[Federal Register Volume 73, Number 75 (Thursday, April 17, 2008)]
[Proposed Rules]
[Pages 20900-20904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-1147]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 88

RIN 0991-AB46


Office of Global Health Affairs; Regulation on the Organizational 
Integrity of Entities Implementing Leadership Act Programs and 
Activities

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Office of Global Health Affairs within the U.S. Department 
of Health and Human Services (HHS) is issuing this Notice of Proposed 
Rulemaking (NPRM) to obtain input from stakeholders and other 
interested parties regarding the separation that must exist between a 
recipient of HHS funds to implement HIV/AIDS programs and activities 
under the United States Leadership Against HIV/AIDS, Tuberculosis and 
Malaria Act of 2003 (the ``Leadership Act''), Public Law No. 108-25 
(May 27, 2003), and an affiliate organization that engages in 
activities that are not consistent with a policy opposing prostitution 
and sex trafficking, as required under Section 301(f) of the Leadership 
Act.
    The proposed rule provides additional information on the policy 
requirement expressed in this law for entities that receive grants, 
contracts, or cooperative agreements from the U.S. Department of Health 
and Human Services (``HHS'') to implement programs or projects under 
the authority

[[Page 20901]]

of the Leadership Act. Specifically, it describes the legal, financial, 
and organizational separation that must exist between these recipients 
of HHS HIV/AIDS funds and an affiliate organization that engages in 
activities that are not consistent with a policy opposing prostitution 
and sex trafficking.

DATES: To be assured consideration, written comments must be received 
on or before May 19, 2008.

ADDRESSES: You may submit written comments to the following address: 
U.S. Department of Health and Human Services, Office of Global Health 
Affairs, Room 639H, 200 Independence Avenue, SW., Washington, DC 20201. 
Comments will be available for public inspection Monday through Friday, 
except for legal holidays, from 9 a.m. until 5 p.m., at Room 639H, 200 
Independence Avenue, SW., Washington, DC 20201. Please call ahead to 1-
202-690-6174, and ask for a representative in the Office of Global 
Health Affairs to schedule your visit.
    You may also submit written comments electronically via the 
Internet at http://www.regulations.gov, or via e-mail to [email protected]. You can download an electronic version of 
the NPRM at http://www.regulations.gov. HHS/OGHA has also posted the 
NPRM and related materials to its Web site at the following Internet 
address: http://www.globalhealth.gov/.

FOR FURTHER INFORMATION CONTACT: William R. Steiger, PhD, Office of 
Global Health Affairs, Hubert H. Humphrey Building, Room 639H, 200 
Independence Avenue, SW., Washington, DC 20201.

SUPPLEMENTARY INFORMATION: 

I. Statutory Authority

    This proposed rule implements a provision in the Leadership Act, 
section 301(f), 22 U.S.C. 7631(f), concerning restrictions on the use 
of funds covered by the Leadership Act. This provision prohibits the 
use of any funds made available to carry out the Leadership Act, or any 
amendment made by this Act, to provide assistance to any group or 
organization that does not have a policy explicitly opposing 
prostitution and sex trafficking.
    There is a related provision in the Leadership Act, Section 301(e), 
22 U.S.C. 7631(e), that prohibits the use of funds made available to 
carry out the Act, or any amendment made by the Act, to promote or 
advocate the legalization or practice of prostitution or sex 
trafficking. This restriction, however, does not apply to the use of 
these funds for palliative care, treatment, or post-exposure 
pharmaceutical prophylaxis, and necessary pharmaceuticals and 
commodities, including test kits, condoms, and, when proven effective, 
microbicides. Section 301(f) of the Leadership Act should be read 
together with Section 301(e).

