Matching fund requirements.

    (a) Federal matching funds are available for expenditures in a State 
based upon the formula specified at Sec.  98.63(a).
    (b) Expenditures in a State under paragraph (a) of this section will 
be matched at the Federal medical assistance rate for the applicable 
fiscal year for allowable activities, as described in the approved State 
Plan, that meet the goals and purposes of the Act.
    (c) In order to receive Federal matching funds for a fiscal year 
under paragraph (a) of this section:
    (1) States shall also expend an amount of non-Federal funds for 
child care activities in the State that is at least equal to the State's 
share of expenditures for fiscal year 1994 or 1995 (whichever is 
greater) under sections 402(g) and (i) of the Social Security Act

[[Page 729]]

as these sections were in effect before October 1, 1995; and
    (2) The expenditures shall be for allowable services or activities, 
as described in the approved State Plan if appropriate, that meet the 
goals and purposes of the Act.
    (3) All Mandatory Funds are obligated in accordance with Sec.  
98.60(d)(2)(i).
    (d) The same expenditure may not be used to meet the requirements 
under both paragraphs (b) and (c) of this section in a fiscal year.
    (e) An expenditure in the State for purposes of this subpart may be:
    (1) Public funds when the funds are:
    (i) Appropriated directly to the Lead Agency specified at Sec.  
98.10, or transferred from another public agency to that Lead Agency and 
under its administrative control, or certified by the contributing 
public agency as representing expenditures eligible for Federal match;
    (ii) Not used to match other Federal funds; and
    (iii) Not Federal funds, or are Federal funds authorized by Federal 
law to be used to match other Federal funds; or
    (2) Donated from private sources when the donated funds:
    (i) Are donated without any restriction that would require their use 
for a specific individual, organization, facility or institution;
    (ii) Do not revert to the donor's facility or use;
    (iii) Are not used to match other Federal funds;
    (iv) Shall be certified both by the Lead Agency and by the donor (if 
funds are donated directly to the Lead Agency) or the Lead Agency and 
the entity designated by the State to receive donated funds pursuant to 
paragraph (f) of this section (if funds are donated directly to the 
designated entity) as available and representing funds eligible for 
Federal match; and
    (v) Shall be subject to the audit requirements in Sec.  98.65 of 
these regulations.
    (f) Donated funds need not be transferred to or under the 
administrative control of the Lead Agency in order to qualify as an 
expenditure eligible to receive Federal match under this section. They 
may be given to the public or private entities designated by the State 
to implement the child care program in accordance with Sec.  98.11 
provided that such entities are identified and designated in the State 
Plan to receive donated funds in accordance with Sec.  98.16(d)(2).
    (g) The following are not counted as an eligible State expenditure 
under this part:
    (1) In-kind contributions; and
    (2) Family contributions to the cost of care as required by Sec.  
98.45(k).
    (h) Public pre-kindergarten (pre-K) expenditures:
    (1) May be used to meet the maintenance-of-effort requirement only 
if the State has not reduced its expenditures for full-day/full-year 
child care services; and
    (2) May be eligible for Federal match if the State includes in its 
Plan, as provided in Sec.  98.16(w), a description of the efforts it 
will undertake to ensure that pre-K programs meet the needs of working 
parents.
    (3) In any fiscal year, a State may use public pre-K funds for up to 
20% of the funds serving as maintenance-of-effort under this subsection. 
In addition, in any fiscal year, a State may use other public pre-K 
funds as expenditures serving as State matching funds under this 
subsection; such public pre-K funds used as State expenditures may not 
exceed 30% of the amount of a State's expenditures required to draw down 
the State's full allotment of Federal matching funds available under 
this subsection.
    (4) If applicable, the CCDF Plan shall reflect the State's intent to 
use public pre-K funds in excess of 10%, but not for more than 20% of 
its maintenance-of-effort or 30% of its State matching funds in a fiscal 
year. Also, the Plan shall describe how the State will coordinate its 
pre-K and child care services to expand the availability of child care.
    (i) Matching funds are subject to the obligation and liquidation 
requirements at Sec.  98.60(d)(3).

[63 FR 39981, July 24, 1998, as amended at 72 FR 27979, May 18, 2007. 
Redesignated and amended at 81 FR 67588, 67590, Sept. 30, 2016]

[[Page 730]]



Sec.  98.56  Restrictions on the use of funds.

    (a) General. (1) Funds authorized under section 418 of the Social 
Security Act and section 658B of the Child Care and Development Block 
Grant Act, and all funds transferred to the Lead Agency pursuant to 
section 404(d) of the Social Security Act, shall be expended consistent 
with these regulations. Funds transferred pursuant to section 404(d) of 
the Social Security Act shall be treated as Discretionary Funds;
    (2) Funds shall be expended in accordance with applicable State and 
local laws, except as superseded by Sec.  98.3.
    (b) Construction. (1) For State and local agencies and nonsectarian 
agencies or organizations, no funds shall be expended for the purchase 
or improvement of land, or for the purchase, construction, or permanent 
improvement of any building or facility. However, funds may be expended 
for minor remodeling, and for upgrading child care facilities to assure 
that providers meet State and local child care standards, including 
applicable health and safety requirements. Improvements or upgrades to a 
facility which are not specified under the definitions of construction 
or major renovation at Sec.  98.2 may be considered minor remodeling and 
are, therefore, not prohibited.
    (2) For sectarian agencies or organizations, the prohibitions in 
paragraph (b)(1) of this section apply; however, funds may be expended 
for minor remodeling only if necessary to bring the facility into 
compliance with the health and safety requirements established pursuant 
to Sec.  8.41.
    (3) Tribes and tribal organizations are subject to the requirements 
at Sec.  98.84 regarding construction and renovation.
    (c) Tuition. Funds may not be expended for students enrolled in 
grades 1 through 12 for:
    (1) Any service provided to such students during the regular school 
day;
    (2) Any service for which such students receive academic credit 
toward graduation; or
    (3) Any instructional services that supplant or duplicate the 
academic program of any public or private school.
    (d) Sectarian purposes and activities. Funds provided under grants 
or contracts to providers may not be expended for any sectarian purpose 
or activity, including sectarian worship or instruction. Assistance 
provided to parents through certificates is not a grant or contract. 
Funds provided through child care certificates may be expended for 
sectarian purposes or activities, including sectarian worship or 
instruction when provided as part of the child care services.
    (e) Non-Federal share for other Federal programs. The CCDF may not 
be used as the non-Federal share for other Federal grant programs, 
unless explicitly authorized by statute.

[63 FR 39981, July 24, 1998. Redesignated and amended at 81 FR 67588, 
67590, Sept. 30, 2016]



Sec.  98.57  Cost allocation.

    (a) The Lead Agency and subgrantees shall keep on file cost 
allocation plans or indirect cost agreements, as appropriate, that have 
been amended to include costs allocated to the CCDF.
    (b) Subgrantees that do not already have a negotiated indirect rate 
with the Federal government should prepare and keep on file cost 
allocation plans or indirect cost agreements, as appropriate.
    (c) Approval of the cost allocation plans or indirect cost 
agreements is not specifically required by these regulations, but these 
plans and agreements are subject to review.

[63 FR 39981, July 24, 1998. Redesignated at 81 FR 67588, Sept. 30, 
2016]



                     Subpart G_Financial Management



Sec.  98.60  Availability of funds.

    (a) The CCDF is available, subject to the availability of 
appropriations, in accordance with the apportionment of funds from the 
Office of Management and Budget as follows:
    (1) Discretionary Funds are available to States, Territories, and 
Tribes,
    (2) Mandatory and Matching Funds are available to States;
    (3) Tribal Mandatory Funds are available to Tribes.

[[Page 731]]

    (b) Subject to the availability of appropriations, in accordance 
with relevant statutory provisions and the apportionment of funds from 
the Office of Management and Budget, the Secretary:
    (1) May withhold a portion of the CCDF funds made available for a 
fiscal year for the provision of technical assistance, for research, 
evaluation, and demonstration, and for a national toll free hotline and 
Web site;
    (2) Will award the remaining CCDF funds to grantees that have an 
approved application and Plan.
    (c) The Secretary may make payments in installments, and in advance 
or by way of reimbursement, with necessary adjustments due to 
overpayments or underpayments.
    (d) The following obligation and liquidation provisions apply to 
States and Territories:
    (1) Discretionary Fund allotments shall be obligated in the fiscal 
year in which funds are awarded or in the succeeding fiscal year. 
Unliquidated obligations as of the end of the succeeding fiscal year 
shall be liquidated within one year.
    (2)(i) Mandatory Funds for States requesting Matching Funds per 
Sec.  98.55 shall be obligated in the fiscal year in which the funds are 
granted and are available until expended.
    (ii) Mandatory Funds for States that do not request Matching Funds 
are available until expended.
    (3) Both the Federal and non-Federal share of the Matching Fund 
shall be obligated in the fiscal year in which the funds are granted and 
liquidated no later than the end of the succeeding fiscal year.
    (4) Except for paragraph (d)(5) of this section, determination of 
whether funds have been obligated and liquidated will be based on:
    (i) State or local law; or,
    (ii) If there is no applicable State or local law, the regulation at 
45 CFR 75.2, Expenditures and Obligations.
    (5) Obligations may include subgrants or contracts that require the 
payment of funds to a third party (e.g., subgrantee or contractor). 
However, the following are not considered third party subgrantees or 
contractors:
    (i) A local office of the Lead Agency;
    (ii) Another entity at the same level of government as the Lead 
Agency; or
    (iii) A local office of another entity at the same level of 
government as the Lead Agency.
    (6) In instances where the Lead Agency issues child care 
certificates, funds for child care services provided through a child 
care certificate will be considered obligated when a child care 
certificate is issued to a family in writing that indicates:
    (i) The amount of funds that will be paid to a child care provider 
or family, and
    (ii) The specific length of time covered by the certificate, which 
is limited to the date established for redetermination of the family's 
eligibility, but shall be no later than the end of the liquidation 
period.
    (7) In instances where third party agencies issue child care 
certificates, the obligation of funds occurs upon entering into 
agreement through a subgrant or contract with such agency, rather than 
when the third party issues certificates to a family.
    (8) Any funds not obligated during the obligation period specified 
in paragraph (d) of this section will revert to the Federal government. 
Any funds not liquidated by the end of the applicable liquidation period 
specified in paragraph (d) of this section will also revert to the 
Federal government.
    (e) The following obligation and liquidation provisions apply to 
Tribal Discretionary and Tribal Mandatory Funds:
    (1) Tribal grantees shall obligate all funds by the end of the 
fiscal year following the fiscal year for which the grant is awarded. 
Any funds not obligated during this period will revert to the Federal 
government.
    (2) Obligations that remain unliquidated at the end of the 
succeeding fiscal year shall be liquidated within the next fiscal year. 
Any tribal funds that remain unliquidated by the end of this period will 
also revert to the Federal government.
    (f) Cash advances shall be limited to the minimum amounts needed and 
shall be timed to be in accord with the actual, immediate cash 
requirements of the State Lead Agency, its subgrantee or contractor in 
carrying out

[[Page 732]]

the purpose of the program in accordance with 31 CFR part 205.
    (g) Funds that are returned (e.g., loan repayments, funds 
deobligated by cancellation of a child care certificate, unused 
subgrantee funds) as well as program income (e.g., contributions made by 
families directly to the Lead Agency or subgrantee for the cost of care 
where the Lead Agency or subgrantee has made a full payment to the child 
care provider) shall,
    (1) if received by the Lead Agency during the applicable obligation 
period, described in paragraphs (d) and (e) of this section, be used for 
activities specified in the Lead Agency's approved plan and must be 
obligated by the end of the obligation period; or
    (2) if received after the end of the applicable obligation period 
described at paragraphs (d) and (e) of this section, be returned to the 
Federal government.
    (h) Repayment of loans made to child care providers as part of a 
quality improvement activity pursuant to Sec.  98.53, may be made in 
cash or in services provided in-kind. Payment provided in-kind shall be 
based on fair market value. All loans shall be fully repaid.
    (i) Lead Agencies shall recover child care payments that are the 
result of fraud. These payments shall be recovered from the party 
responsible for committing the fraud.

[63 FR 39981, July 24, 1998, as amended at 81 FR 3020, Jan. 20, 2016; 81 
FR 67591, Sept. 30, 2016]



Sec.  98.61  Allotments from the Discretionary Fund.

    (a) To the 50 States, the District of Columbia, and the Commonwealth 
of Puerto Rico an amount equal to the funds appropriated for the Child 
Care and Development Block Grant, less amounts reserved for technical 
assistance, research, and the national hotline and Web site, pursuant to 
Sec.  98.60(b), and amounts reserved for the Territories and Tribes, 
pursuant to Sec.  98.60(b) and paragraphs (b) and (c) of this section, 
shall be allotted based upon the formula specified in section 658O(b) of 
the Act (42 U.S.C. 9858m(b)).
    (b) For the U.S. Territories of Guam, American Samoa, the Virgin 
Islands of the United States, and the Commonwealth of the Northern 
Mariana Islands an amount up to one-half of one percent of the amount 
appropriated for the Child Care and Development Block Grant shall be 
reserved.
    (1) Funds shall be allotted to these Territories based upon the 
following factors:
    (i) A Young Child factor--the ratio of the number of children in the 
Territory under five years of age to the number of such children in all 
Territories; and
    (ii) An Allotment Proportion factor--determined by dividing the per 
capita income of all individuals in all the Territories by the per 
capita income of all individuals in the Territory.
    (A) Per capita income shall be:
    (1) Equal to the average of the annual per capita incomes for the 
most recent period of three consecutive years for which satisfactory 
data are available at the time such determination is made; and
    (2) Determined every two years.
    (B) Per capita income determined, pursuant to paragraph 
(b)(1)(ii)(A) of this section, will be applied in establishing the 
allotment for the fiscal year for which it is determined and for the 
following fiscal year.
    (C) If the Allotment Proportion factor determined at paragraph 
(b)(1)(ii) of this section:
    (1) Exceeds 1.2, then the Allotment Proportion factor of the 
Territory shall be considered to be 1.2; or
    (2) Is less than 0.8, then the Allotment Proportion factor of the 
Territory shall be considered to be 0.8.
    (2)(i) The formula used in calculating a Territory's allotment is as 
follows:

[GRAPHIC] [TIFF OMITTED] TR24JY98.000


    (ii) For purposes of the formula specified at paragraph (b)(2)(i) of 
this section, the term ``YCFt'' means the Territory's Young 
Child factor as defined at paragraph (b)(1)(i) of this section.
    (iii) For purposes of the formula specified at paragraph (b)(2)(i) 
of this section, the term ``APFt'' means the Territory's 
Allotment Proportion factor as defined at paragraph (b)(1)(ii) of this 
section.

[[Page 733]]

    (c) For Indian Tribes and tribal organizations, including any 
Alaskan Native Village or regional or village corporation as defined in 
or established pursuant to the Alaska Native Claims Settlement Act (43 
U.S.C. 1601 et seq.) not less than two percent of the amount 
appropriated for the Child Care and Development Block Grant shall be 
reserved.
    (1) Except as specified in paragraph (c)(2) of this section, grants 
to individual tribal grantees will be equal to the sum of:
    (i) A base amount as set by the Secretary; and
    (ii) An additional amount per Indian child under age 13 (or such 
similar age as determined by the Secretary from the best available 
data), which is determined by dividing the amount of funds available, 
less amounts set aside for eligible Tribes, pursuant to paragraph 
(c)(1)(i) of this section, by the number of all Indian children living 
on or near tribal reservations or other appropriate area served by the 
tribal grantee, pursuant to Sec.  98.80(e).
    (2) Grants to Tribes with fewer than 50 Indian children that apply 
as part of a consortium, pursuant to Sec.  98.80(b)(1), are equal to the 
sum of:
    (i) A portion of the base amount, pursuant to paragraph (c)(1)(i) of 
this section, that bears the same ratio as the number of Indian children 
in the Tribe living on or near the reservation, or other appropriate 
area served by the tribal grantee, pursuant to Sec.  98.80(e), does to 
50; and
    (ii) An additional amount per Indian child, pursuant to paragraph 
(c)(1)(ii) of this section.
    (3) Tribal consortia will receive grants that are equal to the sum 
of the individual grants of their members.
    (d) All funds reserved for Territories at paragraph (b) of this 
section will be allotted to Territories, and all funds reserved for 
Tribes at paragraph (c) of this section will be allotted to tribal 
grantees. Any funds that are returned by the Territories after they have 
been allotted will revert to the Federal government.
    (e) For other organizations, up to $2,000,000 may be reserved from 
the tribal funds reserved at paragraph (c) of this section. From this 
amount the Secretary may award a grant to a Native Hawaiian 
Organization, as defined in section 4009(4) of the Augustus F. Hawkins-
Robert T. Stafford Elementary and Secondary School Improvement 
Amendments of 1988 (20 U.S.C. 4909(4)) and to a private non-profit 
organization established for the purpose of serving youth who are 
Indians or Native Hawaiians. The Secretary will establish selection 
criteria and procedures for the award of grants under this subsection by 
notice in the Federal Register.
    (f) Lead Agencies shall expend any funds that may be set-aside for 
targeted activities pursuant to annual appropriations law as directed by 
the Secretary.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016]



Sec.  98.62  Allotments from the Mandatory Fund.

    (a) Each of the 50 States and the District of Columbia will be 
allocated from the funds appropriated under section 418(a)(3) of the 
Social Security Act, less the amounts reserved for technical assistance 
pursuant to Sec.  98.60(b)(1) and the amount reserved for Tribes 
pursuant to paragraph (b) of this section, an amount of funds equal to 
the greater of:
    (1) the Federal share of its child care expenditures under 
subsections (g) and (i) of section 402 of the Social Security Act (as in 
effect before October 1, 1995) for fiscal year 1994 or 1995 (whichever 
is greater); or
    (2) the average of the Federal share of its child care expenditures 
under the subsections referred to in subparagraph (a)(1) of this section 
for fiscal years 1992 through 1994.
    (b) For Indian Tribes and tribal organizations up to 2 percent of 
the amount appropriated under section 418(a)(3) of the Social Security 
Act shall be allocated according to the formula at paragraph (c) of this 
section. In Alaska, only the following 13 entities shall receive 
allocations under this subpart, in accordance with the formula at 
paragraph (c) of this section:
    (1) The Metlakatla Indian Community of the Annette Islands Reserve:
    (2) Arctic Slope Native Association;
    (3) Kawerak, Inc.;

[[Page 734]]

    (4) Maniilaq Association;
    (5) Association of Village Council Presidents;
    (6) Tanana Chiefs Conference;
    (7) Cook Inlet Tribal Council;
    (8) Bristol Bay Native Association;
    (9) Aleutian and Pribilof Islands Association;
    (10) Chugachmuit;
    (11) Tlingit and Haida Central Council;
    (12) Kodiak Area Native Association; and
    (13) Copper River Native Association.
    (c)(1) Grants to individual Tribes with 50 or more Indian children, 
and to Tribes with fewer than 50 Indian children that apply as part of a 
consortium pursuant to Sec.  98.80(b)(1), will be equal to an amount per 
Indian child under age 13 (or such similar age as determined by the 
Secretary from the best available data), which is determined by dividing 
the amount of funds available, by the number of Indian children in each 
Tribe's service area pursuant to Sec.  98.80(e).
    (2) Tribal consortia will receive grants that are equal to the sum 
of the individual grants of their members.



Sec.  98.63  Allotments from the Matching Fund.

    (a) To each of the 50 States and the District of Columbia there is 
allocated an amount equal to its share of the total available under 
section 418(a)(3) of the Social Security Act. That amount is based on 
the same ratio as the number of children under age 13 residing in the 
State bears to the national total of children under age 13. The number 
of children under 13 is derived from the best data available to the 
Secretary for the second preceding fiscal year.
    (b) For purposes of this section, the amounts available under 
section 418(a)(3) of the Social Security Act (42 U.S.C. 618(a)(3)) 
excludes the amounts reserved and allocated under Sec.  98.60(b)(1) for 
technical assistance, research and evaluation, and the national toll-
free hotline and Web site and under Sec.  98.62(a) and (b) for the 
Mandatory Fund.
    (c) Amounts under this section are available pursuant to the 
requirements at Sec.  98.55(c).

[63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016]



Sec.  98.64  Reallotment and redistribution of funds.

    (a) According to the provisions of this section State and Tribal 
Discretionary Funds are subject to reallotment, and State Matching Funds 
are subject to redistribution. State funds are reallotted or 
redistributed only to States as defined for the original allocation. 
Tribal funds are reallotted only to Tribes. Funds granted to the 
Territories are not subject to reallotment. Any funds granted to the 
Territories that are returned after they have been allotted will revert 
to the Federal government.
    (b) Any portion of a State's Discretionary Fund allotment that is 
not required to carry out its Plan, in the period for which the 
allotment is made available, shall be reallotted to other States in 
proportion to the original allotments. For purposes of this paragraph 
the term ``State'' means the 50 States, the District of Columbia, and 
the Commonwealth of Puerto Rico. The other Territories and the Tribes 
may not receive reallotted State Discretionary Funds.
    (1) Each year, the State shall report to the Secretary either the 
dollar amount from the previous year's grant that it will be unable to 
obligate by the end of the obligation period or that all funds will be 
obligated during such time. Such report shall be postmarked by April 
1st.
    (2) Based upon the reallotment reports submitted by States, the 
Secretary will reallot funds.
    (i) If the total amount available for reallotment is $25,000 or 
more, funds will be reallotted to States in proportion to each State's 
allotment for the applicable fiscal year's funds, pursuant to Sec.  
98.61(a).
    (ii) If the amount available for reallotment is less than $25,000, 
the Secretary will not reallot any funds, and such funds will revert to 
the Federal government.
    (iii) If an individual reallotment amount to a State is less than 
$500, the

[[Page 735]]

Secretary will not issue the award, and such funds will revert to the 
Federal government.
    (3) If a State does not submit a reallotment report by the deadline 
for report submittal, either:
    (i) The Secretary will determine that the State does not have any 
funds available for reallotment; or
    (ii) In the case of a report postmarked after April 1st, any funds 
reported to be available for reallotment shall revert to the Federal 
government.
    (4) States receiving reallotted funds shall obligate and expend 
these funds in accordance with Sec.  98.60. The reallotment of funds 
does not extend the obligation period or the program period for 
expenditure of such funds.
    (c)(1) Any portion of the Matching Fund granted to a State that is 
not obligated in the period for which the grant is made shall be 
redistributed. Funds, if any, will be redistributed on the request of, 
and only to, those other States that have met the requirements of Sec.  
98.55(c) in the period for which the grant was first made. For purposes 
of this paragraph (c)(1), the term ``State'' means the 50 States and the 
District of Columbia. Territorial and tribal grantees may not receive 
redistributed Matching Funds.
    (2) Matching Funds allotted to a State under Sec.  98.63(a), but not 
granted, shall also be redistributed in the manner described in 
paragraph (1) of this section.
    (3) The amount of Matching Funds granted to a State that will be 
made available for redistribution will be based on the State's financial 
report to ACF for the Child Care and Development Fund (ACF-696) and is 
subject to the monetary limits at paragraph (b)(2) of this section.
    (4) A State eligible to receive redistributed Matching Funds shall 
also use the ACF-696 to request its share of the redistributed funds, if 
any.
    (5) A State's share of redistributed Matching Funds is based on the 
same ratio as the number of children under 13 residing in the State to 
the number of children residing in all States eligible to receive and 
that request the redistributed Matching Funds.
    (6) Redistributed funds are considered part of the grant for the 
fiscal year in which the redistribution occurs.
    (d) Any portion of a Tribe's allotment of Discretionary Funds that 
is not required to carry out its Plan, in the period for which the 
allotment is made available, shall be reallotted to other tribal 
grantees in proportion to their original allotments. States and 
Territories may not receive reallotted tribal funds.
    (1) Each year, the Tribe shall report to the Secretary either the 
dollar amount from the previous year's grant that it will be unable to 
obligate by the end of the obligation period or that all funds will be 
obligated during such time. Such report shall be postmarked by a 
deadline established by the Secretary.
    (2) Based upon the reallotment reports submitted by Tribes, the 
Secretary will reallot Tribal Discretionary Funds among the other 
Tribes.
    (i) If the total amount available for reallotment is $25,000 or 
more, funds will be reallotted to other tribal grantees in proportion to 
each Tribe's original allotment for the applicable fiscal year pursuant 
to Sec.  98.62(c).
    (ii) If the total amount available for reallotment is less than 
$25,000, the Secretary will not reallot any funds, and such funds will 
revert to the Federal government.
    (iii) If an individual reallotment amount to an applicant Tribe is 
less than $500, the Secretary will not issue the award, and such funds 
will revert to the Federal government.
    (3) If a Tribe does not submit a reallotment report by the deadline 
for report submittal, either:
    (i) The Secretary will determine that Tribe does not have any funds 
available for reallotment; or
    (ii) In the case of a report received after the deadline established 
by the Secretary, any funds reported to be available for reallotment 
shall revert to the Federal government.
    (4) Tribes receiving reallotted funds shall obligate and expend 
these funds

[[Page 736]]

in accordance with Sec.  98.60. The reallotment of funds does not extend 
the obligation period or the program period for expenditure of such 
funds.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016]



Sec.  98.65  Audits and financial reporting.

    (a) Each Lead Agency shall have an audit conducted after the close 
of each program period in accordance with 45 CFR part 75, subpart F, and 
the Single Audit Act Amendments of 1996.
    (b) Lead Agencies are responsible for ensuring that subgrantees are 
audited in accordance with appropriate audit requirements.
    (c) Not later than 30 days after the completion of the audit, Lead 
Agencies shall submit a copy of their audit report to the legislature of 
the State or, if applicable, to the Tribal Council(s). Lead Agencies 
shall also submit a copy of their audit report to the HHS Inspector 
General for Audit Services, as well as to their cognizant agency, if 
applicable.
    (d) Any amounts determined through an audit not to have been 
expended in accordance with these statutory or regulatory provisions, or 
with the Plan, and that are subsequently disallowed by the Department 
shall be repaid to the Federal government, or the Secretary will offset 
such amounts against any other CCDF funds to which the Lead Agency is or 
may be entitled.
    (e) Lead Agencies shall provide access to appropriate books, 
documents, papers and records to allow the Secretary to verify that CCDF 
funds have been expended in accordance with the statutory and regulatory 
requirements of the program, and with the Plan.
    (f) The audit required in paragraph (a) of this section shall be 
conducted by an agency that is independent of the State, Territory or 
Tribe as defined by generally accepted government auditing standards 
issued by the Comptroller General, or a public accountant who meets such 
independent standards.
    (g) Lead Agencies shall submit financial reports, in a manner 
specified by ACF, quarterly for each fiscal year until funds are 
expended.
    (h) At a minimum, a State or territorial Lead Agency's quarterly 
report shall include the following information on expenditures under 
CCDF grant funds, including Discretionary (which includes realloted 
funding and any funds transferred from the TANF block grant), Mandatory, 
and Matching Funds (which includes redistributed funding); and State 
Matching and Maintenance-of-Effort (MOE) Funds:
    (1) Child care administration;
    (2) Quality activities, including any sub-categories of quality 
activities as required by ACF;
    (3) Direct services;
    (4) Non-direct services, including:
    (i) Establishment and maintenance of computerized child care 
information systems;
    (ii) Certificate program cost/eligibility determination;
    (iii) All other non-direct services; and
    (5) Such other information as specified by the Secretary.
    (i) Tribal Lead Agencies shall submit financial reports annually in 
a manner specified by ACF.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67591, Sept. 30, 2016]



Sec.  98.66  Disallowance procedures.

    (a) Any expenditures not made in accordance with the Act, the 
implementing regulations, or the approved Plan, will be subject to 
disallowance.
    (b) If the Department, as the result of an audit or a review, finds 
that expenditures should be disallowed, the Department will notify the 
Lead Agency of this decision in writing.
    (c)(1) If the Lead Agency agrees with the finding that amounts were 
not expended in accordance with the Act, these regulations, or the Plan, 
the Lead Agency shall fulfill the provisions of the disallowance notice 
and repay any amounts improperly expended; or
    (2) The Lead Agency may appeal the finding:
    (i) By requesting reconsideration from the Assistant Secretary, 
pursuant to paragraph (f) of this section; or
    (ii) By following the procedure in paragraph (d) of this section.
    (d) A Lead Agency may appeal the disallowance decision to the 
Departmental Appeals Board in accordance with 45 CFR part 16.

[[Page 737]]

    (e) The Lead Agency may appeal a disallowance of costs that the 
Department has determined to be unallowable under an award. A grantee 
may not appeal the determination of award amounts or disposition of 
unobligated balances.
    (f) The Lead Agency's request for reconsideration in (c)(2)(i) of 
this section shall be postmarked no later than 30 days after the receipt 
of the disallowance notice. A Lead Agency may request an extension 
within the 30-day time frame. The request for reconsideration, pursuant 
to (c)(2)(i) of this section, need not follow any prescribed form, but 
it shall contain:
    (1) The amount of the disallowance;
    (2) The Lead Agency's reasons for believing that the disallowance 
was improper; and
    (3) A copy of the disallowance decision issued pursuant to paragraph 
(b) of this section.
    (g)(1) Upon receipt of a request for reconsideration, pursuant to 
(c)(2)(i) of this section, the Assistant Secretary or the Assistant 
Secretary's designee will inform the Lead Agency that the request is 
under review.
    (2) The Assistant Secretary or the designee will review any material 
submitted by the Lead Agency and any other necessary materials.
    (3) If the reconsideration decision is adverse to the Lead Agency's 
position, the response will include a notification of the Lead Agency's 
right to appeal to the Departmental Appeals Board, pursuant to paragraph 
(d) of this section.
    (h) If a Lead Agency refuses to repay amounts after a final decision 
has been made, the amounts will be offset against future payments to the 
Lead Agency.
    (i) The appeals process in this section is not applicable if the 
disallowance is part of a compliance review, pursuant to Sec.  98.90, 
the findings of which have been appealed by the Lead Agency.
    (j) Disallowances under the CCDF program are subject to interest 
regulations at 45 CFR part 30. Interest will begin to accrue from the 
date of notification.



Sec.  98.67  Fiscal requirements.

    (a) Lead Agencies shall expend and account for CCDF funds in 
accordance with their own laws and procedures for expending and 
accounting for their own funds.
    (b) Unless otherwise specified in this part, contracts that entail 
the expenditure of CCDF funds shall comply with the laws and procedures 
generally applicable to expenditures by the contracting agency of its 
own funds.
    (c) Fiscal control and accounting procedures shall be sufficient to 
permit:
    (1) Preparation of reports required by the Secretary under this 
subpart and under subpart H; and
    (2) The tracing of funds to a level of expenditure adequate to 
establish that such funds have not been used in violation of the 
provisions of this part.



Sec.  98.68  Program integrity.

    (a) Lead Agencies are required to describe in their Plan effective 
internal controls that are in place to ensure integrity and 
accountability, while maintaining continuity of services, in the CCDF 
program. These shall include:
    (1) Processes to ensure sound fiscal management;
    (2) Processes to identify areas of risk;
    (3) Processes to train child care providers and staff of the Lead 
Agency and other agencies engaged in the administration of CCDF about 
program requirements and integrity; and
    (4) Regular evaluation of internal control activities.
    (b) Lead Agencies are required to describe in their Plan the 
processes that are in place to:
    (1) Identify fraud or other program violations, which may include, 
but are not limited to the following:
    (i) Record matching and database linkages;
    (ii) Review of attendance and billing records;
    (iii) Quality control or quality assurance reviews; and
    (iv) Staff training on monitoring and audit processes.
    (2) Investigate and recover fraudulent payments and to impose 
sanctions on clients or providers in response to fraud.
    (c) Lead Agencies must describe in their Plan the procedures that 
are in place for documenting and verifying that children receiving 
assistance under this part meet eligibility criteria

[[Page 738]]

at the time of eligibility determination and redetermination. Because a 
child meeting eligibility requirements at the most recent eligibility 
determination or redetermination is considered eligible during the 
period between redeterminations as described in Sec.  98.21(a)(1):
    (1) The Lead Agency shall pay any amount owed to a child care 
provider for services provided for such a child during this period under 
a payment agreement or authorization for services; and
    (2) Any CCDF payment made for such a child during this period shall 
not be considered an error or improper payment under subpart K of this 
part due to a change in the family's circumstances, as set forth at 
Sec.  98.21(a).

[81 FR 67591, Sept. 30, 2016]



                Subpart H_Program Reporting Requirements



Sec.  98.70  Reporting requirements.

    (a) Quarterly Case-level Report--
    (1) State and territorial Lead Agencies that receive assistance 
under the CCDF shall prepare and submit to the Department, in a manner 
specified by the Secretary, a quarterly case-level report of monthly 
family case-level data. Data shall be collected monthly and submitted 
quarterly. States may submit the data monthly if they choose to do so.
    (2) The information shall be reported for the three-month federal 
fiscal period preceding the required report. The first report shall be 
submitted no later than August 31, 1998, and quarterly thereafter. The 
first report shall include data from the third quarter of FFY 1998 
(April 1998 through June 1998). States and Territorial Lead Agencies 
which choose to submit case-level data monthly must submit their report 
for April 1998 no later than July 30, 1998. Following reports must be 
submitted every thirty days thereafter.
    (3) State and territorial Lead Agencies choosing to submit data 
based on a sample shall submit a sampling plan to ACF for approval 60 
days prior to the submission of the first quarterly report. States are 
not prohibited from submitting case-level data for the entire population 
receiving CCDF services.
    (4) Quarterly family case-level reports to the Secretary shall 
include the information listed in Sec.  98.71(a).
    (b) Annual Report--
    (1) State and territorial Lead Agencies that receive assistance 
under CCDF shall prepare and submit to the Secretary an annual report. 
The report shall be submitted, in a manner specified by the Secretary, 
by December 31 of each year and shall cover the most recent federal 
fiscal year (October through September).
    (2) The first annual aggregate report shall be submitted no later 
than December 31, 1997, and every twelve months thereafter.
    (3) Biennial reports to Congress by the Secretary shall include the 
information listed in Sec.  98.71(b).
    (c) Tribal Annual Report--
    (1) Tribal Lead Agencies that receive assistance under CCDF shall 
prepare and submit to the Secretary an annual aggregate report.
    (2) The report shall be submitted in the manner specified by the 
Secretary by December 31 of each year and shall cover services for 
children and families served with CCDF funds during the preceding 
Federal Fiscal Year.
    (3) Biennial reports to Congress by the Secretary shall include the 
information listed in Sec.  98.71(c).
    (d) State and territorial Lead Agencies shall make the following 
reports publicly available on a Web site in a timely manner:
    (1) Annual administrative data reports under paragraph (b) of this 
section;
    (2) Quarterly financial reports under Sec.  98.65(g); and
    (3) Annual quality progress reports under Sec.  98.53(f).

[63 FR 39981, July 24, 1998, as amended at 81 FR 67592, Sept. 30, 2016]



Sec.  98.71  Content of report.

    (a) At a minimum, a State or territorial Lead Agency's quarterly 
case-level report to the Secretary, as required in Sec.  98.70, shall 
include the following information on services provided under CCDF grant 
funds, including Federal Discretionary (which includes any funds 
transferred from the

[[Page 739]]

TANF Block Grant), Mandatory, and Matching Funds; and State Matching and 
Maintenance-of-Effort (MOE) Funds:
    (1) The total monthly family income and family size used for 
determining eligibility;
    (2) Zip code of residence of the family and zip code of the location 
of the child care provider;
    (3) Gender and month/year of birth of children;
    (4) Ethnicity and race of children;
    (5) Whether the head of the family is a single parent
    (6) The sources of family income and assistance from employment 
(including self-employment), cash or other assistance under the 
Temporary Assistance for Needy Families program under Part A of title IV 
of the Social Security Act (42 U.S.C. 609(a)(7)), cash or other 
assistance under a State program for which State spending is counted 
toward the maintenance of effort requirement under section 409(a)(7) of 
the Social Security Act, housing assistance, assistance under the Food 
Stamp Act of 1977, and other assistance programs;
    (7) The month/year child care assistance to the family started;
    (8) The type(s) of child care in which the child was enrolled (such 
as family child care, in-home care, or center-based child care;
    (9) Whether the child care provider was a relative;
    (10) The total monthly child care copayment by the family;
    (11) If applicable, any amount charged by the provider to the family 
more than the required copayment in instances where the provider's price 
exceeds the subsidy payment;
    (12) The total expected dollar amount per month to be received by 
the provider for each child;
    (13) The total hours per month of such care;
    (14) Unique identifier of the head of the family unit receiving 
child care assistance, and of the child care provider;
    (15) Reasons for receiving care;
    (16) Whether the family is experiencing homelessness;
    (17) Whether the parent(s) are in the military service;
    (18) Whether the child has a disability;
    (19) Primary language spoken at home;
    (20) Date of the child care provider's most recent health, safety 
and fire inspection meeting the requirements of Sec.  98.42(b)(2);
    (21) Indicator of the quality of the child care provider; and
    (22) Any additional information that the Secretary shall require.
    (b) At a minimum, a State or territorial Lead Agency's annual 
aggregate report to the Secretary, as required in Sec.  98.70(b), shall 
include the following information on services provided through all CCDF 
grant funds, including Federal Discretionary (which includes any funds 
transferred from the TANF Block Grant), Mandatory, and Matching Funds; 
and State Matching and MOE Funds:
    (1) The number of child care providers that received funding under 
CCDF as separately identified based on the types of providers listed in 
section 658P(5) of the amended Child Care and Development Block Grant 
Act;
    (2) The number of children served by payments through certificates 
or vouchers, contracts or grants, and cash under public benefit 
programs, listed by the primary type of child care services provided 
during the last month of the report period (or the last month of service 
for those children leaving the program before the end of the report 
period);
    (3) The manner in which consumer education information was provided 
to parents and the number of parents to whom such information was 
provided;
    (4) The total number (without duplication) of children and families 
served under CCDF;
    (5) The number of child fatalities by type of care; and
    (6) Any additional information that the Secretary shall require.
    (c) A Tribal Lead Agency's annual report as required in Sec.  
98.70(c), shall include such information as the Secretary shall require.

[81 FR 67592, Sept. 30, 2016]

[[Page 740]]



                         Subpart I_Indian Tribes



Sec.  98.80  General procedures and requirements.

    An Indian Tribe or tribal organization (as described in subpart G of 
these regulations) may be awarded grants to plan and carry out programs 
for the purpose of increasing the availability, affordability, and 
quality of child care and childhood development programs subject to the 
following conditions:
    (a) An Indian Tribe applying for or receiving CCDF funds shall be 
subject to the requirements under this part as specified in this section 
based on the size of the awarded funds. The Secretary shall establish 
thresholds for Tribes' total CCDF allotments pursuant to Sec. Sec.  
98.61(c) and 98.62(b) to be divided into three categories:
    (1) Large allocations;
    (2) Medium allocations; and
    (3) Small allocations.
    (b) An Indian Tribe applying for or receiving CCDF funds shall:
    (1) Have at least 50 children under 13 years of age (or such similar 
age, as determined by the Secretary from the best available data) in 
order to be eligible to operate a CCDF program. This limitation does not 
preclude an Indian Tribe with fewer than 50 children under 13 years of 
age from participating in a consortium that receives CCDF funds; and
    (2) Demonstrate its current service delivery capability, including 
skills, personnel, resources, community support, and other necessary 
components to satisfactorily carry out the proposed program.
    (c) A consortium representing more than one Indian Tribe may be 
eligible to receive CCDF funds on behalf of a particular Tribe if:
    (1) The consortium adequately demonstrates that each participating 
Tribe authorizes the consortium to receive CCDF funds on behalf of each 
Tribe or tribal organization in the consortium;
    (2) The consortium consists of Tribes that each meet the eligibility 
requirements for the CCDF program as defined in this part, or that would 
otherwise meet the eligibility requirements if the Tribe or tribal 
organization had at least 50 children under 13 years of age;
    (3) All the participating consortium members are in geographic 
proximity to one another (including operation in a multi-State area) or 
have an existing consortium arrangement; and
    (4) The consortium demonstrates that it has the managerial, 
technical and administrative staff with the ability to administer 
government funds, manage a CCDF program and comply with the provisions 
of the Act and of this part.
    (d) The awarding of a grant under this section shall not affect the 
eligibility of any Indian child to receive CCDF services provided by the 
State or States in which the Indian Tribe is located.
    (e) For purposes of the CCDF, the determination of the number of 
children in the Tribe, pursuant to paragraph (b)(1) of this section, 
shall include Indian children living on or near reservations, with the 
exception of Tribes in Alaska, California and Oklahoma.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67592, Sept. 30, 2016]



Sec.  98.81  Application and Plan procedures.

    (a) In order to receive CCDF funds, a Tribal Lead Agency shall apply 
for funds pursuant to Sec.  98.13, except that the requirement at Sec.  
98.13(b)(2) does not apply.
    (b) Tribal Lead Agencies with large and medium allocations shall 
submit a CCDF Plan, as described at Sec.  98.16, with the following 
additions and exceptions:
    (1) The Plan shall include the basis for determining family 
eligibility.
    (i) If the Tribe's median income is below a certain level 
established by the Secretary, then, at the Tribe's option, any Indian 
child in the Tribe's service area shall be considered eligible to 
receive CCDF funds, regardless of the family's income, work, or training 
status, provided that provision for services still goes to those with 
the highest need.
    (ii) If the Tribe's median income is above the level established by 
the Secretary, then a tribal program must determine eligibility for 
services pursuant to Sec.  98.20(a)(2). A tribal program, as specified 
in its Plan, may use either:
    (A) 85 percent of the State median income for a family of the same 
size; or

[[Page 741]]

    (B) 85 percent of the median income for a family of the same size 
residing in the area served by the Tribal Lead Agency.
    (2) For purposes of determining eligibility, the following terms 
shall also be defined:
    (i) Indian child; and
    (ii) Indian reservation or tribal service area.
    (3) The Tribal Lead Agency shall also assure that:
    (i) The applicant shall coordinate, to the maximum extent feasible, 
with the Lead Agency in the State in which the applicant shall carry out 
CCDF programs or activities, pursuant to Sec.  98.82; and
    (ii) In the case of an applicant located in a State other than 
Alaska, California, or Oklahoma, CCDF programs and activities shall be 
carried out on an Indian reservation for the benefit of Indian children, 
pursuant to Sec.  98.83(b).
    (4) The Plan shall include any information, as prescribed by the 
Secretary, necessary for determining the number of children in 
accordance with Sec. Sec.  98.61(c), 98.62(c), and 98.80(b)(1).
    (5) The Plan shall include a description of the Tribe's payment 
rates, how they are established, and how they support quality including, 
where applicable, cultural and linguistic appropriateness.
    (6) The Plan is not subject to the following requirements:
    (i) The early learning and developmental guidelines requirement at 
Sec.  98.15(a)(9);
    (ii) The certification to develop the CCDF Plan in consultation with 
the State Advisory Council at Sec.  98.15(b)(1);
    (iii) The licensing requirements applicable to child care services 
at Sec.  98.15(b)(6) and Sec.  98.16(u);
    (iv) The identification of the public or private entities designated 
to receive private funds at Sec.  98.16(d)(2);
    (v) A definition of very low income at Sec.  98.16(g)(8);
    (vi) A description at Sec.  98.16(i)(4) of how the Lead Agency will 
meet the needs of certain families specified at Sec.  98.50(e);
    (vii) The description of the market rate survey or alternative 
methodology at Sec.  98.16(r);
    (viii) The description relating to Matching Funds at Sec.  98.16(w); 
and
    (ix) The description of how the Lead Agency prioritizes increasing 
access to high-quality child care in areas with high concentration of 
poverty at Sec.  98.16(y).
    (7) In its initial Plan, an Indian Tribe shall describe its current 
service delivery capability pursuant to Sec.  98.80(b)(2).
    (8) A consortium shall also provide the following:
    (i) A list of participating or constituent members, including 
demonstrations from these members pursuant to Sec.  98.80(c)(1);
    (ii) A description of how the consortium is coordinating services on 
behalf of its members, pursuant to Sec.  98.83(c)(1); and
    (iii) As part of its initial Plan, the additional information 
required at Sec.  98.80(c)(4).
    (9) Plans for Tribal Lead Agencies with medium allocations are not 
subject to the following requirements unless the Tribe chooses to 
include such services, and, therefore, the associated requirements, in 
its program:
    (i) The assurance at Sec.  98.15(a)(2) regarding options for 
services;
    (ii) A description of any limits established for the provision of 
in-home care at Sec.  98.16(i)(2), or
    (iii) A description of the child care certificate payment system(s) 
at Sec.  98.16(q).
    (c) Tribal Lead Agencies with small allocations shall submit an 
abbreviated CCDF Plan, as described by the Secretary.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67593, Sept. 30, 2016]



Sec.  98.82  Coordination.

    Tribal applicants shall coordinate the development of the Plan and 
the provision of services, to the extent practicable, as required by 
Sec. Sec.  98.12 and 98.14 and:
    (a) To the maximum extent feasible, with the Lead Agency in the 
State or States in which the applicant will carry out the CCDF program; 
and
    (b) With other Federal, State, local, and tribal child care and 
childhood development programs.

[81 FR 67593, Sept. 30, 2016]

[[Page 742]]



Sec.  98.83  Requirements for tribal programs.

    (a) The grantee shall designate an agency, department, or unit to 
act as the Tribal Lead Agency to administer the CCDF program.
    (b) With the exception of Alaska, California, and Oklahoma, programs 
and activities for the benefit of Indian children shall be carried out 
on or near an Indian reservation.
    (c) In the case of a tribal grantee that is a consortium:
    (1) A brief description of the direct child care services funded by 
CCDF for each of their participating Tribes shall be provided by the 
consortium in their three-year CCDF Plan; and
    (2) Variations in CCDF programs or requirements and in child care 
licensing, regulatory and health and safety requirements shall be 
specified in written agreements between the consortium and the Tribe.
    (3) If a Tribe elects to participate in a consortium arrangement to 
receive one part of the CCDF (e.g., Discretionary Funds), it may not 
join another consortium or apply as a direct grantee to receive the 
other part of the CCDF (e.g., Tribal Mandatory Funds).
    (4) If a Tribe relinquishes its membership in a consortium at any 
time during the fiscal year, CCDF funds awarded on behalf of the member 
Tribe will remain with the tribal consortium to provide direct child 
care services to other consortium members for that fiscal year.
    (d)(1) Tribal Lead Agencies shall not be subject to:
    (i) The requirement to produce a consumer education Web site at 
Sec.  98.33(a). Tribal Lead Agencies still must collect and disseminate 
the provider-specific consumer education information described at Sec.  
98.33(a) through (d), but may do so using methods other than a Web site;
    (ii) The requirement to have licensing applicable to child care 
services at Sec.  98.40;
    (iii) The requirement for a training and professional development 
framework at Sec.  98.44(a);
    (iv) The market rate survey or alternative methodology described at 
Sec.  98.45(b)(2) and the related requirements at Sec.  98.45(c), (d), 
(e), and (f);
    (v) The requirement that Lead Agencies shall give priority for 
services to children of families with very low family income at Sec.  
98.46(a)(1);
    (vi) The requirement that Lead Agencies shall prioritize increasing 
access to high-quality child care in areas with significant 
concentrations of poverty and unemployment at Sec.  98.46(b);
    (vii) The requirements about Mandatory and Matching Funds at Sec.  
98.50(e);
    (viii) The requirement to complete the quality progress report at 
Sec.  98.53(f);
    (ix) The requirement that Lead Agencies shall expend no more than 
five percent from each year's allotment on administrative costs at Sec.  
98.54(a); and
    (x) The Matching Fund requirements at Sec. Sec.  98.55 and 98.63.
    (2) Tribal Lead Agencies with large, medium, and small allocations 
shall be subject to the provision at Sec.  98.42(b)(2) to require 
inspections of child care providers and facilities, unless a Tribal Lead 
Agency describes an alternative monitoring approach in its Plan and 
provides adequate justification for the approach.
    (3) Tribal Lead Agencies with large, medium, and small allocations 
shall be subject to the requirement at Sec.  98.43 to conduct 
comprehensive criminal background checks, unless the Tribal Lead Agency 
describes an alternative background check approach in its Plan and 
provides adequate justification for the approach.
    (e) Tribal Lead Agencies with medium and small allocations shall not 
be subject to the requirement for certificates at Sec.  98.30(a) and 
(d).
    (f) Tribal Lead Agencies with small allocations must spend their 
CCDF funds in alignment with the goals and purposes described in Sec.  
98.1. These Tribes shall have flexibility in how they spend their CCDF 
funds and shall be subject to the following requirements:
    (1) The health and safety requirements described in Sec.  98.41;
    (2) The monitoring requirements at Sec. Sec.  98.42 and 98.83(d)(2); 
and
    (3) The background checks requirements described in Sec. Sec.  98.43 
and 98.83(d)(3);
    (4) The requirements to spend funds on activities to improve the 
quality of

[[Page 743]]

child care described in Sec. Sec.  98.83(g) and 98.53;
    (5) The use of funds requirements at Sec.  98.56 and cost allocation 
requirement at Sec.  98.57;
    (6) The financial management requirements at subpart G of this part 
that are applicable to Tribes;
    (7) The reporting requirements at subpart H of this part that are 
applicable to Tribes;
    (8) The eligibility definitions at Sec.  98.81(b)(2);
    (9) The 15 percent limitation on administrative activities at Sec.  
98.83(i);
    (10) The monitoring, non-compliance, and complaint provisions at 
subpart J of this part; and
    (11) Any other requirement established by the Secretary.
    (g) Of the aggregated amount of funds expanded (i.e., Discretionary 
and Mandatory Funds),
    (1) For Tribal Lead Agencies with large, medium and small 
allocations, no less than four percent in fiscal years 2017, seven 
percent in fiscal years 2018 and 2019, eight percent in fiscal years 
2020 and 2021, and nine percent in fiscal years 2022 and each succeeding 
fiscal year shall be used for activities designed to improve the quality 
of child care services and increase parental options for, and access to 
high-quality child care as described at Sec.  98.53; and
    (2) For Tribal Lead Agencies with large and medium allocations no 
less than three percent in fiscal year 2019 and each succeeding fiscal 
year shall be used to carry out activities at Sec.  98.53(a)(4) as such 
activities relate to the quality of care for infants and toddler.
    (3) Nothing in this section shall preclude the Tribal Lead Agencies 
from reserving a larger percentage of funds to carry out activities 
described in paragraph (g)(1) and (2) of this section.
    (h) The base amount of any tribal grant is not subject to the 
administrative cost limitation at paragraph (i) of this section, the 
direct services requirement at Sec.  98.50(f)(2), or the quality 
expenditure requirement at Sec.  98.53(a). The base amount may be 
expended for any costs consistent with the purposes and requirements of 
the CCDF.
    (i) Not more than 15 percent of the aggregate CCDF funds expended by 
the Tribal Lead Agency from each fiscal year's (including amounts used 
for construction and renovation in accordance with Sec.  98.84, but not 
including the base amount provided under paragraph (h) of this section) 
shall be expended for administrative activities. Amounts used for 
construction and major renovation in accordance with Sec.  98.84 are not 
considered administrative costs.
    (j)(1) CCDF funds are available for costs incurred by the Tribal 
Lead Agency only after the funds are made available by Congress for 
Federal obligation unless costs are incurred for planning activities 
related to the submission of an initial CCDF Plan.
    (2) Federal obligation of funds for planning costs, pursuant to 
paragraph (i)(1) of this section is subject to the actual availability 
of the appropriation.

[81 FR 67593, Sept. 30, 2016, as amended at 82 FR 3186, Jan. 11, 2017]



Sec.  98.84  Construction and renovation of child care facilities.

    (a) Upon requesting and receiving approval from the Secretary, 
Tribal Lead Agencies may use amounts provided under Sec. Sec.  98.61(c) 
and 98.62(b) to make payments for construction or major renovation of 
child care facilities (including paying the cost of amortizing the 
principal and paying interest on loans).
    (b) To be approved by the Secretary, a request shall be made in 
accordance with uniform procedures established by program instruction 
and, in addition, shall demonstrate that:
    (1) Adequate facilities are not otherwise available to enable the 
Tribal Lead Agency to carry out child care programs;
    (2) The lack of such facilities will inhibit the operation of child 
care programs in the future; and
    (3) The use of funds for construction or major renovation will not 
result in a decrease in the level of child care services provided by the 
Tribal Lead Agency as compared to the level of services provided by the 
Tribal Lead Agency in the preceding fiscal year. The Secretary shall 
waive this requirement if:

[[Page 744]]

    (i) The Secretary determines that the decrease in the level of child 
care services provided by the Indian tribe or tribal organization is 
temporary; and
    (ii) The Indian tribe or tribal organization submits to the 
Secretary a plan that demonstrates that after the date on which the 
construction or renovation is completed:
    (A) The level of direct child care services will increase; or
    (B) The quality of child care services will improve.
    (c)(1) Tribal Lead Agency may use CCDF funds for reasonable and 
necessary planning costs associated with assessing the need for 
construction or renovation or for preparing a request, in accordance 
with the uniform procedures established by program instruction, to spend 
CCDF funds on construction or major renovation.
    (2) A Tribal Lead Agency may only use CCDF funds to pay for the 
costs of an architect, engineer, or other consultant for a project that 
is subsequently approved by the Secretary. If the project later fails to 
gain the Secretary's approval, the Tribal Lead Agency must pay for the 
architectural, engineering or consultant costs using non-CCDF funds.
    (d) Tribal Lead Agencies that receive approval from the Secretary to 
use CCDF funds for construction or major renovation shall comply with 
the following:
    (1) Federal share requirements and use of property requirements at 
45 CFR 75.318;
    (2) Transfer and disposition of property requirements at 45 CFR 
75.318(c);
    (3) Title requirements at 45 CFR 75.318(a);
    (4) Cost principles and allowable cost requirements at subpart E of 
this part;
    (5) Program income requirements at 45 CFR 75.307;
    (6) Procurement procedures at 45 CFR 92.36; 75.326 through 75.335; 
and
    (7) Any additional requirements established by program instruction, 
including requirements concerning:
    (i) The recording of a Notice of Federal Interest in the property;
    (ii) Rights and responsibilities in the event of a grantee's default 
on a mortgage;
    (iii) Insurance and maintenance;
    (iv) Submission of plans, specifications, inspection reports, and 
other legal documents; and
    (v) Modular units.
    (e) In lieu of obligation and liquidation requirements at Sec.  
98.60(e), Tribal Lead Agencies shall liquidate CCDF funds used for 
construction or major renovation by the end of the second fiscal year 
following the fiscal year for which the grant is awarded.
    (f) Tribal Lead Agencies may expend funds, without requesting 
approval pursuant to paragraph (a) of this section, for minor 
renovation.
    (g) A new tribal grantee (i.e., one that did not receive CCDF funds 
the preceding fiscal year) may spend no more than an amount equivalent 
to its Tribal Mandatory allocation on construction and renovation. A new 
tribal grantee must spend an amount equivalent to its Discretionary 
allocation on activities other than construction or renovation (i.e., 
direct services, quality activities, or administrative costs).
    (h) A construction or renovation project that requires and receives 
approval by the Secretary must include as part of the construction and 
renovation costs:
    (1) planning costs as allowed at Sec.  98.84(c);
    (2) labor, materials and services necessary for the functioning of 
the facility; and
    (3) initial equipment for the facility. Equipment means items which 
are tangible, nonexpendable personal property having a useful life of 
more than five years.

[63 FR 39981, July 24, 1998, as amended at 81 FR 3020, Jan. 20, 2016; 81 
FR 67594, Sept. 30, 2016]



           Subpart J_Monitoring, Non-compliance and Complaints



Sec.  98.90  Monitoring.

    (a) The Secretary will monitor programs funded under the CCDF for 
compliance with:
    (1) The Act;
    (2) The provisions of this part; and
    (3) The provisions and requirements set forth in the CCDF Plan 
approved under Sec.  98.18;
    (b) If a review or investigation reveals evidence that the Lead 
Agency,

[[Page 745]]

or an entity providing services under contract or agreement with the 
Lead Agency, has failed to substantially comply with the Plan or with 
one or more provisions of the Act or implementing regulations, the 
Secretary will issue a preliminary notice to the Lead Agency of possible 
non-compliance. The Secretary shall consider comments received from the 
Lead Agency within 60 days (or such longer period as may be agreed upon 
between the Lead Agency and the Secretary).
    (c) Pursuant to an investigation conducted under paragraph (a) of 
this section, a Lead Agency shall make appropriate books, documents, 
papers, manuals, instructions, and records available to the Secretary, 
or any duly authorized representatives, for examination or copying on or 
off the premises of the appropriate entity, including subgrantees and 
contractors, upon reasonable request.
    (d)(1) Lead Agencies and subgrantees shall retain all CCDF records, 
as specified in paragraph (c) of this section, and any other records of 
Lead Agencies and subgrantees that are needed to substantiate compliance 
with CCDF requirements, for the period of time specified in paragraph 
(e) of this section.
    (2) Lead Agencies and subgrantees shall provide through an 
appropriate provision in their contracts that their contractors will 
retain and permit access to any books, documents, papers, and records of 
the contractor that are directly pertinent to that specific contract.
    (e) Length of retention period. (1) Except as provided in paragraph 
(e)(2) of this section, records specified in paragraph (c) of this 
section shall be retained for three years from the day the Lead Agency 
or subgrantee submits the Financial Reports required by the Secretary, 
pursuant to Sec.  98.65(g), for the program period.
    (2) If any litigation, claim, negotiation, audit, disallowance 
action, or other action involving the records has been started before 
the expiration of the three-year retention period, the records shall be 
retained until completion of the action and resolution of all issues 
that arise from it, or until the end of the regular three-year period, 
whichever is later.



Sec.  98.91  Non-compliance.

    (a) If after reasonable notice to a Lead Agency, pursuant to Sec.  
98.90 or Sec.  98.93, a final determination is made that:
    (1) There has been a failure by the Lead Agency, or by an entity 
providing services under contract or agreement with the Lead Agency, to 
comply substantially with any provision or requirement set forth in the 
Plan approved under Sec.  98.16; or
    (2) If in the operation of any program for which funding is provided 
under the CCDF, there is a failure by the Lead Agency, or by an entity 
providing services under contract or agreement with the Lead Agency, to 
comply substantially with any provision of the Act or this part, the 
Secretary will provide to the Lead Agency a written notice of a finding 
of non-compliance. This notice will be issued within 60 days of the 
preliminary notification in Sec.  98.90(b), or within 60 days of the 
receipt of additional comments from the Lead Agency, whichever is later, 
and will provide the opportunity for a hearing, pursuant to part 99.
    (b) The notice in paragraph (a) of this section will include all 
relevant findings, as well as any penalties or sanctions to be applied, 
pursuant to Sec.  98.92.
    (c) Issues subject to review at the hearing include the finding of 
non-compliance, as well as any penalties or sanctions to be imposed 
pursuant to Sec.  98.92.



Sec.  98.92  Penalties and sanctions.

    (a) Upon a final determination that the Lead Agency has failed to 
substantially comply with the Act, the implementing regulations, or the 
Plan, one of the following penalties will be applied:
    (1) The Secretary will disallow any improperly expended funds;
    (2) An amount equal to or less than the improperly expended funds 
will be deducted from the administrative portion of the State allotment 
for the following fiscal year; or
    (3) A combination of the above options will be applied.
    (b) In addition to imposing the penalties described in paragraph (a) 
of this section, the Secretary may impose other appropriate sanctions, 
including:

[[Page 746]]

    (1) Disqualification of the Lead Agency from the receipt of further 
funding under the CCDF; or
    (2)(i) A penalty of not more than four percent of the funds allotted 
under Sec.  98.61 (i.e., the Discretionary Funds) for a Fiscal Year 
shall be withheld if the Secretary determines that the Lead Agency has 
failed to implement a provision of the Act, these regulations, or the 
Plan required under Sec.  98.16;
    (ii) This penalty will be withheld no earlier than the second full 
quarter following the quarter in which the Lead Agency was notified of 
the proposed penalty;
    (iii) This penalty will not be applied if the Lead Agency corrects 
the failure or violation before the penalty is to be applied or if it 
submits a plan for corrective action that is acceptable to the 
Secretary; or
    (iv) The Lead Agency may show cause to the Secretary why the amount 
of the penalty, if applied, should be reduced.
    (3)(i) A penalty of five percent of the funds allotted under Sec.  
98.61 (i.e., the Discretionary Funds) for a Fiscal Year shall be 
withheld for any For Fiscal Year the Secretary determines that the Lead 
Agency has failed to give priority for service in accordance with Sec.  
98.46(a);
    (ii) This penalty will be withheld no earlier than the first full 
Fiscal Year following the determination to apply the penalty;
    (iii) This penalty will not be applied if the Lead Agency corrects 
its failure to comply and amends its CCDF Plan within six months of 
being notified of the failure; and
    (iv) The Secretary may waive a penalty for one year in the event of 
extraordinary circumstances, such as a natural disaster.
    (4)(i) A penalty of five percent of the funds allotted under Sec.  
98.61 (i.e., the Discretionary Funds) for a Fiscal Year shall be 
withheld for any Fiscal Year that the Secretary determines that the 
State, Territory, or Tribe has failed to comply substantially with the 
criminal background check requirements at Sec.  98.43;
    (ii) This penalty will be withheld no earlier than the first full 
Fiscal Year following the determination to apply the penalty; and
    (iii) This penalty will not be applied if the State, Territory, or 
Tribe corrects the failure before the penalty is to be applied or if it 
submits a plan for corrective action that is acceptable to the 
Secretary.
    (c) If a Lead Agency is subject to additional sanctions as provided 
under paragraph (b) of this section, specific identification of any 
additional sanctions being imposed will be provided in the notice 
provided pursuant to Sec.  98.91.
    (d) Nothing in this section, or in Sec.  98.90 or Sec.  98.91, will 
preclude the Lead Agency and the Department from informally resolving a 
possible compliance issue without following all of the steps described 
in Sec. Sec.  98.90, 98.91 and 98.92. Penalties and/or sanctions, as 
described in paragraphs (a) and (b) of this section, may nevertheless be 
applied, even though the issue is resolved informally.
    (e) It is at the Secretary's sole discretion to choose the penalty 
to be imposed under paragraphs (a) and (b) of this section.

[63 FR 39981, July 24, 1998, as amended at 81 FR 67594, Sept. 30, 2016]



Sec.  98.93  Complaints.

    (a) This section applies to any complaint (other than a complaint 
alleging violation of the nondiscrimination provisions) that a Lead 
Agency has failed to use its allotment in accordance with the terms of 
the Act, the implementing regulations, or the Plan. The Secretary is not 
required to consider a complaint unless it is submitted as required by 
this section. Complaints with respect to discrimination should be 
referred to the Office of Civil Rights of the Department.
    (b) Complaints with respect to the CCDF shall be submitted in 
writing to the Assistant Secretary for Children and Families. The 
complaint shall identify the provision of the Plan, the Act, or this 
part that was allegedly violated, specify the basis for alleging the 
violation(s), and include all relevant information known to the person 
submitting it.
    (c) The Department shall promptly furnish a copy of any complaint to 
the affected Lead Agency. Any comments received from the Lead Agency 
within 60 days (or such longer period as may

[[Page 747]]

be agreed upon between the Lead Agency and Department) shall be 
considered by the Department in responding to the complaint. The 
Department will conduct an investigation of complaints, where 
appropriate.
    (d) The Department will provide a written response to complaints 
within 180 days after receipt. If a final resolution cannot be provided 
at that time, the response will state the reasons why additional time is 
necessary.
    (e) Complaints that are not satisfactorily resolved through 
communication with the Lead Agency will be pursued through the process 
described in Sec.  98.90.

[63 FR 39981, Sept. 24, 1998, as amended at 81 FR 67595, Sept. 30, 2016]



                     Subpart K_Error Rate Reporting

    Source: 72 FR 50898, Sept. 5, 2007, unless otherwise noted.



Sec.  98.100  Error Rate Report.

    (a) Applicability--The requirements of this subpart apply to the 
fifty States, the District of Columbia and Puerto Rico.
    (b) Generally--States, the District of Columbia and Puerto Rico 
shall calculate, prepare and submit to the Department, a report of 
errors occurring in the administration of CCDF grant funds, at times and 
in a manner specified by the Secretary in instructions. States, the 
District of Columbia and Puerto Rico must use this report to calculate 
their error rates, which is defined as the percentage of cases with an 
error (expressed as the total number of cases with an error compared to 
the total number of cases); the percentage of cases with an improper 
payment (expressed as the total number of cases with an improper payment 
compared to the total number of cases); the percentage of improper 
payments (expressed as the total amount of improper payments in the 
sample compared to the total dollar amount of payments made in the 
sample); the average amount of improper payment; and the estimated 
annual amount of improper payments. The report also will provide 
strategies for reducing their error rates and allow States, the District 
of Columbia and Puerto Rico to set target error rates for the next 
cycle.
    (c) Error Defined--For purposes of this subpart, an ``error'' shall 
mean any violation or misapplication of statutory, contractual, 
administrative, or other legally applicable requirements governing the 
administration of CCDF grant funds, regardless of whether such violation 
results in an improper payment.
    (d) Improper Payment Defined--For purposes of this subpart, 
``improper payment.''
    (1) Means any payment of CCDF grant funds that should not have been 
made or that was made in an incorrect amount (including overpayments and 
underpayments) under statutory, contractual, administrative, or other 
legally applicable requirements governing the administration of CCDF 
grant funds; and
    (2) Includes any payment of CCDF grant funds to an ineligible 
recipient, any payment of CCDF grant funds for an ineligible service, 
any duplicate payment of CCDF grant funds and payments of CCDF grant 
funds for services not received. Because a child meeting eligibility 
requirements at the most recent eligibility determination or 
redetermination is considered eligible between redeterminations as 
described in Sec.  98.21(a)(1), any payment for such a child shall not 
be considered an error or improper payment due to a change in the 
family's circumstances, as set forth at Sec.  98.21(a) and (b).
    (e) Costs of Preparing the Error Rate Report--Provided the error 
rate calculations and reports focus on client eligibility, expenses 
incurred by the States, the District of Columbia and Puerto Rico in 
complying with this rule, including preparation of required reports, 
shall be considered a cost of direct service related to eligibility 
determination and therefore is not subject to the five percent 
limitation on CCDF administrative costs pursuant to Sec.  98.54(a).

[72 FR 50898, Sept. 5, 2007, as amended at 81 FR 67595, Sept. 30, 2016]



Sec.  98.101  Case Review Methodology.

    (a) Case Reviews and Sampling--In preparing the error reports 
required by

[[Page 748]]

this subpart, States, the District of Columbia and Puerto Rico shall 
conduct comprehensive reviews of case records using a methodology 
established by the Secretary. For purposes of the case reviews, States, 
the District of Columbia and Puerto Rico shall select a random sample of 
case records which is estimated to achieve the calculation of an 
estimated annual amount of improper payments with a 90 percent 
confidence interval of 5.0 percent.
    (b) Methodology and Forms--States, the District of Columbia and 
Puerto Rico must prepare and submit forms issued by the Secretary, 
following the accompanying instructions setting forth the methodology to 
be used in conducting case reviews and calculating the error rates.
    (c) Reporting Frequency and Cycle--States, the District of Columbia 
and Puerto Rico shall conduct case reviews and submit error rate reports 
to the Department according to a staggered three-year cycle established 
by the Secretary such that each State, the District of Columbia, and 
Puerto Rico will be selected once, and only once, in every three years.
    (d) Access to Federal Staff--States, the District of Columbia and 
Puerto Rico must provide access to Federal staff to participate and 
provide oversight in case reviews and error rate calculations, including 
access to forms related to determining error rates.
    (e) Record Retention--Records pertinent to the case reviews and 
submission of error rate reports shall be retained for a period of five 
years from the date of submission of the applicable error rate report 
or, if the error rate report was revised, from the date of submission of 
the revision. Records must be made available to Federal staff upon 
request.



Sec.  98.102  Content of Error Rate Reports.

    (a) Baseline Submission Report--At a minimum, States, the District 
of Columbia and Puerto Rico shall submit an initial error rate report to 
the Department, as required in Sec.  98.100, which includes the 
following information on errors and resulting improper payments 
occurring in the administration of CCDF grant funds, including Federal 
Discretionary Funds (which includes any funds transferred from the TANF 
Block Grant), Mandatory and Matching Funds and State Matching and 
Maintenance-of-Effort (MOE Funds):
    (1) Percentage of cases with an error (regardless of whether such 
error resulted in an over or under payment), expressed as the total 
number of cases in the sample with an error compared to the total number 
of cases in the sample;
    (2) Percentage of cases with an improper payment (both over and 
under payments), expressed as the total number of cases in the sample 
with an improper payment compared to the total number of cases in the 
sample;
    (3) Percentage of improper payments (both over and under payments), 
expressed as the total dollar amount of improper payments in the sample 
compared to the total dollar amount of payments made in the sample;
    (4) Average amount of improper payments (gross over and under 
payments, divided by the total number of cases in the sample that had an 
improper payment (both over and under payments));
    (5) Estimated annual amount of improper payments (which is a 
projection of the results from the sample to the universe of cases 
statewide during the 12-month review period) calculated by multiplying 
the percentage of improper payments by the total dollar amount of child 
care payments that the State, the District of Columbia or Puerto Rico 
paid during the 12-month review period;
    (6) For each category of data listed above, targets for errors and 
improper payments in the next reporting cycle;
    (7) Summary of methodology used to arrive at estimate, including 
fieldwork preparation, sample generation, record review and error rate 
computation processes;
    (8) Discussion of the causes of improper payments identified and 
actions that will be taken to correct those causes in order to reduce 
the error rates;
    (9) Description of the information systems and other infrastructure 
that assist the State, the District of Columbia and Puerto Rico in 
identifying and reducing improper payments, or if the State, the 
District of Columbia or

[[Page 749]]

Puerto Rico does not have these tools, a description of actions that 
will be taken to acquire the necessary information systems and other 
infrastructure; and
    (10) Such other information as specified by the Secretary.
    (b) Standard Report--At a minimum, the State, the District of 
Columbia and Puerto Rico shall submit an error rate report to the 
Department, as required in Sec.  98.100, made subsequent to the baseline 
submission report as set forth in Sec.  98.102(a) which includes the 
following information on errors and resulting improper payments 
occurring in the administration of CCDF grant funds, including Federal 
Discretionary Funds (which includes any funds transferred from the TANF 
Block Grant), Mandatory and Matching Funds and State Matching and 
Maintenance-of-Effort (MOE Funds):
    (1) All the information reported in the baseline submission, as set 
forth in Sec.  98.102(a), updated for the current cycle;
    (2) For each category of data listed in Sec.  98.102(a)(1) through 
(5), States, the District of Columbia and Puerto Rico must include data 
and targets from the prior cycle in addition to data from the current 
cycle and targets for the next cycle;
    (3) Description of whether the State, the District of Columbia or 
Puerto Rico met error rate targets set in the prior cycle and, if not, 
an explanation of why not;
    (4) Discussion of the causes of improper payments identified in the 
prior cycle and actions that were taken to correct those causes, in 
addition to a discussion on the causes of improper payments identified 
in the current cycle and actions that will be taken to correct those 
causes in order to reduce the error rates; and
    (5) Such other information as specified by the Secretary.
    (c) Any Lead Agency with an improper payment rate that exceeds a 
threshold established by the Secretary must submit to the Assistant 
Secretary for approval a comprehensive corrective action plan, as well 
as subsequent reports describing progress in implementing the plan.
    (1) The corrective action plan must be submitted within 60 days of 
the deadline for submitting the Lead Agency's standard error rate report 
required by paragraph (b) of this section.
    (2) The corrective action plan must include the following:
    (i) Identification of a senior accountable official;
    (ii) Milestones that clearly identify actions to be taken to reduce 
improper payments and the individual responsible for completing each 
action;
    (iii) A timeline for completing each action within 1 year of the 
Assistant Secretary's approval of the plan, and for reducing the 
improper payment rate below the threshold established by the Secretary; 
and
    (iv) Targets for future improper payment rates.
    (3) Subsequent progress reports must be submitted as requested by 
the Assistant Secretary.
    (4) Failure to carry out actions described in the approved 
corrective action plan will be grounds for a penalty or sanction under 
Sec.  98.92.