II. Background

    The U.S. Government is opposed to prostitution and related 
activities, which are inherently harmful and dehumanizing, and 
contribute to the phenomenon of trafficking in persons. It is critical 
to the effectiveness of the Leadership Act, and to the U.S. 
Government's foreign policy that underlies this effort, that 
organizations that receive Leadership Act funds maintain the integrity 
of the Leadership Act programs and activities they implement, and not 
confuse the U.S. Government's message opposing prostitution and sex 
trafficking by holding positions that conflict with this policy.
    This proposed rule is designed to provide additional clarity for 
contracting and grant officers, contracting officers' technical 
representatives, program officials and implementing partners (e.g., 
grantees, contractors) of HHS regarding the application of language in 
Notices of Availability, Requests for Proposals, and other documents 
pertaining to the policy requirement expressed in 22 U.S.C. 7631(f), 
which provides that organizations that are receiving Leadership Act 
funds must have a policy explicitly opposing prostitution and sex 
trafficking.
    Any entity that receives Leadership Act funds for HIV/AIDS programs 
directly or indirectly (``recipient'') cannot use such U.S. Government 
funds to promote or advocate the legalization or practice of 
prostitution or sex trafficking. In addition, any recipient must have a 
policy explicitly opposing prostitution and sex trafficking.
    The U.S. Government is issuing this proposed rule on 
``Organizational Integrity'' to clarify that the Government's 
organizational partners that have adopted a policy opposing 
prostitution and sex-trafficking may, consistent with this policy 
requirement, maintain an affiliation with separate organizations that 
do not have such a policy, provided such affiliations do not threaten 
the integrity of the Government's programs and its message opposing 
prostitution and sex trafficking, as specified in this proposed rule. 
To maintain program integrity, adequate separation, as outlined in this 
proposed rule, is required between an affiliate that expresses views on 
prostitution and sex trafficking contrary to the Government's message 
and any federally funded partner organization.
    This proposed rule applies to funds used by the U.S. Department of 
Health and Human Services to implement HIV/AIDS programs and activities 
under the Leadership Act. The rule proposes certification language that 
organizations must provide to receive grants, cooperative agreements, 
contracts, and other funding instruments made available by HHS.
    All prime recipients that receive U.S. Government funds (``prime 
recipients'') must certify compliance with the proposed Rule on 
Organizational Integrity prior to actual receipt of such funds, in a 
written statement addressed to the HHS agency's grants or contract 
officer. The certifications by prime recipients are prerequisites to 
the payment of any U.S. Government funds in connection with an award 
under the Leadership Act.
    All recipients must insert provisions to implement the applicable 
parts of this proposed rule in all sub-agreements under their awards. 
These provisions must be express terms and conditions of the sub-
agreement; must acknowledge that compliance with this proposed rule is 
a prerequisite to the receipt and expenditure of U.S. Government funds 
in connection with this document; and must acknowledge that any 
violation of the provisions shall be grounds for unilateral termination 
of the agreement, prior to the end of its term.
    Recipients must agree that HHS may, at any reasonable time, inspect 
the documents and materials maintained or prepared by the recipient in 
the usual course of its operations that relate to the organization's 
compliance with this proposed rule.
    Nothing in the regulation is intended to lessen or relieve relevant 
prohibitions on Federal Government funding under other applicable 
Federal laws.

III. Discussion of the Proposed Rule

    These sections discuss the proposed rule by defining the terms 
relevant to this proposed rule and discussing the restrictions on 
organizations that receive Leadership Act funds.

Section 88.1 Definitions

    This Section defines the terms that are pertinent to this rule. 
Specifically, we propose the following definitions:

    ``Commercial sex act'' means any sex act on account of which 
anything of value is given to or received by any person.
    ``Prime recipients'' are contractors, grantees, applicants or 
awardees who receive

[[Page 20902]]

Leadership Act funds for HIV/AIDS programs directly from HHS.
    ``Prostitution'' means procuring or providing any commercial sex 
act.
    A ``recipient'' is a contractor, grantee, applicant or awardee 
who receives Leadership Act funds for HIV/AIDS programs directly or 
indirectly from HHS. Recipients are both prime recipients and sub-
recipients.
    ``Sex trafficking'' means the recruitment, harboring, 
transportation, provision, or obtaining of a person for the purpose 
of a commercial sex act.
    ``Sub-recipients'' are contractors, grantees, applicants or 
awardees, other than the prime recipient, who receive Leadership Act 
funds for HIV/AIDS programs indirectly from HHS through a contract, 
grant or other financial agreement with a recipient.