[72 FR 50898, Sept. 5, 2007, as amended at 81 FR 67595, Sept. 30, 2016]



PART 99_PROCEDURE FOR HEARINGS FOR THE CHILD CARE AND DEVELOPMENT FUND--
Table of Contents



                            Subpart A_General

Sec.
99.1 Scope of rules.
99.2 Presiding officer.
99.3 Records to be public.
99.4 Suspension of rules.
99.5 Filing and service of papers.

            Subpart B_Preliminary Matters_Notice and Parties

99.11 Notice of hearing or opportunity for hearing.
99.12 Time of hearing.
99.13 Place.
99.14 Issues at hearing.
99.15 Request to participate in hearing.

                      Subpart C_Hearing Procedures

99.21 Authority of presiding officer.
99.22 Rights of parties.
99.23 Discovery.
99.24 Evidentiary purpose.
99.25 Evidence.
99.26 Unsponsored written material.

[[Page 750]]

99.27 Official transcript.
99.28 Record for decision.

               Subpart D_Posthearing Procedures, Decisions

99.31 Posthearing briefs.
99.32 Decisions following hearing.
99.33 Effective date of Assistant Secretary's decision.

    Authority: 42 U.S.C. 618, 9858.

    Source: 57 FR 34428, Aug. 4, 1992, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 99 appear at 63 FR 
39998, July 24, 1998.



                            Subpart A_General



Sec.  99.1  Scope of rules.

    (a) The rules of procedure in this section govern the practice for 
hearings afforded by the Department to Lead Agencies pursuant to Sec.  
98.18(c) or Sec.  98.91, and the practice relating to the decisions of 
such hearings.
    (b) Nothing in this part is intended to preclude or limit 
negotiations between the Department and the Lead Agency, whether before, 
during, or after the hearing, to resolve the issues which are, or 
otherwise would be, considered at the hearing. Such negotiations and 
resolution of issues are not part of the hearing and are not governed by 
the rules in this part, except as expressly provided herein.



Sec.  99.2  Presiding officer.

    (a) (1) The presiding officer at a hearing shall be the Assistant 
Secretary or the Assistant Secretary's designee.
    (2) The designation of the presiding officer shall be in writing. A 
copy of the designation shall be served on all parties.
    (b) The presiding officer, for all hearings, shall be bound by all 
applicable laws and regulations.



Sec.  99.3  Records to be public.

    All pleadings, correspondence, exhibits, transcripts of testimony, 
exceptions, briefs, decisions, and other documents filed in the docket 
in any proceeding may be inspected and copied in the office of the 
Assistant Secretary. Inquiries may be made at the Administration for 
Children and Families, 370 L'Enfant Promenade SW., Washington, DC 20447.



Sec.  99.4  Suspension of rules.

    With notice to all parties, the Assistant Secretary for Children and 
Families or the presiding officer, with respect to pending matters, may 
modify or waive any rule in this part upon determination that no party 
will be unduly prejudiced and the ends of justice will thereby be 
served.



Sec.  99.5  Filing and service of papers.

    (a) An original and two copies of all papers in the proceedings 
shall be filed with the presiding officer. For exhibits and transcripts 
of testimony, only the originals need be filed.
    (b) All papers in the proceedings shall be served on all parties by 
personal delivery or by certified mail. Service on the party's 
designated attorney will be deemed service on the party.



            Subpart B_Preliminary Matters_Notice and Parties



Sec.  99.11  Notice of hearing or opportunity for hearing.

    Proceedings commence when the Assistant Secretary mails a notice of 
hearing or opportunity for hearing to the Lead Agency. The notice shall 
state the time and place for the hearing, and the issues which will be 
considered. A copy of the notice shall be published in the Federal 
Register.



Sec.  99.12  Time of hearing.

    The hearing shall be scheduled not less than 30 days nor more than 
90 days after the date of the notice of the hearing furnished to the 
applicant or Lead Agency, unless otherwise agreed to, in writing, by the 
parties.



Sec.  99.13  Place.

    The hearing shall be held in the city in which the regional office 
of the Department responsible for oversight of the Lead Agency is 
located or in such other place as the Assistant Secretary determines, 
considering both the circumstances of the case and the convenience and 
necessity of the parties or their representatives.

[[Page 751]]



Sec.  99.14  Issues at hearing.

    (a) The Assistant Secretary may, prior to a hearing under Sec.  
98.91 of this part, notify the Lead Agency in writing of additional 
issues which will be considered at the hearing. Such notice shall be 
published in the Federal Register. If such notice is received by the 
Lead Agency less than 20 days before the date of the hearing, a 
postponement of the hearing shall be granted at the request of the Lead 
Agency or any other party. The hearing shall be held on a date 20 days 
after such notice was received, or on such later date as agreed to by 
the Assistant Secretary.
    (b) If, as a result of negotiations between the Department and the 
Lead Agency, the submittal of a Plan amendment, a change in the Lead 
Agency program, or other action by the Lead Agency, any issue is 
resolved in whole or in part, but new or modified issues are presented, 
as specified by the Assistant Secretary, the hearing shall proceed on 
such new or modified issues. A notice of such new or modified issues 
shall be published in the Federal Register. If such notice is received 
by the Lead Agency less than 20 days before the date of the hearing, a 
postponement of the hearing shall be granted at the request of the Lead 
Agency or any other party. The hearing shall be held on a date 20 days 
after such notice was received, or on such later date as agreed to by 
the Assistant Secretary.
    (c)(1) If, at any time, the Assistant Secretary finds that the Lead 
Agency has come into compliance with Federal statutes and regulations on 
any issue, in whole or in part, the Assistant Secretary shall remove 
such issue from the proceedings, in whole or in part, as may be 
appropriate. If all issues are removed, the Assistant Secretary shall 
terminate the hearing.
    (2) Prior to the removal of any issue from the hearing, in whole or 
in part, the Assistant Secretary shall provide all parties other than 
the Department and the Lead Agency (see Sec.  99.15(b)) with written 
notice of the intention, and the reasons for it. Such notice shall 
include a copy of the proposed CCDF Plan provision on which the Lead 
Agency and Assistant Secretary have settled. The parties shall have 15 
days from the receipt of such notice to file their views or any 
information on the merits of the proposed Plan provision and the merits 
of the Assistant Secretary's reasons for removing the issue from the 
hearing.
    (d) The issues considered at the hearing shall be limited to those 
issues of which the Lead Agency is notified, as provided in paragraph 
(a) of this section, and new or modified issues described in paragraph 
(b) of this section; they shall not include issues or parts of issues 
removed from the proceedings pursuant to paragraph (c) of this section.



Sec.  99.15  Request to participate in hearing.

    (a) The Department and the Lead Agency are parties to the hearing 
without making a specific request to participate.
    (b)(1) Other individuals or groups may be recognized as parties, if 
the issues to be considered at the hearing have directly caused them 
injury and their interest is immediately within the zone of interests to 
be protected by the governing Federal statute and regulations.
    (2) Any individual or group wishing to participate as a party shall 
file a petition with the presiding officer within 15 days after notice 
of the hearing has been published in the Federal Register and shall 
serve a copy on each party of record at that time, in accordance with 
Sec.  99.5(b). Such petition shall concisely state:
    (i) Petitioner's interest in the proceeding;
    (ii) Who will appear for petitioner;
    (iii) The issues on which petitioner wishes to participate; and
    (iv) Whether petitioner intends to present witnesses.
    (3) Any party may, within 5 days of receipt of such petition, file 
comments on it.
    (4) The presiding officer shall promptly determine whether each 
petitioner has the requisite interest in the proceedings and shall 
permit or deny participation accordingly. Where petitions to participate 
as parties are made by individuals or groups with common

[[Page 752]]

interests, at the presiding officer's discretion, the presiding officer 
may request that all such petitioners designate a single representative 
or may recognize one or more of such petitioners to represent all such 
petitioners. The presiding officer shall give each petitioner written 
notice of the decision on the petition, and if the petition is denied, 
the presiding officer shall briefly state the grounds for denial. If the 
petition is denied, the presiding officer may recognize the petitioner 
as an amicus curiae.
    (c)(1) Any interested person or organization wishing to participate 
as an amicus curiae shall file a petition with the presiding officer 
before the commencement of the hearing. Such petition shall concisely 
state:
    (i) The petitioner's interest in the hearing;
    (ii) Who will represent the petitioner; and
    (iii) The issues on which petitioner intends to present argument.
    An amicus curiae is not a party but may participate as provided in 
this paragraph.
    (2) The presiding officer may grant the petition upon finding that 
the petitioner has a legitimate interest in the proceedings, that such 
participation will not unduly delay the outcome, and it may contribute 
materially to the proper disposition of the issues.
    (3) An amicus curiae may present a brief oral statement at the 
hearing, at the point in the proceedings specified by the presiding 
officer. The amicus curiae may submit a written statement of position to 
the presiding officer prior to the beginning of a hearing and shall 
serve a copy on each party. The amicus curiae may also submit a brief or 
written statement at such time as the parties submit briefs and shall 
serve a copy on each party.



                      Subpart C_Hearing Procedures



Sec.  99.21  Authority of presiding officer.

    (a) The presiding officer shall have the duty to conduct a fair 
hearing, to avoid delay, maintain order, and make a record of the 
proceedings. The presiding officer shall have all powers necessary to 
accomplish these ends, including, but not limited to, the power to:
    (1) Change the date, time, and place of the hearing, upon due notice 
to the parties. This authority includes the power to continue the 
hearing in whole or in part;
    (2) Hold conferences to settle or simplify the issues in a 
proceeding, or to consider other matters that may aid in the expeditious 
disposition of the proceeding;
    (3) Regulate participation of parties and amici curiae and require 
parties and amici curiae to state their position with respect to the 
various issues in the proceeding;
    (4) Administer oaths and affirmations;
    (5) Rule on all pending motions and other procedural items including 
issuance of protective orders or other relief to a party against whom 
discovery is sought;
    (6) Regulate the course of the hearing and conduct of counsel 
therein;
    (7) Examine witnesses;
    (8) Receive, rule on, exclude or limit evidence or discovery;
    (9) Fix the time for filing motions, petitions, briefs, or other 
items in matters pending;
    (10) If the presiding officer is the Assistant Secretary, make a 
final decision;
    (11) If the presiding officer is not the Assistant Secretary, 
certify the entire record including the recommended findings and 
proposed decision to the Assistant Secretary; and
    (12) Take any action authorized by the rules in this part or in 
conformance with the provisions of 5 U.S.C. 551 through 559.
    (b) The presiding officer does not have authority to compel by 
subpoena the production of witnesses, papers, or other evidence.



Sec.  99.22  Rights of parties.

    All parties may:
    (a) Appear by counsel or other authorized representative, in all 
hearing proceedings;
    (b) Participate in any prehearing conference held by the presiding 
officer;

[[Page 753]]

    (c) Agree to stipulations as to facts which will be made a part of 
the record;
    (d) Make opening statements at the hearing;
    (e) Present relevant evidence on the issues at the hearing;
    (f) Present witnesses who then must be available for cross-
examination by all other parties;
    (g) Present oral arguments at the hearing; and
    (h) Submit written briefs, proposed findings of fact, and proposed 
conclusions of law, after the hearing.



Sec.  99.23  Discovery.

    The Department, the Lead Agency, and any individuals or groups 
recognized as parties shall have the right to conduct discovery 
(including depositions) against opposing parties. Rules 26-37 of the 
Federal Rules of Civil Procedure shall apply to such proceedings; there 
will be no fixed rule on priority of discovery. Upon written motion, the 
presiding officer shall promptly rule upon any objection to such 
discovery action initiated pursuant to this section. The presiding 
officer shall also have the power to grant a protective order or relief 
to any party against whom discovery is sought and to restrict or control 
discovery so as to prevent undue delay in the conduct of the hearing. 
Upon the failure of any party to make discovery, the presiding officer 
may, at the presiding officer's discretion, issue any order and impose 
any sanction (other than contempt orders) authorized by rule 37 of the 
Federal Rules of Civil Procedure.



Sec.  99.24  Evidentiary purpose.

    The purpose of the hearing is to receive factual evidence and expert 
opinion testimony related to the issues in the proceeding. Argument will 
not be received in evidence; rather, it should be presented in 
statements, memoranda, or briefs, as determined by the presiding 
officer. Brief opening statements, which shall be limited to statement 
of the party's position and what the party intends to prove, may be made 
at hearings.



Sec.  99.25  Evidence.

    (a) Testimony. Testimony shall be given orally under oath or 
affirmation by witnesses at the hearing. Witnesses shall be available at 
the hearing for cross-examination by all parties.
    (b) Stipulations and exhibits. Two or more parties may agree to 
stipulations of fact. Such stipulations, or any exhibit proposed by any 
party, shall be exchanged at the prehearing conference or otherwise 
prior to the hearing if the presiding officer so requires.
    (c) Rules of evidence. Technical rules of evidence shall not apply 
to hearings conducted pursuant to this part, but rules or principles 
designed to assure production of the most credible evidence available 
and to subject testimony to test by cross-examination shall be applied 
where reasonably necessary by the presiding officer. A witness may be 
cross-examined on any matter material to the proceeding without regard 
to the scope of direct examination. The presiding officer may exclude 
irrelevant, immaterial, or unduly repetitious evidence. All documents 
and other evidence offered or taken for the record shall be open to 
examination by the parties, and opportunity shall be given to refute 
facts and arguments advanced on either side of the issues.



Sec.  99.26  Unsponsored written material.

    Letters expressing views or urging action and other unsponsored 
written material regarding matters at issue in a hearing will be placed 
in the correspondence section of the docket of the proceeding. These 
data are not deemed part of the evidence or record in the hearing.



Sec.  99.27  Official transcript.

    The Department will designate the official reporter for all 
hearings. The official transcripts of testimony taken, together with any 
stipulations, exhibits, briefs, or memoranda of law filed therewith 
shall be filed with the Department. Transcripts of testimony in hearings 
may be obtained from the official reporter by the parties and the public 
at rates not to exceed the maximum rates fixed by the contract between 
the Department and the reporter. Upon notice to all parties, the

[[Page 754]]

presiding officer may authorize corrections to the transcript which 
involve matters of substance.



Sec.  99.28  Record for decision.

    The transcript of testimony, exhibits, and all papers and requests 
filed in the proceedings, except the correspondence section of the 
docket, including rulings and any recommended or initial decision, shall 
constitute the exclusive record for decision.



               Subpart D_Posthearing Procedures, Decisions



Sec.  99.31  Posthearing briefs.

    The presiding officer shall fix the time for filing posthearing 
briefs, which may contain proposed findings of fact and conclusions of 
law. The presiding officer shall also fix the time for reply briefs, if 
permitted.



Sec.  99.32  Decisions following hearing.

    (a) If the Assistant Secretary is the presiding officer, the 
Assistant Secretary shall issue the decision within 60 days after the 
time for submission of posthearing briefs has expired.
    (b)(1) If the presiding officer is not the Assistant Secretary, the 
presiding officer shall certify the entire record, including the 
recommended findings and proposed decision, to the Assistant Secretary 
within 60 days after the time for submission of posthearing briefs has 
expired. The Assistant Secretary shall serve a copy of the recommended 
findings and proposed decision upon all parties, and amici, if any.
    (2) Any party may, within 20 days of receipt of the recommended 
findings and proposed decision, file exceptions and a supporting brief 
or statement with the Assistant Secretary.
    (3) The Assistant Secretary shall thereupon review the recommended 
decision and, within 45 days after the receipt of the exceptions to the 
recommended findings and proposed decision, issue the decision.
    (c) The decision of the Assistant Secretary under this section shall 
be the final decision of the Secretary and shall constitute ``final 
agency action'' within the meaning of 5 U.S.C. 704. The Assistant 
Secretary's decision shall be promptly served on all parties, and amici, 
if any.



Sec.  99.33  Effective date of Assistant Secretary's decision.

    If, in the case of a hearing pursuant to Sec.  98.18(b) of this 
chapter, the Assistant Secretary concludes that a Plan amendment does 
not comply with the Federal statutes and regulations, the decision that 
further payments will not be made to the Lead Agency, or payments will 
be limited to categories under other parts of the CCDF Plan not 
affected, shall specify the effective date for the withholding of 
Federal funds.



PART 100_INTERGOVERNMENTAL REVIEW OF DEPARTMENT OF HEALTH AND HUMAN SERVICES 
PROGRAMS AND ACTIVITIES--Table of Contents



Sec.
100.1 What is the purpose of these regulations?
100.2 What definitions apply to these regulations?
100.3 What programs and activities of the Department are subject to 
          these regulations?
100.4 [Reserved]
100.5 What is the Secretary's obligation with respect to Federal 
          interagency coordination?
100.6 What procedures apply to the selection of programs and activities 
          under these regulations?
100.7 How does the Secretary communicate with state and local officials 
          concerning the Department's programs and activities?
100.8 How does the Secretary provide states an opportunity to comment on 
          proposed Federal financial assistance and direct Federal 
          development?
100.9 How does the Secretary receive and respond to comments?
100.10 How does the Secretary make efforts to accommodate 
          intergovernmental concerns?
100.11 What are the Secretary's obligations in interstate situations?
100.12 How may a state simplify, consolidate, or substitute federally 
          required state plans?
100.13 May the Secretary waive any provision of these regulations?

    Authority: Executive Order 12372, July 14, 1982 (47 FR 30959), as 
amended April 8, 1983 (48 FR 15887): sec. 401, Intergovernmental 
Cooperation Act of 1968, as amended (31 U.S.C.

[[Page 755]]

6506); sec. 204, Demonstration Cities and Metropolitan Development Act 
of 1966, as amended (42 U.S.C. 3334).

    Source: 48 FR 29200, June 24, 1983, unless otherwise noted.



Sec.  100.1  What is the purpose of these regulations?

    (a) The regulations in this part implement Executive Order 12372, 
``Intergovernmental Review of Federal Programs,'' issued July 14, 1982 
and amended on April 8, 1983. These regulations also implement 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968 and section 204 of the Demonstration Cities and 
Metropolitan Development Act of 1966.
    (b) These regulations are intended to foster an intergovernmental 
partnership and a strengthened Federalism by relying on state processes 
and on state, areawide, regional and local coordination for review of 
proposed Federal financial assistance and direct Federal development.
    (c) These regulations are intended to aid the internal management of 
the Department, and are not intended to create any right or benefit 
enforceable at law by a party against the Department or its officers.



Sec.  100.2  What definitions apply to these regulations?

    Department means the U.S. Department of Health and Human Services 
(HHS).
    Order means Executive Order 12372, issued July 14, 1982, and amended 
April 8, 1983 and titled ``Intergovernmental Review of Federal 
Programs.''
    Secretary means the Secretary of HHS or an official or employee of 
the Department acting for the Secretary under a delegation of authority.
    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust 
Territory of the Pacific Islands.



Sec.  100.3  What programs and activities of the Department 
are subject to these regulations?

    The Secretary publishes in the Federal Register a list of the 
Department's programs and activities that are subject to these 
regulations and identifies which of these are subject to the 
requirements of section 204 of the Demonstration Cities and Metropolitan 
Development Act.



Sec.  100.4  [Reserved]



Sec.  100.5  What is the Secretary's obligation with respect to 
Federal interagency coordination?

    The Secretary, to the extent practicable, consults with and seeks 
advice from all other substantially affected Federal departments and 
agencies in an effort to assure full coordination between such agencies 
and the Department regarding programs and activities covered under these 
regulations.



Sec.  100.6  What procedures apply to the selection of programs 
and activities under these regulations?

    (a) A state may select any program or activity published in the 
Federal Register in accordance with Sec.  100.3 of this part for 
intergovernmental review under these regulations. Each state, before 
selecting programs and activities, shall consult with local elected 
officials.
    (b) Each state that adopts a process shall notify the Secretary of 
the Department's programs and activities selected for that process.
    (c) A state may notify the Secretary of changes in its selections at 
any time. For each change, the state shall submit to the Secretary an 
assurance that the state has consulted with local elected officials 
regarding the change. The Department may establish deadlines by which 
states are required to inform the Secretary of changes in their program 
selections.
    (d) The Secretary uses a state's process as soon as feasible, 
depending on individual programs and activities, after the Secretary is 
notified of its selections.



Sec.  100.7  How does the Secretary communicate with state and local officials 
concerning the Department's programs and activities?

    (a) For those programs and activities selected by a state process 
under Sec.  100.6, the Secretary, to the extent permitted by law:

[[Page 756]]

    (1) Uses the state process to determine views of state and local 
elected officials; and,
    (2) Communicates with state and local elected officials, through the 
state process, as early in a program planning cycle as is reasonably 
feasible to explain specific plans and actions.
    (b) The Secretary provides notice to directly affected state, 
areawide, regional, and local entities in a state of proposed Federal 
finanical assistance or direct Federal development if:
    (1) The state has not adopted a process under the Order; or
    (2) The assistance or development invovles a program or activity not 
selected for the state process.

This notice may be made by publication in the Federal Register or other 
appropriate means, which the Department in its discretion deems 
appropriate.



Sec.  100.8  How does the Secretary provide states an opportunity 
to comment on proposed Federal financial assistance and direct 
Federal development?

    (a) Except in unusal circumstances, the Secretary gives state 
processes or directly affected state, areawide, regional and local 
officials and entities:
    (1) At least 30 days from the date established by the Secretary to 
comment on proposed direct Federal development or Federal financial 
assistance in the form of noncompeting continuation awards; and
    (2) At least 60 days from the date established by the Secretary to 
comment on proposed direct Federal development or Federal financial 
assistance other than noncompeting continuation awards.
    (b) This section also applies to comments in cases in which the 
review, coordination, and communication with the Department have been 
delegated.
    (c) Applicants for programs and activities subject to section 204 of 
the Demonstration Cities and Metropolitan Act shall allow areawide 
agencies a 60-day opportunity for review and comment.



Sec.  100.9  How does the Secretary receive and respond to comments?

    (a) The Secretary follows the procedures in Sec.  100.10 if:
    (1) A state office or official is designated to act as a single 
point of contact between a state process and all Federal agencies, and
    (2) That office or official transmits a state process recommendation 
for a program selected under Sec.  100.6.
    (b)(1) The single point of contract is not obligated to transmit 
comments from state, areawide, regional or local officials and entities 
where there is no state process recommendation.
    (2) If a state process recommendation is transmitted by a single 
point of contact, all comments from state, areawide, regional, and local 
officials and entities that differ from it must also be transmitted.
    (c) If a state has not established a process, or is unable to submit 
a state process recommendation, state, areawide, regional and local 
officials and entities may submit comments either to the applicant or to 
the Department.
    (d) If a program or activity is not selected for review under a 
state process, state, areawide, regional and local officials and 
entities may submit comments either to the applicant or to the 
Department. In addition, if a state process recommendation for a 
nonselected program or activity is transmitted to the Department by the 
single point of contact, the Secretary follows the procedures of Sec.  
100.10 of this part.
    (e) The Secretary considers comments which do not constitute a state 
process recommendation submitted under these regulations and for which 
the Secretary is not required to apply the procedures of Sec.  100.10 of 
this part, when such comments are provided by a single point of contact, 
by the applicant, or directly to the Department by a commenting party.
    (f) If an applicant receives comments under Sec.  100.9(a)(2), (c) 
or (d) of this part, it must forward such comments to the Department 
with its application materials.

[[Page 757]]



Sec.  100.10  How does the Secretary make efforts to accommodate 
intergovernmental concerns?

    (a) If a state process provides a state process recommendation to 
the Department through its single point of contact, the Secretary 
either:
    (1) Accepts the recommendation;
    (2) Reaches a mutually agreeable solution with the state process; or
    (3) Provides the single point of contact with such written 
explanation of the decision as the Secretary in this or her discretion 
deems appropriate. The Secretary may also supplement the written 
explanation by providing the explanation to the single point of contact 
by telephone, other telecommunication, or other means.
    (b) In any explanation under paragraph (a)(3) of this section, the 
Secretary informs the single point of contact that:
    (1) The Department will not implement its decision for at least ten 
days after the single point of contact receives the explanation; or
    (2) The Secretary has reviewed the decision and determined that, 
because of unsual circumstances, the waiting period of at least ten days 
is not feasible.
    (c) For purposes of computing the waiting period under paragraph 
(b)(1) of this section, a single point of contact is presumed to have 
received written explanation 5 days after the date such notification is 
dated.



Sec.  100.11  What are the Secretary's obligations in interstate situations?

    (a) The Secretary is responsible for:
    (1) Identifying proposed Federal financial assistance and direct 
Federal development that have an impact on interstate areas;
    (2) Notifying appropriate officials and entities in states which 
have adopted a process and which select the Department's program or 
activity.
    (3) Making efforts to identify and notify the affected state, 
areawide, regional, and local officials and entities in those states 
that have not adopted a process under the Order or do not select the 
Department's program or activity;
    (4) Responding pursuant to Sec.  100.10 of this part if the 
Secretary receives a recommendation from a designated areawide agency 
transmitted by a single point of contact, in cases in which the review, 
coordination, and communication with the Department have been delegated.
    (b) The Secretary uses the procedures in Sec.  100.10 if a state 
process provides a state process recommendation to the Department 
through a single point of contact.



Sec.  100.12  How may a state simplify, consolidate, or substitute federally 
required state plans?

    (a) As used in this section:
    (1) Simplify means that a state may develop its own format, choose 
its own submission date, and select the planning period for a state 
plan.
    (2) Consolidate means that a state may meet statutory and regulatory 
requirements by combining two or more plans into one document and that 
the state can select the format, submission date, and planning period 
for the consolidated plan.
    (3) Substitute means that a state may use a plan or other document 
that it has developed for its own purposes to meet Federal requirements.
    (b) If not inconsistent with law, a state may decide to try to 
simplify, consolidate, or substitute federally required state plans 
without prior approval by the Secretary.
    (c) The Secretary reviews each state plan that a state has 
simplified, consolidated, or substituted and accepts the plan only if 
its contents meet Federal requirements.



Sec.  100.13  May the Secretary waive any provision of these regulations?

    In an emergency, the Secretary may waive any provision of these 
regulations.



PART 101_DESCRIBING AGENCY NEEDS--Table of Contents



      Subpart A_Health Resources Priorities and Allocations System

                                 General

Sec.
101.1 Purpose.
101.2 Priorities and allocations authority.
101.3 Program eligibility.

[[Page 758]]

                          Subpart B_Definitions

101.20 Definitions.

                   Subpart C_Placement of Rated Orders

101.30 Delegations of authority.
101.31 Priority ratings.
101.32 Elements of a rated order.
101.33 Acceptance and rejection of rated orders.
101.34 Preferential scheduling.
101.35 Extension of priority ratings.
101.36 Changes or cancellations of priority ratings and rated orders.
101.37 Use of rated orders.
101.38 Limitations on placing rated orders.

                 Subpart D_Special Priorities Assistance

101.40 General provisions.
101.41 Requests for priority rating authority.
101.42 Examples of assistance.
101.43 Criteria for assistance.
101.44 Instances where assistance may not be provided.

                      Subpart E_Allocation Actions

101.50 Policy.
101.51 General procedures.
101.52 Controlling the general distribution of a material in the 
          civilian market.
101.53 Types of allocation orders.
101.54 Elements of an allocation order.
101.55 Mandatory acceptance of an allocation order.
101.56 Changes or cancellations of an allocation order.

                       Subpart F_Official Actions

101.60 General provisions.
101.61 Rating Authorizations.
101.62 Directives.
101.63 Letters and Memoranda of Understanding.

                          Subpart G_Compliance

101.70 General provisions.
101.71 Audits and investigations.
101.72 Compulsory process.
101.73 Notification of failure to comply.
101.74 Violations, penalties, and remedies.
101.75 Compliance conflicts.

             Subpart H_Adjustments, Exceptions, and Appeals

101.80 Adjustments or exceptions.
101.81 Appeals.

                   Subpart I_Miscellaneous Provisions

101.90 Protection against claims.
101.91 Records and reports.
101.92 Applicability of this part and official actions.
101.93 Communications.

    Authority: 50 U.S.C. App. 2061-2171;

    Source: 80 FR 42413, July 17, 2015, unless otherwise noted.



      Subpart A_Health Resources Priorities and Allocations System

                                 General



Sec.  101.1  Purpose.

    This section provides guidance and procedures for use of Defense 
Production Act (DPA) of 1950 Section 101(a) priorities and allocations 
authority with respect to all forms of health resources necessary or 
appropriate to promote the national defense. The guidance and procedures 
in this part are consistent with the guidance and procedures provided in 
other regulations that, as a whole, form the Federal Priorities and 
Allocations System. Guidance and procedures for use of the DPA 
priorities and allocations authority with respect to other types of 
resources are provided for: food resources, food resource facilities, 
and the domestic distribution of farm equipment and commercial 
fertilizer in7 CFR part 700; energy supplies in 10 CFR part 217; all 
forms of civil transportation in 49 CFR part 33; water resources in 32 
CFR part 555; and all other materials, services, and facilities, 
including construction materials in the Defense Priorities and 
Allocations System (DPAS) regulation (15 CFR part 700).



Sec.  101.2  Priorities and allocations authority.

    (a) Section 201 of E.O. 13603, delegates the President's authority 
under Section 101 of the DPA. DPA Section 101 provides the President 
with authority to require acceptance and priority performance of 
contracts and orders (other than contracts of employment) to promote the 
national defense over performance of any other contracts or orders, and 
to allocate materials, services, and facilities as deemed necessary or 
appropriate to promote the national defense to a number of agencies. 
Section 201 of E.O. 13603 delegates the

[[Page 759]]

President's authority to specific agencies as follows:
    (1) The Secretary of Agriculture with respect to food resources, 
food resource facilities, livestock resources, veterinary resources, 
plant health resources, and the domestic distribution of farm equipment 
and commercial fertilizer;
    (2) The Secretary of Energy with respect to all forms of energy;
    (3) The Secretary of Health and Human Services with respect to 
health resources;
    (4) The Secretary of Transportation with respect to all forms of 
civil transportation;
    (5) The Secretary of Defense with respect to water resources; and
    (6) The Secretary of Commerce for all other materials, services, and 
facilities, including construction materials.
    (b) Section 202(a) of E.O. 13603 states that the priorities and 
allocations authority delegated in Section 201 of that Executive Order 
may be used only to support programs that have been determined in 
writing as necessary or appropriate to promote the national defense:
    (1) By the Secretary of Defense with respect to military production 
and construction, military assistance to foreign nations, military use 
of civil transportation, stockpiles managed by the Department of 
Defense, space, and directly related activities;
    (2) By the Secretary of Energy with respect to energy production and 
construction, distribution and use, and directly related activities; and
    (3) By the Secretary of Homeland Security with respect to all other 
national defense programs, including civil defense and continuity of 
Government.
    (c) Section 201(e) of E.O. 13603 provides that each department that 
is delegated priorities and allocations authority under Section 201(a) 
of E.O. 13603 may use this authority with respect to control of the 
general distribution of any material (including applicable services) in 
the civilian market only after:
    (1) Making the finding required under Section 101(b) of the DPA; and
    (2) The finding has been approved by the President.
    (d) Priorities authorities (and other authorities delegated to the 
Secretary in E.O. 13603 but not covered by this regulation) have been 
re-delegated by the Secretary to the Assistant Secretary for 
Preparedness and Response (the ``ASPR''). The Secretary retains the 
authority for allocations.



Sec.  101.3  Program eligibility.

    Certain programs to promote the national defense are eligible for 
priorities and allocations support. These include programs for military 
and energy production or construction, military or critical 
infrastructure assistance to any foreign nation, deployment and 
sustainment of military forces, homeland security, stockpiling, space, 
and any directly related activity. Other eligible programs include 
emergency preparedness activities conducted pursuant to Title VI of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 
U.S.C. 5195 et seq.] and critical infrastructure protection and 
restoration.



                          Subpart B_Definitions



Sec.  101.20  Definitions.

    The following definitions pertain to all sections of this part:
    Allocation means the control of the distribution of materials, 
services, or facilities for a purpose deemed necessary or appropriate to 
promote the national defense.
    Allocation order means an official action to control the 
distribution of materials, services, or facilities for a purpose deemed 
necessary or appropriate to promote the national defense.
    Allotment means an official action that specifies the maximum 
quantity or use of a material, service, or facility authorized for a 
specific use to promote the national defense.
    Approved program means a program determined by the Secretary of 
Defense, the Secretary of Energy, or the Secretary of Homeland Security 
to be necessary or appropriate to promote the national defense, in 
accordance with Section 202 of E.O. 13603.
    Construction means the erection, addition, extension, or alteration 
of any building, structure, or project, using materials or products 
which are to be an integral and permanent part of the

[[Page 760]]

building, structure, or project. Construction does not include 
maintenance and repair.
    Critical infrastructure means any systems and assets, whether 
physical or cyber-based, so vital to the United States that the 
degradation or destruction of such systems and assets would have a 
debilitating impact on national security, including, but not limited to, 
national economic security and national public health or safety.
    Defense Production Act or DPA means the Defense Production Act of 
1950, as amended (50 U.S.C. App. 2061 et seq.).
    Delegate agency means a Federal government agency authorized by 
delegation from HHS to place priority ratings on contracts or orders 
needed to support approved programs.
    Directive means an official action that requires a person to take or 
refrain from taking certain actions in accordance with its provisions.
    Emergency preparedness means all those activities and measures 
designed or undertaken to prepare for or minimize the effects of a 
hazard upon the civilian population, to deal with the immediate 
emergency conditions which would be created by the hazard, and to 
effectuate emergency repairs to, or the emergency restoration of, vital 
utilities and facilities destroyed or damaged by the hazard. ``Emergency 
Preparedness'' includes the following:
    (1) Measures to be undertaken in preparation for anticipated hazards 
(including the establishment of appropriate organizations, operational 
plans, and supporting agreements, the recruitment and training of 
personnel, the conduct of research, the procurement and stockpiling of 
necessary materials and supplies, the provision of suitable warning 
systems, the construction or preparation of shelters, shelter areas, and 
control centers, and, when appropriate, the nonmilitary evacuation of 
the civilian population).
    (2) Measures to be undertaken during a hazard (including the 
enforcement of passive defense regulations prescribed by duly 
established military or civil authorities, the evacuation of personnel 
to shelter areas, the control of traffic and panic, and the control and 
use of lighting and civil communications).
    (3) Measures to be undertaken following a hazard (including 
activities for firefighting; rescue; emergency medical, health and 
sanitation services; monitoring for specific dangers of special weapons; 
unexploded bomb reconnaissance; essential debris clearance; emergency 
welfare measures; and immediately essential emergency repair or 
restoration of damaged vital facilities).
    Facilities includes all types of buildings, structures, or other 
improvements to real property (but excluding farms, churches or other 
places of worship, and private dwelling houses), and services relating 
to the use of any such building, structure, or other improvement.
    Farm equipment means equipment, machinery, and repair parts 
manufactured for use on farms in connection with the production or 
preparation for market use of Food resources.
    Fertilizer means any product or combination of products that contain 
one or more of the elements--nitrogen, phosphorus, and potassium--for 
use as a plant nutrient.
    Food resource facilities means plants, machinery, vehicles 
(including on-farm), and other facilities required for the production, 
processing, distribution, and storage (including cold storage) of food 
resources, and for the domestic distribution of farm equipment and 
fertilizer (excluding transportation thereof).
    Food resources means all commodities and products, (simple, mixed, 
or compound), or complements to such commodities or products, that are 
capable of being ingested by either human beings or animals, 
irrespective of other uses to which such commodities or products may be 
put, at all stages of processing from the raw commodity to the products 
thereof in vendible form for human or animal consumption. ``Food 
Resources'' also means potable water packaged in commercially marketable 
containers, all starches, sugars, vegetable and animal or marine fats 
and oils, seed, cotton, hemp, and flax fiber, but does not mean any such 
material after it loses its identity as an agricultural commodity or 
agricultural product.

[[Page 761]]

    Hazard means an emergency or disaster resulting from:
    (1) A natural disaster; or
    (2) An accidental or human-caused event.
    Health resources means drugs, biological products, medical devices, 
materials, facilities, health supplies, services and equipment required 
to diagnose, mitigate or prevent the impairment of, improve, treat, 
cure, or restore the physical or mental health conditions of the 
population.
    Homeland Security includes efforts--
    (1) To prevent terrorist attacks within the United States;
    (2) To reduce the vulnerability of the United States to terrorism;
    (3) To minimize damage from a terrorist attack in the United States; 
and
    (4) To recover from a terrorist attack in the United States.
    Industrial Resource means all materials, services, and facilities, 
including construction materials, but not including: Food resources, 
food resource facilities, and the domestic distribution of farm 
equipment and commercial fertilizer; all forms of health resources; all 
forms of civil transportation; and water resources.
    Item means any raw, in process, or manufactured material, article, 
commodity, supply, equipment, component, accessory, part, assembly, or 
product of any kind, technical information, process, or service.
    Maintenance and Repair and Operating Supplies (MRO) includes the 
following--
    (1) ``Maintenance'' is the upkeep necessary to continue any plant, 
facility, or equipment in working condition.
    (2) ``Repair'' is the restoration of any plant, facility, or 
equipment to working condition when it has been rendered unsafe or unfit 
for service by wear and tear, damage, or failure of parts.
    (3) ``Operating Supplies'' are any resources carried as operating 
supplies according to a person's established accounting practice. 
``Operating Supplies'' may include hand tools and expendable tools, 
jigs, dies, fixtures used on production equipment, lubricants, cleaners, 
chemicals and other expendable items.
    (4) MRO does not include items produced or obtained for sale to 
other persons or for installation upon or attachment to the property of 
another person, or items required for the production of such items; 
items needed for the replacement of any plant, facility, or equipment; 
or items for the improvement of any plant, facility, or equipment by 
replacing items which are still in working condition with items of a new 
or different kind, quality, or design.
    Materials includes--
    (1) Any raw materials (including minerals, metals, and advanced 
processed materials), commodities, articles, components (including 
critical components), products, and items of supply;
    (2) Any technical information or services ancillary to the use of 
any such materials, commodities, articles, components, products, or 
items; and
    (3) Natural resources such as oil and gas.
    National defense means programs for military and health resources 
production or construction, military or critical infrastructure 
assistance to any foreign nation, homeland security, stockpiling, space, 
and any directly related activity. Such term includes emergency 
preparedness activities conducted pursuant to title VI of the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195, 
et seq.) and critical infrastructure protection and restoration.
    Official action means an action taken by the Department of Health 
and Human Services or another resource agency under the authority of the 
Defense Production Act, E.O.13603, and this part or another regulation 
under the Federal Priorities and Allocations System. Such actions 
include the issuance of Rating Authorizations, Directives, Set Asides, 
Allotments, Letters of Understanding, Memoranda of Understanding, and 
Demands for Information, Inspection Authorizations, and Administrative 
Subpoenas.
    Person includes an individual, corporation, partnership, 
association, or any other organized group of persons, or legal successor 
or representative thereof, or any State or local government or agency 
thereof.
    Rated order means a prime contract, a subcontract, or a purchase 
order in support of an approved program issued

[[Page 762]]

in accordance with the provisions of this part.
    Resource agency means any agency delegated priorities and 
allocations authority as specified in Sec.  101.2.
    Secretary means the Secretary of Health and Human Services.
    Services includes any effort that is needed for or incidental to--
    (1) The development, production, processing, distribution, delivery, 
or use of an industrial resource or a critical technology item;
    (2) The construction of facilities;
    (3) The movement of individuals and property by all modes of civil 
transportation; or
    (4) Other national defense programs and activities.
    Set-aside means an official action that requires a person to reserve 
materials, services, or facilities capacity in anticipation of the 
receipt of rated orders.
    Stafford Act means title VI (Emergency Preparedness) of the Robert 
T. Stafford Disaster Relief and Emergency Assistance Act, as amended (42 
U.S.C. 5195-5197h).
    Water resources means all usable water, from all sources, within the 
jurisdiction of the United States, that can be managed, controlled, and 
allocated to meet emergency requirements, except ``water resources does 
not include usable water that qualifies as ``food resources''.



                   Subpart C_Placement of Rated Orders



Sec.  101.30  Delegations of authority.

    The priorities and allocations authorities of the President under 
Title I of the DPA with respect to all forms of health resources have 
been delegated to the Secretary under E.O. 13603. The Secretary may re-
delegate the Secretary's priority rating activities under the DPA though 
the allocations authority provided to the Secretary is not subject to 
delegation per Section 201(e) of E.O. 13603.



Sec.  101.31  Priority ratings.

    (a) Levels of priority. (1) There are two levels of priority 
established by Federal Priorities and Allocations System regulations, 
identified by the rating symbols ``DO'' and ``DX''.
    (2) All DO-rated orders have equal priority with each other and take 
precedence over unrated orders. All DX-rated orders have equal priority 
with each other and take precedence over DO-rated orders and unrated 
orders. (For resolution of conflicts among rated orders of equal 
priority, see Sec.  101.34(c).)
    (3) In addition, a Directive regarding priority treatment for a 
given item issued by the Department of Health and Human Services for 
that item takes precedence over any DX-rated order, DO-rated order, or 
unrated order, as stipulated in the Directive. (For a full discussion of 
Directives, see Sec.  101. 62.
    (b) Program identification symbols. Program identification symbols, 
such as ``DO-HR'', or ``DX-HR'', indicate which approved program is 
being supported by a rated order. Programs may be approved under the 
procedures of E.O. 13603 Section 202 at any time. Program identification 
symbols do not connote any priority.
    (c) Priority ratings. A priority rating consists of the rating 
symbol--DO or DX--and the program identification symbol, such as DO-HR 
or DX-HR.



Sec.  101.32  Elements of a rated order.

    Each rated order must include:
    (a) The appropriate priority rating (e.g. DO-HR or DX-HR);
    (b) A required delivery date or dates. The words ``immediately'' or 
``as soon as possible'' do not constitute a delivery date. A 
``requirements contract'', ``basic ordering agreement'', ``prime vendor 
contract'', or similar procurement document bearing a priority rating 
may contain no specific delivery date or dates and may provide for the 
furnishing of items or service from time-to-time or within a stated 
period against specific purchase orders, such as ``calls'', 
``requisitions'', and ``delivery orders''. These purchase orders must 
specify a required delivery date or dates and are to be considered as 
rated as of the date of their receipt by the supplier and not as of the 
date of the original procurement document;

[[Page 763]]

    (c) The written signature on a manually placed order, or the digital 
signature or name on an electronically placed order, of an individual 
authorized to sign rated orders for the person placing the order. The 
signature or use of the name certifies that the rated order is 
authorized under this part and that the requirements of this part are 
being followed; and
    (d)(1) A statement that reads in substance:

    This is a rated order certified for national defense use, and you 
are required to follow all the provisions of the Health Resources 
Priorities and Allocations System regulation at 45 CFR part 101.

    (2) If the rated order is placed in support of emergency 
preparedness requirements and expedited action is necessary and 
appropriate to meet these requirements, the following sentences should 
be added following the statement set forth in paragraph (d)(1) of this 
section:
    (i) This rated order is placed for the purpose of emergency 
preparedness. It must be accepted or rejected within two (2) days after 
receipt of the order if:
    (A) The order is issued in response to a hazard that has occurred; 
or
    (B) If the order is issued to prepare for an imminent hazard, as 
specified in HRPAS Sec.  101.33(e).
    (ii) [Reserved]



Sec.  101.33  Acceptance and rejection of rated orders.

    (a) Mandatory acceptance. (1) Except as otherwise specified in this 
section, a person shall accept every rated order received and must fill 
such orders regardless of any other rated or unrated orders that have 
been accepted.
    (2) A person shall not discriminate against rated orders in any 
manner such as by charging higher prices or by imposing different terms 
and conditions than for comparable unrated orders.
    (b) Mandatory rejection. Unless otherwise directed by HHS for a 
rated order involving all forms of health resources:
    (1) A person shall not accept a rated order for delivery on a 
specific date if unable to fill the order by that date. However, the 
person must inform the customer of the earliest date on which delivery 
can be made and offer to accept the order on the basis of that date. 
Scheduling conflicts with previously accepted lower rated or unrated 
orders are not sufficient reason for rejection under this section.
    (2) A person shall not accept a DO-rated order for delivery on a 
date which would interfere with delivery of any previously accepted DO- 
or DX-rated orders. However, the person must offer to accept the order 
based on the earliest delivery date otherwise possible.
    (3) A person shall not accept a DX-rated order for delivery on a 
date which would interfere with delivery of any previously accepted DX-
rated orders, but must offer to accept the order based on the earliest 
delivery date otherwise possible.
    (4) If a person is unable to fill all of the rated orders of equal 
priority status received on the same day, the person must accept, based 
upon the earliest delivery dates, only those orders which can be filled, 
and reject the other orders. For example, a person must accept order A 
requiring delivery on December 15 before accepting order B requiring 
delivery on December 31. However, the person must offer to accept the 
rejected orders based on the earliest delivery dates otherwise possible.
    (c) Optional rejection. Unless otherwise directed by HHS for a rated 
order involving all forms of health resources, rated orders may be 
rejected in any of the following cases as long as a supplier does not 
discriminate among customers:
    (1) If the person placing the order is unwilling or unable to meet 
regularly established terms of sale or payment;
    (2) If the order is for an item not supplied or for a service not 
capable of being performed;
    (3) If the order is for an item or service produced, acquired, or 
provided only for the supplier's own use for which no orders have been 
filled for two years prior to the date of receipt of the rated order. 
If, however, a supplier has sold some of these items or provided similar 
services, the supplier is obligated to accept rated orders up to that 
quantity or portion of production

[[Page 764]]

or service, whichever is greater, sold or provided within the past two 
years;
    (4) If the person placing the rated order, other than the U.S. 
Government, makes the item or performs the service being ordered;
    (5) If acceptance of a rated order or performance against a rated 
order would violate any other regulation, official action, or order of 
the HHS issued under the authority of the DPA or another relevant 
statute.
    (d) Customer notification requirements. (1) Except as provided in 
paragraph (e) of this section, a person must accept or reject a rated 
order in writing or electronically within fifteen (15) working days 
after receipt of a DO-rated order and within ten (10) working days after 
receipt of a DX-rated order. If the order is rejected, the person must 
give reasons in writing or electronically for the rejection.
    (2) If a person has accepted a rated order and subsequently finds 
that shipment or performance will be delayed, the person must notify the 
customer immediately, give the reasons for the delay, and advise of a 
new shipment or performance date. If notification is given verbally, 
written or electronic confirmation must be provided within five (5) 
working days.
    (e) Exception for emergency response conditions. If the rated order 
is placed for the purpose of emergency preparedness, a person must 
accept or reject a rated order and transmit the acceptance or rejection 
in writing or in an electronic format within two (2) days after receipt 
of the order if:
    (1) The order is issued in response to a hazard that has occurred; 
or
    (2) The order is issued to prepare for an imminent hazard.



Sec.  101.34  Preferential scheduling.

    (a) A person must schedule operations, including the acquisition of 
all needed production items or services, in a timely manner to satisfy 
the delivery requirements of each rated order. Modifying production or 
delivery schedules is necessary only when required delivery dates for 
rated orders cannot otherwise be met.
    (b) DO-rated orders must be given production preference over unrated 
orders, if necessary to meet required delivery dates, even if this 
requires the diversion of items being processed or ready for delivery or 
services being performed against unrated orders. Similarly, DX-rated 
orders must be given preference over DO-rated orders and unrated orders. 
(Examples: If a person receives a DO-rated order with a delivery date of 
June 3 and if meeting that date would mean delaying production or 
delivery of an item for an unrated order, the unrated order must be 
delayed. If a DX-rated order is received calling for delivery on July 15 
and a person has a DO-rated order requiring delivery on June 2 and 
operations can be scheduled to meet both deliveries, there is no need to 
alter production schedules to give any additional preference to the DX-
rated order.)
    (c) Conflicting rated orders. (1) If a person finds that delivery or 
performance against any accepted rated orders conflicts with the 
delivery or performance against other accepted rated orders of equal 
priority status, the person shall give precedence to the conflicting 
orders in the sequence in which they are to be delivered or performed 
(not to the receipt dates). If the conflicting orders are scheduled to 
be delivered or performed on the same day, the person shall give 
precedence to those orders that have the earliest receipt dates.
    (2) If a person is unable to resolve rated order delivery or 
performance conflicts under this section, the person should promptly 
seek special priorities assistance as provided in Sec. Sec.  101.40 
through 101.44. If the person's customer objects to the rescheduling of 
delivery or performance of a rated order, the customer should promptly 
seek special priorities assistance as provided in Sec. Sec.  101.40 
through 101.44. For any rated order against which delivery or 
performance will be delayed, the person must notify the customer as 
provided in Sec.  101.33(d)(2).
    (d) If a person is unable to purchase needed production items in 
time to fill a rated order by its required delivery date, the person 
must fill the rated order by using inventoried production items. A 
person who uses inventoried items to fill a rated order may replace 
those items with the use of a rated order as provided in Sec.  
101.37(b).

[[Page 765]]



Sec.  101.35  Extension of priority ratings.

    (a) A person must use rated orders with suppliers to obtain items or 
services needed to fill a rated order. The person must use the priority 
rating indicated on the customer's rated order, except as otherwise 
provided in this part or as directed by the Department of Health and 
Human Services.
    (b) The priority rating must be included on each successive order 
placed to obtain items or services needed to fill a customer's rated 
order. This continues from contractor to subcontractor to supplier 
throughout the entire procurement chain.



Sec.  101.36  Changes or cancellations of priority ratings and rated orders.

    (a) The priority rating on a rated order may be changed or canceled 
by:
    (1) An official action of HHS; or
    (2) Written notification from the originating agency that placed the 
rated order.
    (b) If an unrated order is amended so as to make it a rated order, 
or a DO rating is changed to a DX rating, the supplier must give the 
appropriate preferential treatment to the order as of the date the 
change is received by the supplier.
    (c) An amendment to a rated order that significantly alters a 
supplier's original production or delivery schedule shall constitute a 
new rated order as of the date of its receipt. The supplier must accept 
or reject the amended order according to the provisions of Sec.  101.33.
    (d) The following amendments do not constitute a new rated order: a 
change in shipping destination; a reduction in the total amount of the 
order; an increase in the total amount of the order which has negligible 
impact upon deliveries; a minor variation in size or design; or a change 
which is agreed upon between the supplier and the customer.
    (e) If a person no longer needs items or services to fill a rated 
order, any rated orders placed with suppliers for the items or services, 
or the priority rating on those orders, must be canceled.
    (f) When a priority rating is added to an unrated order, or is 
changed or canceled, all suppliers must be promptly notified in writing.



Sec.  101.37  Use of rated orders.

    (a) A person must use rated orders to obtain:
    (1) Items which will be physically incorporated into other items to 
fill rated orders, including that portion of such items normally 
consumed or converted into scrap or by-products in the course of 
processing;
    (2) Containers or other packaging materials required to make 
delivery of the finished items against rated orders;
    (3) Services, other than contracts of employment, needed to fill 
rated orders; and
    (4) MRO needed to produce the finished items to fill rated orders.
    (b) A person may use a rated order to replace inventoried items 
(including finished items) if such items were used to fill rated orders, 
as follows:
    (1) The order must be placed within 90 days of the date of use of 
the inventory.
    (2) A DO rating and the program identification symbol indicated on 
the customer's rated order must be used on the order. A DX rating may 
not be used even if the inventory was used to fill a DX-rated order.
    (3) If the priority ratings on rated orders from one customer or 
several customers contain different program identification symbols, the 
rated orders may be combined. In this case, the program identification 
symbol ``H1'' must be used (i.e., DO-H1).
    (c) A person may combine DX- and DO-rated orders from one customer 
or several customers if the items or services covered by each level of 
priority are identified separately and clearly. If different program 
identification symbols are indicated on those rated orders of equal 
priority, the person must use the program identification symbol ``H1'' 
(i.e., DO-H1 or DX-H1).
    (d) Combining rated and unrated orders. (1) A person may combine 
rated and unrated order quantities on one purchase order provided that:
    (i) The rated quantities are separately and clearly identified; and
    (ii) The four elements of a rated order, as required by Sec.  
101.32, are included on the order with the statement required in Sec.  
101.32(d) modified to read in substance:


[[Page 766]]


    This purchase order contains rated order quantities certified for 
national defense use, and you are required to follow all applicable 
provisions of the Health Resources Priorities and Allocations System 
regulations at 45 CFR part 101, subpart A, only as it pertains to the 
rated quantities.

    (2) A supplier must accept or reject the rated portion of the 
purchase order as provided in Sec.  101.33 and give preferential 
treatment only to the rated quantities as required by this part. This 
part may not be used to require preferential treatment for the unrated 
portion of the order.
    (3) Any supplier who believes that rated and unrated orders are 
being combined in a manner contrary to the intent of this part or in a 
fashion that causes undue or exceptional hardship may submit a request 
for adjustment or exception under Sec.  101.80.
    (e) A person may place a rated order for the minimum commercially 
procurable quantity even if the quantity needed to fill a rated order is 
less than that minimum. However, a person must combine rated orders as 
provided in paragraph (c) of this section, if possible, to obtain 
minimum procurable quantities.
    (f) A person is not required to place a priority rating on an order 
for less than one-half of the Simplified Acquisition Threshold (as 
established in the Federal Acquisition Regulation (FAR) (see 48 CFR 
2.101) or in other authorized acquisition regulatory or management 
systems) whichever amount is greater, provided that delivery can be 
obtained in a timely fashion without the use of the priority rating.



Sec.  101.38  Limitations on placing rated orders.

    (a) General limitations. (1) A person may not place a DO- or DX-
rated order unless entitled to do so under this part.
    (2) Rated orders may not be used to obtain:
    (i) Delivery on a date earlier than needed;
    (ii) A greater quantity of the item or services than needed, except 
to obtain a minimum procurable quantity. Separate rated orders may not 
be placed solely for the purpose of obtaining minimum procurable 
quantities on each order;
    (iii) Items or services in advance of the receipt of a rated order, 
except as specifically authorized by HHS (see Sec.  101.41(c) for 
information on obtaining authorization for a priority rating in advance 
of a rated order);
    (iv) Items that are not needed to fill a rated order, except as 
specifically authorized by HHS, or as otherwise permitted by this part; 
or
    (v) Any of the following items unless specific priority rating 
authority has been obtained from HHS, a Delegate Agency, or the 
Department of Commerce, as appropriate:
    (A) Items for plant improvement, expansion, or construction, unless 
they will be physically incorporated into a construction project covered 
by a rated order; and
    (B) Production or construction equipment or items to be used for the 
manufacture of production equipment. [For information on requesting 
priority rating authority, see Sec.  101.41.]
    (vi) Any items related to the development of chemical or biological 
warfare capabilities or the production of chemical or biological 
weapons, unless such development or production has been authorized by 
the President or the Secretary of Defense. This provision does not 
however prohibit the use of the priority and allocations authority to 
acquire or produce qualified countermeasures that are necessary to 
treat, identify, or prevent harm from any biological or chemical agent 
that may cause a public health emergency affecting national security.
    (b) Jurisdictional limitations. Unless authorized by the resource 
agency with jurisdiction, the provisions of this part are not applicable 
to the following resources:
    (1) Food resources, food resource facilities, and the domestic 
distribution of farm equipment and commercial fertilizer (Resource 
agency with jurisdiction--Department of Agriculture);
    (2) Energy supplies (Resource agency with jurisdiction--Department 
of Energy);
    (3) All forms of civil transportation (Resource agency with 
jurisdiction--Department of Transportation);

[[Page 767]]

    (4) Water resources (Resource agency with jurisdiction--Department 
of Defense/U.S. Army Corps of Engineers); and
    (5) Communications services (Resource agency with jurisdiction-- 
National Communications System under E.O. 12472 of April 3, 1984).



                 Subpart D_Special Priorities Assistance



Sec.  101.40  General provisions.

    (a) The six regulations that comprise the Federal Priorities and 
Allocations System are designed to be largely self-executing. However, 
from time-to-time production or delivery problems will arise in 
connection with rated orders for health resources as covered under this 
part. In this event, a person should immediately contact the Secretary 
for guidance, as specified in Sec.  101.93. If the HHS is unable to 
resolve the problem or to authorize the use of a priority rating and 
believes additional assistance is warranted, HHS may forward the request 
to another agency with resource jurisdiction, or the Department of 
Commerce, as appropriate, for action. Special priorities assistance is 
provided to alleviate problems that do arise.
    (b) Special priorities assistance is available for any reason 
consistent with this part. Generally, special priorities assistance is 
provided to expedite deliveries, resolve delivery conflicts, place rated 
orders, locate suppliers, or to verify information supplied by customers 
and vendors. Special priorities assistance may also be used to request 
rating authority for items that are not normally eligible for priority 
treatment.
    (c) A request for special priorities assistance or priority rating 
authority must be submitted to the Secretary, as specified in Sec.  
101.93.



Sec.  101.41  Requests for priority rating authority.

    (a) If a rated order is likely to be delayed because a person is 
unable to obtain items or services not normally rated under this part, 
the person may request the authority to use a priority rating in 
ordering the needed items or services.
    (b) Rating authority for production or construction equipment. (1) A 
request for priority rating authority for production or construction 
equipment must be submitted to the U.S. Department of Commerce on Form 
BIS-999.
    (2) When the use of a priority rating is authorized for the 
procurement of production or construction equipment, a rated order may 
be used either to purchase or to lease such equipment. However, in the 
latter case, the equipment may be leased only from a person engaged in 
the business of leasing such equipment or from a person willing to lease 
rather than sell.
    (c) Rating authority in advance of a rated prime contract. (1) In 
certain cases and upon specific request, the Department of Health and 
Human Services, in order to promote the national defense, may authorize 
a person to place a priority rating on an order to a supplier in advance 
of the issuance of a rated prime contract. In these instances, the 
person requesting advance-rating authority must obtain sponsorship of 
the request from the Department of Health and Human Services or the 
appropriate Delegate Agency. The person shall also assume any business 
risk associated with the placing of rated orders in the event the rated 
prime contract is not issued.
    (2) The person must state the following in the request:

    It is understood that the authorization of a priority rating in 
advance of our receiving a rated prime contract from the Department of 
Health and Human Services and our use of that priority rating with our 
suppliers in no way commits the Department of Health and Human Services 
or any other government agency to enter into a contract or order or to 
expend funds. Further, we understand that the Federal Government shall 
not be liable for any cancellation charges, termination costs, or other 
damages that may accrue if a rated prime contract is not eventually 
placed and, as a result, we must subsequently cancel orders placed with 
the use of the priority rating authorized as a result of this request.

    (3) In reviewing requests for rating authority in advance of a rated 
prime contract, HHS will consider, among other things, the following 
criteria:
    (i) The probability that the prime contract will be awarded;

[[Page 768]]

    (ii) The impact of the resulting rated orders on suppliers and on 
other authorized programs;
    (iii) Whether the contractor is the sole source;
    (iv) Whether the item being produced has a long lead time;
    (v) The time period for which the rating is being requested.
    (4) The HHS may require periodic reports on the use of the rating 
authority granted under paragraph (c) of this section.
    (5) If a rated prime contract is not issued, the person shall 
promptly notify all suppliers who have received rated orders pursuant to 
the advanced rating authority that the priority rating on those orders 
is cancelled.



Sec.  101.42  Examples of assistance.

    (a) While special priorities assistance may be provided for any 
reason in support of this part, it is usually provided in situations 
where:
    (1) A person is experiencing difficulty in obtaining delivery 
against a rated order by the required delivery date; or
    (2) A person cannot locate a supplier for an item or service needed 
to fill a rated order.
    (b) Other examples of special priorities assistance include:
    (1) Ensuring that rated orders receive preferential treatment by 
suppliers;
    (2) Resolving production or delivery conflicts between various rated 
orders;
    (3) Assisting in placing rated orders with suppliers;
    (4) Verifying the urgency of rated orders; and
    (5) Determining the validity of rated orders.



Sec.  101.43  Criteria for assistance.

    Requests for special priorities assistance should be timely, i.e., 
the request has been submitted promptly and enough time exists for HHS, 
or the agencies to which HHS has delegated its authority to issue rated 
orders (the ``Delegate Agency''), or the Department of Commerce for 
industrial resources to effect a meaningful resolution to the problem, 
and must establish that:
    (a) There is an urgent need for the item; and
    (b) The applicant has made a reasonable effort to resolve the 
problem.



Sec.  101.44  Instances where assistance may not be provided.

    Special priorities assistance is provided at the discretion of HHS 
or the Delegate Agency when it is determined that such assistance is 
warranted to meet the objectives of this part. Examples where assistance 
may not be provided include situations when a person is attempting to:
    (a) Secure a price advantage;
    (b) Obtain delivery prior to the time required to fill a rated 
order;
    (c) Gain competitive advantage;
    (d) Disrupt an industry apportionment program in a manner designed 
to provide a person with an unwarranted share of scarce items; or
    (e) Overcome a supplier's regularly established terms of sale or 
conditions of doing business.



                      Subpart E_Allocation Actions



Sec.  101.50  Policy.

    (a) It is the policy of the Federal Government that the allocations 
authority under title I of the Defense Production Act may:
    (1) Only be used when there is insufficient supply of a material, 
service, or facility to satisfy national defense supply requirements 
through the use of the priorities authority or when the use of the 
priorities authority would cause a severe and prolonged disruption in 
the supply of materials, services, or facilities available to support 
normal U.S. economic activities; and
    (2) Not be used to ration materials or services at the retail level.
    (b) Allocation orders, when used, will be distributed equitably 
among the suppliers of the materials, services, or facilities being 
allocated and not require any person to relinquish a disproportionate 
share of the civilian market.



Sec.  101.51  General procedures.

    When HHS plans to execute its allocations authority to address a 
supply problem within its resource jurisdiction, the Department shall 
develop a plan that includes the following information:

[[Page 769]]

    (a) A copy of the Secretary's finding for Presidential approval 
made, in accordance with Section 201(e) of E.O. 13603, that the material 
or materials at issue are scarce and critical materials essential to the 
national defense and that the requirements for national defense for such 
material(s) cannot otherwise be met without creating a significant 
dislocation of the normal distribution of such material(s) in to such a 
degree as to create appreciable hardship.
    (b) A detailed description of the situation to include any unusual 
events or circumstances that have created the requirement for an 
allocation action;
    (c) A statement of the specific objective(s) of the allocation 
action;
    (d) A list of the materials, services, or facilities to be 
allocated;
    (e) A list of the sources of the materials, services, or facilities 
that will be subject to the allocation action;
    (f) A detailed description of the provisions that will be included 
in the allocation orders, including the type(s) of allocation orders, 
the percentages or quantity of capacity or output to be allocated for 
each purpose, and the duration of the allocation action (i.e., 
anticipated start and end dates);
    (g) An evaluation of the impact of the proposed allocation action on 
the civilian market; and
    (h) Proposed actions, if any, to mitigate disruptions to civilian 
market operations.



Sec.  101.52  Controlling the general distribution of a material 
in the civilian market.

    (a) No allocation action taken by HHS may be used to control the 
general distribution of a material in the civilian market, unless the 
Secretary has:
    (1) Made a written finding that:
    (i) Such material is a scarce and critical material essential to the 
national defense, and
    (ii) The requirements of the national defense for such material 
cannot otherwise be met without creating a significant dislocation of 
the normal distribution of such material in the civilian market to such 
a degree as to create appreciable hardship;
    (2) Submitted the finding for the President's approval through the 
Assistant to the President for National Security Affairs; and
    (3) The President has approved the finding.
    (b) The requirements of this section may not delegated by the 
Secretary (See E.O. 13603, Section 201(e)).



Sec.  101.53  Types of allocation orders.

    There are three types of allocation orders available for 
communicating allocation actions. These are:
    (a) Set-aside. An official action that requires a person to reserve 
materials, services, or facilities capacity in anticipation of the 
receipt of rated orders;
    (b) Directive. An official action that requires a person to take or 
refrain from taking certain actions in accordance with its provisions. A 
directive can require a person to: Stop or reduce production of an item; 
prohibit the use of selected materials, services, or facilities; or 
divert the use of materials, services, or facilities from one purpose to 
another; and
    (c) Allotment. An official action that specifies the maximum 
quantity of a material, service, or facility authorized for a specific 
use.



Sec.  101.54  Elements of an allocation order.

    Each allocation order must include:
    (a) A detailed description of the required allocation action(s);
    (b) Specific start and end calendar dates for each required 
allocation action;
    (c) The written signature on a manually placed order, or the digital 
signature or name on an electronically placed order, of the Secretary of 
Health and Human Services. The signature or use of the name certifies 
that the order is authorized under this part and that the requirements 
of this part are being followed;
    (d) A statement that reads in substance:

    This is an allocation order certified for national defense use. 
[Insert the legal name of the person receiving the order] is required to 
comply with this order, in accordance with the provisions of the Health 
Resources Priorities and Allocations System regulation (45 CFR part 101, 
subpart A), which is part of the Federal Priorities and Allocations 
System; and


[[Page 770]]


    (e) A current copy of the Health Resources Priorities and 
Allocations System regulation (subpart A of this part).



Sec.  101.55  Mandatory acceptance of an allocation order.

    (a) Except as otherwise specified in this section (see paragraph (c) 
of this section), a person shall accept and comply with every allocation 
order received.
    (b) A person shall not discriminate against an allocation order in 
any manner such as by charging higher prices for materials, services, or 
facilities covered by the order or by imposing terms and conditions for 
contracts and orders involving allocated materials, services, or 
facilities that differ from the person's terms and conditions for 
contracts and orders for the materials, services, or facilities prior to 
receiving the allocation order.
    (c) If a person is unable to comply fully with the required 
action(s) specified in an allocation order, the person must notify the 
Secretary, as specified in Sec.  101.93, immediately, explain the extent 
to which compliance is possible, and give the reasons why full 
compliance is not possible. If notification is given verbally, written 
or electronic confirmation must be provided within five (5) working 
days. Such notification does not release the person from complying with 
the order to the fullest extent possible, until the person is notified 
by the Department of Health and Human Services that the order has been 
changed or cancelled.



Sec.  101.56  Changes or cancellations of an allocation order.

    An allocation order may be changed or canceled by an official action 
of the Department of Health and Human Services.



                       Subpart F_Official Actions



Sec.  101.60  General provisions.

    (a) HHS may take specific official actions to implement the 
provisions of this subpart.
    (b) These official actions include, but are limited to, Rating 
Authorizations, Directives, and Memoranda of Understanding (See Sec.  
101.20.)



Sec.  101.61  Rating Authorizations.

    (a) A Rating Authorization is an official action granting specific 
priority rating authority that:
    (1) Permits a person to place a priority rating on an order for an 
item or service not normally ratable under this part; or
    (2) Authorizes a person to modify a priority rating on a specific 
order or series of contracts or orders.
    (b) To request priority rating authority, see Sec.  101.41.



Sec.  101.62  Directives.

    (a) A Directive is an official action that requires a person to take 
or refrain from taking certain actions in accordance with its 
provisions.
    (b) A person must comply with each Directive issued. However, a 
person may not use or extend a Directive to obtain any items from a 
supplier, unless expressly authorized to do so in the Directive.
    (c) A Priorities Directive takes precedence over all DX-rated 
orders, DO-rated orders, and unrated orders previously or subsequently 
received, unless a contrary instruction appears in the Directive.
    (d) An Allocations Directive takes precedence over all Priorities 
Directives, DX-rated orders, DO-rated orders, and unrated orders 
previously or subsequently received, unless a contrary instruction 
appears in the Directive.



Sec.  101.63  Letters and Memoranda of Understanding.

    (a) A Letter or Memorandum of Understanding is an official action 
that may be issued in resolving special priorities assistance cases to 
reflect an agreement reached by all parties including HHS, the 
Department of Commerce (if applicable), a Delegate Agency (if 
applicable), the supplier, and the customer).
    (b) A Letter or Memorandum of Understanding is not used to alter 
scheduling between rated orders, to authorize the use of priority 
ratings, to impose restrictions under this part. Rather, Letters or 
Memoranda of Understanding are used to confirm production or shipping 
schedules that do not

[[Page 771]]

require modifications to other rated orders.



                          Subpart G_Compliance



Sec.  101.70  General provisions.

    (a) HHS may take specific official actions for any reason necessary 
or appropriate to the enforcement or the administration of the Defense 
Production Act and other applicable statutes, this part, or an official 
action. Such actions include Administrative Subpoenas, Demands for 
Information, and Inspection Authorizations.
    (b) Any person who places or receives a rated order or an allocation 
order must comply with the provisions of this part.
    (c) Willful violation of the provisions of title I or section 705 of 
the Defense Production Act and other applicable statutes, this part, or 
an official action of the Department of Health and Human Services is a 
criminal act, punishable as provided in the Defense Production Act and 
other applicable statutes, and as set forth in Sec.  101.74.



Sec.  101.71  Audits and investigations.