Section 88.2 Objective Integrity of Recipients

    This section of the proposed rule describes the separation that 
must exist between a recipient of HHS funds to implement HIV/AIDS 
programs and activities under the United States Leadership Against HIV/
AIDS, Tuberculosis and Malaria Act of 2003 (the ``Leadership Act''), 
Public Law No. 108-25 (May 27, 2003), and an affiliate organization 
that engages in activities that are not consistent with a policy 
opposing prostitution and sex trafficking, as required under Section 
301(f) of the Leadership Act.
    Paragraph (a) sets forth criteria for establishing the objective 
integrity and independence that a recipient must have from an affiliate 
organization that engages in activities inconsistent with a policy 
opposing prostitution and sex trafficking.
    The criteria for affiliate independence in this proposed rule are 
modeled on criteria upheld as facially constitutional by the U.S. Court 
of Appeals for the Second Circuit in Velazquez v. Legal Services Corp., 
164 F.3d 757, 767 (2d Cir. 1999), and Brooklyn Legal Services Corp. v. 
Legal Services Corp., 462 F.3d 219, 229-33 (2d Cir. 2006), cases 
involving similar organization-wide limitations applied to recipients 
of Federal funding.
    This proposed rule clarifies that an independent organization 
affiliated with a recipient of Leadership Act funds need not have a 
policy explicitly opposing prostitution and sex trafficking for the 
recipient to maintain compliance with the policy requirement. The 
independent affiliate's position on these issues will have no effect on 
the recipient organization's eligibility for Leadership Act funds, so 
long as the affiliate satisfies the criteria for objective integrity 
and independence detailed in this proposed rule. By ensuring adequate 
separation between the recipient and affiliate organizations, these 
criteria guard against a public perception that the affiliate's views 
on prostitution and sex-trafficking may be attributed to the recipient 
organization, and thus to the Government, thereby avoiding the risk of 
confusing the Government's message opposing prostitution and sex 
trafficking.
    Under Paragraph (b) of this section, an organization is ineligible 
to receive any Federal funds for HIV/AIDS programs made available under 
the Leadership Act, unless it has provided the certifications required 
by Sec.  88.3.

Section 88.3 Certifications

    This section of the proposed rule describes the certifications 
required to receive Leadership Act funding from HHS.
    The required certification implements the Organizational Integrity 
Section through an Organizational Integrity Certification, located at 
Section 88.3(d)(1), in which a recipient of Leadership Act funds 
administered by an HHS agency certifies it has objective integrity and 
independence from any affiliated organization that engages in 
activities inconsistent with a policy opposing prostitution and sex 
trafficking.
    The certification contains Acknowledgement and Sub-Recipient 
Certifications at Section 88.3(d)(2) and (3). These require each 
recipient to acknowledge that its provision of the certifications is a 
prerequisite to receiving Federal funds; that the Federal Government 
can stop or withdraw those funds if HHS finds a certification to have 
been inaccurate, or that such a certification becomes inaccurate; and 
that the prime recipient will ensure all its sub-recipients also 
provide the required certifications. As detailed in the Certifications 
Section, a sub-recipient must, at a minimum, provide the same 
certifications as those provided by the prime recipient.
    Paragraph (e) contains information regarding requirements for the 
renewal of the certifications. HHS requires each recipient to provide 
renewed certifications each Federal Fiscal Year, in alignment with the 
award cycle. Additionally, current funding recipients, as of the 
effective date of the regulation, must file a certification upon any 
extension, amendment, or modification of the funding instrument that 
extends the term of such instrument, or adds additional funds to it.

IV. Impact Analysis

Regulatory Flexibility Act

    The Secretary certifies under 5 U.S.C. 605(b), as enacted by the 
Regulatory Flexibility Act (Pub. L. 96-354), that this rule will not 
result in a significant impact on a substantial number of small 
entities. Since enactment of the policy requirement in the Leadership 
Act, HHS has required its contract solicitations and grant 
announcements for discretionary Leadership Act funding to include a 
section regarding ``Prostitution and Related Activities.'' The statute 
explicitly requires certifications.