    (a) Audits and investigations are official examinations of books, 
records, documents, other writings and information to ensure that the 
provisions of the Defense Production Act and other applicable statutes, 
this part, and official actions have been properly followed. An audit or 
investigation may also include interviews and a systems evaluation to 
detect problems or failures in the implementation of this part.
    (b) When undertaking an audit or investigation, HHS shall:
    (1) Define the scope and purpose in the official action given to the 
person under investigation; and
    (2) Have ascertained that the information sought or other adequate 
and authoritative data are not available from any Federal or other 
responsible agency.
    (c) In administering this part, HHS may issue the following 
documents that constitute official actions:
    (1) Administrative Subpoenas. An Administrative Subpoena requires a 
person to appear as a witness before an official designated by HHS to 
testify under oath on matters of which that person has knowledge 
relating to the enforcement or the administration of the Defense 
Production Act and other applicable statutes, this part, or official 
actions. An Administrative Subpoena may also require the production of 
books, papers, records, documents and physical objects or property.
    (2) Demands for Information. A Demand for Information requires a 
person to furnish to a duly authorized representative of HHS any 
information necessary or appropriate to the enforcement or the 
administration of the Defense Production Act and other applicable 
statutes, this part, or official actions.
    (3) Inspection Authorizations. An Inspection Authorization requires 
a person to permit a duly authorized representative of HHS to interview 
the person's employees or agents, to inspect books, records, documents, 
other writings, and information, including electronically-stored 
information, in the person's possession or control at the place where 
that person usually keeps them or otherwise, and to inspect a person's 
property when such interviews and inspections are necessary or 
appropriate to the enforcement or the administration of the Defense 
Production Act and related statutes, this part, or official actions.
    (d) The production of books, records, documents, other writings, and 
information will not be required at any place other than where they are 
usually kept, if, prior to the return date specified in the 
Administrative Subpoena or Demand for Information, a duly authorized 
official of HHS is furnished with copies of such material that are 
certified under oath to be true copies. As an alternative, a duly 
authorized representative of HHS may enter into a stipulation with a 
person as to the content of the material.
    (e) An Administrative Subpoena, Demand for Information, or 
Inspection Authorization, shall include the name, title, or official 
position of the person to be served, the evidence sought to be adduced, 
and its general relevance to the scope and purpose of the audit, 
investigation, or other inquiry. If employees or agents are to be 
interviewed; if books, records, documents, other

[[Page 772]]

writings, or information are to be produced; or if property is to be 
inspected; the Administrative Subpoena, Demand for Information, or 
Inspection Authorization will describe them with particularity.
    (f) Service of documents shall be made in the following manner:
    (1) Service of a Demand for Information or Inspection Authorization 
shall be made personally, or by Certified Mail-Return Receipt Requested 
at the person's last known address. Service of an Administrative 
Subpoena shall be made personally. Personal service may also be made by 
leaving a copy of the document with someone at least 18 years old at the 
person's last known dwelling or place of business.
    (2) Service upon other than an individual may be made by serving a 
partner, corporate officer, or a managing or general agent authorized by 
appointment or by law to accept service of process. If an agent is 
served, a copy of the document shall be mailed to the person named in 
the document.
    (3) Any individual 18 years of age or over may serve an 
Administrative Subpoena, Demand for Information, or Inspection 
Authorization. When personal service is made, the individual making the 
service shall prepare an affidavit as to the manner in which service was 
made and the identity of the person served, and return the affidavit, 
and in the case of subpoenas, the original document, to the issuing 
officer. In case of failure to make service, the reasons for the failure 
shall be stated on the original document.



Sec.  101.72  Compulsory process.

    (a) If a person refuses to permit a duly authorized representative 
of the Department of Health and Human Services to have access to any 
premises or to the source of information necessary to the administration 
or the enforcement of the Defense Production Act and other applicable 
statutes, this part, or official actions, HHS, through its authorized 
representative may seek compulsory process. Compulsory process means the 
institution of appropriate legal action, including ex parte application 
for an inspection warrant or its equivalent, in any forum of appropriate 
jurisdiction.
    (b) Compulsory process may be sought in advance of an audit, 
investigation, or other inquiry, if, in the judgment of the Secretary 
there is reason to believe that a person will refuse to permit an audit, 
investigation, or other inquiry, or that other circumstances exist which 
make such process desirable or necessary.



Sec.  101.73  Notification of failure to comply.

    (a) At the conclusion of an audit, investigation, or other inquiry, 
or at any other time, HHS may inform the person in writing of HHS's 
position regarding that person's non-compliance with the requirements of 
the DPA and other applicable statutes, this part, or an official action.
    (b) In cases where HHS determines that failure to comply with the 
provisions of the DPA and other applicable statutes, this part, or an 
official action was inadvertent, the person may be informed in writing 
of the particulars involved and the corrective action to be taken. 
Failure to take corrective action may then be construed as a willful 
violation of DPA and other applicable statutes, this part, or an 
official action.



Sec.  101.74  Violations, penalties, and remedies.

    (a) Willful violation of the provisions of the DPA, the priorities 
provisions of the Selective Service Act and related statutes (when 
applicable), this part, or an official action, is a crime and upon 
conviction, a person may be punished by fine or imprisonment, or both. 
The maximum penalties provided by the DPA are a $10,000 fine, or one 
year in prison, or both. The maximum penalties provided by the Selective 
Service Act and related statutes are a $50,000 fine, or three years in 
prison, or both.
    (b) The Government may also seek an injunction from a court of 
appropriate jurisdiction to prohibit the continuance of any violation 
of, or to enforce compliance with, the DPA, this part, or an official 
action.
    (c) In order to secure the effective enforcement of the DPA and 
other applicable statutes, this part, and official actions, the 
following are prohibited:

[[Page 773]]

    (1) No person may solicit, influence or permit another person to 
perform any act prohibited by, or to omit any act required by, the DPA 
and other applicable statutes, this part, or an official action.
    (2) No person may conspire or act in concert with any other person 
to perform any act prohibited by, or to omit any act required by, the 
DPA and other applicable statutes, this part, or an official action.
    (3) No person shall deliver any item if the person knows or has 
reason to believe that the item will be accepted, redelivered, held, or 
used in violation of the DPA and other applicable statutes, this part, 
or an official action. In such instances, the person must immediately 
notify HHS that, in accordance with this provision, delivery has not 
been made.



Sec.  101.75  Compliance conflicts.

    If compliance with any provision of the DPA and other applicable 
statutes, this part, or an official action would prevent a person from 
filling a rated order or from complying with another provision of the 
DPA and other applicable statutes, this part, or an official action, the 
person must immediately notify the Secretary, as specified in Sec.  
101.93, for resolution of the conflict.



             Subpart H_Adjustments, Exceptions, and Appeals



Sec.  101.80  Adjustments or exceptions.

    (a) A person may submit a request to the Secretary for an adjustment 
or exception on the ground that:
    (1) A provision of this part or an official action results in an 
undue or exceptional hardship on that person not suffered generally by 
others in similar situations and circumstances; or
    (2) The consequences of following a provision of this part or an 
official action are contrary to the intent of the DPA and other 
applicable statutes, or this part.
    (b) Each request for adjustment or exception must be in writing and 
contain a complete statement of all the facts and circumstances related 
to the provision of this part or official action from which adjustment 
is sought and a full and precise statement of the reasons why relief 
should be provided.
    (c) The submission of a request for adjustment or exception shall 
not relieve any person from the obligation of complying with the 
provision of this part or official action in question while the request 
is being considered unless such interim relief is granted in writing by 
the Secretary or the Secretary's designated representative.
    (d) A decision of the Secretary or the Secretary's designated 
representative under this section may be appealed to the Secretary (For 
information on the appeal procedure, see Sec.  101.81.)



Sec.  101.81  Appeals.

    (a) Any person whose request for adjustment or exception was denied 
by the Secretary or the Secretary's designated representative under 
Section. 94a.80, may appeal to the Secretary who, through the 
Secretary's designated representative, shall review and reconsider the 
denial.
    (b)(1) Except as provided in paragraph (b)(2) of this section, an 
appeal must be received by the Secretary no later than 45 days after 
receipt of a written notice of denial. After this 45 day period, an 
appeal may be accepted at the discretion of the Secretary.
    (2) For requests for adjustment or exception involving rated orders 
placed for the purpose of emergency preparedness (see Sec.  101.33(e)), 
an appeal must be received by the Secretary, no later than 15 days after 
receipt of a written notice of denial. Contract performance under the 
order shall not be stayed pending resolution of the appeal.
    (c) Each appeal must be in writing and contain a complete statement 
of all the facts and circumstances related to the action appealed from 
and a full and precise statement of the reasons the decision should be 
modified or reversed.
    (d) In addition to the written materials submitted in support of an 
appeal, an appellant may request, in writing, an opportunity for an 
informal hearing. This request may be granted or denied at the 
discretion of the Secretary or the Secretary's designated 
representative.

[[Page 774]]

    (e) When a hearing is granted, the Secretary may designate an HHS 
employee to act as the Secretary's representative and hearing officer to 
conduct the hearing and to prepare a report. The hearing officer shall 
determine all procedural questions and impose such time or other 
limitations deemed reasonable. In the event that the hearing officer 
decides that a printed transcript is necessary, all expenses shall be 
borne by the appellant.
    (f) When determining an appeal, the Secretary may consider all 
information submitted during the appeal as well as any recommendations, 
reports, or other relevant information and documents available to HHS or 
consult with any other persons or groups.
    (g) The submission of an appeal under this section shall not relieve 
any person from the obligation of complying with the provision of this 
part or official action in question while the appeal is being considered 
unless such relief is granted in writing by the Secretary.



                    Subpart I_Miscellaneous Provisions



Sec.  101.90  Protection against claims.

    A person shall not be held liable for damages or penalties for any 
act or failure to act resulting directly or indirectly from compliance 
with any provision of this part, or an official action, notwithstanding 
that such provision or action shall subsequently be declared invalid by 
judicial or other competent authority.



Sec.  101.91  Records and reports.

    (a) Persons are required to make and preserve for at least three 
years, accurate and complete records of any transaction covered by this 
part or an official action.
    (b) Records must be maintained in sufficient detail to permit the 
determination, upon examination, of whether each transaction complies 
with the provisions of this part or any official action. However, this 
part does not specify any particular method or system to be used.
    (c) Records required to be maintained by this part must be made 
available for examination on demand by duly authorized representatives 
of HHS as provided in Sec.  101.71.
    (d) In addition, persons must develop, maintain, and submit any 
other records and reports to HHS that may be required for the 
administration of the DPA and other applicable statutes, and this part.
    (e) DPA Section 705(d), as implemented by E.O. 13603, provides that 
information obtained under this section which the Secretary deems 
confidential, or with reference to which a request for confidential 
treatment is made by the person furnishing such information, shall not 
be published or disclosed unless the Secretary determines that the 
withholding of this information is contrary to the interest of the 
national defense. Information required to be submitted to HHS in 
connection with the enforcement or administration of the DPA, this part, 
or an official action, is deemed to be confidential under DPA Section 
705(d) and shall be handled in accordance with applicable Federal law.



Sec.  101.92  Applicability of this part and official actions.

    (a) This part and all official actions, unless specifically stated 
otherwise, apply to transactions in any state, territory, or possession 
of the United States and the District of Columbia.
    (b) This part and all official actions apply not only to deliveries 
to other persons but also include deliveries to affiliates and 
subsidiaries of a person and deliveries from one branch, division, or 
section of a single entity to another branch, division, or section under 
common ownership or control.
    (c) This part and its schedules shall not be construed to affect any 
administrative actions taken by HHS, or any outstanding contracts or 
orders placed pursuant to any of the regulations, orders, schedules or 
delegations of authority previously issued by HHS pursuant to authority 
granted to HHS, by the President under the DPA and E.O. 13603. Such 
actions, contracts, or orders shall continue in full force and effect 
under this part unless modified or terminated by proper authority.

[[Page 775]]



Sec.  101.93  Communications.

    All communications concerning this part, including requests for 
copies of the part and explanatory information, requests for guidance or 
clarification, and requests for adjustment or exception shall be 
addressed to the Secretary, U.S. Department of Health and Human 
Services, and Washington, DC.



PART 102_ADJUSTMENT OF CIVIL MONETARY PENALTIES FOR INFLATION--
Table of Contents



Sec.
102.1 Applicability.
102.2 Applicability date.
102.3 Penalty adjustment and table.

    Authority: Public Law 101-410, Sec. 701 of Public Law 114-74, 31 
U.S.C. 3801-3812.

    Source: 81 FR 61565, Sept. 6, 2016, unless otherwise noted.



Sec.  102.1  Applicability.

    This part applies to each statutory provision under the laws 
administered by the Department of Health and Human Services concerning 
the civil monetary penalties which may be assessed or enforced by an 
agency pursuant to Federal law or is assessed or enforced pursuant to 
civil judicial actions in the Federal courts or administrative 
proceedings. The regulations cited in this part supersede existing HHS 
regulations setting forth civil monetary penalty amounts. If applicable, 
the HHS agencies responsible for specific civil monetary penalties will 
amend their regulations to reflect the adjusted amounts and/or a cross-
reference to 45 CFR part 102 in separate actions as soon as practicable.



Sec.  102.2  Applicability date.

    The increased penalty amounts set forth in the right-most column of 
the table in Section 102.3, ``Maximum Adjusted Penalty ($)'', apply to 
all civil monetary penalties which are assessed after August 1, 2016, 
including those penalties whose associated violations occurred after 
November 2, 2015.



Sec.  102.3  Penalty adjustment and table.

    The adjusted statutory penalty provisions and their applicable 
amounts are set out in the following table. The right-most column in the 
table, ``Maximum Adjusted Penalty ($)'', provides the maximum adjusted 
civil penalty amounts. The civil monetary penalty amounts are adjusted 
annually.

[[Page 776]]



                      Table 1 to Sec.   102.3--Civil Monetary Penalty Authorities Administered by HHS Agencies and Penalty Amounts
                                                                    January 17, 2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                     Date of
                                                                                                                       last         2019         2020
                                                                                                                     penalty      Maximum      Maximum
                                              CFR \1\                  HHS agency              Description \2\      figure or     adjusted     adjusted
                                                                                                                    adjustment  penalty ($)  penalty ($)
                                                                                                                       \3\                       \4\
--------------------------------------------------------------------------------------------------------------------------------------------------------
21 U.S.C.:
    333(b)(2)(A)....................  ......................  FDA                          Penalty for violations         2019      105,194      107,050
                                                                                            related to drug
                                                                                            samples resulting in
                                                                                            a conviction of any
                                                                                            representative of
                                                                                            manufacturer or
                                                                                            distributor in any 10-
                                                                                            year period.
    333(b)(2)(B)....................  ......................  FDA                          Penalty for violation          2019    2,146,800    2,184,670
                                                                                            related to drug
                                                                                            samples resulting in
                                                                                            a conviction of any
                                                                                            representative of
                                                                                            manufacturer or
                                                                                            distributor after the
                                                                                            second conviction in
                                                                                            any 10-yr period.
    333(b)(3).......................  ......................  FDA                          Penalty for failure to         2019      210,386      214,097
                                                                                            make a report
                                                                                            required by 21 U.S.C.
                                                                                            353(d)(3)(E) relating
                                                                                            to drug samples.
    333(f)(1)(A)....................  ......................  FDA                          Penalty for any person         2019       28,413       28,914
                                                                                            who violates a
                                                                                            requirement related
                                                                                            to devices for each
                                                                                            such violation.
                                                                                           Penalty for aggregate          2019    1,894,261    1,927,676
                                                                                            of all violations
                                                                                            related to devices in
                                                                                            a single proceeding.
    333(f)(2)(A)....................  ......................  FDA                          Penalty for any                2019       79,875       81,284
                                                                                            individual who
                                                                                            introduces or
                                                                                            delivers for
                                                                                            introduction into
                                                                                            interstate commerce
                                                                                            food that is
                                                                                            adulterated per 21
                                                                                            U.S.C. 342(a)(2)(B)
                                                                                            or any individual who
                                                                                            does not comply with
                                                                                            a recall order under
                                                                                            21 U.S.C. 350l.

[[Page 777]]

 
                                                                                           Penalty in the case of         2019      399,374      406,419
                                                                                            any other person
                                                                                            other than an
                                                                                            individual) for such
                                                                                            introduction or
                                                                                            delivery of
                                                                                            adulterated food.
                                                                                           Penalty for aggregate          2019      798,747      812,837
                                                                                            of all such
                                                                                            violations related to
                                                                                            adulterated food
                                                                                            adjudicated in a
                                                                                            single proceeding.
    333(f)(3)(A)....................  ......................  FDA                          Penalty for all                2019       12,103       12,316
                                                                                            violations
                                                                                            adjudicated in a
                                                                                            single proceeding for
                                                                                            any person who
                                                                                            violates 21 U.S.C.
                                                                                            331(jj) by failing to
                                                                                            submit the
                                                                                            certification
                                                                                            required by 42 U.S.C.
                                                                                            282(j)(5)(B) or
                                                                                            knowingly submitting
                                                                                            a false
                                                                                            certification; by
                                                                                            failing to submit
                                                                                            clinical trial
                                                                                            information under 42
                                                                                            U.S.C. 282(j); or by
                                                                                            submitting clinical
                                                                                            trial information
                                                                                            under 42 U.S.C.
                                                                                            282(j) that is false
                                                                                            or misleading in any
                                                                                            particular under 42
                                                                                            U.S.C. 282(j)(5)(D).
    333(f)(3)(B)....................  ......................  FDA                          Penalty for each day           2019       12,103       12,316
                                                                                            any above violation
                                                                                            is not corrected
                                                                                            after a 30-day period
                                                                                            following
                                                                                            notification until
                                                                                            the violation is
                                                                                            corrected.
    333(f)(4)(A)(i).................  ......................  FDA                          Penalty for any                2019      302,585      307,923
                                                                                            responsible person
                                                                                            that violates a
                                                                                            requirement of 21
                                                                                            U.S.C. 355(o) (post-
                                                                                            marketing studies,
                                                                                            clinical trials,
                                                                                            labeling), 21 U.S.C.
                                                                                            355(p) (risk
                                                                                            evaluation and
                                                                                            mitigation (REMS)),
                                                                                            or 21 U.S.C. 355-1
                                                                                            (REMS).

[[Page 778]]

 
                                                                                           Penalty for aggregate          2019    1,210,340    1,231,690
                                                                                            of all such above
                                                                                            violations in a
                                                                                            single proceeding.
    333(f)(4)(A)(ii)................  ......................  FDA                          Penalty for REMS               2019      302,585      307,923
                                                                                            violation that
                                                                                            continues after
                                                                                            written notice to the
                                                                                            responsible person
                                                                                            for the first 30-day
                                                                                            period (or any
                                                                                            portion thereof) the
                                                                                            responsible person
                                                                                            continues to be in
                                                                                            violation.
                                                                                           Penalty for REMS               2019    1,210,340    1,231,690
                                                                                            violation that
                                                                                            continues after
                                                                                            written notice to
                                                                                            responsible person
                                                                                            doubles for every 30-
                                                                                            day period thereafter
                                                                                            the violation
                                                                                            continues, but may
                                                                                            not exceed penalty
                                                                                            amount for any 30-day
                                                                                            period.
                                                                                           Penalty for aggregate          2019   12,103,404   12,316,908
                                                                                            of all such above
                                                                                            violations
                                                                                            adjudicated in a
                                                                                            single proceeding.
    333(f)(9)(A)....................  ......................  FDA                          Penalty for any person         2019       17,547       17,857
                                                                                            who violates a
                                                                                            requirement which
                                                                                            relates to tobacco
                                                                                            products for each
                                                                                            such violation.
                                                                                           Penalty for aggregate          2019    1,169,798    1,190,433
                                                                                            of all such
                                                                                            violations of tobacco
                                                                                            product requirement
                                                                                            adjudicated in a
                                                                                            single proceeding.

[[Page 779]]

 
    333(f)(9)(B)(i)(I)..............  ......................  FDA                          Penalty per violation          2019      292,450      297,609
                                                                                            related to violations
                                                                                            of tobacco
                                                                                            requirements.
                                                                                           Penalty for aggregate          2019    1,169,798    1,190,433
                                                                                            of all such
                                                                                            violations of tobacco
                                                                                            product requirements
                                                                                            adjudicated in a
                                                                                            single proceeding.
333(f)(9)(B)(i)(II).................  ......................  FDA                          Penalty in the case of         2019      292,450      297,609
                                                                                            a violation of
                                                                                            tobacco product
                                                                                            requirements that
                                                                                            continues after
                                                                                            written notice to
                                                                                            such person, for the
                                                                                            first 30-day period
                                                                                            (or any portion
                                                                                            thereof) the person
                                                                                            continues to be in
                                                                                            violation.
                                                                                           Penalty for violation          2019    1,169,798    1,190,433
                                                                                            of tobacco product
                                                                                            requirements that
                                                                                            continues after
                                                                                            written notice to
                                                                                            such person shall
                                                                                            double for every 30-
                                                                                            day period thereafter
                                                                                            the violation
                                                                                            continues, but may
                                                                                            not exceed penalty
                                                                                            amount for any 30-day
                                                                                            period.
                                                                                           Penalty for aggregate          2019   11,697,983   11,904,335
                                                                                            of all such
                                                                                            violations related to
                                                                                            tobacco product
                                                                                            requirements
                                                                                            adjudicated in a
                                                                                            single proceeding.

[[Page 780]]

 
    333(f)(9)(B)(ii)(I).............  ......................  FDA                          Penalty for any person         2019      292,450      297,609
                                                                                            who either does not
                                                                                            conduct post-market
                                                                                            surveillance and
                                                                                            studies to determine
                                                                                            impact of a modified
                                                                                            risk tobacco product
                                                                                            for which the HHS
                                                                                            Secretary has
                                                                                            provided them an
                                                                                            order to sell, or who
                                                                                            does not submit a
                                                                                            protocol to the HHS
                                                                                            Secretary after being
                                                                                            notified of a
                                                                                            requirement to
                                                                                            conduct post-market
                                                                                            surveillance of such
                                                                                            tobacco products.
                                                                                           Penalty for aggregate          2019    1,169,798    1,190,433
                                                                                            of for all such above
                                                                                            violations
                                                                                            adjudicated in a
                                                                                            single proceeding.
    333(f)(9)(B)(ii)(II)............  ......................  FDA                          Penalty for violation          2019      292,450      297,609
                                                                                            of modified risk
                                                                                            tobacco product post-
                                                                                            market surveillance
                                                                                            that continues after
                                                                                            written notice to
                                                                                            such person for the
                                                                                            first 30-day period
                                                                                            (or any portion
                                                                                            thereof) that the
                                                                                            person continues to
                                                                                            be in violation.

[[Page 781]]

 
                                                                                           Penalty for post-              2019    1,169,798    1,190,433
                                                                                            notice violation of
                                                                                            modified risk tobacco
                                                                                            product post-market
                                                                                            surveillance shall
                                                                                            double for every 30-
                                                                                            day period thereafter
                                                                                            that the tobacco
                                                                                            product requirement
                                                                                            violation continues
                                                                                            for any 30-day
                                                                                            period, but may not
                                                                                            exceed penalty amount
                                                                                            for any 30-day period.
                                                                                           Penalty for aggregate          2019   11,697,983   11,904,335
                                                                                            above tobacco product
                                                                                            requirement
                                                                                            violations
                                                                                            adjudicated in a
                                                                                            single proceeding.
    333(g)(1).......................  ......................  FDA                          Penalty for any person         2019      302,585      307,923
                                                                                            who disseminates or
                                                                                            causes another party
                                                                                            to disseminate a
                                                                                            direct-to-consumer
                                                                                            advertisement that is
                                                                                            false or misleading
                                                                                            for the first such
                                                                                            violation in any 3-
                                                                                            year period.
                                                                                           Penalty for each               2019      605,171      615,846
                                                                                            subsequent above
                                                                                            violation in any 3-
                                                                                            year period.
    333 note........................  ......................  FDA                          Penalty to be applied          2019          292          297
                                                                                            for violations of 21
                                                                                            U.S.C. 387f(d)(5) or
                                                                                            of violations of
                                                                                            restrictions on the
                                                                                            sale or distribution
                                                                                            of tobacco products
                                                                                            promulgated under 21
                                                                                            U.S.C. 387f(d) (e.g.,
                                                                                            violations of
                                                                                            regulations in 21 CFR
                                                                                            part 1140) with
                                                                                            respect to a retailer
                                                                                            with an approved
                                                                                            training program in
                                                                                            the case of a second
                                                                                            regulation violation
                                                                                            within a 12-month
                                                                                            period.

[[Page 782]]

 
                                                                                           Penalty in the case of         2019          584          594
                                                                                            a third violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 24-month
                                                                                            period.
                                                                                           Penalty in the case of         2019        2,340        2,381
                                                                                            a fourth violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 24-month
                                                                                            period.
                                                                                           Penalty in the case of         2019        5,849        5,952
                                                                                            a fifth violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 36-month
                                                                                            period.
                                                                                           Penalty in the case of         2019       11,698       11,904
                                                                                            a sixth or subsequent
                                                                                            violation of 21
                                                                                            U.S.C. 387f(d)(5) or
                                                                                            of the tobacco
                                                                                            product regulations
                                                                                            within a 48-month
                                                                                            period as determined
                                                                                            on a case-by-case
                                                                                            basis.

[[Page 783]]

 
                                                                                           Penalty to be applied          2019          292          297
                                                                                            for violations of 21
                                                                                            U.S.C. 387f(d)(5) or
                                                                                            of violations of
                                                                                            restrictions on the
                                                                                            sale or distribution
                                                                                            of tobacco products
                                                                                            promulgated under 21
                                                                                            U.S.C. 387f(d) (e.g.,
                                                                                            violations of
                                                                                            regulations in 21 CFR
                                                                                            part 1140) with
                                                                                            respect to a retailer
                                                                                            that does not have an
                                                                                            approved training
                                                                                            program in the case
                                                                                            of the first
                                                                                            regulation violation.
                                                                                           Penalty in the case of         2019          584          594
                                                                                            a second violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 12-month
                                                                                            period.
                                                                                           Penalty in the case of         2019        1,170        1,191
                                                                                            a third violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 24-month
                                                                                            period.
                                                                                           Penalty in the case of         2019        2,340        2,381
                                                                                            a fourth violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 24-month
                                                                                            period.
                                                                                           Penalty in the case of         2019        5,849        5,952
                                                                                            a fifth violation of
                                                                                            21 U.S.C. 387f(d)(5)
                                                                                            or of the tobacco
                                                                                            product regulations
                                                                                            within a 36-month
                                                                                            period.
                                                                                           Penalty in the case of         2019       11,698       11,904
                                                                                            a sixth or subsequent
                                                                                            violation of 21
                                                                                            U.S.C. 387f(d)(5) or
                                                                                            of the tobacco
                                                                                            product regulations
                                                                                            within a 48-month
                                                                                            period as determined
                                                                                            on a case-by-case
                                                                                            basis.

[[Page 784]]

 
    335b(a).........................  ......................  FDA                          Penalty for each               2019      445,846      453,711
                                                                                            violation for any
                                                                                            individual who made a
                                                                                            false statement or
                                                                                            misrepresentation of
                                                                                            a material fact,
                                                                                            bribed, destroyed,
                                                                                            altered, removed, or
                                                                                            secreted, or procured
                                                                                            the destruction,
                                                                                            alteration, removal,
                                                                                            or secretion of, any
                                                                                            material document,
                                                                                            failed to disclose a
                                                                                            material fact,
                                                                                            obstructed an
                                                                                            investigation,
                                                                                            employed a consultant
                                                                                            who was debarred,
                                                                                            debarred individual
                                                                                            provided consultant
                                                                                            services.
                                                                                           Penalty in the case of         2019    1,783,384    1,814,843
                                                                                            any other person
                                                                                            (other than an
                                                                                            individual) per above
                                                                                            violation.
360pp(b)(1).........................  ......................  FDA                          Penalty for any person         2019        2,924        2,976
                                                                                            who violates any such
                                                                                            requirements for
                                                                                            electronic products,
                                                                                            with each unlawful
                                                                                            act or omission
                                                                                            constituting a
                                                                                            separate violation.
                                                                                           Penalty imposed for            2019      996,806    1,014,390
                                                                                            any related series of
                                                                                            violations of
                                                                                            requirements relating
                                                                                            to electronic
                                                                                            products.
42 U.S.C............................  ......................  ...........................  ......................         2019

[[Page 785]]

 
    262(d)..........................  ......................  FDA                          Penalty per day for            2019      229,269      233,313
                                                                                            violation of order of
                                                                                            recall of biological
                                                                                            product presenting
                                                                                            imminent or
                                                                                            substantial hazard.
    263b(h)(3)......................  ......................  FDA                          Penalty for failure to         2019       17,834       18,149
                                                                                            obtain a mammography
                                                                                            certificate as
                                                                                            required.
    300aa-28(b)(1)..................  ......................  FDA                          Penalty per occurrence         2019      229,269      233,313
                                                                                            for any vaccine
                                                                                            manufacturer that
                                                                                            intentionally
                                                                                            destroys, alters,
                                                                                            falsifies, or
                                                                                            conceals any record
                                                                                            or report required.
    256b(d)(1)(B)(vi)...............  ......................  HRSA                         Penalty for each               2019        5,781        5,883
                                                                                            instance of
                                                                                            overcharging a 340B
                                                                                            covered entity.
    299c-(3)(d).....................  ......................  AHRQ                         Penalty for an                 2019       15,034       15,299
                                                                                            establishment or
                                                                                            person supplying
                                                                                            information obtained
                                                                                            in the course of
                                                                                            activities for any
                                                                                            purpose other than
                                                                                            the purpose for which
                                                                                            it was supplied.
    653(l)(2).......................  45 CFR 303.21(f)......  ACF                          Penalty for Misuse of          2019        1,542        1,569
                                                                                            Information in the
                                                                                            National Directory of
                                                                                            New Hires.
    262a(i)(1)......................  42 CFR 1003.910.......  OIG                          Penalty for each               2019      348,708      354,859
                                                                                            individual who
                                                                                            violates safety and
                                                                                            security procedures
                                                                                            related to handling
                                                                                            dangerous biological
                                                                                            agents and toxins.
                                                                                           Penalty for any other          2019      697,418      709,720
                                                                                            person who violates
                                                                                            safety and security
                                                                                            procedures related to
                                                                                            handling dangerous
                                                                                            biological agents and
                                                                                            toxins.
    300jj-51........................  ......................  OIG                          Penalty per violation          2019    1,063,260    1,082,016
                                                                                            for committing
                                                                                            information blocking.

[[Page 786]]

 
    1320a-7a(a).....................  42 CFR 1003.210(a)(1).  OIG                          Penalty for knowingly          2019       20,504       20,866
                                                                                            presenting or causing
                                                                                            to be presented to an
                                                                                            officer, employee, or
                                                                                            agent of the United
                                                                                            States a false claim.
                                                                                           Penalty for knowingly          2019       20,504       20,866
                                                                                            presenting or causing
                                                                                            to be presented a
                                                                                            request for payment
                                                                                            which violates the
                                                                                            terms of an
                                                                                            assignment,
                                                                                            agreement, or PPS
                                                                                            agreement.
                                      42 CFR 1003.210(a)(2).  ...........................  Penalty for knowingly          2019       30,757       31,300
                                                                                            giving or causing to
                                                                                            be presented to a
                                                                                            participating
                                                                                            provider or supplier
                                                                                            false or misleading
                                                                                            information that
                                                                                            could reasonably be
                                                                                            expected to influence
                                                                                            a discharge decision.
                                      42 CFR 1003.210(a)(3).  ...........................  Penalty for an                 2019       20,504       20,866
                                                                                            excluded party
                                                                                            retaining ownership
                                                                                            or control interest
                                                                                            in a participating
                                                                                            entity.
                                      42 CFR 1003.1010......  ...........................  Penalty for                    2019       20,504       20,866
                                                                                            remuneration offered
                                                                                            to induce program
                                                                                            beneficiaries to use
                                                                                            particular providers,
                                                                                            practitioners, or
                                                                                            suppliers.
                                      42 CFR 1003.210(a)(4).  ...........................  Penalty for employing          2019       20,504       20,866
                                                                                            or contracting with
                                                                                            an excluded
                                                                                            individual.

[[Page 787]]

 
                                      42 CFR 1003.310(a)(3).  ...........................  Penalty for knowing            2019      102,522      104,330
                                                                                            and willful
                                                                                            solicitation,
                                                                                            receipt, offer, or
                                                                                            payment of
                                                                                            remuneration for
                                                                                            referring an
                                                                                            individual for a
                                                                                            service or for
                                                                                            purchasing, leasing,
                                                                                            or ordering an item
                                                                                            to be paid for by a
                                                                                            Federal health care
                                                                                            program.
                                      42 CFR 1003.210(a)(1).  ...........................  Penalty for ordering           2019       20,504       20,866
                                                                                            or prescribing
                                                                                            medical or other item
                                                                                            or service during a
                                                                                            period in which the
                                                                                            person was excluded.
                                      42 CFR 1003.210(a)(6).  ...........................  Penalty for knowingly          2019      102,522      104,330
                                                                                            making or causing to
                                                                                            be made a false
                                                                                            statement, omission
                                                                                            or misrepresentation
                                                                                            of a material fact in
                                                                                            any application, bid,
                                                                                            or contract to
                                                                                            participate or enroll
                                                                                            as a provider or
                                                                                            supplier.
                                      42 CFR 1003.210(a)(8).  ...........................  Penalty for knowing of         2019       20,504       20,866
                                                                                            an overpayment and
                                                                                            failing to report and
                                                                                            return.
                                      42 CFR 1003.210(a)(7).  ...........................  Penalty for making or          2019       57,812       58,832
                                                                                            using a false record
                                                                                            or statement that is
                                                                                            material to a false
                                                                                            or fraudulent claim.
                                      42 CFR 1003.210(a)(9).  ...........................  Penalty for failure to         2019       30,757       31,300
                                                                                            grant timely access
                                                                                            to HHS OIG for
                                                                                            audits,
                                                                                            investigations,
                                                                                            evaluations, and
                                                                                            other statutory
                                                                                            functions of HHS OIG.
    1320a-7a(b).....................  ......................  OIG                          Penalty for payments           2019        5,126        5,216
                                                                                            by a hospital or
                                                                                            critical access
                                                                                            hospital to induce a
                                                                                            physician to reduce
                                                                                            or limit services to
                                                                                            individuals under
                                                                                            direct care of
                                                                                            physician or who are
                                                                                            entitled to certain
                                                                                            medical assistance
                                                                                            benefits.

[[Page 788]]

 
                                                                                           Penalty for physicians         2019        5,126        5,216
                                                                                            who knowingly receive
                                                                                            payments from a
                                                                                            hospital or critical
                                                                                            access hospital to
                                                                                            induce such physician
                                                                                            to reduce or limit
                                                                                            services to
                                                                                            individuals under
                                                                                            direct care of
                                                                                            physician or who are
                                                                                            entitled to certain
                                                                                            medical assistance
                                                                                            benefits.
                                      42 CFR 1003.210(a)(10)  ...........................  Penalty for a                  2019       10,252       10,433
                                                                                            physician who
                                                                                            executes a document
                                                                                            that falsely
                                                                                            certifies home health
                                                                                            needs for Medicare
                                                                                            beneficiaries.
    1320a-7a(o).....................  ......................  OIG                          Penalty for knowingly          2016       10,000       10,176
                                                                                            presenting or causing
                                                                                            to be presented a
                                                                                            false or fraudulent
                                                                                            specified claim under
                                                                                            a grant, contract, or
                                                                                            other agreement for
                                                                                            which the Secretary
                                                                                            provides funding.

[[Page 789]]

 
                                                                                           Penalty for knowingly          2016       50,000       50,882
                                                                                            making, using, or
                                                                                            causing to be made or
                                                                                            used any false
                                                                                            statement, omission,
                                                                                            or misrepresentation
                                                                                            of a material fact in
                                                                                            any application,
                                                                                            proposal, bid,
                                                                                            progress report, or
                                                                                            other document
                                                                                            required to directly
                                                                                            or indirectly receive
                                                                                            or retain funds
                                                                                            provided pursuant to
                                                                                            grant, contract, or
                                                                                            other agreement.
                                                                                           Penalty for Knowingly          2016       50,000       50,882
                                                                                            making, using, or
                                                                                            causing to be made or
                                                                                            used, a false record
                                                                                            or statement material
                                                                                            to a false or
                                                                                            fraudulent specified
                                                                                            claim under grant,
                                                                                            contract, or other
                                                                                            agreement.
                                                                                           Penalty for knowingly          2016   50,000 for   53,231 for
                                                                                            making, using, or                    each false   each false
                                                                                            causing to be made or                record or      record
                                                                                            used, a false record                 statement,   statement,
                                                                                            or statement material                10,000 per   10,646 per
                                                                                            to an obligation to                     day.         day.
                                                                                            pay or transmit funds
                                                                                            or property with
                                                                                            respect to grant,
                                                                                            contract, or other
                                                                                            agreement, or
                                                                                            knowingly conceals or
                                                                                            improperly avoids or
                                                                                            decreases any such
                                                                                            obligation.
                                                                                           Penalty for failure to         2016       15,000       15,265
                                                                                            grant timely access,
                                                                                            upon reasonable
                                                                                            request, to the
                                                                                            Inspector General
                                                                                            (I.G.) for purposes
                                                                                            of audits,
                                                                                            investigations,
                                                                                            evaluations, or other
                                                                                            statutory functions
                                                                                            of I.G. in matters
                                                                                            involving grants,
                                                                                            contracts, or other
                                                                                            agreements.

[[Page 790]]

 
    1320a-7e(b)(6)(A)...............  42 CFR 1003.810.......  OIG                          Penalty for failure to         2019       39,121       39,811
                                                                                            report any final
                                                                                            adverse action taken
                                                                                            against a health care
                                                                                            provider, supplier,
                                                                                            or practitioner.
    1320b-10(b)(1)..................  42 CFR 1003.610(a)....  OIG                          Penalty for the misuse         2019       10,519       10,705
                                                                                            of words, symbols, or
                                                                                            emblems in
                                                                                            communications in a
                                                                                            manner in which a
                                                                                            person could falsely
                                                                                            construe that such
                                                                                            item is approved,
                                                                                            endorsed, or
                                                                                            authorized by HHS.
    1320b-10(b)(2)..................  42 CFR 1003.610(a)....  OIG                          Penalty for the misuse         2019       52,596       53,524
                                                                                            of words, symbols, or
                                                                                            emblems in a
                                                                                            broadcast or telecast
                                                                                            in a manner in which
                                                                                            a person could
                                                                                            falsely construe that
                                                                                            such item is
                                                                                            approved, endorsed,
                                                                                            or authorized by HHS.
    1395i-3(b)(3)(B)(ii)(1).........  42 CFR 1003.210(a)(11)  OIG                          Penalty for                    2019        2,194        2,233
                                                                                            certification of a
                                                                                            false statement in
                                                                                            assessment of
                                                                                            functional capacity
                                                                                            of a Skilled Nursing
                                                                                            Facility resident
                                                                                            assessment.
    1395i-3(b)(3)(B)(ii)(2).........  42 CFR 1003.210(a)(11)  OIG                          Penalty for causing            2019       10,967       11,160
                                                                                            another to certify or
                                                                                            make a false
                                                                                            statement in
                                                                                            assessment of
                                                                                            functional capacity
                                                                                            of a Skilled Nursing
                                                                                            Facility resident
                                                                                            assessment.

[[Page 791]]

 
    1395i-3(g)(2)(A)................  42 CFR 1003.1310......  OIG                          Penalty for any                2019        4,388        4,465
                                                                                            individual who
                                                                                            notifies or causes to
                                                                                            be notified a Skilled
                                                                                            Nursing Facility of
                                                                                            the time or date on
                                                                                            which a survey is to
                                                                                            be conducted.
    1395w-27(g)(2)(A)...............  42 CFR 1003.410.......  OIG                          Penalty for a Medicare         2019       39,936       40,640
                                                                                            Advantage
                                                                                            organization that
                                                                                            substantially fails
                                                                                            to provide medically
                                                                                            necessary, required
                                                                                            items and services.
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization that
                                                                                            charges excessive
                                                                                            premiums.
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization that
                                                                                            improperly expels or
                                                                                            refuses to reenroll a
                                                                                            beneficiary.
                                                                                           Penalty for a Medicare         2019      156,488      159,248
                                                                                            Advantage
                                                                                            organization that
                                                                                            engages in practice
                                                                                            that would reasonably
                                                                                            be expected to have
                                                                                            the effect of denying
                                                                                            or discouraging
                                                                                            enrollment.
                                                                                           Penalty per individual         2019       23,473       23,887
                                                                                            who does not enroll
                                                                                            as a result of a
                                                                                            Medicare Advantage
                                                                                            organization's
                                                                                            practice that would
                                                                                            reasonably be
                                                                                            expected to have the
                                                                                            effect of denying or
                                                                                            discouraging
                                                                                            enrollment.
                                                                                           Penalty for a Medicare         2019      156,488      159,248
                                                                                            Advantage
                                                                                            organization
                                                                                            misrepresenting or
                                                                                            falsifying
                                                                                            information to
                                                                                            Secretary.

[[Page 792]]

 
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization
                                                                                            misrepresenting or
                                                                                            falsifying
                                                                                            information to
                                                                                            individual or other
                                                                                            entity.
                                                                                           Penalty for Medicare           2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization
                                                                                            interfering with
                                                                                            provider's advice to
                                                                                            enrollee and non-
                                                                                            managed care
                                                                                            organization (MCO)
                                                                                            affiliated providers
                                                                                            that balance bill
                                                                                            enrollees.
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization that
                                                                                            employs or contracts
                                                                                            with excluded
                                                                                            individual or entity.
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization
                                                                                            enrolling an
                                                                                            individual in without
                                                                                            prior written consent.
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization
                                                                                            transferring an
                                                                                            enrollee to another
                                                                                            plan without consent
                                                                                            or solely for the
                                                                                            purpose of earning a
                                                                                            commission.
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization failing
                                                                                            to comply with
                                                                                            marketing
                                                                                            restrictions or
                                                                                            applicable
                                                                                            implementing
                                                                                            regulations or
                                                                                            guidance.

[[Page 793]]

 
                                                                                           Penalty for a Medicare         2019       39,121       39,811
                                                                                            Advantage
                                                                                            organization
                                                                                            employing or
                                                                                            contracting with an
                                                                                            individual or entity
                                                                                            who violates 1395w-
                                                                                            27(g)(1)(A)-(J).
    1395w-141(i)(3).................  ......................  OIG                          Penalty for a                  2019       13,669       13,910
                                                                                            prescription drug
                                                                                            card sponsor that
                                                                                            falsifies or
                                                                                            misrepresents
                                                                                            marketing materials,
                                                                                            overcharges program
                                                                                            enrollees, or misuse
                                                                                            transitional
                                                                                            assistance funds.
    1395cc(g).......................  ......................  OIG                          Penalty for improper           2019        5,317        5,411
                                                                                            billing by Hospitals,
                                                                                            Critical Access
                                                                                            Hospitals, or Skilled
                                                                                            Nursing Facilities.
    1395dd(d)(1)....................  42 CFR 1003.510.......  OIG                          Penalty for a hospital         2019      109,663      111,597
                                                                                            or responsible
                                                                                            physician dumping
                                                                                            patients needing
                                                                                            emergency medical
                                                                                            care, if the hospital
                                                                                            has 100 beds or more.
                                                                                           Penalty for a hospital         2019       54,833       55,800
                                                                                            or responsible
                                                                                            physician dumping
                                                                                            patients needing
                                                                                            emergency medical
                                                                                            care, if the hospital
                                                                                            has less than 100
                                                                                            beds.
    1395mm(i)(6)(B)(i)..............  42 CFR 1003.410.......  OIG                          Penalty for a health           2019       54,833       55,800
                                                                                            maintenance
                                                                                            organization (HMO) or
                                                                                            competitive plan is
                                                                                            such plan
                                                                                            substantially fails
                                                                                            to provide medically
                                                                                            necessary, required
                                                                                            items or services.
                                                                                           Penalty for HMOs/              2019       54,833       55,800
                                                                                            competitive medical
                                                                                            plans that charge
                                                                                            premiums in excess of
                                                                                            permitted amounts.

[[Page 794]]

 
                                                                                           Penalty for a HMO or           2019       54,833       55,800
                                                                                            competitive medical
                                                                                            plan that expels or
                                                                                            refuses to reenroll
                                                                                            an individual per
                                                                                            prescribed conditions.
                                                                                           Penalty for a HMO or           2019      219,327      223,196
                                                                                            competitive medical
                                                                                            plan that implements
                                                                                            practices to
                                                                                            discourage enrollment
                                                                                            of individuals
                                                                                            needing services in
                                                                                            future.
                                                                                           Penalty per individual         2019       31,558       32,115
                                                                                            not enrolled in a
                                                                                            plan as a result of a
                                                                                            HMO or competitive
                                                                                            medical plan that
                                                                                            implements practices
                                                                                            to discourage
                                                                                            enrollment of
                                                                                            individuals needing
                                                                                            services in the
                                                                                            future.
                                                                                           Penalty for a HMO or           2019      219,327      223,196
                                                                                            competitive medical
                                                                                            plan that
                                                                                            misrepresents or
                                                                                            falsifies information
                                                                                            to the Secretary.
                                                                                           Penalty for a HMO or           2019       54,833       55,800
                                                                                            competitive medical
                                                                                            plan that
                                                                                            misrepresents or
                                                                                            falsifies information
                                                                                            to an individual or
                                                                                            any other entity.
                                                                                           Penalty for failure by         2019       54,833       55,800
                                                                                            HMO or competitive
                                                                                            medical plan to
                                                                                            assure prompt payment
                                                                                            of Medicare risk
                                                                                            sharing contracts or
                                                                                            incentive plan
                                                                                            provisions.

[[Page 795]]

 
                                                                                           Penalty for HMO that           2019       50,334       51,222
                                                                                            employs or contracts
                                                                                            with excluded
                                                                                            individual or entity.
    1395nn(g)(3)....................  42 CFR 1003.310.......  OIG                          Penalty for submitting         2019       25,372       25,820
                                                                                            or causing to be
                                                                                            submitted claims in
                                                                                            violation of the
                                                                                            Stark Law's
                                                                                            restrictions on
                                                                                            physician self-
                                                                                            referrals.
    1395nn(g)(4)....................  42 CFR 1003.310.......  OIG                          Penalty for                    2019      169,153      172,137
                                                                                            circumventing Stark
                                                                                            Law's restrictions on
                                                                                            physician self-
                                                                                            referrals.
    1395ss(d)(1)....................  42 CFR 1003.1110......  OIG                          Penalty for a material         2019       10,519       10,705
                                                                                            misrepresentation
                                                                                            regarding Medigap
                                                                                            compliance policies.
    1395ss(d)(2)....................  42 CFR 1003.1110......  OIG                          Penalty for selling            2019       10,519       10,705
                                                                                            Medigap policy under
                                                                                            false pretense.
    1395ss(d)(3)(A)(ii).............  42 CFR 1003.1110......  OIG                          Penalty for an issuer          2019       47,357       48,192
                                                                                            that sells health
                                                                                            insurance policy that
                                                                                            duplicates benefits.
                                                                                           Penalty for someone            2019       28,413       28,914
                                                                                            other than issuer
                                                                                            that sells health
                                                                                            insurance that
                                                                                            duplicates benefits.
    1395ss(d)(4)(A).................  42 CFR 1003.1110......  OIG                          Penalty for using mail         2019       10,519       10,705
                                                                                            to sell a non-
                                                                                            approved Medigap
                                                                                            insurance policy.
    1396b(m)(5)(B)(i)...............  42 CFR 1003.410.......  OIG                          Penalty for a Medicaid         2019       52,596       53,524
                                                                                            MCO that
                                                                                            substantially fails
                                                                                            to provide medically
                                                                                            necessary, required
                                                                                            items or services.
                                                                                           Penalty for a Medicaid         2019       52,596       53,524
                                                                                            MCO that charges
                                                                                            excessive premiums.
                                                                                           Penalty for a Medicaid         2019      210,386      214,097
                                                                                            MCO that improperly
                                                                                            expels or refuses to
                                                                                            reenroll a
                                                                                            beneficiary.

[[Page 796]]

 
                                                                                           Penalty per individual         2019       31,558       32,115
                                                                                            who does not enroll
                                                                                            as a result of a
                                                                                            Medicaid MCO's
                                                                                            practice that would
                                                                                            reasonably be
                                                                                            expected to have the
                                                                                            effect of denying or
                                                                                            discouraging
                                                                                            enrollment.
                                                                                           Penalty for a Medicaid         2019      210,386      214,097
                                                                                            MCO misrepresenting
                                                                                            or falsifying
                                                                                            information to the
                                                                                            Secretary.
                                                                                           Penalty for a Medicaid         2019       52,596       53,524
                                                                                            MCO misrepresenting
                                                                                            or falsifying
                                                                                            information to an
                                                                                            individual or another
                                                                                            entity.
                                                                                           Penalty for a Medicaid         2019       47,357       48,192
                                                                                            MCO that fails to
                                                                                            comply with contract
                                                                                            requirements with
                                                                                            respect to physician
                                                                                            incentive plans.
    1396r(b)(3)(B)(ii)(I)...........  42 CFR 1003.210(a)(11)  OIG                          Penalty for willfully          2019        2,194        2,233
                                                                                            and knowingly
                                                                                            certifying a material
                                                                                            and false statement
                                                                                            in a Skilled Nursing
                                                                                            Facility resident
                                                                                            assessment.
    1396r(b)(3)(B)(ii)(II)..........  42 CFR 1003.210(a)(11)  OIG                          Penalty for willfully          2019       10,967       11,160
                                                                                            and knowingly causing
                                                                                            another individual to
                                                                                            certify a material
                                                                                            and false statement
                                                                                            in a Skilled Nursing
                                                                                            Facility resident
                                                                                            assessment.

[[Page 797]]

 
    1396r(g)(2)(A)(i)...............  42 CFR 1003.1310......  OIG                          Penalty for notifying          2019        4,388        4,465
                                                                                            or causing to be
                                                                                            notified a Skilled
                                                                                            Nursing Facility of
                                                                                            the time or date on
                                                                                            which a survey is to
                                                                                            be conducted.
    1396r-8(b)(3)(B)................  42 CFR 1003.1210......  OIG                          Penalty for the                2019      189,427      192,768
                                                                                            knowing provision of
                                                                                            false information or
                                                                                            refusing to provide
                                                                                            information about
                                                                                            charges or prices of
                                                                                            a covered outpatient
                                                                                            drug.
    1396r-8(b)(3)(C)(i).............  42 CFR 1003.1210......  OIG                          Penalty per day for            2019       18,943       19,277
                                                                                            failure to timely
                                                                                            provide information
                                                                                            by drug manufacturer
                                                                                            with rebate agreement.
    1396r-8(b)(3)(C)(ii)............  42 CFR 1003.1210......  OIG                          Penalty for knowing            2019      189,427      192,768
                                                                                            provision of false
                                                                                            information by drug
                                                                                            manufacturer with
                                                                                            rebate agreement.
    1396t(i)(3)(A)..................  42 CFR 1003.1310......  OIG                          Penalty for notifying          2019        3,788        3,855
                                                                                            home and community-
                                                                                            based providers or
                                                                                            settings of survey.
    11131(c)........................  42 CFR 1003.810.......  OIG                          Penalty for failing to         2019       22,927       23,331
                                                                                            report a medical
                                                                                            malpractice claim to
                                                                                            National Practitioner
                                                                                            Data Bank.
    11137(b)(2).....................  42 CFR 1003.810.......  OIG                          Penalty for breaching          2019       22,927       23,331
                                                                                            confidentiality of
                                                                                            information reported
                                                                                            to National
                                                                                            Practitioner Data
                                                                                            Bank.
    299b-22(f)(1)...................  42 CFR 3.404..........  OCR                          Penalty for violation          2019       12,695       12,919
                                                                                            of confidentiality
                                                                                            provision of the
                                                                                            Patient Safety and
                                                                                            Quality Improvement
                                                                                            Act.
                                      45 CFR                  OCR                          Penalty for each pre-          2019          159          162
                                       160.404(b)(1)(i),                                    February 18, 2009
                                       (ii).                                                violation of the
                                                                                            Health Insurance
                                                                                            Portability and
                                                                                            Accountability Act
                                                                                            (HIPAA)
                                                                                            administrative
                                                                                            simplification
                                                                                            provisions.
                                                                                           Calendar Year Cap.....         2019       39,936       40,640

[[Page 798]]

 
    1320(d)-5(a)....................  45 CFR                  OCR                          Penalty for each
                                       160.404(b)(2)(i)(A),                                 February 18, 2009 or
                                       (B).                                                 later violation of a
                                                                                            HIPAA administrative
                                                                                            simplification
                                                                                            provision in which it
                                                                                            is established that
                                                                                            the covered entity or
                                                                                            business associate
                                                                                            did not know and by
                                                                                            exercising reasonable
                                                                                            diligence, would not
                                                                                            have known that the
                                                                                            covered entity or
                                                                                            business associate
                                                                                            violated such a
                                                                                            provision:
                                                                                             Minimum.............         2019          117          119
                                                                                             Maximum.............         2019       58,490       59,522
                                                                                             Calendar Year Cap...         2019    1,754,698    1,785,651
                                      45 CFR                  OCR                          Penalty for each
                                       160.404(b)(2)(ii)(A),                                February 18, 2009 or
                                       (B).                                                 later violation of a
                                                                                            HIPAA administrative
                                                                                            simplification
                                                                                            provision in which it
                                                                                            is established that
                                                                                            the violation was due
                                                                                            to reasonable cause
                                                                                            and not to willful
                                                                                            neglect:
                                                                                             Minimum.............         2019        1,170        1,191
                                                                                             Maximum.............         2019       58,490       59,522
                                                                                             Calendar Year Cap...         2019    1,754,698    1,785,651

[[Page 799]]

 
                                      45 CFR                  OCR                          Penalty for each
                                       160.404(b)(2)(iii)(A)                                February 18, 2009 or
                                       , (B).                                               later violation of a
                                                                                            HIPAA administrative
                                                                                            simplification
                                                                                            provision in which it
                                                                                            is established that
                                                                                            the violation was due
                                                                                            to willful neglect
                                                                                            and was corrected
                                                                                            during the 30-day
                                                                                            period beginning on
                                                                                            the first date the
                                                                                            covered entity or
                                                                                            business associate
                                                                                            knew, or, by
                                                                                            exercising reasonable
                                                                                            diligence, would have
                                                                                            known that the
                                                                                            violation occurred:
                                                                                             Minimum.............         2019       11,698       11,904
                                                                                             Maximum.............         2019       58,490       59,522
                                                                                             Calendar Year Cap...         2019    1,754,698    1,785,651
                                      45 CFR                  OCR                          Penalty for each
                                       160.404(b)(2)(iv)(A),                                February 18, 2009 or
                                       (B).                                                 later violation of a
                                                                                            HIPAA administrative
                                                                                            simplification
                                                                                            provision in which it
                                                                                            is established that
                                                                                            the violation was due
                                                                                            to willful neglect
                                                                                            and was not corrected
                                                                                            during the 30-day
                                                                                            period beginning on
                                                                                            the first date the
                                                                                            covered entity or
                                                                                            business associate
                                                                                            knew, or by
                                                                                            exercising reasonable
                                                                                            diligence, would have
                                                                                            known that the
                                                                                            violation occurred:
                                                                                             Minimum.............         2019       58,490       59,522
                                                                                             Maximum.............         2019    1,754,698    1,785,651
                                                                                             Calendar Year Cap...         2019    1,754,698    1,785,651
    263a(h)(2)(B) & 1395w-            42 CFR                  CMS                          Penalty for a clinical
     2(b)(2)(A)(ii).                   493.1834(d)(2)(i).                                   laboratory's failure
                                                                                            to meet participation
                                                                                            and certification
                                                                                            requirements and
                                                                                            poses immediate
                                                                                            jeopardy:
                                                                                             Minimum.............         2019        6,417        6,530
                                                                                             Maximum.............         2019       21,039       21,410

[[Page 800]]

 
                                      42 CFR                  CMS                          Penalty for a clinical
                                       493.1834(d)(2)(ii).                                  laboratory's failure
                                                                                            to meet participation
                                                                                            and certification
                                                                                            requirements and the
                                                                                            failure does not pose
                                                                                            immediate jeopardy:
                                                                                             Minimum.............         2019          106          108
                                                                                             Maximum.............         2019        6,311        6,422
    300gg-15(f).....................  45 CFR 147.200(e).....  CMS                          Failure to provide the         2019        1,156        1,176
                                                                                            Summary of Benefits
                                                                                            and Coverage.
    300gg-18........................  45 CFR 158.606........  CMS                          Penalty for violations         2019          116          118
                                                                                            of regulations
                                                                                            related to the
                                                                                            medical loss ratio
                                                                                            reporting and
                                                                                            rebating.
    1320a-7h(b)(1)..................  42 CFR 402.105(d)(5),   CMS                          Penalty for
                                       42 CFR 403.912(a) &                                  manufacturer or group
                                       (c).                                                 purchasing
                                                                                            organization failing
                                                                                            to report information
                                                                                            required under 42
                                                                                            U.S.C. 1320a-7h(a),
                                                                                            relating to physician
                                                                                            ownership or
                                                                                            investment interests:
                                                                                             Minimum.............         2019        1,156        1,176
                                                                                             Maximum.............         2019       11,562       11,766
                                                                                             Calendar Year Cap...         2019      173,436      176,495
    1320a-7h(b)(2)..................  42 CFR 402.105(h), 42   CMS                          Penalty for
                                       CFR 403.912(b) & (c).                                manufacturer or group
                                                                                            purchasing
                                                                                            organization
                                                                                            knowingly failing to
                                                                                            report information
                                                                                            required under 42
                                                                                            U.S.C. 1320a-7h(a),
                                                                                            relating to physician
                                                                                            ownership or
                                                                                            investment interests:
                                                                                             Minimum.............         2019       11,562       11,766

[[Page 801]]

 
                                                                                             Maximum.............         2019      115,624      117,664
                                                                                             Calendar Year Cap...         2019    1,156,242    1,176,638
                                                              CMS                          Penalty for an                 2019      115,624      117,664
                                                                                            administrator of a
                                                                                            facility that fails
                                                                                            to comply with notice
                                                                                            requirements for the
                                                                                            closure of a facility.
    1320a-7j(h)(3)(A)...............  42 CFR 488.446(a)(1),   CMS                          Minimum penalty for            2019          578          588
                                       (2), & (3).                                          the first offense of
                                                                                            an administrator who
                                                                                            fails to provide
                                                                                            notice of facility
                                                                                            closure.
                                                                                           Minimum penalty for            2019        1,735        1,766
                                                                                            the second offense of
                                                                                            an administrator who
                                                                                            fails to provide
                                                                                            notice of facility
                                                                                            closure.
                                                                                           Minimum penalty for            2019        3,468        3,529
                                                                                            the third and
                                                                                            subsequent offenses
                                                                                            of an administrator
                                                                                            who fails to provide
                                                                                            notice of facility
                                                                                            closure.
    1320a-8(a)(1)...................  ......................  CMS                          Penalty for an entity          2019        8,457        8,606
                                                                                            knowingly making a
                                                                                            false statement or
                                                                                            representation of
                                                                                            material fact in the
                                                                                            determination of the
                                                                                            amount of benefits or
                                                                                            payments related to
                                                                                            old-age, survivors,
                                                                                            and disability
                                                                                            insurance benefits,
                                                                                            special benefits for
                                                                                            certain World War II
                                                                                            veterans, or
                                                                                            supplemental security
                                                                                            income for the aged,
                                                                                            blind, and disabled.

[[Page 802]]

 
                                                                                           Penalty for violation          2019        7,975        8,116
                                                                                            of 42 U.S.C. 1320a-
                                                                                            8(a)(1) if the
                                                                                            violator is a person
                                                                                            who receives a fee or
                                                                                            other income for
                                                                                            services performed in
                                                                                            connection with
                                                                                            determination of the
                                                                                            benefit amount or the
                                                                                            person is a physician
                                                                                            or other health care
                                                                                            provider who submits
                                                                                            evidence in
                                                                                            connection with such
                                                                                            a determination.
    1320a-8(a)(3)...................  ......................  CMS                          Penalty for a                  2019        6,623        6,740
                                                                                            representative payee
                                                                                            (under 42 U.S.C.
                                                                                            405(j), 1007, or
                                                                                            1383(a)(2))
                                                                                            converting any part
                                                                                            of a received payment
                                                                                            from the benefit
                                                                                            programs described in
                                                                                            the previous civil
                                                                                            monetary penalty to a
                                                                                            use other than for
                                                                                            the benefit of the
                                                                                            beneficiary.
    1320b-25(c)(1)(A)...............  ......................  CMS                          Penalty for failure of         2019      231,249      235,328
                                                                                            covered individuals
                                                                                            to report to the
                                                                                            Secretary and 1 or
                                                                                            more law enforcement
                                                                                            officials any
                                                                                            reasonable suspicion
                                                                                            of a crime against a
                                                                                            resident, or
                                                                                            individual receiving
                                                                                            care, from a long-
                                                                                            term care facility.

[[Page 803]]

 
    1320b-25(c)(2)(A)...............  ......................  CMS                          Penalty for failure of         2019      346,872      352,991
                                                                                            covered individuals
                                                                                            to report to the
                                                                                            Secretary and 1 or
                                                                                            more law enforcement
                                                                                            officials any
                                                                                            reasonable suspicion
                                                                                            of a crime against a
                                                                                            resident, or
                                                                                            individual receiving
                                                                                            care, from a long-
                                                                                            term care facility if
                                                                                            such failure
                                                                                            exacerbates the harm
                                                                                            to the victim of the
                                                                                            crime or results in
                                                                                            the harm to another
                                                                                            individual.
    1320b-25(d)(2)..................  ......................  CMS                          Penalty for a long-            2019      231,249      235,328
                                                                                            term care facility
                                                                                            that retaliates
                                                                                            against any employee
                                                                                            because of lawful
                                                                                            acts done by the
                                                                                            employee, or files a
                                                                                            complaint or report
                                                                                            with the State
                                                                                            professional
                                                                                            disciplinary agency
                                                                                            against an employee
                                                                                            or nurse for lawful
                                                                                            acts done by the
                                                                                            employee or nurse.
    1395b-7(b)(2)(B)................  42 CFR 402.105(g).....  CMS                          Penalty for any person         2019          156          159
                                                                                            who knowingly and
                                                                                            willfully fails to
                                                                                            furnish a beneficiary
                                                                                            with an itemized
                                                                                            statement of items or
                                                                                            services within 30
                                                                                            days of the
                                                                                            beneficiary's request.
    1395i-3(h)(2)(B)(ii)(I).........  42 CFR                  CMS                          Penalty per day for a
                                       488.408(d)(1)(iii).                                  Skilled Nursing
                                                                                            Facility that has a
                                                                                            Category 2 violation
                                                                                            of certification
                                                                                            requirements:
                                                                                             Minimum.............         2019          110          112
                                                                                             Maximum.............         2019        6,579        6,695
                                      42 CFR                  CMS                          Penalty per instance
                                       488.408(d)(1)(iv).                                   of Category 2
                                                                                            noncompliance by a
                                                                                            Skilled Nursing
                                                                                            Facility:
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320

[[Page 804]]

 
                                      42 CFR                  CMS                          Penalty per day for a
                                       488.408(e)(1)(iii).                                  Skilled Nursing
                                                                                            Facility that has a
                                                                                            Category 3 violation
                                                                                            of certification
                                                                                            requirements:
                                                                                             Minimum.............         2019        6,690        6,808
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per instance
                                       488.408(e)(1)(iv).                                   of Category 3
                                                                                            noncompliance by a
                                                                                            Skilled Nursing
                                                                                            Facility:
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per day and
                                       488.408(e)(2)(ii).                                   per instance for a
                                                                                            Skilled Nursing
                                                                                            Facility that has
                                                                                            Category 3
                                                                                            noncompliance with
                                                                                            Immediate Jeopardy:
                                                                                           Per Day (Minimum).....         2019        6,690        6,808
                                                                                           Per Day (Maximum).....         2019       21,933       22,320
                                                                                           Per Instance (Minimum)         2019        2,194        2,233
                                                                                           Per Instance (Maximum)         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per day of a
                                       488.438(a)(1)(i).                                    Skilled Nursing
                                                                                            Facility that fails
                                                                                            to meet certification
                                                                                            requirements. These
                                                                                            amounts represent the
                                                                                            upper range per day:
                                                                                             Minimum.............         2019        6,690        6,808
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per day of a
                                       488.438(a)(1)(ii).                                   Skilled Nursing
                                                                                            Facility that fails
                                                                                            to meet certification
                                                                                            requirements. These
                                                                                            amounts represent the
                                                                                            lower range per day:
                                                                                             Minimum.............         2019          110          112

[[Page 805]]

 
                                                                                             Maximum.............         2019        6,579        6,695
                                      42 CFR 488.438(a)(2)..  CMS                          Penalty per instance
                                                                                            of a Skilled Nursing
                                                                                            Facility that fails
                                                                                            to meet certification
                                                                                            requirements:
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320
    1395l(h)(5)(D)..................  42 CFR                  CMS                          Penalty for knowingly,         2019       15,975       16,257
                                       402.105(d)(2)(i).                                    willfully, and
                                                                                            repeatedly billing
                                                                                            for a clinical
                                                                                            diagnostic laboratory
                                                                                            test other than on an
                                                                                            assignment-related
                                                                                            basis. (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395l(i)(6).....................  ......................  CMS                          Penalty for knowingly          2019        4,208        4,282
                                                                                            and willfully
                                                                                            presenting or causing
                                                                                            to be presented a
                                                                                            bill or request for
                                                                                            payment for an
                                                                                            intraocular lens
                                                                                            inserted during or
                                                                                            after cataract
                                                                                            surgery for which the
                                                                                            Medicare payment rate
                                                                                            includes the cost of
                                                                                            acquiring the class
                                                                                            of lens involved.
    1395l(q)(2)(B)(i)...............  42 CFR 402.105(a).....  CMS                          Penalty for knowingly          2019        4,027        4,098
                                                                                            and willfully failing
                                                                                            to provide
                                                                                            information about a
                                                                                            referring physician
                                                                                            when seeking payment
                                                                                            on an unassigned
                                                                                            basis.

[[Page 806]]

 
    1395m(a)(11)(A).................  42 CFR 402.1(c)(4),     CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(ii).                                   durable medical
                                                                                            equipment supplier
                                                                                            that knowingly and
                                                                                            willfully charges for
                                                                                            a covered service
                                                                                            that is furnished on
                                                                                            a rental basis after
                                                                                            the rental payments
                                                                                            may no longer be
                                                                                            made. (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395m(a)(18)(B).................  42 CFR 402.1(c)(5),     CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(iii).                                  nonparticipating
                                                                                            durable medical
                                                                                            equipment supplier
                                                                                            that knowingly and
                                                                                            willfully fails to
                                                                                            make a refund to
                                                                                            Medicare
                                                                                            beneficiaries for a
                                                                                            covered service for
                                                                                            which payment is
                                                                                            precluded due to an
                                                                                            unsolicited telephone
                                                                                            contact from the
                                                                                            supplier. (Penalties
                                                                                            are assessed in the
                                                                                            same manner as 42
                                                                                            U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).

[[Page 807]]

 
    1395m(b)(5)(C)..................  42 CFR 402.1(c)(6),     CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(iv).                                   nonparticipating
                                                                                            physician or supplier
                                                                                            that knowingly and
                                                                                            willfully charges a
                                                                                            Medicare beneficiary
                                                                                            more than the
                                                                                            limiting charge for
                                                                                            radiologist services.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395m(h)(3).....................  42 CFR 402.1(c)(8),     CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(vi).                                   supplier of
                                                                                            prosthetic devices,
                                                                                            orthotics, and
                                                                                            prosthetics that
                                                                                            knowing and willfully
                                                                                            charges for a covered
                                                                                            prosthetic device,
                                                                                            orthotic, or
                                                                                            prosthetic that is
                                                                                            furnished on a rental
                                                                                            basis after the
                                                                                            rental payment may no
                                                                                            longer be made.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395m(a)(11)(A), that
                                                                                            is in the same manner
                                                                                            as 1395u(j)(2)(B),
                                                                                            which is assessed
                                                                                            according to 1320a-
                                                                                            7a(a)).
    1395m(j)(2)(A)(iii).............  ......................  CMS                          Penalty for any                2019        1,692        1,722
                                                                                            supplier of durable
                                                                                            medical equipment
                                                                                            including a supplier
                                                                                            of prosthetic
                                                                                            devices, prosthetics,
                                                                                            orthotics, or
                                                                                            supplies that
                                                                                            knowingly and
                                                                                            willfully distributes
                                                                                            a certificate of
                                                                                            medical necessity in
                                                                                            violation of Section
                                                                                            1834(j)(2)(A)(i) of
                                                                                            the Act or fails to
                                                                                            provide the
                                                                                            information required
                                                                                            under Section
                                                                                            1834(j)(2)(A)(ii) of
                                                                                            the Act.

[[Page 808]]

 
    1395m(j)(4).....................  42 CFR 402.1(c)(10),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(vii).                                  supplier of durable
                                                                                            medical equipment,
                                                                                            including a supplier
                                                                                            of prosthetic
                                                                                            devices, prosthetics,
                                                                                            orthotics, or
                                                                                            supplies that
                                                                                            knowingly and
                                                                                            willfully fails to
                                                                                            make refunds in a
                                                                                            timely manner to
                                                                                            Medicare
                                                                                            beneficiaries for
                                                                                            series billed other
                                                                                            than on as assignment-
                                                                                            related basis under
                                                                                            certain conditions.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395m(j)(4) and
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395m(k)(6).....................  42 CFR 402.1(c)(31),    CMS                          Penalty for any person         2019       15,975       16,257
                                       402.105(d)(3).                                       or entity who
                                                                                            knowingly and
                                                                                            willfully bills or
                                                                                            collects for any
                                                                                            outpatient therapy
                                                                                            services or
                                                                                            comprehensive
                                                                                            outpatient
                                                                                            rehabilitation
                                                                                            services on other
                                                                                            than an assignment-
                                                                                            related basis.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395m(k)(6) and
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).