Executive Order 12866--Regulatory Planning and Review

    The HHS has drafted and reviewed this regulation in accordance with 
Executive Order 12866, Section 1(b), Principles of Regulation. HHS has 
determined this rule is a ``significant regulatory action'' under 
Executive Order 12866, Section 3(f)(4), Regulatory Planning and Review, 
because it raises novel legal or policy issues that arise out of legal 
mandates and the President's priorities, and, accordingly, the Office 
of Management and Budget has reviewed it.
    This benefits of this rule are to ensure that an appropriate 
separation exists between recipients of Leadership Act funds and 
affiliated entities that engage in activities inconsistent with a 
policy opposing prostitution and sex trafficking, which will prevent 
confusion of the Government's message opposing prostitution and sex 
trafficking in Leadership Act programs and activities.
    The cost of this rule is unlikely to be significant. Since 2004, 
HHS has required recipients of Emergency Plan funding to certify their 
compliance with Section 301(f) of the Leadership Act, and HHS/OGHA 
issued a ``Guidance on Organizational Integrity,'' similar to this 
proposed regulation, on July 23, 2007. Although HHS/OGHA directed HHS 
agencies to disseminate this Guidance to their contractors and grantees 
that receive funding under the Leadership Act, and provided means for 
the public to comment on that Guidance, including whether the document 
is economically significant under definitions provided by the Office of 
Management and Budget, no one has submitted comments.

Executive Order 13132--Federalism

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

[[Page 20903]]

Unfunded Mandates Reform Act of 1995

    Section 202 of the Unfunded Mandates Reform Act of 1995 requires 
that a covered Federal Department or agency prepare a budgetary impact 
statement before promulgating a rule that includes any Federal mandate 
that could result in the expenditure by State, local, and tribal 
Governments, in the aggregate, or by the private sector, of $100 
million or more in any one year. The HHS has determined this rule would 
not impose a mandate that will result in the expenditure by State, 
local, and Tribal Governments, in the aggregate, or by the private 
sector, of more than $100 million in any one year.

Assessment of Federal Regulation and Policies on Families

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

Paperwork Reduction Act

    To obtain or retain Leadership Act funding for HIV/AIDS programs 
and activities, HHS will require recipients to submit certifications. 
The title of the information collection is ``Certification Regarding 
the Organizational Integrity of Entities Implementing Leadership Act 
Programs and Activities.'' The documents are necessary to ensure that 
recipients of Leadership Act funding have objective integrity and 
independence from any affiliated organizations that engage in 
activities inconsistent with a policy opposing prostitution and sex 
trafficking.
    HHS estimates that 555 respondents will prepare documents to 
validate that recipients have objective integrity and independence from 
affiliated organizations that engage in activities inconsistent with 
policies opposing prostitution and sex trafficking. HHS therefore 
estimates annual aggregate burden to collect the information as 
follows:

                                             Annual Burden Estimates
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                                                                     Number of        Average
                   Instrument                        Number of    responses  per   burden hours    Total burden
                                                    respondents      respondent    per response        hours
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Certifications..................................             555               1              .5           277.5
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    HHS has submitted this information collection to the Office of 
Management and Budget (OMB) for regular approval, and HHS will accept 
comments from the public, in accordance with the Paperwork Reduction 
Act of 1995. Comments received during the comment period should 
primarily focus on the following: (1) Whether the proposed collection 
of information is necessary for the proper performance of the functions 
of the Department, including whether the information will have 
practical utility; (2) the accuracy of the Department's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used; (3) how to enhance 
the quality, utility, and clarity of the information to be collected; 
and (4) how to minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology (e.g., by 
permitting the electronic submission of responses).
    All comments and suggestions, or questions regarding additional 
information, should go to HHS/OGHA.

List of Subjects in 45 CFR Part 88

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

    Dated: February 26, 2008.
William R. Steiger,
Director, Office of Global Health Affairs.

    Approved: March 18, 2008.
Michael O. Leavitt,
Secretary of Health and Human Services.

    For the reasons stated in the preamble, the Office of Global Health 
Affairs amends 45 CFR to add part 88 as follows:

PART 88--ORGANIZATIONAL INTEGRITY OF ENTITIES IMPLEMENTING PROGRAMS 
AND ACTIVITIES UNDER THE LEADERSHIP ACT

Sec.
88.1 Definitions.
88.2 Organizational integrity of recipients.
88.3 Certifications.

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


Sec.  88.1  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.
    ``Prime recipients'' are contractors, grantees, applicants or 
awardees who receive Leadership Act funds for HIV/AIDS programs 
directly from HHS.
    ``Prostitution'' means procuring or providing any commercial sex 
act.
    A ``recipient'' is a contractor, grantee, applicant or awardee who 
receives 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.
    ``Sub-recipients'' are contractors, grantees, applicants or 
awardees, other than prime recipients, who receive Leadership Act funds 
for HIV/AIDS programs indirectly from HHS through a contract, grant or 
other financial agreement with a recipient.