[[Page 809]]

 
    1395m(l)(6).....................  42 CFR 402.1(c)(32),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(4).                                       supplier of ambulance
                                                                                            services who
                                                                                            knowingly and
                                                                                            willfully fills or
                                                                                            collects for any
                                                                                            services on other
                                                                                            than an assignment-
                                                                                            related basis.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(b)(18)(B),
                                                                                            which is assessed
                                                                                            according to 1320a-
                                                                                            7a(a)).
    1395u(b)(18)(B).................  42 CFR 402.1(c)(11),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(viii).                                 practitioner
                                                                                            specified in Section
                                                                                            1842(b)(18)(C) of the
                                                                                            Act or other person
                                                                                            that knowingly and
                                                                                            willfully bills or
                                                                                            collects for any
                                                                                            services by the
                                                                                            practitioners on
                                                                                            other than an
                                                                                            assignment-related
                                                                                            basis. (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395u(j)(2)(B)..................  42 CFR 402.1(c).......  CMS                          Penalty for any                2019       15,975       16,257
                                                                                            physician who charges
                                                                                            more than 125% for a
                                                                                            non-participating
                                                                                            referral. (Penalties
                                                                                            are assessed in the
                                                                                            same manner as 42
                                                                                            U.S.C. 1320a-7a(a)).

[[Page 810]]

 
    1395u(k)........................  42 CFR 402.1(c)(12),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(ix).                                   physician who
                                                                                            knowingly and
                                                                                            willfully presents or
                                                                                            causes to be
                                                                                            presented a claim for
                                                                                            bill for an assistant
                                                                                            at a cataract surgery
                                                                                            performed on or after
                                                                                            March 1, 1987, for
                                                                                            which payment may not
                                                                                            be made because of
                                                                                            section 1862(a)(15).
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395u(l)(3).....................  42 CFR 402.1(c)(13),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(x).                                    nonparticipating
                                                                                            physician who does
                                                                                            not accept payment on
                                                                                            an assignment-related
                                                                                            basis and who
                                                                                            knowingly and
                                                                                            willfully fails to
                                                                                            refund on a timely
                                                                                            basis any amounts
                                                                                            collected for
                                                                                            services that are not
                                                                                            reasonable or
                                                                                            medically necessary
                                                                                            or are of poor
                                                                                            quality under
                                                                                            1842(l)(1)(A).
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).

[[Page 811]]

 
    1395u(m)(3).....................  42 CFR 402.1(c)(14),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(xi).                                   nonparticipating
                                                                                            physician charging
                                                                                            more than $500 who
                                                                                            does not accept
                                                                                            payment for an
                                                                                            elective surgical
                                                                                            procedure on an
                                                                                            assignment related
                                                                                            basis and who
                                                                                            knowingly and
                                                                                            willfully fails to
                                                                                            disclose the required
                                                                                            information regarding
                                                                                            charges and
                                                                                            coinsurance amounts
                                                                                            and fails to refund
                                                                                            on a timely basis any
                                                                                            amount collected for
                                                                                            the procedure in
                                                                                            excess of the charges
                                                                                            recognized and
                                                                                            approved by the
                                                                                            Medicare program.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395u(n)(3).....................  42 CFR 402.1(c)(15),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(xii).                                  physician who
                                                                                            knowingly, willfully,
                                                                                            and repeatedly bills
                                                                                            one or more
                                                                                            beneficiaries for
                                                                                            purchased diagnostic
                                                                                            tests any amount
                                                                                            other than the
                                                                                            payment amount
                                                                                            specified by the Act.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).

[[Page 812]]

 
    1395u(o)(3)(B)..................  42 CFR 414.707(b).....  CMS                          Penalty for any                2019       15,975       16,257
                                                                                            practitioner
                                                                                            specified in Section
                                                                                            1842(b)(18)(C) of the
                                                                                            Act or other person
                                                                                            that knowingly and
                                                                                            willfully bills or
                                                                                            collects for any
                                                                                            services pertaining
                                                                                            to drugs or biologics
                                                                                            by the practitioners
                                                                                            on other than an
                                                                                            assignment-related
                                                                                            basis. (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(b)(18)(B) and
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395u(p)(3)(A)..................  ......................  CMS                          Penalty for any                2019        4,208        4,282
                                                                                            physician or
                                                                                            practitioner who
                                                                                            knowingly and
                                                                                            willfully fails
                                                                                            promptly to provide
                                                                                            the appropriate
                                                                                            diagnosis codes upon
                                                                                            CMS or Medicare
                                                                                            administrative
                                                                                            contractor request
                                                                                            for payment or bill
                                                                                            not submitted on an
                                                                                            assignment-related
                                                                                            basis.
    1395w-3a(d)(4)(A)...............  42 CFR 414.806........  CMS                          Penalty for a                  2019       13,669       13,910
                                                                                            pharmaceutical
                                                                                            manufacturer's
                                                                                            misrepresentation of
                                                                                            average sales price
                                                                                            of a drug, or
                                                                                            biologic.

[[Page 813]]

 
    1395w-4(g)(1)(B)................  42 CFR 402.1(c)(17),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(xiii).                                 nonparticipating
                                                                                            physician, supplier,
                                                                                            or other person that
                                                                                            furnishes physician
                                                                                            services not on an
                                                                                            assignment-related
                                                                                            basis who either
                                                                                            knowingly and
                                                                                            willfully bills or
                                                                                            collects in excess of
                                                                                            the statutorily-
                                                                                            defined limiting
                                                                                            charge or fails to
                                                                                            make a timely refund
                                                                                            or adjustment.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395w-4(g)(3)(B)................  42 CFR 402.1(c)(18),    CMS                          Penalty for any person         2019       15,975       16,257
                                       402.105(d)(2)(xiv).                                  that knowingly and
                                                                                            willfully bills for
                                                                                            statutorily defined
                                                                                            State-plan approved
                                                                                            physicians' services
                                                                                            on any other basis
                                                                                            than an assignment-
                                                                                            related basis for a
                                                                                            Medicare/Medicaid
                                                                                            dual eligible
                                                                                            beneficiary.
                                                                                            (Penalties are
                                                                                            assessed in the same
                                                                                            manner as 42 U.S.C.
                                                                                            1395u(j)(2)(B), which
                                                                                            is assessed according
                                                                                            to 1320a-7a(a)).
    1395w-27(g)(3)(A); 1857(g)(3)...  42 CFR 422.760(b); 42   CMS                          Penalty for each               2019       39,121       39,811
                                       CFR 423.760(b).                                      termination
                                                                                            determination the
                                                                                            Secretary makes that
                                                                                            is the result of
                                                                                            actions by a Medicare
                                                                                            Advantage
                                                                                            organization or Part
                                                                                            D sponsor that has
                                                                                            adversely affected an
                                                                                            individual covered
                                                                                            under the
                                                                                            organization's
                                                                                            contract.

[[Page 814]]

 
    1395w-27(g)(3)(B); 1857(g)(3)...  ......................  CMS                          Penalty for each week          2019       15,649       15,925
                                                                                            beginning after the
                                                                                            initiation of civil
                                                                                            money penalty
                                                                                            procedures by the
                                                                                            Secretary because a
                                                                                            Medicare Advantage
                                                                                            organization or Part
                                                                                            D sponsor has failed
                                                                                            to carry out a
                                                                                            contract, or has
                                                                                            carried out a
                                                                                            contract
                                                                                            inconsistently with
                                                                                            regulations.
    1395w-27(g)(3)(D); 1857(g)(3)...  ......................  CMS                          Penalty for a Medicare         2019      145,335      147,899
                                                                                            Advantage
                                                                                            organization's or
                                                                                            Part D sponsor's
                                                                                            early termination of
                                                                                            its contract.
    1395y(b)(3)(C)..................  42 CFR 411.103(b).....  CMS                          Penalty for an                 2019        9,472        9,639
                                                                                            employer or other
                                                                                            entity to offer any
                                                                                            financial or other
                                                                                            incentive for an
                                                                                            individual entitled
                                                                                            to benefits not to
                                                                                            enroll under a group
                                                                                            health plan or large
                                                                                            group health plan
                                                                                            which would be a
                                                                                            primary plan.
    1395y(b)(5)(C)(ii)..............  42 CFR 402.1(c)(20),    CMS                          Penalty for any non-           2019        1,542        1,569
                                       42 CFR 402.105(b)(2).                                governmental employer
                                                                                            that, before October
                                                                                            1, 1998, willfully or
                                                                                            repeatedly failed to
                                                                                            provide timely and
                                                                                            accurate information
                                                                                            requested relating to
                                                                                            an employee's group
                                                                                            health insurance
                                                                                            coverage.

[[Page 815]]

 
    1395y(b)(6)(B)..................  42 CFR 402.1(c)(21),    CMS                          Penalty for any entity         2019        3,383        3,443
                                       402.105(a).                                          that knowingly,
                                                                                            willfully, and
                                                                                            repeatedly fails to
                                                                                            complete a claim form
                                                                                            relating to the
                                                                                            availability of other
                                                                                            health benefits in
                                                                                            accordance with
                                                                                            statute or provides
                                                                                            inaccurate
                                                                                            information relating
                                                                                            to such on the claim
                                                                                            form.
    1395y(b)(7)(B)(i)...............  ......................  CMS                          Penalty for any entity         2019        1,211        1,232
                                                                                            serving as insurer,
                                                                                            third party
                                                                                            administrator, or
                                                                                            fiduciary for a group
                                                                                            health plan that
                                                                                            fails to provide
                                                                                            information that
                                                                                            identifies situations
                                                                                            where the group
                                                                                            health plan is or was
                                                                                            a primary plan to
                                                                                            Medicare to the HHS
                                                                                            Secretary.
    1395y(b)(8)(E)..................  ......................  CMS                          Penalty for any non-           2019        1,211        1,232
                                                                                            group health plan
                                                                                            that fails to
                                                                                            identify claimants
                                                                                            who are Medicare
                                                                                            beneficiaries and
                                                                                            provide information
                                                                                            to the HHS Secretary
                                                                                            to coordinate
                                                                                            benefits and pursue
                                                                                            any applicable
                                                                                            recovery claim.
    1395nn(g)(5)....................  42 CFR 411.361........  CMS                          Penalty for any person         2019       20,134       20,489
                                                                                            that fails to report
                                                                                            information required
                                                                                            by HHS under Section
                                                                                            1877(f) concerning
                                                                                            ownership,
                                                                                            investment, and
                                                                                            compensation
                                                                                            arrangements.

[[Page 816]]

 
    1395pp(h).......................  42 CFR 402.1(c)(23),    CMS                          Penalty for any                2019       15,975       16,257
                                       402.105(d)(2)(xv).                                   durable medical
                                                                                            equipment supplier,
                                                                                            including a supplier
                                                                                            of prosthetic
                                                                                            devices, prosthetics,
                                                                                            orthotics, or
                                                                                            supplies, that
                                                                                            knowingly and
                                                                                            willfully fails to
                                                                                            make refunds in a
                                                                                            timely manner to
                                                                                            Medicare
                                                                                            beneficiaries under
                                                                                            certain conditions.
                                                                                            (42 U.S.C.
                                                                                            1395(m)(18) sanctions
                                                                                            apply here in the
                                                                                            same manner, which is
                                                                                            under 1395u(j)(2) and
                                                                                            1320a-7a(a)).
    1395ss(a)(2)....................  42 CFR 402.1(c)(24),    CMS                          Penalty for any person         2019       54,832       55,799
                                       405.105(f)(1).                                       that issues a
                                                                                            Medicare supplemental
                                                                                            policy that has not
                                                                                            been approved by the
                                                                                            State regulatory
                                                                                            program or does not
                                                                                            meet Federal
                                                                                            standards after a
                                                                                            statutorily defined
                                                                                            effective date.
    1395ss(d)(3)(A)(vi)(II).........                          CMS                          Penalty for someone            2019       28,413       28,914
                                                                                            other than issuer
                                                                                            that sells or issues
                                                                                            a Medicare
                                                                                            supplemental policy
                                                                                            to beneficiary
                                                                                            without a disclosure
                                                                                            statement.
                                                                                           Penalty for an issuer          2019       47,357       48,192
                                                                                            that sells or issues
                                                                                            a Medicare
                                                                                            supplemental policy
                                                                                            without disclosure
                                                                                            statement.

[[Page 817]]

 
    1395ss(d)(3)(B)(iv).............  ......................  CMS                          Penalty for someone            2019       28,413       28,914
                                                                                            other than issuer
                                                                                            that sells or issues
                                                                                            a Medicare
                                                                                            supplemental policy
                                                                                            without
                                                                                            acknowledgement form.
                                                                                           Penalty for issuer             2019       47,357       48,192
                                                                                            that sells or issues
                                                                                            a Medicare
                                                                                            supplemental policy
                                                                                            without an
                                                                                            acknowledgement form.
    1395ss(p)(8)....................  42 CFR 402.1(c)(25),    CMS                          Penalty for any person         2019       28,413       28,914
                                       402.105(e).                                          that sells or issues
                                                                                            Medicare supplemental
                                                                                            polices after a given
                                                                                            date that fail to
                                                                                            conform to the
                                                                                            National Association
                                                                                            of Insurance
                                                                                            Commissioners (NAIC)
                                                                                            or Federal standards
                                                                                            established by
                                                                                            statute.
                                      42 CFR 402.1(c)(25),    CMS                          Penalty for any person         2019       47,357       48,192
                                       405.105(f)(2).                                       that sells or issues
                                                                                            Medicare supplemental
                                                                                            polices after a given
                                                                                            date that fail to
                                                                                            conform to the NAIC
                                                                                            or Federal standards
                                                                                            established by
                                                                                            statute.
    1395ss(p)(9)(C).................  42 CFR 402.1(c)(26),    CMS                          Penalty for any person         2019       28,413       28,914
                                       402.105(e).                                          that sells a Medicare
                                                                                            supplemental policy
                                                                                            and fails to make
                                                                                            available for sale
                                                                                            the core group of
                                                                                            basic benefits when
                                                                                            selling other
                                                                                            Medicare supplemental
                                                                                            policies with
                                                                                            additional benefits
                                                                                            or fails to provide
                                                                                            the individual,
                                                                                            before selling the
                                                                                            policy, an outline of
                                                                                            coverage describing
                                                                                            benefits.

[[Page 818]]

 
                                      42 CFR 402.1(c)(26),    ...........................  Penalty for any person         2019       47,357       48,192
                                       405.105(f)(3), (4).                                  that sells a Medicare
                                                                                            supplemental policy
                                                                                            and fails to make
                                                                                            available for sale
                                                                                            the core group of
                                                                                            basic benefits when
                                                                                            selling other
                                                                                            Medicare supplemental
                                                                                            policies with
                                                                                            additional benefits
                                                                                            or fails to provide
                                                                                            the individual,
                                                                                            before selling the
                                                                                            policy, an outline of
                                                                                            coverage describing
                                                                                            benefits.
    1395ss(q)(5)(C).................  42 CFR 402.1(c)(27),    CMS                          Penalty for any person         2019       47,357       48,192
                                       405.105(f)(5).                                       that fails to suspend
                                                                                            the policy of a
                                                                                            policyholder made
                                                                                            eligible for medical
                                                                                            assistance or
                                                                                            automatically
                                                                                            reinstates the policy
                                                                                            of a policyholder who
                                                                                            has lost eligibility
                                                                                            for medical
                                                                                            assistance, under
                                                                                            certain circumstances.
    1395ss(r)(6)(A).................  42 CFR 402.1(c)(28),    CMS                          Penalty for any person         2019       47,357       48,192
                                       405.105(f)(6).                                       that fails to provide
                                                                                            refunds or credits as
                                                                                            required by section
                                                                                            1882(r)(1)(B).

[[Page 819]]

 
    1395ss(s)(4)....................  42 CFR 402.1(c)(29),    CMS                          Penalty for any issuer         2019       20,104       20,459
                                       405.105(c).                                          of a Medicare
                                                                                            supplemental policy
                                                                                            that does not waive
                                                                                            listed time periods
                                                                                            if they were already
                                                                                            satisfied under a
                                                                                            proceeding Medicare
                                                                                            supplemental policy,
                                                                                            or denies a policy,
                                                                                            or conditions the
                                                                                            issuances or
                                                                                            effectiveness of the
                                                                                            policy, or
                                                                                            discriminates in the
                                                                                            pricing of the policy
                                                                                            base on health status
                                                                                            or other specified
                                                                                            criteria.
    1395ss(t)(2)....................  42 CFR 402.1(c)(30),    CMS                          Penalty for any issuer         2019       47,357       48,192
                                       405.105(f)(7).                                       of a Medicare
                                                                                            supplemental policy
                                                                                            that fails to fulfill
                                                                                            listed
                                                                                            responsibilities.
    1395ss(v)(4)(A).................  ......................  CMS                          Penalty someone other          2019       20,503       20,865
                                                                                            than issuer who
                                                                                            sells, issues, or
                                                                                            renews a Medigap Rx
                                                                                            policy to an
                                                                                            individual who is a
                                                                                            Part D enrollee.
                                                                                           Penalty for an issuer          2019       34,174       34,777
                                                                                            who sells, issues, or
                                                                                            renews a Medigap Rx
                                                                                            policy who is a Part
                                                                                            D enrollee.
    1395bbb(c)(1)...................  42 CFR 488.725(c).....  CMS                          Penalty for any                2019        4,388        4,465
                                                                                            individual who
                                                                                            notifies or causes to
                                                                                            be notified a home
                                                                                            health agency of the
                                                                                            time or date on which
                                                                                            a survey of such
                                                                                            agency is to be
                                                                                            conducted.
    1395bbb(f)(2)(A)(i).............  42 CFR                  CMS                          Maximum daily penalty          2019       21,039       21,410
                                       488.845(b)(2)(iii) 42                                amount for each day a
                                       CFR 488.845(b)(3)-                                   home health agency is
                                       (6); and 42 CFR                                      not in compliance
                                       488.845(d)(1)(ii).                                   with statutory
                                                                                            requirements.
                                      42 CFR 488.845(b)(3)..  ...........................  Penalty per day for
                                                                                            home health agency's
                                                                                            noncompliance (Upper
                                                                                            Range):
                                                                                             Minimum.............         2019       17,883       18,198
                                                                                             Maximum.............         2019       21,039       21,410

[[Page 820]]

 
                                      42 CFR                  ...........................  Penalty for a home             2019       21,039       21,410
                                       488.845(b)(3)(i).                                    health agency's
                                                                                            deficiency or
                                                                                            deficiencies that
                                                                                            cause immediate
                                                                                            jeopardy and result
                                                                                            in actual harm.
                                      42 CFR                  ...........................  Penalty for a home             2019       18,934       19,268
                                       488.845(b)(3)(ii).                                   health agency's
                                                                                            deficiency or
                                                                                            deficiencies that
                                                                                            cause immediate
                                                                                            jeopardy and result
                                                                                            in potential for harm.
                                      42 CFR                  ...........................  Penalty for an                 2019       17,883       18,198
                                       488.845(b)(3)(iii).                                  isolated incident of
                                                                                            noncompliance in
                                                                                            violation of
                                                                                            established home
                                                                                            health agency (HHA)
                                                                                            policy.
                                      42 CFR 488.845(b)(4)..  ...........................  Penalty for a repeat
                                                                                            and/or condition-
                                                                                            level deficiency that
                                                                                            does not constitute
                                                                                            immediate jeopardy,
                                                                                            but is directly
                                                                                            related to poor
                                                                                            quality patient care
                                                                                            outcomes (Lower
                                                                                            Range):
                                                                                             Minimum.............         2019        3,157        3,213
                                                                                             Maximum.............         2019       17,883       18,198
                                      42 CFR 488.845(b)(5)..  ...........................  Penalty for a repeat
                                                                                            and/or condition-
                                                                                            level deficiency that
                                                                                            does not constitute
                                                                                            immediate jeopardy
                                                                                            and that is related
                                                                                            predominately to
                                                                                            structure or process-
                                                                                            oriented conditions
                                                                                            (Lower Range):
                                                                                             Minimum.............         2019        1,052        1,071
                                                                                             Maximum.............         2019        8,415        8,563

[[Page 821]]

 
                                      42 CFR 488.845(b)(6)..  ...........................  Penalty imposed for
                                                                                            instance of
                                                                                            noncompliance that
                                                                                            may be assessed for
                                                                                            one or more singular
                                                                                            events of condition-
                                                                                            level noncompliance
                                                                                            that are identified
                                                                                            and where the
                                                                                            noncompliance was
                                                                                            corrected during the
                                                                                            onsite survey:
                                                                                             Minimum.............         2019        2,104        2,141
                                                                                             Maximum.............         2019       21,039       21,410
                                                                                           Penalty for each day           2019       21,039       21,410
                                                                                            of noncompliance
                                                                                            (Maximum).
                                      42 CFR                                               Penalty for each day           2019       21,039       21,410
                                       488.845(d)(1)(ii).                                   of noncompliance
                                                                                            (Maximum).
    1396b(m)(5)(B)..................  42 CFR 460.46.........  CMS                          Penalty for Programs
                                                                                            of All-Inclusive Care
                                                                                            for the Elderly
                                                                                            (PACE) organization's
                                                                                            practice that would
                                                                                            reasonably be
                                                                                            expected to have the
                                                                                            effect of denying or
                                                                                            discouraging
                                                                                            enrollment:
                                                                                             Minimum.............         2019       23,473       23,887
                                                                                             Maximum.............         2019      156,488      159,248
                                                                                           Penalty for a PACE             2019       39,121       39,811
                                                                                            organization that
                                                                                            charges excessive
                                                                                            premiums.
                                                                                           Penalty for a PACE             2019      156,488      159,248
                                                                                            organization
                                                                                            misrepresenting or
                                                                                            falsifying
                                                                                            information to CMS,
                                                                                            the State, or an
                                                                                            individual or other
                                                                                            entity.
                                                                                           Penalty for each               2019       39,121       39,811
                                                                                            determination the CMS
                                                                                            makes that the PACE
                                                                                            organization has
                                                                                            failed to provide
                                                                                            medically necessary
                                                                                            items and services of
                                                                                            the failure has
                                                                                            adversely affected
                                                                                            (or has the
                                                                                            substantial
                                                                                            likelihood of
                                                                                            adversely affecting)
                                                                                            a PACE participant.

[[Page 822]]

 
                                                                                           Penalty for                    2019       39,121       39,811
                                                                                            involuntarily
                                                                                            disenrolling a
                                                                                            participant.
                                                                                           Penalty for                    2019       39,121       39,811
                                                                                            discriminating or
                                                                                            discouraging
                                                                                            enrollment or
                                                                                            disenrollment of
                                                                                            participants on the
                                                                                            basis of an
                                                                                            individual's health
                                                                                            status or need for
                                                                                            health care services.
    1396r(h)(3)(C)(ii)(I)...........  42 CFR                  CMS                          Penalty per day for a
                                       488.408(d)(1)(iii).                                  nursing facility's
                                                                                            failure to meet a
                                                                                            Category 2
                                                                                            Certification:
                                                                                             Minimum.............         2019          110          112
                                                                                             Maximum.............         2019        6,579        6,695
                                      42 CFR                  CMS                          Penalty per instance
                                       488.408(d)(1)(iv).                                   for a nursing
                                                                                            facility's failure to
                                                                                            meet Category 2
                                                                                            certification:
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per day for a
                                       488.408(e)(1)(iii).                                  nursing facility's
                                                                                            failure to meet
                                                                                            Category 3
                                                                                            certification:
                                                                                             Minimum.............         2019        6,690        6,808
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per instance
                                       488.408(e)(1)(iv).                                   for a nursing
                                                                                            facility's failure to
                                                                                            meet Category 3
                                                                                            certification:
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per instance
                                       488.408(e)(2)(ii).                                   for a nursing
                                                                                            facility's failure to
                                                                                            meet Category 3
                                                                                            certification, which
                                                                                            results in immediate
                                                                                            jeopardy:

[[Page 823]]

 
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per day for
                                       488.438(a)(1)(i).                                    nursing facility's
                                                                                            failure to meet
                                                                                            certification (Upper
                                                                                            Range):
                                                                                             Minimum.............         2019        6,690        6,808
                                                                                             Maximum.............         2019       21,933       22,320
                                      42 CFR                  CMS                          Penalty per day for
                                       488.438(a)(1)(ii).                                   nursing facility's
                                                                                            failure to meet
                                                                                            certification (Lower
                                                                                            Range):
                                                                                             Minimum.............         2019          110          112
                                                                                             Maximum.............         2019        6,579        6,695
                                      42 CFR 488.438(a)(2)..  CMS                          Penalty per instance
                                                                                            for nursing
                                                                                            facility's failure to
                                                                                            meet certification:
                                                                                             Minimum.............         2019        2,194        2,233
                                                                                             Maximum.............         2019       21,933       22,320
    1396r(f)(2)(B)(iii)(I)(c).......  42 CFR                  CMS                          Grounds to prohibit            2019       10,967       11,160
                                       483.151(b)(2)(iv) and                                approval of Nurse
                                       (b)(3)(iii).                                         Aide Training
                                                                                            Program--if assessed
                                                                                            a penalty in
                                                                                            1819(h)(2)(B)(i) or
                                                                                            1919(h)(2)(A)(ii) of
                                                                                            ``not less than
                                                                                            $5,000'' [Not civil
                                                                                            monetary penalties
                                                                                            (CMPs) authority, but
                                                                                            a specific CMP amount
                                                                                            (CMP at this level)
                                                                                            that is the
                                                                                            triggering condition
                                                                                            for disapproval].
    1396r(h)(3)(C)(ii)(I)...........  42 CFR 483.151(c)(2)..  CMS                          Grounds to waive               2019       10,967       11,160
                                                                                            disapproval of nurse
                                                                                            aide training
                                                                                            program--reference to
                                                                                            disapproval based on
                                                                                            imposition of CMP
                                                                                            ``not less than
                                                                                            $5,000'' [Not CMP
                                                                                            authority but CMP
                                                                                            imposition at this
                                                                                            level determines
                                                                                            eligibility to seek
                                                                                            waiver of disapproval
                                                                                            of nurse aide
                                                                                            training program].

[[Page 824]]

 
    1396t(j)(2)(C)..................  ......................  CMS                          Penalty for each day
                                                                                            of noncompliance for
                                                                                            a home or community
                                                                                            care provider that no
                                                                                            longer meets the
                                                                                            minimum requirements
                                                                                            for home and
                                                                                            community care:
                                                                                             Minimum.............         2019            2            2
                                                                                             Maximum.............         2019       18,943       19,277
    1396u-2(e)(2)(A)(i).............  42 CFR 438.704........  CMS                          Penalty for a Medicaid         2019       39,121       39,811
                                                                                            managed care
                                                                                            organization that
                                                                                            fails substantially
                                                                                            to provide medically
                                                                                            necessary items and
                                                                                            services.
                                                                                           Penalty for Medicaid           2019       39,121       39,811
                                                                                            managed care
                                                                                            organization that
                                                                                            imposes premiums or
                                                                                            charges on enrollees
                                                                                            in excess of the
                                                                                            premiums or charges
                                                                                            permitted.
                                                                                           Penalty for a Medicaid         2019       39,121       39,811
                                                                                            managed care
                                                                                            organization that
                                                                                            misrepresents or
                                                                                            falsifies information
                                                                                            to another individual
                                                                                            or entity.
                                                                                           Penalty for a Medicaid         2019       39,121       39,811
                                                                                            managed care
                                                                                            organization that
                                                                                            fails to comply with
                                                                                            the applicable
                                                                                            statutory
                                                                                            requirements for such
                                                                                            organizations.

[[Page 825]]

 
    1396u-2(e)(2)(A)(ii)............  42 CFR 438.704........  CMS                          Penalty for a Medicaid         2019      156,488      159,248
                                                                                            managed care
                                                                                            organization that
                                                                                            misrepresents or
                                                                                            falsifies information
                                                                                            to the HHS Secretary.
                                                                                           Penalty for Medicaid           2019      156,488      159,248
                                                                                            managed care
                                                                                            organization that
                                                                                            acts to discriminate
                                                                                            among enrollees on
                                                                                            the basis of their
                                                                                            health status.
    1396u-2(e)(2)(A)(iv)............  42 CFR 438.704........  CMS                          Penalty for each               2019       23,473       23,887
                                                                                            individual that does
                                                                                            not enroll as a
                                                                                            result of a Medicaid
                                                                                            managed care
                                                                                            organization that
                                                                                            acts to discriminate
                                                                                            among enrollees on
                                                                                            the basis of their
                                                                                            health status.
    1396u(h)(2).....................  42 CFR Part 441,        CMS                          Penalty for a provider         2019       21,933       22,320
                                       Subpart I.                                           not meeting one of
                                                                                            the requirements
                                                                                            relating to the
                                                                                            protection of the
                                                                                            health, safety, and
                                                                                            welfare of
                                                                                            individuals receiving
                                                                                            community supported
                                                                                            living arrangements
                                                                                            services.
    1396w-2(c)(1)...................  ......................  CMS                          Penalty for disclosing         2019       11,698       11,904
                                                                                            information related
                                                                                            to eligibility
                                                                                            determinations for
                                                                                            medical assistance
                                                                                            programs.
    18041(c)(2).....................  45 CFR 150.315; 45 CFR  CMS                          Failure to comply with         2019          159          162
                                       156.805(c).                                          requirements of the
                                                                                            Public Health
                                                                                            Services Act; Penalty
                                                                                            for violations of
                                                                                            rules or standards of
                                                                                            behavior associated
                                                                                            with issuer
                                                                                            participation in the
                                                                                            federally-facilitated
                                                                                            Exchange. (42 U.S.C.
                                                                                            300gg-22(b)(2)(C)).
    18081(h)(1)(A)(i)(II)...........  42 CFR 155.285........  CMS                          Penalty for providing          2019       28,906       29,416
                                                                                            false information on
                                                                                            Exchange application.

[[Page 826]]

 
    18081(h)(1)(B)..................  42 CFR 155.285........  CMS                          Penalty for knowingly          2019      289,060      294,159
                                                                                            or willfully
                                                                                            providing false
                                                                                            information on
                                                                                            Exchange application.
    18081(h)(2).....................  42 CFR 155.260........  CMS                          Penalty for knowingly          2019       28,906       29,416
                                                                                            or willfully
                                                                                            disclosing protected
                                                                                            information from
                                                                                            Exchange.
31 U.S.C.:
    1352............................  45 CFR 93.400(e)......  HHS                          Penalty for the first          2019       20,134       20,489
                                                                                            time an individual
                                                                                            makes an expenditure
                                                                                            prohibited by
                                                                                            regulations regarding
                                                                                            lobbying disclosure,
                                                                                            absent aggravating
                                                                                            circumstances.
                                                                                           Penalty for second and
                                                                                            subsequent offenses
                                                                                            by individuals who
                                                                                            make an expenditure
                                                                                            prohibited by
                                                                                            regulations regarding
                                                                                            lobbying disclosure:
                                                                                             Minimum.............         2019       20,134       20,489
                                                                                             Maximum.............         2019      201,340      204,892
                                                                                           Penalty for the first          2019       20,134       20,489
                                                                                            time an individual
                                                                                            fails to file or
                                                                                            amend a lobbying
                                                                                            disclosure form,
                                                                                            absent aggravating
                                                                                            circumstances
                                                                                           Penalty for second and
                                                                                            subsequent offenses
                                                                                            by individuals who
                                                                                            fail to file or amend
                                                                                            a lobbying disclosure
                                                                                            form, absent
                                                                                            aggravating
                                                                                            circumstances:
                                                                                             Minimum.............         2019       20,134       20,489

[[Page 827]]

 
                                                                                             Maximum.............         2019      201,340      204,892
                                      45 CFR Part 93,         HHS                          Penalty for failure to
                                       Appendix A.                                          provide certification
                                                                                            regarding lobbying in
                                                                                            the award documents
                                                                                            for all sub-awards of
                                                                                            all tiers:
                                                                                             Minimum.............         2019       20,134       20,489
                                                                                             Maximum.............         2019      201,340      204,892
                                                                                           Penalty for failure to
                                                                                            provide statement
                                                                                            regarding lobbying
                                                                                            for loan guarantee
                                                                                            and loan insurance
                                                                                            transactions:
                                                                                             Minimum.............         2019       20,134       20,489
                                                                                             Maximum.............         2019      201,340      204,892
    3801-3812.......................  45 CFR 79.3(a)(1)(iv).  HHS                          Penalty against any            2019       10,520       10,706
                                                                                            individual who--with
                                                                                            knowledge or reason
                                                                                            to know--makes,
                                                                                            presents or submits a
                                                                                            false, fictitious or
                                                                                            fraudulent claim to
                                                                                            the Department.
                                      45 CFR 79.3(b)(1)(ii).  ...........................  Penalty against any            2019       10,520       10,706
                                                                                            individual who--with
                                                                                            knowledge or reason
                                                                                            to know--makes,
                                                                                            presents or submits a
                                                                                            false, fictitious or
                                                                                            fraudulent claim to
                                                                                            the Department.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Some HHS components have not promulgated regulations regarding their civil monetary penalty-specific statutory authorities.
\2\ The description is not intended to be a comprehensive explanation of the underlying violation; the statute and corresponding regulation, if
  applicable, should be consulted.
\3\ Statutory or Inflation Act Adjustment.
\4\ The cost of living multiplier for 2020, based on the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October 2019, not
  seasonally adjusted, is 1.01764, as indicated in OMB Memorandum M-20-05, ``Implementation of Penalty Inflation Adjustments for 2019, Pursuant to the
  Federal Civil Penalties Adjustment Act Improvements Act of 2015'' (December 16, 2019).


[81 FR 61565, Sept. 6, 2016, as amended at 83 FR 51370, Oct. 11, 2018; 
84 FR 59550, Nov. 5, 2019; 85 FR 2870, Jan. 17, 2020]


[[Page 829]]



                              FINDING AIDS




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

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 831]]



                    Table of CFR Titles and Chapters




                     (Revised as of October 1, 2021)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
       III  Administrative Conference of the United States (Parts 
                300--399)
        IV  Miscellaneous Agencies (Parts 400--599)
        VI  National Capital Planning Commission (Parts 600--699)

                    Title 2--Grants and Agreements

            Subtitle A--Office of Management and Budget Guidance 
                for Grants and Agreements
         I  Office of Management and Budget Governmentwide 
                Guidance for Grants and Agreements (Parts 2--199)
        II  Office of Management and Budget Guidance (Parts 200--
                299)
            Subtitle B--Federal Agency Regulations for Grants and 
                Agreements
       III  Department of Health and Human Services (Parts 300--
                399)
        IV  Department of Agriculture (Parts 400--499)
        VI  Department of State (Parts 600--699)
       VII  Agency for International Development (Parts 700--799)
      VIII  Department of Veterans Affairs (Parts 800--899)
        IX  Department of Energy (Parts 900--999)
         X  Department of the Treasury (Parts 1000--1099)
        XI  Department of Defense (Parts 1100--1199)
       XII  Department of Transportation (Parts 1200--1299)
      XIII  Department of Commerce (Parts 1300--1399)
       XIV  Department of the Interior (Parts 1400--1499)
        XV  Environmental Protection Agency (Parts 1500--1599)
     XVIII  National Aeronautics and Space Administration (Parts 
                1800--1899)
        XX  United States Nuclear Regulatory Commission (Parts 
                2000--2099)
      XXII  Corporation for National and Community Service (Parts 
                2200--2299)
     XXIII  Social Security Administration (Parts 2300--2399)
      XXIV  Department of Housing and Urban Development (Parts 
                2400--2499)
       XXV  National Science Foundation (Parts 2500--2599)
      XXVI  National Archives and Records Administration (Parts 
                2600--2699)

[[Page 832]]

     XXVII  Small Business Administration (Parts 2700--2799)
    XXVIII  Department of Justice (Parts 2800--2899)
      XXIX  Department of Labor (Parts 2900--2999)
       XXX  Department of Homeland Security (Parts 3000--3099)
      XXXI  Institute of Museum and Library Services (Parts 3100--
                3199)
     XXXII  National Endowment for the Arts (Parts 3200--3299)
    XXXIII  National Endowment for the Humanities (Parts 3300--
                3399)
     XXXIV  Department of Education (Parts 3400--3499)
      XXXV  Export-Import Bank of the United States (Parts 3500--
                3599)
     XXXVI  Office of National Drug Control Policy, Executive 
                Office of the President (Parts 3600--3699)
    XXXVII  Peace Corps (Parts 3700--3799)
     LVIII  Election Assistance Commission (Parts 5800--5899)
       LIX  Gulf Coast Ecosystem Restoration Council (Parts 5900--
                5999)

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  Government Accountability Office (Parts 1--199)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
        IV  Office of Personnel Management and Office of the 
                Director of National Intelligence (Parts 1400--
                1499)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Parts 2100--2199)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Parts 3200--
                3299)
     XXIII  Department of Energy (Parts 3300--3399)
      XXIV  Federal Energy Regulatory Commission (Parts 3400--
                3499)
       XXV  Department of the Interior (Parts 3500--3599)
      XXVI  Department of Defense (Parts 3600--3699)

[[Page 833]]

    XXVIII  Department of Justice (Parts 3800--3899)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  U.S. International Development Finance Corporation 
                (Parts 4300--4399)
     XXXIV  Securities and Exchange Commission (Parts 4400--4499)
      XXXV  Office of Personnel Management (Parts 4500--4599)
     XXXVI  Department of Homeland Security (Parts 4600--4699)
    XXXVII  Federal Election Commission (Parts 4700--4799)
        XL  Interstate Commerce Commission (Parts 5000--5099)
       XLI  Commodity Futures Trading Commission (Parts 5100--
                5199)
      XLII  Department of Labor (Parts 5200--5299)
     XLIII  National Science Foundation (Parts 5300--5399)
       XLV  Department of Health and Human Services (Parts 5500--
                5599)
      XLVI  Postal Rate Commission (Parts 5600--5699)
     XLVII  Federal Trade Commission (Parts 5700--5799)
    XLVIII  Nuclear Regulatory Commission (Parts 5800--5899)
      XLIX  Federal Labor Relations Authority (Parts 5900--5999)
         L  Department of Transportation (Parts 6000--6099)
       LII  Export-Import Bank of the United States (Parts 6200--
                6299)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Parts 6400--6499)
        LV  National Endowment for the Arts (Parts 6500--6599)
       LVI  National Endowment for the Humanities (Parts 6600--
                6699)
      LVII  General Services Administration (Parts 6700--6799)
     LVIII  Board of Governors of the Federal Reserve System 
                (Parts 6800--6899)
       LIX  National Aeronautics and Space Administration (Parts 
                6900--6999)
        LX  United States Postal Service (Parts 7000--7099)
       LXI  National Labor Relations Board (Parts 7100--7199)
      LXII  Equal Employment Opportunity Commission (Parts 7200--
                7299)
     LXIII  Inter-American Foundation (Parts 7300--7399)
      LXIV  Merit Systems Protection Board (Parts 7400--7499)
       LXV  Department of Housing and Urban Development (Parts 
                7500--7599)
      LXVI  National Archives and Records Administration (Parts 
                7600--7699)
     LXVII  Institute of Museum and Library Services (Parts 7700--
                7799)
    LXVIII  Commission on Civil Rights (Parts 7800--7899)
      LXIX  Tennessee Valley Authority (Parts 7900--7999)
       LXX  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 8000--8099)
      LXXI  Consumer Product Safety Commission (Parts 8100--8199)
    LXXIII  Department of Agriculture (Parts 8300--8399)

[[Page 834]]

     LXXIV  Federal Mine Safety and Health Review Commission 
                (Parts 8400--8499)
     LXXVI  Federal Retirement Thrift Investment Board (Parts 
                8600--8699)
    LXXVII  Office of Management and Budget (Parts 8700--8799)
      LXXX  Federal Housing Finance Agency (Parts 9000--9099)
   LXXXIII  Special Inspector General for Afghanistan 
                Reconstruction (Parts 9300--9399)
    LXXXIV  Bureau of Consumer Financial Protection (Parts 9400--
                9499)
    LXXXVI  National Credit Union Administration (Parts 9600--
                9699)
     XCVII  Department of Homeland Security Human Resources 
                Management System (Department of Homeland 
                Security--Office of Personnel Management) (Parts 
                9700--9799)
    XCVIII  Council of the Inspectors General on Integrity and 
                Efficiency (Parts 9800--9899)
      XCIX  Military Compensation and Retirement Modernization 
                Commission (Parts 9900--9999)
         C  National Council on Disability (Parts 10000--10049)
        CI  National Mediation Board (Parts 10100--10199)
       CII  U.S. Office of Special Counsel (Parts 10200--10299)

                      Title 6--Domestic Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 1--199)
         X  Privacy and Civil Liberties Oversight Board (Parts 
                1000--1099)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)
        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Agricultural Marketing Service (Federal Grain 
                Inspection Service, Fair Trade Practices Program), 
                Department of Agriculture (Parts 800--899)

[[Page 835]]

        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  [Reserved]
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  [Reserved]
       XXV  Office of Advocacy and Outreach, Department of 
                Agriculture (Parts 2500--2599)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy Policy and New Uses, Department of 
                Agriculture (Parts 2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)
     XXXIV  National Institute of Food and Agriculture (Parts 
                3400--3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

[[Page 836]]

         L  Rural Business-Cooperative Service, and Rural 
                Utilities Service, Department of Agriculture 
                (Parts 5000--5099)

                    Title 8--Aliens and Nationality

         I  Department of Homeland Security (Parts 1--499)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1399)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Agricultural Marketing Service (Fair Trade Practices 
                Program), Department of Agriculture (Parts 200--
                299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 
                1000--1099)
      XIII  Nuclear Waste Technical Review Board (Parts 1300--
                1399)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Parts 1800--1899)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)
        II  Election Assistance Commission (Parts 9400--9499)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)
        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  [Reserved]
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  [Reserved]
         X  Bureau of Consumer Financial Protection (Parts 1000--
                1099)

[[Page 837]]

        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XII  Federal Housing Finance Agency (Parts 1200--1299)
      XIII  Financial Stability Oversight Council (Parts 1300--
                1399)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
       XVI  Office of Financial Research, Department of the 
                Treasury (Parts 1600--1699)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--1199)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)

[[Page 838]]

      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  National Technical Information Service, Department of 
                Commerce (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
        XV  Office of the Under-Secretary for Economic Affairs, 
                Department of Commerce (Parts 1500--1599)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399) [Reserved]

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  U.S. Customs and Border Protection, Department of 
                Homeland Security; Department of the Treasury 
                (Parts 0--199)
        II  United States International Trade Commission (Parts 
                200--299)
       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  U.S. Immigration and Customs Enforcement, Department 
                of Homeland Security (Parts 400--599) [Reserved]

[[Page 839]]

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 
                800--899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  United States Agency for Global Media (Parts 500--599)
       VII  U.S. International Development Finance Corporation 
                (Parts 700--799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
      XIII  Millennium Challenge Corporation (Parts 1300--1399)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)
       XVI  Japan-United States Friendship Commission (Parts 
                1600--1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

[[Page 840]]

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799) 
                [Reserved]
       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XV  Emergency Mortgage Insurance and Loan Programs, 
                Department of Housing and Urban Development (Parts 
                2700--2799) [Reserved]

[[Page 841]]

        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
      XXIV  Board of Directors of the HOPE for Homeowners Program 
                (Parts 4000--4099) [Reserved]
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--899)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900--999)
        VI  Office of the Assistant Secretary, Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Parts 1200--1299)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--End)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--399)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--799)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--299)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)

[[Page 842]]

        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 
                0--99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Employee Benefits Security Administration, Department 
                of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Bureau of Safety and Environmental Enforcement, 
                Department of the Interior (Parts 200--299)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
         V  Bureau of Ocean Energy Management, Department of the 
                Interior (Parts 500--599)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)
       XII  Office of Natural Resources Revenue, Department of the 
                Interior (Parts 1200--1299)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance

[[Page 843]]

         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 
                200--399)
        IV  Secret Service, Department of the Treasury (Parts 
                400--499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of Investment Security, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)
         X  Financial Crimes Enforcement Network, Department of 
                the Treasury (Parts 1000--1099)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Department of Defense, Defense Logistics Agency (Parts 
                1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
      XVII  Office of the Director of National Intelligence (Parts 
                1700--1799)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Corps of Engineers, Department of the Army, Department 
                of Defense (Parts 200--399)
        IV  Great Lakes St. Lawrence Seaway Development 
                Corporation, Department of Transportation (Parts 
                400--499)

[[Page 844]]

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)
        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Career, Technical, and Adult Education, 
                Department of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599) 
                [Reserved]
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
       VII  Office of Educational Research and Improvement, 
                Department of Education (Parts 700--799) 
                [Reserved]
            Subtitle C--Regulations Relating to Education
        XI  [Reserved]
       XII  National Council on Disability (Parts 1200--1299)



                           Title 35 [Reserved]




             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 
                300--399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
        VI  [Reserved]
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Parts 1500--
                1599)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  U.S. Copyright Office, Library of Congress (Parts 
                200--299)

[[Page 845]]

       III  Copyright Royalty Board, Library of Congress (Parts 
                300--399)
        IV  National Institute of Standards and Technology, 
                Department of Commerce (Parts 400--599)

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--199)
        II  Armed Forces Retirement Home (Parts 200--299)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Regulatory Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--1099)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)
      VIII  Gulf Coast Ecosystem Restoration Council (Parts 1800--
                1899)
        IX  Federal Permitting Improvement Steering Council (Part 
                1900)

          Title 41--Public Contracts and Property Management

            Subtitle A--Federal Procurement Regulations System 
                [Note]
            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
   62--100  [Reserved]
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
  103--104  [Reserved]
       105  General Services Administration (Parts 105-1--105-999)

[[Page 846]]

       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
  129--200  [Reserved]
            Subtitle D--Other Provisions Relating to Property 
                Management
       201  Federal Acquisition Security Council (Part 201)
            Subtitle E [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)
       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-1--303-99)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
   II--III  [Reserved]
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--699)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1099)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 400--999)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10099)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency, Department of 
                Homeland Security (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

[[Page 847]]

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)
       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
        IX  Denali Commission (Parts 900--999)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Administration for Children and Families, Department 
                of Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission of Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Parts 2300--2399)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Homeland Security (Parts 
                1--199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Homeland Security (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

[[Page 848]]

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                300--399)
        IV  National Telecommunications and Information 
                Administration, Department of Commerce, and 
                National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 400--499)
         V  The First Responder Network Authority (Parts 500--599)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Defense Acquisition Regulations System, Department of 
                Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)
         7  Agency for International Development (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        30  Department of Homeland Security, Homeland Security 
                Acquisition Regulation (HSAR) (Parts 3000--3099)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)

[[Page 849]]

        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199) [Reserved]
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399) 
                [Reserved]
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  Civilian Board of Contract Appeals, General Services 
                Administration (Parts 6100--6199)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Pipeline and Hazardous Materials Safety 
                Administration, Department of Transportation 
                (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Homeland Security (Parts 
                400--499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board (Parts 1000--1399)
        XI  Research and Innovative Technology Administration, 
                Department of Transportation (Parts 1400--1499) 
                [Reserved]
       XII  Transportation Security Administration, Department of 
                Homeland Security (Parts 1500--1699)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)

[[Page 850]]

        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

[[Page 851]]





           Alphabetical List of Agencies Appearing in the CFR




                     (Revised as of October 1, 2021)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Conference of the United States    1, III
Advisory Council on Historic Preservation         36, VIII
Advocacy and Outreach, Office of                  7, XXV
Afghanistan Reconstruction, Special Inspector     5, LXXXIII
     General for
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development              2, VII; 22, II
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, VIII, IX, X, XI; 9, 
                                                  II
Agricultural Research Service                     7, V
Agriculture, Department of                        2, IV; 5, LXXIII
  Advocacy and Outreach, Office of                7, XXV
  Agricultural Marketing Service                  7, I, VIII, IX, X, XI; 9, 
                                                  II
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Economic Research Service                       7, XXXVII
  Energy Policy and New Uses, Office of           2, IX; 7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  National Institute of Food and Agriculture      7, XXXIV
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force, Department of                          32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX
Architectural and Transportation Barriers         36, XI
   Compliance Board
[[Page 852]]

Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI; 38, II
Army, Department of                               32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase from People Who Are
  Federal Acquisition Regulation                  48, 19
Career, Technical, and Adult Education, Office    34, IV
     of
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chemical Safety and Hazard Investigation Board    40, VI
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X, XIII
Civil Rights, Commission on                       5, LXVIII; 45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce, Department of                           2, XIII; 44, IV; 50, VI
  Census Bureau                                   15, I
  Economic Affairs, Office of the Under-          15, XV
       Secretary for
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II; 37, IV
  National Marine Fisheries Service               50, II, IV
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Technical Information Service          15, XI
  National Telecommunications and Information     15, XXIII; 47, III, IV
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Secretary of Commerce, Office of                15, Subtitle A
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Financial Protection Bureau              5, LXXXIV; 12, X
Consumer Product Safety Commission                5, LXXI; 16, II
Copyright Royalty Board                           37, III
Corporation for National and Community Service    2, XXII; 45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Council of the Inspectors General on Integrity    5, XCVIII
     and Efficiency
Court Services and Offender Supervision Agency    5, LXX; 28, VIII
     for the District of Columbia
Customs and Border Protection                     19, I
Defense, Department of                            2, XI; 5, XXVI; 32, 
                                                  Subtitle A; 40, VII
  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III; 
                                                  48, 51
  Defense Acquisition Regulations System          48, 2
  Defense Intelligence Agency                     32, I

[[Page 853]]

  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  National Imagery and Mapping Agency             32, I
  Navy, Department of                             32, VI; 48, 52
  Secretary of Defense, Office of                 2, XI; 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
Denali Commission                                 45, IX
Disability, National Council on                   5, C; 34, XII
District of Columbia, Court Services and          5, LXX; 28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Office of the Under-Secretary   15, XV
     for
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          2, XXXIV; 5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Career, Technical, and Adult Education, Office  34, IV
       of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
Educational Research and Improvement, Office of   34, VII
Election Assistance Commission                    2, LVIII; 11, II
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employee Benefits Security Administration         29, XXV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Policy, National Commission for        1, IV
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             2, IX; 5, XXIII; 10, II, 
                                                  III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   2, XV; 5, LIV; 40, I, IV, 
                                                  VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                2, Subtitle A; 5, III, 
                                                  LXXVII; 14, VI; 48, 99
  National Drug Control Policy, Office of         2, XXXVI; 21, III
  National Security Council                       32, XXI; 47, II
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
     States
[[Page 854]]

Export-Import Bank of the United States           2, XXXV; 5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       5, XXXVII; 11, I
Federal Emergency Management Agency               44, I
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Agency                    5, LXXX; 12, XII
Federal Labor Relations Authority                 5, XIV, XLIX; 22, XIV
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Permitting Improvement Steering Council   40, IX
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Financial Crimes Enforcement Network              31, X
Financial Research Office                         12, XVI
Financial Stability Oversight Council             12, XIII
Fine Arts, Commission of                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102

[[Page 855]]

  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Accountability Office                  4, I
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Great Lakes St. Lawrence Seaway Development       33, IV
     Corporation
Gulf Coast Ecosystem Restoration Council          2, LIX; 40, VIII
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          2, III; 5, XLV; 45, 
                                                  Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X, XIII
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Indian Health Service                           25, V
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  2, XXX; 5, XXXVI; 6, I; 8, 
                                                  I
  Coast Guard                                     33, I; 46, I; 49, IV
  Coast Guard (Great Lakes Pilotage)              46, III
  Customs and Border Protection                   19, I
  Federal Emergency Management Agency             44, I
  Human Resources Management and Labor Relations  5, XCVII
       Systems
  Immigration and Customs Enforcement Bureau      19, IV
  Transportation Security Administration          49, XII
HOPE for Homeowners Program, Board of Directors   24, XXIV
     of
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Housing and Urban Development, Department of      2, XXIV; 5, LXV; 24, 
                                                  Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Immigration and Customs Enforcement Bureau        19, IV
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Independent Counsel, Offices of                   28, VI
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
   Secretary
[[Page 856]]

Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII, XV
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior, Department of                           2, XIV
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV
  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Natural Resource Revenue, Office of             30, XII
  Ocean Energy Management, Bureau of              30, V
  Reclamation, Bureau of                          43, I
  Safety and Environmental Enforcement, Bureau    30, II
       of
  Secretary of the Interior, Office of            2, XIV; 43, Subtitle A
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Development Finance Corporation,    5, XXXIII; 22, VII
     U.S.
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
Investment Security, Office of                    31, VIII
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice, Department of                            2, XXVIII; 5, XXVIII; 28, 
                                                  I, XI; 40, IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Independent Counsel, Offices of                 28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor, Department of                              2, XXIX; 5, XLII
  Benefits Review Board                           20, VII
  Employee Benefits Security Administration       29, XXV
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Federal Acquisition Regulation                  48, 29

[[Page 857]]

  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I, VI
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Libraries and Information Science, National       45, XVII
     Commission on
Library of Congress                               36, VII
  Copyright Royalty Board                         37, III
  U.S. Copyright Office                           37, II
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II, LXIV
Micronesian Status Negotiations, Office for       32, XXVII
Military Compensation and Retirement              5, XCIX
     Modernization Commission
Millennium Challenge Corporation                  22, XIII
Mine Safety and Health Administration             30, I
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
Museum and Library Services, Institute of         2, XXXI
National Aeronautics and Space Administration     2, XVIII; 5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   2, XXII; 45, XII, XXV
National Archives and Records Administration      2, XXVI; 5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Capital Planning Commission              1, IV, VI
National Counterintelligence Center               32, XVIII
National Credit Union Administration              5, LXXXVI; 12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           2, XXXVI; 21, III
National Endowment for the Arts                   2, XXXII
National Endowment for the Humanities             2, XXXIII
National Foundation on the Arts and the           45, XI
     Humanities
National Geospatial-Intelligence Agency           32, I
National Highway Traffic Safety Administration    23, II, III; 47, VI; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute of Food and Agriculture        7, XXXIV
National Institute of Standards and Technology    15, II; 37, IV
National Intelligence, Office of Director of      5, IV; 32, XVII
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV
National Mediation Board                          5, CI; 29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       2, XXV; 5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI; 47, II

[[Page 858]]

National Technical Information Service            15, XI
National Telecommunications and Information       15, XXIII; 47, III, IV, V
     Administration
National Transportation Safety Board              49, VIII
Natural Resource Revenue, Office of               30, XII
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy, Department of                               32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     2, XX; 5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Ocean Energy Management, Bureau of                30, V
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       2, XXXVII; 22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, IV, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
  Human Resources Management and Labor Relations  5, XCVII
       Systems, Department of Homeland Security
Pipeline and Hazardous Materials Safety           49, I
     Administration
Postal Regulatory Commission                      5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Privacy and Civil Liberties Oversight Board       6, X
Procurement and Property Management, Office of    7, XXXII
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Contracts, Department of Labor             41, 50
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Relocation Allowances                             41, 302
Research and Innovative Technology                49, XI
     Administration
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Utilities Service                           7, XVII, XVIII, XLII
Safety and Environmental Enforcement, Bureau of   30, II
Science and Technology Policy, Office of, and     32, XXIV; 47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                5, XXXIV; 17, II
Selective Service System                          32, XVI
Small Business Administration                     2, XXVII; 13, I
Smithsonian Institution                           36, V
Social Security Administration                    2, XXIII; 20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
   Office of
[[Page 859]]

State, Department of                              2, VI; 22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Tennessee Valley Authority                        5, LXIX; 18, XIII
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     2, XII; 5, L
  Commercial Space Transportation                 14, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Great Lakes St. Lawrence Seaway Development     33, IV
       Corporation
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 47, IV; 49, V
  Pipeline and Hazardous Materials Safety         49, I
       Administration
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury, Department of the                       2, X; 5, XXI; 12, XV; 17, 
                                                  IV; 31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs and Border Protection                   19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Claims Collection Standards             31, IX
  Federal Law Enforcement Training Center         31, VII
  Financial Crimes Enforcement Network            31, X
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  Investment Security, Office of                  31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
Truman, Harry S. Scholarship Foundation           45, XVIII
United States Agency for Global Media             22, V
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
U.S. Copyright Office                             37, II
U.S. Office of Special Counsel                    5, CII
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs, Department of                   2, VIII; 38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I, VII
World Agricultural Outlook Board                  7, XXXVIII

[[Page 861]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations (CFR) that 
were made by documents published in the Federal Register since January 
1, 2016 are enumerated in the following list. Entries indicate the 
nature of the changes effected. Page numbers refer to Federal Register 
pages. The user should consult the entries for chapters, parts and 
subparts as well as sections for revisions.
For changes to this volume of the CFR prior to this listing, consult the 
annual edition of the monthly List of CFR Sections Affected (LSA). The 
LSA is available at www.govinfo.gov. For changes to this volume of the 
CFR prior to 2001, see the ``List of CFR Sections Affected, 1949-1963, 
1964-1972, 1973-1985, and 1986-2000'' published in 11 separate volumes. 
The ``List of CFR Sections Affected 1986-2000'' is available at 
www.govinfo.gov.

                                  2016

45 CFR
                                                                   81 FR
                                                                    Page
Subtitle A
5 Revised..........................................................74939
16.1 Amended; interim...............................................3012
16.2 (b) amended; interim...........................................3012
16.3 (b) amended; interim...........................................3012
16.7 (a) amended; interim...........................................3012
16.20 (a) revised; interim..........................................3012
16.22 (b)(1) amended; interim.......................................3012
63.8 (c)(1) amended; interim........................................3012
63.34 Amended; interim..............................................3012
75.1 Amended; interim...............................................3012
75.2 Amended; interim...............................................3012
    Correctly amended..............................................19044
75.101 (b)(1) table, (2), (d)(1) and (e)(1) introductory text 
        revised; (c) amended; interim...............................3013
    (f) added......................................................89395
75.102 (b) amended; interim.........................................3014
75.103 (a) and (b) amended; interim.................................3014
75.104 (a)(7) amended; interim......................................3014
75.110 (a) revised; interim.........................................3014
    (a) amended....................................................89395
75.113 Amended; interim.............................................3014
75.203 (c)(5) amended; interim......................................3014
75.205 (a) revised; interim.........................................3014
    (a)(2) correctly amended.......................................19044
75.206 (a) amended; interim.........................................3015
75.207 (a)(4) amended; interim......................................3015
75.210 (a)(1) and (d) amended; (b)(1)(iii) added; interim...........3015
75.211 (b) revised; (c) added; interim..............................3015
75.212 Redesignated as 75.213; new 75.212 added; interim............3015
75.213 Redesignated as 75.214; redesignated from 75.212; interim 
                                                                    3015
    Amended; interim................................................3016
75.214 Redesignated as 75.215; redesignated from 75.213; interim 
                                                                    3015
75.215 Redesignated as 75.216; redesignated from 75.214; interim 
                                                                    3015
75.216 Redesignated as 75.217; redesignated from 75.215; interim 
                                                                    3015
75.217 Redesignated as 75.218; redesignated from 75.216; interim 
                                                                    3015
75.218 Redesignated from 75.217; interim............................3015
75.300 (c) and (d) added...........................................89395
75.305 (b) introductory text amended; (b)(6)(ii) and (9) 
        introductory text revised; interim..........................3016
    (a) revised....................................................89395
75.306 (c) amended; interim.........................................3016
75.307 (e) amended; interim.........................................3016
75.308 (c) revised; interim.........................................3016
75.322 (d)(2) amended; interim......................................3016

[[Page 862]]

75.327 (h) amended; interim.........................................3016
75.329 (c)(2)(i) and (iii) amended; interim.........................3016
75.351 (b) introductory text revised; interim.......................3016
75.352 (a)(1)(i), (iv), (vi), (vii), (viii) and (x) revised; 
        interim.....................................................3016
75.363 Revised; interim.............................................3017
75.365 Revised.....................................................89395
75.372 (a)(1) and (b) revised; (c) added; interim...................3017
75.373 (b) revised; interim.........................................3017
75.409 Introductory text amended; interim...........................3017
75.414 (e)(3) revised; interim......................................3017
    (c)(1)(i), (ii) and (iii) added; (f) amended...................89395
75.419 (b) introductory text amended; interim.......................3017
75.431 (h)(3) amended; (i)(1) and (j) revised; interim..............3017
75.439 (b)(7) added; interim........................................3018
75.448 (b)(3) amended; interim......................................3018
75.449 (b)(1) and (e) amended; interim..............................3018
75.450 (c)(2)(iv) amended; interim..................................3018
75.456 Revised; interim.............................................3018
75.459 Heading amended; interim.....................................3018
75.461 (b)(3) added; interim........................................3018
75.465 (c) introductory text amended; interim.......................3018
75.474 (d) amended; interim.........................................3018
75.477 Added.......................................................89395
75.501 (k) amended; interim.........................................3018
75.515 (b) amended; interim.........................................3018
75 Appendices I, III and IV amended; interim........................3018
    Appendices V, VII, VIII, X, and XI amended; Appendix XII 
added; interim......................................................3019
    Appendix II correctly amended..................................19044
79.3 (a)(1)(iv) and (b)(1)(ii) amended.............................61565
87 Revised.........................................................19426
87.1 (b) amended; interim...........................................3020
87.2 (b) amended; interim...........................................3020
92 Added...........................................................31465
92 Appendix A corrected............................................46613
93.400 (a) amended.................................................61565
93 Appendix A amended..............................................61565
95.610 (b)(12) revised.............................................35479
95.612 Amended.....................................................35479
95.613 (a) amended; interim.........................................3020
95.621 (d) amended; interim.........................................3020
95.625 (a) revised; (b) amended....................................35479
95.705 (a) amended; interim.........................................3020
97.707 (a) amended; interim.........................................3020
98.1 Revised; eff. 11-29-16........................................67573
98.2 Amended; eff. 11-29-16........................................67573
98.10 Introductory text, (d) and (e) revised; (f) added; eff. 11-
        29-16......................................................67574
98.11 (a)(3) amended; (b)(5) revised; eff. 11-29-16................67574
98.12 (c) revised; eff. 11-29-16...................................67574
98.14 (a)(1)(A) through (D) redesignated as (a)(1)(i) through 
        (iv); (a)(1) introductory text, new (iii), new (iv) and 
        (c)(3) revised; (a)(1)(v) through (xiv), (3), (4) and (d) 
        added; eff. 11-29-16.......................................67574
98.15 (a)(6) and (b) revised; (a)(7) through (11) added; eff. 11-
        29-16......................................................67575
98.16 Revised; eff. 11-29-16.......................................67576
98.17 (a) revised; eff. 11-29-16...................................67578
98.18 (b) revised; eff. 11-29-16...................................67578
98.19 Added; eff. 11-29-16.........................................67578
98.20 (a) introductory text, (2), (3) and (b) introductory text 
        revised; (b)(2) and (3) amended; (b)(4) and (c) added; 
        eff. 11-29-16..............................................67579
98.21 Added; eff. 11-29-16.........................................67579
98.30 (e)(1), (f) introductory text and (2) revised; (g) and (h) 
        added; eff. 11-29-16.......................................67580
98.31 Revised; eff. 11-29-16.......................................67581
98.32 Revised; eff. 11-29-16.......................................67581
98.33 Revised; eff. 11-29-16.......................................67581
98.40 (a)(2) redesignated as (a)(3); new (a)(2) added; new (a)(3) 
        revised; eff. 11-29-16.....................................67582
98.41 Revised; eff. 11-29-16.......................................67582
98.42 Revised; eff. 11-29-16.......................................67583
98.43 Redesignated as 98.45; added; eff. 11-29-16..................67584
8.44 Redesignated as 98.46; eff. 11-29-16..........................67584
    Added; eff. 11-29-16...........................................67585
98.45 Redesignated as 98.47; redesignated from 98.43; eff. 11-29-
        16.........................................................67584
    Revised; eff. 11-29-16.........................................67586
98.46 Redesignated as 98.48; redesignated from 98.44; eff. 11-29-
        16.........................................................67584
    Revised; eff. 11-29-16.........................................67587

[[Page 863]]

98.47 Redesignated as 98.49; redesignated from 98.45; eff. 11-29-
        16.........................................................67584
98.48 Redesignated from 98.46; eff. 11-29-16.......................67584
98.49 Redesignated from 98.47; eff. 11-29-16.......................67584
98.50 Revised; eff. 11-29-16.......................................67587
98.51 Redesignated as 98.53; added; eff. 11-29-16..................67588
98.52 Redesignated as 98.54; added; eff. 11-29-16..................67588
98.53 Redesignated as 98.55; redesignated from 98.51 and revised; 
        eff. 11-29-16..............................................67588
98.54 Redesignated as 98.56; redesignated from 98.52; eff. 11-29-
        16.........................................................67588
    (b) and (c) redesignated as (c) and (d); new (b) and (e) 
added; (a) introductory text, (6) and new (d) revised; eff. 11-29-
16.................................................................67590
98.55 Redesignated as 98.57; redesignated from 98.53; eff. 11-29-
        16.........................................................67588
    (e)(2)(iv), (f), (g)(2) and (h)(2) revised; eff. 11-29-16......67590
98.56 Redesignated from 98.54; eff. 11-29-16.......................67588
    (b)(1) amended; (d) and (e) revised; eff. 11-29-16.............67590
98.57 Redesignated from 98.55; eff. 11-29-16.......................67588
98.60 (d)(4)(ii) amended; interim...................................3020
    (b) introductory text, (1), (d)(2)(i), (4)(ii), (6) 
introductory text and (h) revised; (d)(t) redesignated as (d)(8); 
new (d)(7) added; eff. 11-29-16....................................67591
98.61 (a) and (c) introductory text revised; (f) added; eff. 11-
        29-16......................................................67591
98.63 (b) and (c) revised; eff. 11-29-16...........................67591
98.64 (c)(1) revised; eff. 11-29-16................................67591
98.65 (a) and (g) revised; (h) and (i) added; eff. 11-29-16........67591
98.68 Added; eff. 11-29-16.........................................67591
98.70 (d) added; eff. 11-29-16.....................................67592
98.71 Revised; eff. 11-29-16.......................................67592
98.80 (a), (c)(1) and (2) revised; (f) removed; eff. 11-29-16......67592
98.81 (b) introductory text, (1), (5), (6) and (c) revised; (b)(9) 
        added; eff. 11-29-16.......................................67593
98.82 Revised; eff. 11-29-16.......................................67593
98.83 Revised; eff. 11-29-16.......................................67593
98.84 (d)(1) through (6) amended; interim...........................3020
    (b)(3) amended; (b)(3)(i) and (ii) added; (d)(1) through (6) 
revised; eff. 11-29-16.............................................67594
98.92 (a)(1) revised; (b)(3) and (4) added; eff. 11-29-16..........67594
98.93 (b) amended; eff. 11-29-16...................................67595
98.100 (d)(2) amended; (e) revised; eff. 11-29-16..................67595
98.102 (a)(5) revised; (c) added; eff. 11-29-16....................67595
102 Added..........................................................61565

                                  2017

45 CFR
                                                                   82 FR
                                                                    Page
Subtitle A
46 Authority citation revised; eff. 1-19-18.........................7273
46.101--46.124 (Subpart A) Revised; eff. 1-19-18....................7273
98.83 (d)(1) correctly revised......................................3186
102.3 Table revised.................................................9175

                                  2018

45 CFR
                                                                   83 FR
                                                                    Page
Subtitle A
5b.11 (b)(2)(iv)(A) and (B) amended; (b)(2)(iv)(C) added...........14185
46 Regulation at 82 FR 7273 eff. date delayed to 7-19-18............2885
46.101 (l)(3) and (4) revised; interim..............................2893
46.101 (l)(1) heading and (5) added; (l)(2), (3), and (4) revised 
                                                                   28518
102.3 Table revised................................................51370

                                  2019

45 CFR
                                                                   84 FR
                                                                    Page
Subtitle A
5b.11 (b)(2)(viii)(A) added........................................14624
46 Policy statement................................................64432
75 Notification....................................................63809
88 Revised.........................................................23263
88 Technical correction............................................26580
102.3 Table amended................................................59550

[[Page 864]]

                                  2020

45 CFR
                                                                   85 FR
                                                                    Page
Subtitle A
1 Added............................................................78785
3.1 Amended........................................................72910
3.2 (f) table revised..............................................72910
3.5 Amended........................................................72910
3.5 Correction: instruction amended................................81781
3.61 Amended.......................................................72910
45 Subtitle A Policy statement.....................................75893
63.1 Amended.......................................................72911
75.372 Amended.....................................................72911
86 Authority citation revised......................................37243
86.2 (a) and (n) amended...........................................37243
86.18 Added........................................................37243
86.31 (b) revised..................................................37244
86.71 Revised......................................................37244
87 Authority citation revised......................................82145
87.1 Revised.......................................................82145
87.3 Revised.......................................................82146
87.4 Added.........................................................82147
87 Appendix A and Appendix B added.................................82147
92 Revised.........................................................37244
102.3 Table amended.................................................2870

                                  2021

  (Regulations published from January 1, 2021, through October 1, 2021)

45 CFR
                                                                   86 FR
                                                                    Page
Subtitle A
1.1 Revised.........................................................3014
1.2 Existing text designated as (a); new (a) introductory text 
        revised; (b) added..........................................3014
1.6 Added...........................................................3014
1.7 Added...........................................................3014
1.8 Added...........................................................3014
1.9 Added...........................................................3015
8 Added.............................................................5756
8 Regulation at 86 FR 5756 eff. date delayed to 3-22-22............15404
75 Authority citation revised.......................................2278
75 Regulation at 86 FR 2278 eff. date delayed to 8-11-21...........11641
75.101 (f) removed..................................................2278
75.101 Regulation at 86 FR 2278 eff. date delayed to 8-11-21.......11641
75.101 Regulation at 86 FR 2278 postponement of effectiveness......53562
75.300 (c) and (d) revised..........................................2278
75.300 Regulation at 86 FR 2278 eff. date delayed to 8-11-21.......11641
75.300 Regulation at 86 FR 2278 postponement of effectiveness......53562
75.305 (a) revised..................................................2278
75.305 Regulation at 86 FR 2278 eff. date delayed to 8-11-21.......11641
75.305 Regulation at 86 FR 2278 postponement of effectiveness......53562
75.365 Revised......................................................2278
75.365 Regulation at 86 FR 2278 eff. date delayed to 8-11-21.......11641
75.365 Regulation at 86 FR 2278 postponement of effectiveness......53562
75.414 (c)(1)(i) through (iii) revised; (f) amended.................2278
75.414 Regulation at 86 FR 2278 eff. date delayed to 8-11-21.......11641
75.414 Regulation at 86 FR 2278 postponement of effectiveness......53562
75.477 Revised......................................................2278
75.477 Regulation at 86 FR 2278 eff. date delayed to 8-11-21.......11641
75.477 Regulation at 86 FR 2278 postponement of effectiveness......53562
86 Notification....................................................27984
92 Notification....................................................27984


                                  [all]