Sec.  88.2  Organizational integrity of recipients.

    (a) A recipient must have objective integrity and independence from 
any affiliated organization that engages in activities inconsistent 
with a policy opposing prostitution and sex trafficking . Recipients 
include both prime recipients and subrecipients. A recipient will be 
found to have objective integrity and independence from such an 
organization if:
    (1) The affiliated organization is a legally separate entity;
    (2) The affiliated organization receives no transfer of Leadership 
Act funds, and Leadership Act funds do not subsidize activities 
inconsistent with a policy opposing prostitution and sex trafficking; 
and

[[Page 20904]]

    (3) The recipient is physically and financially separate from the 
affiliated organization. Mere bookkeeping separation of Leadership Act 
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 physical and financial separation exists. The presence or 
absence of any one or more factors will not be determinative. Factors 
relevant to this determination shall include but will not be limited to 
the following:
    (i) The existence of separate personnel, management, and 
governance;
    (ii) The existence of separate accounts, accounting records, and 
timekeeping records;
    (iii) The degree of separation from facilities, equipment and 
supplies used by the affiliated organization to conduct activities 
inconsistent with a policy opposing prostitution and sex trafficking, 
and the extent of such activities by the affiliate;
    (iv) The extent to which signs and other forms of identification 
that distinguish the recipient from the affiliated organization are 
present, and signs and materials that could be associated with the 
affiliated organization or activities inconsistent with a policy 
opposing prostitution and sex trafficking are absent; and
    (v) The extent to which HHS, the U.S. Government and the project 
name are protected from public association with the affiliated 
organization and its activities inconsistent with a policy opposing 
prostitution and sex trafficking in materials, such as publications, 
conferences and press or public statements.
    (b) An organization is ineligible to receive any Leadership Act 
funds unless it has provided the certifications required by Sec.  88.3.


Sec.  88.3  Certifications.

    (a) HHS agencies shall include the certification requirements for 
any grant, cooperative agreement, contract, or other funding instrument 
in the public announcement of the availability of the grant, 
cooperative agreement, contract, or other funding instrument.
    (b) Unless the recipient is otherwise excepted, a person authorized 
to bind the recipient shall execute the certifications for the grant, 
cooperative agreement, contract, or other funding instrument.
    (c) A prime recipient must submit its certifications to the grant 
or contract officer of the HHS agency that will award funds. A sub-
recipient must provide its certifications to the prime recipient. The 
prime recipient will submit certifications from its sub-recipients when 
requested to do so by the HHS grant or contract officer.
    (d) The certifications shall state as follows:
    (1) Organizational Integrity Certification: ``I hereby certify that 
[name of recipient], a recipient of the funds made available through 
this [grant, cooperative agreement, contract, or other funding 
instrument], as defined in 45 CFR part 88, from any affiliated 
organization that engages in activities inconsistent with a policy 
opposing prostitution and sex trafficking.''
    (2) Acknowledgement Certification: ``I further certify that the 
recipient acknowledges that these certifications are a prerequisite to 
receipt of U.S. Government funds in connection with this [grant, 
cooperative agreement, contract, or other funding instrument], and that 
any violation of these certifications shall be grounds for termination 
by HHS in accordance with the Federal Acquisition Regulations, part 49 
for contracts, 45 CFR parts 74 or 92 for grants and cooperative 
agreements, as well as any other remedies as provided by law.''
    (3) Sub-Recipient Certification: ``I further certify that the 
recipient will include these identical certification requirements in 
any [grant, cooperative agreement, contract, or other funding 
instrument] to a sub-recipient of funds made available under this 
[grant, cooperative agreement, contract, or other funding instrument], 
and will require such sub-recipient to provide the same certifications 
that the recipient provided.''
    (e) Prime recipients and sub-recipients of funds must file a 
renewed certification each Fiscal Year, in alignment with the award 
cycle. Prime recipients and sub-recipients that are already recipients 
as of the effective date of this regulation must file a certification 
upon any extension, amendment, or modification of the grant, 
cooperative agreement, contract, or other funding instrument that 
extends the term of such instrument, or adds additional funds to it.

[FR Doc. 08-1147 Filed 4-15-08; 10:34 am]
BILLING CODE 4150-38-P